Slide 2 – DISCLAIMER
First, we explained that the spread in raw market cap between large cap and small cap stocks was bouncing off a three standard deviation low
Second, we highlighted the hugely problematic nature of large cap indexes which featured valuations that were, at the time, significantly above the levels seen at the peak of the internet bubble
Third, we highlighted the power of KCR’s Small Cap Model portfolio vs. the Russell 2000, expressing our now long held and much discussed belief that the small cap indexes are deeply flawed constructs bloated with overpriced loss-making companies.
Slide 3 – Agenda
Over the course of this presentation, we will quickly update you on every one of these items per the agenda you see here. We are going to show how the recent sell-off has materially improved the case for KR’s small cap model portfolio. Before we do that, I think it is really important for us to acknowledge what we got right and what we got wrong.
Slide 4 – Small Cap vs. Large Cap: Update & Mea Culpa
As money managers ours