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Passive Aggressive: The Hidden Risks of Passive Investing
A Q&A with Portfolio Manager Daniel Kane (based on a presentation done in November 2024)
In 1990, less than 5% of US mutual fund assets were in passive index funds. Today, more than 50% of assets in US mutual funds and exchange-traded funds (ETFs) are passively managed. How did we get here?Read More
What We're Doing Is Very Big...Dividends
The growth stock trade that propelled US equity markets higher since late 2022 has rapidly come undone in recent weeks.
A Q&A with Portfolio Manager Thomas Reynolds
Tom, congrats on recently celebrating your 7-year anniversary with the Artisan Partners U.S. Value team. To commemorate your time with Artisan, we have a few questions to get to know you better as an investor. You had an unconventional start to your career as you were an anthropology major in college. What was your path from anthropology to becoming a portfolio manager, and how have you been able to apply your social sciences background?
Goodbye "T-Bill and Chill," Hello Dividend Stocks
The “higher for longer” interest rate environment is nearing its end. The Federal Reserve is widely expected this week to join other central banks, including the European Central Bank and the Bank of England, in cutting rates after generational high US inflation has receded back toward the Fed’s 2% target.
Great Expectations
Narratives have always had the power to drive markets. For stocks, few narratives are more compelling than those about new technologies, innovations or business models that can produce tremendous profits growth for the foreseeable future.
A Q&A with Portfolio Manager Daniel Kane
Dan, happy 16-year Artisan anniversary. You joined Artisan during the ’08-’09 financial crisis. I’m sure you have some great stories to tell from those days. What was it like to start your Artisan career at that time?
Vroom, Vroom, Vroom!
Did you hear that sound? That was the sound of Vroom’s engine shutting down. If you’re not familiar with the name, Vroom, was, an online-only used car retailer, which along with Carvana and several other upstarts, aimed to disrupt the incumbent “old-school” auto retailing model. With the announcement that Vroom is winding down its e-commerce operations, we looked back at our Q2 2021 portfolio letter. In it, we compared the business of Vroom to one of the incumbents, AutoNation, through the lens of our three margin of safety investment criteria: business economics, financial condition and valuation.
At the time, both businesses were valued at roughly the same market value, approximately $5.5bn, so we posed the question: if you had to pick one of these two businesses to buy, which would you choose?
The Case for a Dedicated Allocation to Mid Caps
In our previous blog post “Narrow Leadership Creates Opportunity”, we highlighted the attractive valuations of US mid-cap stocks, which are at their cheapest levels relative to large caps in over 20 years. As value investors, we distinctly understand the importance of starting-point valuations for forward returns, however you don’t have to be a value investor to appreciate the asset class’s appeal.
Since 1979, the Russell Midcap® Index has outperformed both the Russell 1000® and 2000® indices (Exhibit 1) on an annualized basis by 0.8 percentage points and 1.9 percentage points, respectively. While that may seem small, the power of compounding can result in large differences as one’s time horizon expands.Read More
Narrow Leadership Creates Opportunity
The US equity market’s narrow leadership in 2023 is well chronicled, but it’s nearly impossible to overstate. The “Magnificent Seven”, as the largest seven US stocks have been dubbed, have dominated YTD equity returns—contributing, in effect, 100% of the S&P 500 Index’s total return (through October).
These seven stocks have returned on average 84%, compared to -3% for the “S&P 493”, and more than half of S&P 500 stocks have generated negative returns. In fact, the equal-weight S&P 500® Index is lagging the market-cap weighted S&P 500 by the most since 1998 as the S&P 500 Index is up over 10%, while the equal-weighted S&P 500 was down ~2% through October.Read More
A Q&A with Portfolio Manager Craig Inman
Craig, happy 11-year Artisan anniversary. To commemorate your time at Artisan Partners and with the U.S. Value team, we have a few questions to better get to know you personally and professionally. To break the ice, please tell us a bit about yourself.
I grew up in South Carolina and have lived in the southern US my entire life. One thing that is interesting about my childhood is my dad was a professional golfer on the PGA Tour (he also played the Senior PGA Tour later in life).