July 25th, 2018 | Seeking Alpha
Gerstein Fisher Blog Post on Small-Cap Growth Singled Out On-Line
A citation from our blog post on “The Trouble with Small-Cap Growth Stocks,” together with a link to the full post, appeared in the “SA for FAs” column on noteworthy research in the July 13, 2018, issue of Seeking Alpha. Seeking Alpha is an on-line publication designed for investors.
Small-cap growth stocks have lower exposure to the positive Value factor, says blog author Gregg S. Fisher, Gerstein Fisher Founder, Portfolio Manager, and Head of Research. Seeking Alpha picks up this idea in its brief excerpt, and goes on to quote the heart of the blog post: “But when we drilled down into the small-cap growth space, we discovered that the bulk of underperformance can be explained by the ‘growthiest’ of stocks within a growth index….” In other words, valuation counts, even in the growth space.
As the blog post details, from 1980 through 2017, these “growthiest” small-cap stocks trailed the most-attractively valued small-cap growth segment by more than five percentage points annualized: a dramatic gap. With that information, along with other Factor-oriented research findings, Gerstein Fisher can build a small-cap growth strategy with the potential for much higher risk-adjusted returns.