Actionable Ideas for Companies and Sponsors

Small/Mid-Cap Companies And Those In Value-Oriented Sectors Should Access The Equity Markets

Recently, we have seen notable institutional buyer rotation into both small/mid-cap companies and companies in value-oriented sectors. This presents a near-term opportunity for these companies to access the new issue market. Since the beginning of May, the small/mid-cap Russell 2000 Index has outperformed the S&P 500 by over 300 basis points and the best performing sectors during this period include consumer discretionary, healthcare, and industrials.  In only 2 of the last 10 years have we seen value outperform growth, and in each of those years, sectors like industrials and financials drove new issue activity.  We believe we are in the early days of this rotation and that small/mid-cap companies and those in these sectors who have seen their share price materially increase should move quickly to raise equity to take advantage of this investor interest.