Investment Experts Advocate Small-Cap Value as Anti-AI Trade
Simon Evan Cook and Stuart Widdowson argue that undervalued small-cap value stocks offer a strategic rotation away from concentrated AI mega-cap growth positions.
Investment experts Simon Evan Cook and Stuart Widdowson argue that small-cap value stocks currently represent an attractive anti-AI trade. Speaking on the Merryn Talks Money podcast, Cook, a fund manager at Downing, suggests that a market rotation from concentrated AI positions into neglected small caps is possible, provided the shift is not triggered by a broader economic crisis or war.
Widdowson, managing partner of Odyssean Capital, reports a mindset shift among wealth managers toward owning small caps despite a soft UK market. He emphasizes the potential for self-help transformations in smaller companies and the benefits of maintaining a concentrated portfolio, citing the recent addition of Zote Foams to the Odyssean portfolio as an example of a rare asset-backed business with a growth story.
The experts also highlight the advantages of emerging funds. They note that smaller, newer funds often outperform because managers are more driven and can invest in inefficient market segments where alpha is more easily found.
