Quarterly and Annual Letters
Below is a complete list of all the research that we have produced, in chronological order.
1Q13 Quarter End Letter
04/05/13 -
1Q13 Quarter End Letter
- The Russell 2000 (R2000) was up +12.4% and the S&P 600 was up +11.8% in 1Q13. This would rank as the 17th best 1Q return since 1940.
- Defensive led in a strong “up” quarter which is uncommon, and fund managers were underweight these sectors when the quarter began. The top five 1Q13 sectors were Energy, Staples, Financials, Health Care and Utilities.
- Four years into the rally, the R2000 is ahead of trend as measured from other major market bottoms. The bad news: after 49 months, the R2000 is currently 18% ahead of where it should be based on historical trends following other major market bottoms.
- Growth and value diverge among the size categories. In 1Q13, growth beat value among smaller companies, but value beat growth among larger companies.
- Correlation ticked up in 1Q13 but volatility remained low. 1Q13 Correlation was 0.4 compared to 0.3 in 4Q12. Volatility remained low at 12.1% and it was the fourth straight quarter with declining volatility.
- Quality led in 1Q13. For the most part, high price, high market cap, high ROIC, high trading volume led in 1Q13 though zero or negative ROIC companies outperformed the top quartile ROIC companies.
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