We Believe Small Caps Could Have a Five-Year Tailwind

Small Caps could have a Five-Year Tailwind | Breach Inlet Capital
  • After four years of vast underperformance, Small Cap Value (SCV) stocks, the Small Caps, are up ~27% compared to only ~14% for Large Cap Growth (LCG) stocks in the first six months of 2021[1]
  • Pay attention to these noticeable performance trends. History and valuations suggest we are in early innings to capture this opportunity.
  • We believe small cap strategies are well-positioned to provide investors an opportunity to compound capital in this next cycle. The graphs below tell the story for Small Caps.

A Difficult 4 Years for Small Caps (2017-2020)

Small Caps could have a Five-Year Tailwind | Breach Inlet Capital
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As the charts above illustrate, past market cycles for small caps over time have performed strongly on both an absolute and relative basis.  Equally as important is in these environments is to find individual companies that are best positioned to be among the leaders in the Small Caps segment of the market. 

TipTree (TIPT) is an example of the new small caps transformative investment that exemplifies our investment process and one that we believe may benefit in this next cycle. Visit our website for additional information about TIPT and other transformational investments in the strategy.

This information is provided on a confidential basis and for informational purposes only. This material may not be reproduced, displayed, modified, or distributed without the express prior written consent of Breach Inlet Capital Management, LLC (“BICM”). This information is intended solely for the receipt. This presentation has been prepared, in part, based on information reported or provided by Tiptree or other third-party sources. BICM has not independently verified such information and cannot guarantee the accuracy of all data contained herein.

This information is not complete and is only current as of the date hereof and may be superseded by subsequent market events or for other reasons. This information is not investment advice and is not a recommendation to purchase or sell any specific security. All opinions herein are those of Chris Colvin, principal of BICM. Mr. Colvin and BICM do not make any representations or warranties as to the accuracy or completeness of the information including that obtained from third parties or which is provided in third-party sites linked in this presentation.

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[1] Small Cap Value Index represents data taken from the Russell 2000 Value Index returns ending June 30, 2021. The Large Cap Growth Stock returns represent data from the S&P Growth Indices.