Small-Cap Stocks Post Best First Half in 35 Years

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**Ann Berry** (0:26)
The Thursday, July 2nd, it's Brew Markets Daily, and I'm Ann Berry. In a market dominated by glamorous mega caps and AI hyperscalers, smaller companies can often fly under the radar. So today, we revisit my January conversation with Manny Weintraub, principal at Cannell & Spears, where he pursues a small cap dividend growth strategy. Manny explains how he defines this category, why we may be at peak tech, and how simply buying a basket of small caps through an ETF may not in fact be the best approach. As Manny frames it, it's the revenge of the non-nerds. So let's listen back to that conversation with Manny Weintraub, Principal of Cannell & Spears.
I'm Arch Manning.

**SPEAKER_3** (1:04)
I'm Madison Skinner. I'm Eva Jovovich.

**SPEAKER_4** (1:06)
I'm De'Coria Moore.

**Manny Weintraub** (1:07)
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**SPEAKER_4** (1:17)
Think you have what it takes?

**Ann Berry** (1:19)
Manny, when you and I met, we had possibly the nerdiest conversation you can imagine at a holiday cocktail party. I had just interviewed the CEO of Build-A-Bear for the show, and we were talking about your investment strategy.
And this isn't investment advice, this is just the conversation that you and I had. You said, oh my gosh, that's so interesting.

**Manny Weintraub** (1:37)
Yes.

**Ann Berry** (1:37)
I've invested in the Build-A-Bear stock over time.

**Manny Weintraub** (1:40)
Yes.

**Ann Berry** (1:41)
And that's what prompted this conversation.

**Manny Weintraub** (1:42)
Yeah.

**Ann Berry** (1:43)
Because you have a thesis on small cap stocks.
We find the news is dominated by big tech and the big AI trade and large companies. So I'd love to get your perspective on how you define small cap stocks and why they're interesting to you.

**Manny Weintraub** (2:00)
So I think small cap stocks are interesting because they're what power America. Like you're going to have a much higher concentration of revenue based in the United States of America. And as we're going through, for whatever reason, this reshoring philosophy in America. And I think that small cap stocks, and what I'm seeing is that small cap stocks are going to benefit. I also think this is a really interesting time with the Fed cutting rates at all time highs.
That is traditionally a very good time to be investing in small cap stocks because the local economy is really going to take off. And then AI, I think, we're in a world, a lot of your listeners might not even remember this world, but there was a movie called Revenge of the Nerds when I was in the 80s. And at that time, people who were very smart and good with technology were like looked down on, like which is inconceivable, mind blown.
And so the past 40 years have been very good for software companies and technology companies. But what we're starting to see now with AI, so we're not chasing a hot AI trade, but with AI, the physical world matters more than ever, whether it's electricity or filters. So it's a great time to invest in small cap stocks. Also, it's a good time to put small cap stocks on your radar, because let's say in the 90s, everyone had some sort of allocation to small cap stocks. But certainly since the great financial crisis, the outperformance of large cap stocks has been so marked that people might have forgotten that they even could use an allocation to small cap stocks. But if, and I'm not saying we are, I own mega cap tech and different strategies, but it might be sort of the peak of the mega cap tech trend. And if so, you know, you always have to be wondering, where am I going to make money next? And I think small cap stocks are a great way to do that for the next wave.

**Ann Berry** (4:21)
So let's nerd out on the jargon for just a second, and then we can get into some stories. I know, I love the revenge of the nerds spoke to me, because I am such a nerd myself, Manny. Define small cap stock in terms of the market cap for us.