Seth Cogswell, a contrarian Portfolio Manager at Running Oak and the brains behind the RUNN ETF, challenges the obsession with mega-cap stocks. He highlights the untapped potential of mid-cap companies, which have historically outperformed larger counterparts. Cogswell discusses the dangers of corporate debt and the looming threat of 'zombie companies' in today’s market. He emphasizes the importance of quality investing and advocates for an equal-weight approach to harness opportunities where others overlook, providing fresh insights into navigating complex market dynamics.
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insights INSIGHT
Contrarian Investing Boosts Returns
Investing where others have driven prices up leads to lower returns and higher risk due to high valuations.
Investing where others aren't provides lower valuations, higher return potential, and a margin of error in uncertainty.
question_answer ANECDOTE
Investing as Long-Term Dating
Seth shared a fun moment involving NASDAQ's display and Running Oak's rebranding revealing their new logo.
He likened investing relationships to dating, emphasizing the importance of a reliable, long-term partnership.
insights INSIGHT
Complacency Masks Market Risks
Market complacency has led investors to ignore risk, expecting stocks to always bounce back.
Rising awareness of risk temporarily shakes markets, but optimism quickly returns.
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Ever wonder why everyone seems to chase the same handful of mega-cap tech stocks? Seth Cogswell of Running Oak challenges this herd mentality with a refreshingly contrarian perspective: the real opportunity lies in investing where others aren't.
This candid conversation explores how market complacency has driven investors to overlook compelling opportunities hiding in plain sight. Seth makes a powerful case for mid-cap stocks, which have actually outperformed large-caps by 60 basis points annually over 33 years—delivering 20% more total return—yet remain undervalued while the S&P 500's largest components trade at extreme premiums.
The discussion delves into today's unprecedented corporate debt landscape, where companies have borrowed heavily just to finance buybacks rather than productive investments. As interest rates rise, we may witness a complete reversal of this trend: companies selling equity to pay down debt, creating significant headwinds for overleveraged firms and their shareholders. Meanwhile, "zombie companies" that survived only through cheap refinancing face an existential threat.
Seth shares the philosophy behind Running Oak's RUNN ETF, explaining why quality factors like lower debt and earnings consistency matter more than ever, and why equal-weighting positions offers both protection and opportunity in today's market environment. You'll gain insights into why historical patterns suggest today's market concentration is anomalous rather than the new normal.
Whether you're concerned about portfolio concentration, seeking undervalued opportunities, or simply want a fresh perspective on navigating today's complex markets, this conversation offers practical wisdom that cuts through the noise. Ready to discover where smart money is quietly positioning for the next market phase? Listen now and reconsider what might be missing from your investment approach.
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