Clues and commentaries on the global prospects for stocks, bonds and alternatives.
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Signs of a Market Turning
Royce & Associates | January 7,2016

Chuck Royce and Francis Gannon share their thoughts on the small-cap equity market

  • We think there has been too much attention paid to interest rates and not enough to credit spreads and the corporate cost of capital.
  • Historically credit crunches have led to trouble for small-caps as a whole, however, we believe that companies with low leverage, high returns on invested capital, and other indicators of financial strength should have a marked advantage in a more challenging or difficult credit environment.
  • We see profitability and profit growth becoming increasingly important, which will make it harder for unprofitable small-caps to maintain leadership.
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