As the expression goes “the worm has turned”. In our January letter we wrote about last year’s narrow market leadership which favored just a handful of large cap growth stocks. We cited the extreme valuation of the “FANG stocks” and suggested that this form of momentum investing was reaching an extreme. Subsequently, market leadership has dramatically changed and value stocks along with smaller cap companies have returned to favor, contributing to our out performance in the first quarter. Higher oil prices, less nervousness about Federal Reserve policy have spurred the dramatic improvement in stock prices since the market low on February 11th.
Clearly we are living with uncertainty. We are experiencing a polarizing election cycle and an economic recovery that has been slow in pace but long in duration. We remain optimistic that our stocks are attractively priced and encouraged by a high level of insider buying among our core holdings.
We would also like to pass along the good news that Assistant CIO, Mac Muirhead has passed level 1 of the CFA exam.