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A Much More Balanced Picture

A Much More Balanced Picture

International Small Cap Review of the Second Quarter of 2021 | KayneCast 160

July 20, 2021

Domestically, some of the smallest market caps, the lowest quality and most highly leveraged businesses tended to outperform in the first quarter of 2021. According to Craig Thrasher, senior portfolio manager and analyst with KAR’s International Small Cap portfolio, there were similar themes in the international small cap universe. However, as we moved into the second quarter, it was a much more balanced picture with higher quality companies having a better showing. 

Key Contributors and Detractors in International Small Cap

To learn more about the top 5 contributors and detractors in KAR’s International Small Cap strategy for Q2 2021 listen to the podcast above. 

How Temporary Setbacks Offer Opportunity

Certain countries such as India, Brazil, and the UK continue to struggle with COVID-19, setting near-term challenges for international investors. Still, Thrasher points out that, due to vaccines, these setbacks are temporary. “Right now, it seems clear to us that we’re simply talking about a matter of when, not if, recovery will happen. With this in mind, we are focusing on finding opportunities in areas where investors are focusing on near-term COVID impacts.”

As an example, the portfolio recently purchased stock in one of the leading credit bureaus in Brazil. The stock had traded down due to some of the negative news around COVID-19 and Brazil, but the company’s long-term positive structural story made the investment an attractive opportunity.

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.

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