Love me or hate me, but please don’t ignore me!
We are pleased by our performance over the past year and since inception. Our portfolio companies continue to thrive based on our analysis. They are all advancing their businesses in ways that we believe add exciting long-term value for shareholders. In 2024, however, the market’s reaction to this success has been a resounding . . . “meh.“
High-profile stocks often attract debate among pundits and speculative investors. We rarely actively invest in such situations, as it is challenging to find a rational advantage when so many investors are focused on a stock. Moreover, the momentum of crowded investments tends to be unpredictable, even if we believe the stock price has detached from its fundamental value.
In contrast, we typically find our best investments in companies that have been largely ignored by the market. These companies are often overlooked for good reasons, but the opportunity arises when something changes that the market does not notice or fully appreciate due to entrenched assumptions.
The downside of our investment approach is that the market can remain disinterested for longer than expected. We believe this is currently happening to many of our largest investments. As Tom Petty famously sang: “The waiting is the hardest part.”
The good news is that when we are right about a company and the market wakes up to that fact, repricing can come swiftly. This is why our long-term performance is driven by significant, impactful quarters. Given the unpredictability of these quarters, the benefits accrue to investors who give the strategy time to succeed.
Our “ignored” stocks continue to execute
Below is our write-up from Q1 about two of our top holdings and a follow-up with new information in Q2. Both companies had significant announcements in Q2 with little reaction in their stock price.
BGC, Q1 Note: The company continues to show double digit earnings growth in its core business, received approval to launch a competing business to the CME, and management continues to buy back stock with their strong cash flow. Despite all these positives, the stock is still trading for less than 10x estimated earnings. We continue to cheer on management as they unlock the value of their multi-year investments.
BGC Q2 Update: BGC announced the partners for the futures platform include the largest banks and traders, such as JP Morgan, Goldman Sachs and Citidel. The company will launch futures in September in their first foray against CME. Their core business continues to grow earnings greater than 10%. They are buying back stock and have increased their dividend.
Energy Fuels Q1 Note: Uranium prices pulled back after a wild run last year, weighing on sentiment in the sector. Energy Fuels, in our opinion, has irreplaceable assets that could allow them to become a U.S. -based hub to generate strategically important materials, such as uranium for nuclear power, rare earth magnets for industrial and military applications, and isotopes for medical care. Management continues to sign long-term contracts, invest in assets, and negotiate supply agreements to bolster their already strong position.
Energy Fuels Q2 Update: The company showed that little capital is needed to reach 2 million pounds of annual uranium production and a clear path to 5 million pounds. Along with Cameco, this will make Energy Fuels one of the only North American companies with a proven and quick path to higher production. Also, the company announced the acquisition of Australian and Madagascar assets for rare earth magnet materials. With these acquisitions, the company will have the ability to be a large, low-cost, and China-free producer in a strategically important supply chain for the technology and defense industries. Currently, magnet production is dominated by China, which poses an economic and military liability for the West.
We are excited to follow our companies’ growth and success in the coming years.
Thank you for your trust and confidence. We are always here to answer your questions, please call or email.
With kind regards,
Zack
Small Cap Q2 2024 Commentary
Zack Perry
Love me or hate me, but please don’t ignore me!
We are pleased by our performance over the past year and since inception. Our portfolio companies continue to thrive based on our analysis. They are all advancing their businesses in ways that we believe add exciting long-term value for shareholders. In 2024, however, the market’s reaction to this success has been a resounding . . . “meh.“
High-profile stocks often attract debate among pundits and speculative investors. We rarely actively invest in such situations, as it is challenging to find a rational advantage when so many investors are focused on a stock. Moreover, the momentum of crowded investments tends to be unpredictable, even if we believe the stock price has detached from its fundamental value.
In contrast, we typically find our best investments in companies that have been largely ignored by the market. These companies are often overlooked for good reasons, but the opportunity arises when something changes that the market does not notice or fully appreciate due to entrenched assumptions.
The downside of our investment approach is that the market can remain disinterested for longer than expected. We believe this is currently happening to many of our largest investments. As Tom Petty famously sang: “The waiting is the hardest part.”
The good news is that when we are right about a company and the market wakes up to that fact, repricing can come swiftly. This is why our long-term performance is driven by significant, impactful quarters. Given the unpredictability of these quarters, the benefits accrue to investors who give the strategy time to succeed.
