Twenty-three years after going out on his own to start a small cap fund, David Paradice has backed Sam Theodore to find value in a sector where the little guys have been losing out.
Most great investors are contrarians at heart. Which helps explain why veteran fund manager David Paradice isn’t too fazed at the prospect of launching a new, small-cap fund in a market that’s drawing comparisons toDavid Paradice says small caps can grow even despite a softer economic outlook., represents something of a return to Paradice’s roots.
The Small Cap Opportunities fund is a response to clients who’ve long been keen for the firm to offer new small-cap exposure. This is a market-wide trend; fellow fund manager Firetrail recently said it has been approached by five large superannuation funds seeking to lift with small cap exposure, while the Future Fund is also looking to deploy at this end of the market.
And while he concedes picking a bottom in this underperformance is not easy, he sees no shortage of opportunity. “When we look at these companies, you can’t help but find really good value. You’re seeing more opportunities emerge as this is happening,” Theodore says. The next phase is narrowing down the investible universe. After working out which industry structures are most positive, and which companies look like mispriced opportunities, this is where the old-fashioned, shoe-leather investing starts.
“It will have significant upside if it can achieve that number. The early signs are quite positive that it’s on the way but obviously, it needs to keep executing to get there.”
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