Predictability in investments usually commands a cost premium, Seth Rosen, Managing Partner of Nitorum Capital, noted in his 2016 year-end letter to investors reviewed by ValueWalk. Rosen worked at Ricky Sandler’s Eminence Capital before funding Nitorum Capital in late 2014. This makes the current stock market valuation particularly questionable in such a politically and economically unpredictable world.

2016 Hedge Fund Letters

Nitorum Capital

Nitorum Capital  – Higher oil and interest rates signaled a growing economy

Nitorum CapitalWhen Rosen looks at the current market environment, he notes “meaningful dispersion” between the S&P 500, containing mostly large, multinational stocks, and the small-cap Russell 2000, which meaningfully outperformed. Over the fourth quarter the S&P 500 was higher by a strong 3.82% but Russell 200 beat this by 8.82%, signaling a belief small business may benefit under the Trump administration.

Another dispersion signal came from within the S&P 500, showing that niche sectors and approaches within larger stock categories are where performance had been taking place. There was a 17.24% differential between the S&P 500 Financials Sector Index and the more diversified index of 500 stocks.


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