July 2024 / VIDEO
Two questions on US equities with…Matt Mahon
Portfolio Manager Matt Mahon discusses his outlook and expectations for US smaller companies
Transcript
0:12
Smaller-cap valuations have been relatively attractive versus their large cap peers for some time now.
0:18
But valuation alone is not a catalyst for outperformance.
0:22
You need valuation, but you also need fundamentals.
0:25
Over the coming years, we’ve seen an inflection in small-cap fundamentals as industries like industrials and the energy complex improve relative to the past.
0:35
Those inflecting fundamentals support many of the smaller companies and in aggregate will help small-cap earnings on a relative basis versus their large-cap peers, providing a tailwind to the fundamentals for these businesses.
0:52
Today, we're finding attractive opportunities in the energy complex as falling energy productivity,
0:57
the unwinding of the shale revolution, is creating the need for greater investment in the energy industry, and in suppliers that help combat falling productivity.
1:08
As well, we're finding attractive areas of opportunity in health care, as the next generation of medicine takes hold in some of the most innovative companies that are driving that change.
1:18
We're seeing an extreme bifurcation where parts of a given industry are performing very well, as in the AI companies within the semiconductor universe.
1:30
But within semiconductors, there's also parts that are experiencing deeply recessionary volumes, like analog and microcontrollers and diodes.
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