Seeking Opportunity in the 'Lesser Known'
Allison Thacker, co-manager of multiple RS growth funds, says her team has been taking a look at IPOs and smaller firms that underperformed in 2008 as investors flocked to the safety of 'known quantities.'
Allison Thacker, co-manager of multiple RS growth funds, says her team has been taking a look at IPOs and smaller firms that underperformed in 2008 as investors flocked to the safety of 'known quantities.'
Ryan Leggio: The market has obviously recovered significantly since the March lows. Where are you spending a lot of time and where is your team spending a lot of time doing research right now?
Allison Thacker: I think we are seeing opportunities to go back to some areas that hadn't been a particular focus over the last 18 months. One example would be relatively small caps. Some things sub-$500 million market cap really were not a lot of high interest to investors last year. People felt like they wanted to go to known quantities, known management teams; they didn't want to invest in new IPOs. Those type of companies really underperformed in 2008 because investors went back to the safe choices as opposed to these newer choices.
And so we've been doing a lot of work kind of looking at these smaller-cap companies, trying to find names that have long-term growth franchises, reviewing a lot of the IPOs of the last four or five years looking for opportunities.
Usually in bear markets, companies that can get public during a beat market are usually very strong performers post the bear market, because investors have really high hurdle rates for what can get public.
So we think there's a lot of opportunity in this small-cap area, so all of our products are actually looking to invest more into the smaller end of the market cap range.
Leggio: Great. Thanks, Allison. Thanks so much for joining us.
Thacker: Thank you for having me.
Leggio: And thank you for joining us. This is Ryan Leggio for Morningstar.
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