After some time on the sidelines, Co-Portfolio Manager Gareth Brown is back in the hot seat, joining CIO Steve Johnson for the latest episode of Stocks Neat as they delve into lessons from the recent Berkshire Hathaway meeting.

They reflect on the meeting’s evolution over decades, how size has impacted investment decisions and the increasing conservatism in Berkshire Hathaway's investment strategy.

Additionally, Steve and Gareth revisit a topic previously explored at the beginning of the year - the underperformance of small-cap stocks. They examine the current valuation differential between small and large-cap stocks, with relative valuations for US small caps at their lowest levels on record. They shed light on what this means for investors and discuss the potential for a change in sentiment towards small-cap stocks as we enter, and ultimately emerge from, any recession.

According to recent research from Global Alpha Capital Management, small caps tend to underperform going into a recession. But that underperformance typically stops right around the onset of a recession. From that recessionary onset, small caps have outperformed large caps over the following 3-4 years in all 6 US recessions for which the company had data. 

Pour yourself a glass of whisky and join Steve and Gareth as they explore these topics while sipping on a glass of Super Nikka Japanese Whisky.

Show Notes:

• Stocks Neat episode on small caps - The contrarian case for small-caps in 2023
• Steve's recent Livewire article - Why a recession might be needed for small caps to work
• Global Alpha article - Small cap is back

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