![]() They’re growing fast-revenue is expected to grow at least 10%, earnings per share is expected to grow at least 15%, both for multiple quarters in a row.It doesn’t feel like it in your gut, probably, but that’s what the history books tell you.”ĬTSIX focuses on small companies with two characteristics: Referring to the below chart, he said, “Historically, this is typically a good entry point. It’s murky right now but a lot of damage has already been done.” Of course, we’ve got geopolitical concerns now front and center. “There are a lot of things to worry about,” Nelson continued, “the Fed tightening cycle and the trajectory. “Down is down and it’s just as painful either way,” he acknowledged, “but to me, it’s more believable that you could see a recovery, because is not being led by negative estimate revisions.” There always are, but for the most part, business is fine, and in a lot of cases, much better than fine, but stocks are getting hit anyway,” Nelson said. Recent earnings updates have revealed a few companies with issues related to Covid, supply chain and/or labor constraints. Omicron sort of bled over into January and that disrupted some operations to some extent,” he said. They’re expecting some softness in the March quarter, they’re guiding to that. ![]() On earnings calls, companies are “talking about a really strong 2022, but it’s going to be more second half-weighted than people were originally modeling. ![]() By contrast, today’s small company fundamentals are fairly strong, according to Nelson. In the one-year period between Maand March 15, 2001, Nelson recalled, the Russell 2000 Growth Index underperformed the Russell 3000 Index by about 44 percentage points.īut here’s the difference, he said: While small caps today have lost about 70% of the ground lost 20 years ago, investors at that time were reacting to severe negative earnings revisions. Small cap growth stocks, in particular, have taken “a pounding” approaching the magnitude of their drawdown during the dot com bubble in 2000. Nelson provided his analysis of the volatility within the asset class and its impact on Calamos Timpani Small Cap Growth Fund (CTSIX) on last week’s CIO Conference Call ( listen to the call in its entirety here). They seesawed back and forth since, finishing February with a -8.66% year-to-date return. “A valuation re-rating lower without a lot of teeth behind it”-that’s how Calamos Senior Portfolio Manager Brandon Nelson describes what’s been happening with small caps.Īs tracked by the Russell 2000 Index, small caps started their decline near Thanksgiving and entered bear market territory on January 27. ![]()
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