Rolling 5-Year Results Remain Strong
Our goal has always been to deliver exceptional 5-year rolling returns—and we’ve done just that. For those who believed in us from the start, thank you. We’re proud to have delivered industry- leading results over the long term.
While the past year has been underwhelming, it’s consistent with our message to all prospective investors: in a concentrated portfolio, there will be stretches—often 12 months or longer—where performance lags. But if we execute our strategy effectively, those quieter periods are often followed by strong, market-beating returns. This pattern is not an anomaly; it’s the nature of focused, conviction-driven investing.
Our portfolio companies are not just surviving, they’re thriving. They are growing revenue, expanding margins, and increasing market share, even in the face of macroeconomic headwinds.
Portfolio Fundamentals Are Robust Despite Economic Uncertainty
As I write this quarterly commentary, markets are reacting to renewed macroeconomic and geopolitical uncertainty, including President Trump’s tariff announcements. Small-cap stocks, which often trade with lower liquidity, tend to be especially sensitive to these types of surprises and don’t perform well during reflexive selling.
However, once the initial volatility fades, we believe our portfolio is well-supported by strong fundamentals. Most of our holdings are either unaffected by tariffs or stand to benefit from them. For those that are impacted, the effect usually comes from a temporary slowdown in broader demand than from direct effects on their business.
Importantly, our companies are trading at compelling valuations relative to their earnings power and long-term growth prospects. While valuation doesn’t shield stocks during broad market sell- offs, quality businesses at lower valuations are prone to recover faster and ultimately outperform as the market begins to distinguish the strong from the weak.
Our holdings are characterized by sound balance sheets, healthy growth, and strong earnings potential. Below, we highlight several of our key positions and why we continue to have high conviction in them.
Top Portfolio Holdings: Why We Remain Confident
Our companies are not just inexpensive; they are growing, competitive, and resilient. Below are a few examples to help you better understand what you own and why we remain confident:
BGC Group (BGC): Revenue growth is near 10% with earnings growing even faster. As a wholesale market broker (trader) of bonds, credit, interest rates and commodities, their business is not affected by tariffs. The company benefits from a secular rise in trading volumes and volatility across asset classes. Yet, it trades at just ~8x earnings, a compelling valuation for non- cyclical growth.
Energy Fuels (UUUU): Positioned to be a low-cost US supplier of uranium and rare earth elements. The company has brought mines online and secured major commercial partnerships. With bipartisan support for domestic critical mineral production, Energy Fuels is poised to deliver products and materials faster and at a lower cost than most of its US competitors. The company should be a beneficiary of tariffs and the need for secure US-centric supply chains.
Newmark (NMRK): A commercial real estate (CRE) broker that is growing and taking market share even amid a challenged CRE environment. As leasing and refinancing volumes normalize, growth should accelerate. And it trades at under 10x earnings. Tariffs don’t affect its operations directly. If more industrial activity returns to the US, the demand for commercial real estate services will grow.
Genius Sports (GENI): A tech platform for sports betting and data rights, with long-term partnerships with the NFL, NCAA, ESL and others. Revenue is growing rapidly, and their position is locked in for years to come. Outside of the effects of a slower economy, tariffs would have no effect on their business.
FLEX Ltd. (FLEX): A contract manufacturer benefiting from supply chain realignment and digital manufacturing. It trades for ~12x earnings despite improving growth and margins. Flex is one of the few companies that will be impacted by tariffs in the near term. While short-term tariff headwinds are probable, FLEX is also an important solution for customers who are reshoring operations and supply chains.
Small-Cap Valuations: A Historic Opportunity
Small caps are trading at historic discounts relative to large caps:
- As of Q1 2025, the Russell 2000 trades at a P/S of ~1.0, while the S&P 500 trades at a P/S of
~2.85. (Source: Bloomberg)
- The valuation gap between small and large caps is at a 20-year high. (Source: Bloomberg)
This gap creates opportunity. While the Magnificent 7 have dominated headlines and flows, the rest of the market—particularly small caps—have been largely overlooked. Historically, such extremes in valuation dispersion have been followed by strong small-cap outperformance.
Why This Matters for Your Portfolio
Most investors in index funds are far more concentrated than they realize. Today:
- The “Magnificent 7” make up over 30% of the S&P 500
- …and nearly 50% of the Nasdaq 100
This is not great diversification—it’s concentration in a single factor: mega-cap tech.
Our portfolio looks nothing like these indexes. As a result, we believe it pairs well with passive strategies, offering meaningful diversification and improving the risk/return profile of a long- term portfolio.
Final Thoughts
Investing is hard, especially when markets don’t reward fundamentals right away and unpredictable events cause market turmoil. But history and our experience show that quality, growing, undervalued companies tend to be great investments over time. We remain confident in our strategy and our businesses.
