In this episode, Ryan Loehr speaks with Nick Cregan, Founder and Portfolio Manager at Fairlight Asset Management.

Fairlight Asset Management is a preeminent global small-mid cap manager responsible for managing A$1B. Despite the youth of the firm, the group has quickly established a formidable reputation locally with a tight-knit investment team that each brings a long and successful track record in the segment. Nick has previously held senior positions with Evans and Partners, managing a global equity strategy awarded “best global fund” in 2016 and top decile performance since inception. He also worked in New York and London with Schroders, as a Senior Analyst of the US $7bn small mid cap fund, responsible for a fourth of its assets. Closer to home, Nick ran an Australian Microcap equities strategy, with 11% per annum outperformance over five years. As Bloomberg published in June 2023, the Fairlight strategy was up 24% for the year, outperforming 97% of global equity peers.

I wanted to speak to Nick because as often occurs in environments like we witnessed in 2022, there is a widening gap between large and mega cap valuations relative to small-mid cap constituents. This can create outsized opportunities. Investors incorrectly assume that smaller means riskier, which isn’t always the case. In 2023, we have witnessed US markets rally, with the S&P500 up circa 20% year to date. However, of this, the 5-largest technology names have driven most of this return, largely on the back of AI-related optimism. Valuations do matter, and ultimately drive long-term value. Many large and mega cap names now look expensive, well above their long-term average. while small-mids look increasingly attractive, well below these multiples. For meaningful diversification, Small-Mids can play a critical role in portfolios. Nick and I talk about the importance of having a clear investment philosophy, strict valuation discipline, and how investors can get exposure to exciting thematics without the excessive price tag.

Disclaimer:
The information in this podcast series is for general financial educational purposes only, should not be considered financial advice and is only intended for wholesale clients. That means the information does not consider your objectives, financial situation or needs. You should consider if the information is appropriate for you and your needs. You should always consult your trusted licensed professional adviser before making any investment decision.

Episode 24 | Back to the future