This paper employs similar analytical structures to those used in our newsletter High-Quality Midcap Value, The Case for Common Sense. In this paper, Kailash presents what we believe is compelling evidence that:
- Record Quality Spreads: The spreads between the highest and lowest quality firms in the Russell 2000 index have hit levels last seen during the internet mania
- Record Value Spreads: Like 2000, today, the lowest quality firms are trading at a very large premium to the highest quality firms; the only difference between today and 2000 is the spreads today are 2x wider
- Conclusion: With Quality & Value spreads both at the widest levels since 1978, today is the single best opportunity to buy high-quality small-cap firms in over 40 years
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