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Quarterly Stock Market Commentary for Q3 2022

Quarterly Stock Market Commentary for Q3 2022

November 29, 2022

Each quarter, our portfolio managers and research analysts provide insightful commentary on stock market performance, as well as the latest trends and behaviors affecting the market today.

Our high conviction investment strategies focus on quality businesses, including Small Cap, Mid Cap, Large Cap, Growth, and International strategies, which we believe are  positioned for resiliency in any market environment.

In this discussion roundup for Q3 2022, you can quickly find individual recaps of each actively managed strategy, all recorded from our stock market insights podcast, KayneCast. Subscribe to KayneCast today to be automatically notified when future quarterly reviews are made available.

You can also read the full Q3 2022 market review in our provided commentary, or revisit our past quarterly recaps:

 

Q3 2022 Stock Market Recap

Market volatility remained a concern in Q3 2022, with fears of recession turning into a reality. Geopolitical events continued to impact performance, as well as rising interest rates, inflation, and weakened consumer confidence. KAR’s strategy remains focused on seeking quality businesses built to withstand market volatility.

KAR Contributors: Jordan Greenhouse, Doug Foreman

Read the complete summary and market review for Q3 2022, or listen to the full discussion in episode 197 of KayneCast.

 

Small-Mid Cap Core

High levels of volatility, climbing interest rates and inflationary pressures in September added to overall market slowdown in Q3 2022. KAR continues to set its sights on high quality businesses in segments under pressure from geopolitical events, the ongoing effects of COVID-19, and the rising costs for gas and food prices.

KAR Contributors: Jordan Greenhouse, Julie Kutasov

Read the complete summary of the Small-Mid Cap Core Q3 2022 review, or listen to the full discussion in episode 198 of KayneCast.

 

Small Cap Quality

Despite increased interest rates enacted by the Fed, inflation continued to play a significant role for Small Cap Quality performance in Q3 2022. COVID-19 and ever-present restrictions still in place in countries like Russia and China are also affecting market uncertainty.

KAR Contributors: Jordan Greenhouse, Julie Kutasov

Read the complete summary of the Small Cap Quality Q3 2022 review, or listen to the full discussion in episode 199 of KayneCast.

 

Mid Cap Growth

Given the economic slowdown surrounding the Fed’s attempts to prevent a hard landing from the current recession, the Q3 2022 recap for Mid Cap Sustainable Growth showed continued uncertainty in the market amid rising interest rates and inflation. For these reasons, KAR notes that companies may be looking to avoid aggressive growth strategies heading into Q4 2022.

KAR Contributors: Jordan Greenhouse, Chris Armbruster

Read the complete summary of the Mid Cap Growth Q3 2022 review, or listen to the full discussion in episode 200 of KayneCast.

 

Small Cap Core

Small Cap stock performance trended toward lower-quality investing behaviors in Q3 2022, as KAR had expected according to historical data. During Q3 2022, the Small Cap portfolio was largely affected by inflationary pressures, the prolonged war in Ukraine, and supply chain headaches, among other geopolitical events.

KAR Contributors: Jordan Greenhouse, Jon Christensen

Read the complete summary of the Small Cap Core Q3 2022 review, or listen to the full discussion in episode 201 of KayneCast.

 

Mid Cap Core

Mid Cap Core performance saw volatile fluctuations through Q3 2022, where only energy and industrial sectors held strong. The analysts at KAR are maintaining a cautionary outlook heading into Q4 for Mid Cap Core stocks, but remain confident in the ability of high quality companies to ride out market turbulence.

KAR Contributors: Jordan Greenhouse, Jon Christensen

Read the complete summary of the Mid Cap Core Q3 2022 review, or listen to the full discussion in episode 202 of KayneCast.

 

Global Dividend Yield

The Global Dividend Yield strategy found investors in a prolonged whirlwind of geopolitical events in Q3 2022, including the Russian Ukraine conflict, COVID-19 variants, and central banks clamping down on inflationary pressures. KAR believes that higher yielding stocks will recover as inflation rates begin to settle heading into Q4.

KAR Contributors: Jordan Greenhouse, Richard Sherry

Read the complete summary of the Global Dividend Yield Q3 2022 review, or listen to the full discussion in episode 203 of KayneCast.

 

International Small Cap

The KAR International Small Cap portfolio managers believe that devalued markets worldwide present new opportunities for cautious investors. The International Small Cap Q3 2022 review examines global factors such as high energy prices and their effect on consumer behavior, particularly in Europe and the U.K.

KAR Contributors: Jordan Greenhouse, Craig Thrasher

Read the complete summary of the International Small Cap Q3 2022 review, or listen to the full discussion in episode 204 of KayneCast.

 

Long Short

The KAR Long-Short strategy was impacted by surging interest rates in Q3 2022, with Communication Services, Real Estate, and Materials among the sectors hit hardest. As with any strategy, forecasting the Long-Short outlook for Q4 is uncertain given the volatile state of the market, but KAR remains confident in its Long-Short portfolio over the long term given the strategy’s well-diversified collection of businesses.

KAR Contributors: Jordan Greenhouse, Chris Wright

Read the complete summary of the Long-Short Q3 2022 review, or listen to the full discussion in episode 205 of KayneCast.

DISCLOSURE

This information is being provided by Kayne Anderson Rudnick Investment Management, LLC (“KAR”) for illustrative purposes only. Information contained in this material is not intended by KAR to be interpreted as investment advice, a recommendation or solicitation to purchase securities, or a recommendation of a particular course of action and has not been updated since the date of the material, and KAR does not undertake to update the information presented should it change. This information is based on KAR’s opinions at the time of the recording of this material and are subject to change based on market activity. There is no guarantee that any forecasts made will come to pass. KAR makes no warranty as to the accuracy or reliability of the information contained herein. Past performance is no guarantee of future results.

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