History doesn’t repeat, but it does rhyme – and if this adage holds true, small caps are likely to present strong opportunities for patient investors over the coming years.
Add to this the drawdown of calendar year 2022 resulted in a relatively broad-brush approach taken to many small caps, with the result in many instances meaning the baby was thrown out with the bathwater. There will undoubtedly be more earnings downgrades as certain sectors continue to feel the brunt of higher interest rates and inflation, but equity markets are forward-looking and the next set of downgrades may indicate we have reached the bottom of the earnings trough for this cycle.
operates a portfolio of tourism and public-transport assets across Australia and various global markets. We are attracted to the defensive growth characteristics of the business, which is a product of both the contracted nature of the public-transport division and management’s ability to drive growth through winning and retaining contracts.