Let us know if you’d like to discuss any holdings in more detail—we’re here to help you stay informed and invested with conviction.
With gratitude,
Zack
Small Cap Q1 2025 Commentary
Zack Perry
Rolling 5-Year Results Remain Strong
Our goal has always been to deliver exceptional 5-year rolling returns—and we’ve done just that. For those who believed in us from the start, thank you. We’re proud to have delivered industry- leading results over the long term.
While the past year has been underwhelming, it’s consistent with our message to all prospective investors: in a concentrated portfolio, there will be stretches—often 12 months or longer—where performance lags. But if we execute our strategy effectively, those quieter periods are often followed by strong, market-beating returns. This pattern is not an anomaly; it’s the nature of focused, conviction-driven investing.
Our portfolio companies are not just surviving, they’re thriving. They are growing revenue, expanding margins, and increasing market share, even in the face of macroeconomic headwinds.
Portfolio Fundamentals Are Robust Despite Economic Uncertainty
As I write this quarterly commentary, markets are reacting to renewed macroeconomic and geopolitical uncertainty, including President Trump’s tariff announcements. Small-cap stocks, which often trade with lower liquidity, tend to be especially sensitive to these types of surprises and don’t perform well during reflexive selling.
However, once the initial volatility fades, we believe our portfolio is well-supported by strong fundamentals. Most of our holdings are either unaffected by tariffs or stand to benefit from them. For those that are impacted, the effect usually comes from a temporary slowdown in broader demand than from direct effects on their business.
Importantly, our companies are trading at compelling valuations relative to their earnings power and long-term growth prospects. While valuation doesn’t shield stocks during broad market sell- offs, quality businesses at lower valuations are prone to recover faster and ultimately outperform as the market begins to distinguish the strong from the weak.
Our holdings are characterized by sound balance sheets, healthy growth, and strong earnings potential. Below, we highlight several of our key positions and why we continue to have high conviction in them.
Top Portfolio Holdings: Why We Remain Confident
Our companies are not just inexpensive; they are growing, competitive, and resilient. Below are a few examples to help you better understand what you own and why we remain confident:
BGC Group (BGC): Revenue growth is near 10% with earnings growing even faster. As a wholesale market broker (trader) of bonds, credit, interest rates and commodities, their business is not affected by tariffs. The company benefits from a secular rise in trading volumes and volatility across asset classes. Yet, it trades at just ~8x earnings, a compelling valuation for non- cyclical growth.
Energy Fuels (UUUU): Positioned to be a low-cost US supplier of uranium and rare earth elements. The company has brought mines online and secured major commercial partnerships. With bipartisan support for domestic critical mineral production, Energy Fuels is poised to deliver products and materials faster and at a lower cost than most of its US competitors. The company should be a beneficiary of tariffs and the need for secure US-centric supply chains.
Newmark (NMRK): A commercial real estate (CRE) broker that is growing and taking market share even amid a challenged CRE environment. As leasing and refinancing volumes normalize, growth should accelerate. And it trades at under 10x earnings. Tariffs don’t affect its operations directly. If more industrial activity returns to the US, the demand for commercial real estate services will grow.
Genius Sports (GENI): A tech platform for sports betting and data rights, with long-term partnerships with the NFL, NCAA, ESL and others. Revenue is growing rapidly, and their position is locked in for years to come. Outside of the effects of a slower economy, tariffs would have no effect on their business.
FLEX Ltd. (FLEX): A contract manufacturer benefiting from supply chain realignment and digital manufacturing. It trades for ~12x earnings despite improving growth and margins. Flex is one of the few companies that will be impacted by tariffs in the near term. While short-term tariff headwinds are probable, FLEX is also an important solution for customers who are reshoring operations and supply chains.
Small-Cap Valuations: A Historic Opportunity
Small caps are trading at historic discounts relative to large caps:
~2.85. (Source: Bloomberg)
This gap creates opportunity. While the Magnificent 7 have dominated headlines and flows, the rest of the market—particularly small caps—have been largely overlooked. Historically, such extremes in valuation dispersion have been followed by strong small-cap outperformance.
Why This Matters for Your Portfolio
Most investors in index funds are far more concentrated than they realize. Today:
This is not great diversification—it’s concentration in a single factor: mega-cap tech.
Our portfolio looks nothing like these indexes. As a result, we believe it pairs well with passive strategies, offering meaningful diversification and improving the risk/return profile of a long- term portfolio.
Final Thoughts
Investing is hard, especially when markets don’t reward fundamentals right away and unpredictable events cause market turmoil. But history and our experience show that quality, growing, undervalued companies tend to be great investments over time. We remain confident in our strategy and our businesses.
Let us know if you’d like to discuss any holdings in more detail—we’re here to help you stay informed and invested with conviction.
With gratitude,
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.
Talk To Us