Our “ignored” stocks continue to execute
Below is our write-up from Q1 about two of our top holdings and a follow-up with new information in Q2. Both companies had significant announcements in Q2 with little reaction in their stock price.
BGC, Q1 Note: The company continues to show double digit earnings growth in its core business, received approval to launch a competing business to the CME, and management continues to buy back stock with their strong cash flow. Despite all these positives, the stock is still trading for less than 10x estimated earnings. We continue to cheer on management as they unlock the value of their multi-year investments.
BGC Q2 Update: BGC announced the partners for the futures platform include the largest banks and traders, such as JP Morgan, Goldman Sachs and Citidel. The company will launch futures in September in their first foray against CME. Their core business continues to grow earnings greater than 10%. They are buying back stock and have increased their dividend.
Energy Fuels Q1 Note: Uranium prices pulled back after a wild run last year, weighing on sentiment in the sector. Energy Fuels, in our opinion, has irreplaceable assets that could allow them to become a U.S. -based hub to generate strategically important materials, such as uranium for nuclear power, rare earth magnets for industrial and military applications, and isotopes for medical care. Management continues to sign long-term contracts, invest in assets, and negotiate supply agreements to bolster their already strong position.
Energy Fuels Q2 Update: The company showed that little capital is needed to reach 2 million pounds of annual uranium production and a clear path to 5 million pounds. Along with Cameco, this will make Energy Fuels one of the only North American companies with a proven and quick path to higher production. Also, the company announced the acquisition of Australian and Madagascar assets for rare earth magnet materials. With these acquisitions, the company will have the ability to be a large, low-cost, and China-free producer in a strategically important supply chain for the technology and defense industries. Currently, magnet production is dominated by China, which poses an economic and military liability for the West.
We are excited to follow our companies’ growth and success in the coming years.
Thank you for your trust and confidence. We are always here to answer your questions, please call or email.
With kind regards,
Zack
Disclosure and Source
Investment advisory services offered through Robertson Stephens Wealth Management, LLC (“Robertson Stephens”), an SEC-registered investment advisor. Registration does not imply any specific level of skill or training and does not constitute an endorsement of the firm by the Commission. This material is for general informational purposes only and should not be construed as investment, tax or legal advice. It does not constitute a recommendation or offer to buy or sell any security, has not been tailored to the needs of any specific investor, and should not provide the basis for any investment decision. Please consult with your Advisor prior to making any investment decisions. The information contained herein was compiled from sources believed to be reliable, but Robertson Stephens does not guarantee its accuracy orcompleteness.Information, views and opinions are current as ofthe date ofthis presentation,are based on the information available atthe time, and are subjectto change based on marketand other conditions. Robertson Stephens assumes no duty to update this information. Unlessotherwise noted, any individual opinions presented are those of the author and not necessarilythose of Robertson Stephens. Performancemaybe compared to several indices.Indices are unmanaged and reflect the reinvestment of all income or dividends but do notreflectthe deduction of any fees orexpenses which would reduce returns. A complete list of RobertsonStephens Investment Office recommendations overthe previous 12 months is available upon request. Past performance does not guarantee future results.Forward-looking performance objectives,targets or estimates are not guaranteed and may notbe achieved.Investing entailsrisks, including possible loss of principal. Alternative investments are speculative and involve substantialrisks including significant loss of principal, high illiquidity, long time horizons, unevengrowth rates,high fees, onerous tax consequences,limitedtransparency and limited regulation.Alternative investmentsare not suitable for all investors and are only available to qualified investors. Please referto the private placement memorandumfor a complete listing anddescription ofterms and risks. Thismaterial is an investment advisory publication intended forinvestment advisoryclients and prospective clients only. Robertson Stephens onlytransactsbusiness in states in which it is properlyregistered or is excluded orexempted fromregistration.A copy of Robertson Stephens’ current written disclosure brochure filed with the SEC which discusses, amongotherthings, Robertson Stephens’business practices, services and fees, isavailable through the SEC’s website at:www.adviserinfo.sec.gov. ©2025 RobertsonStephensWealth Management, LLC. All rights reserved. Robertson Stephens is a registered trademark ofRobertson Stephens Wealth Management, LLC in the United States and elsewhere. © 2025 Robertson Stephens. Wealth Management, LLC. All rights reserved. Robertson Stephens is a registered trademark of Robertson Stephens Wealth Management, LLC in the United States and elsewhere.
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