Small Caps are Growth and innovation Plays For Your Portfolio

• Many pundits and analysts are still calling this second half 20% move as a ” bear market rally” so we are in a fight the FED move?

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• The XBI remains our key indicator for small cap biotechs, It is up 14.55% over one month at $93.78 but is still down 16% YTD.  IWM is up 16.5% over one month mirroring biotech small cap performance.
• Thesis behind small cap weighting is they are more insulated from the dreaded MACRO and provide growth and innovation.

We developed this mini-small/mid cap portfolio on July based on our limited knowledge of these companies reading analyst reports and following technicals and news.But we owned all of them and traded them. We still hold all 7 positions but sold ChemoCentryx. Most of these stocks are well known and have good analyst coverage. Many are so called “momentum” stocks and can be volatile.

The market rallied big time last week with a major rotation into energy up. over 7% and the NAZ up 3%. Many strategists say the broad rally is over done and that high inflation will continue through 2022.

The only laggard in the portfolio is Quidel/ Ortho which is undergoing a  merger integration of the small cap hypergrowth diagnostic company Quidel with the JNJ spinoff revamped Ortho Clinical Diagnostics. We hope to add more QDEL after the dust settles from recent earnings for the first time of the combined company We have great confidence in Quidel management.

The ARKG also shows more speculative activity.

The big winners of our current picks are: MRTX, CYRX and EVH and of course CCXI up 124%!.

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