Tag - Cavm

Small-cap stocks pushed higher Wednesday, bolstered by a rally in tech stocks and another soothing pullback in crude oil prices. The Russell 2000 (NYSE:IWM) gained 4.85, or 0.67%, to 725.90, the highest daily close since June 19.

Importantly, small caps finally broke free of the recent trading range. Sustained action above 726 is still needed to validate the upside breakout. Today’s rally also confirmed a breach of trendline resistance from both the June peak and the previous July high, which adds to the chart-related glow.

Crude oil prices slipped to 3-month lows today when the weekly inventory report showed a larger-than-expected build in crude oil stocks. The report reflected an increase in stocks of 1.7 million barrels, well beyond the forecast for a rise of 300,000. Still, gasoline stocks had a surprisingly large drawdown of inventory, which took some of the bearish sting out of the crude data. Overall, the weak tone in crude oil continues to provide a cushion for equity markets, providing some hope that consumers will spend less at the gas pump and more on other endeavors...

A 28-year veteran of small- cap growth research and investing, Mary Lisanti is president and chief investment officer of AH Lisanti Capital Growth, where she manages the firm’s small-cap growth strategy. Lisanti has spent 12 years as a small-cap analyst and strategist on Wall Street, holding such positions as CIO of ING Investments, senior portfolio manager for the small-cap growth and mid-cap growth strategies at Strong Capital Management and managing director and head of the small/mid-cap team at Bankers Trust Company. Lisanti was named Fund Manager of the Year in 1996 by Barron's.

What qualities do you look for in a small-cap stock? Have your criterion changed given the current macro environment?

“We are growth investors. Therefore what matters to us most is the ability of the company to grow its earnings at an above average rate for a period of time. We do a lot of research, such as interview management, talk to customers, look at research reports and 10Ks and 10Qs, among other things. The majority of companies in which we invest tend to have a product or service we believe is unique and different; they tend to have management teams that we think highly of, and they have strong balance sheets — no debt and several dollars per share in cash.

“My criterion has not changed. The only difference is we probably spend even more now with management.  The quality of management really makes the difference. It’s huge. In the 80s, you would score them in your research reports. People have gotten out of that habit because everything’s been easy and now, now I think . . .