Still Chugging Along: The Market that Could
The global economic recovery is moving along but there remain some areas of concern. Our managers? discussion included such things as rising commodity prices, real estate problems and perhaps most interesting to readers, how they have investment portfolios positioned. Included in the roundtable were Bert L. Boksen (Small/Mid Cap Growth); James Camp (Fixed Income); Ed Cowart (Equity Income/Value); Todd McCallister (Small/Mid Cap Core); Jack McPherson (Small Cap Core Value); Eric Mintz (Small/Mid Cap Growth); Richard Skeppstrom (Large Cap Core); and Stacey Serafini Thomas (Small/Mid Cap Core)
Mergers, Acquisitions and Opportunities
After several years in which worldwide M&A activity dropped steeply, corporate dealmaking could make a comeback in 2011. Corporate cash balances are near record highs, and management teams are turning to M&As to create shareholder value, a trend that is likely to continue over the next 12 to 18 months. Last year saw worldwide small-cap M&A deals jump 14.7% over the previous year, especially among technology, healthcare and industrial names. The Small Cap team at Eagle Boston, witnessed the same trend in their portfolios, as several holdings were acquired by larger competitors during 2010.
The Case for Mid-cap Equities
Mid-cap stocks have been a ?sweet spot? in the U.S. equity markets given their risk/return characteristics. These stocks have produced excellent relative performance in both up and down markets, capturing more of the market in up periods and less of the market in down episodes over the same time period than their large-cap or small-cap counterparts.
Word on the Street: Cautious Optimism
The general consensus among Eagle managers is that companies are more optimistic than they have been in many years. Businesses are starting to loosen their purse strings, albeit slowly and deliberately, to take advantage of competitive opportunities. Eagle managers continue to believe independent, diligent research is paramount in selecting stocks right now and that this likely will prove to be an excellent opportunity for long-term investors.