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November 21, 2023

Out hunting for European smallcaps

European small cap stocks are now trading at the biggest discount to Europe large caps in 20 years. This was not always the case. In fact, small caps traded historically at a 15% premium in terms of Price-to-earnings ratio due to their better earnings growth profile. We draw 2 conclusions: 1/ It is not only in the US that stock market investors focus on a few large caps and ignore the remaining market and 2/ historically, such an undervaluation triggered each time an outperformance of small caps over the coming 12 months ( 2003, 2008 and 2015 ). If you can not reach us over the coming months, we are out hunting for new investment opportunities in the small cap space.