• Subscribe
  • Log In
  • Home
  • Daily Diary
  • Asset Class
    • U.S. Equity
    • Fixed Income
    • Global Equity
    • Commodities
    • Currencies
  • Sector
    • Basic Materials
    • Consumer Discretionary
    • Consumer Staples
    • Energy
    • Financial Services
    • Healthcare
    • Industrials
    • Real Estate
    • Technology
    • Telecom Services
    • Transportation
    • Utilities
  • Latest
    • Articles
    • Video
    • Columnist Conversations
    • Best Ideas
    • Stock of the Day
  • Street Notes
  • Authors
    • Doug Kass
    • Bruce Kamich
    • Jim Cramer
    • Jim "Rev Shark" DePorre
    • Helene Meisler
    • Jonathan Heller
    • - See All -
  • Options
  • RMPIA
  • Switch Product
    • Action Alerts PLUS
    • Quant Ratings
    • Real Money
    • Real Money Pro
    • Retirement
    • Stocks Under $10
    • TheStreet
    • Top Stocks
    • Trifecta Stocks
  1. Home
  2. / Investing

Give Me a Real Pullback -- One Where I Can't Resist Buying These 3 Small-Caps

Give me all of this and more, without a bear market correction.
By JONATHAN HELLER
Feb 07, 2018 | 01:00 PM EST
Stocks quotes in this article: FOGO, VHI, MANU

I do realize that I've been obsessed by the market's recent volatility, but perhaps for different reasons than many other investors. To a degree, I view it as positive, wiping away the excesses and reminding us all that bull markets can't continue uninterrupted forever, and that we need to keep our portfolios in balance. We've now experienced five volatile trading days in the S&P 500 (days the market closes up or down at least 1%) in the past eight, and the index is down just over 5% in that stretch. That includes Monday's 4.1% drubbing.

But what interests me even more, is how the nether regions of the market have been doing, the smaller names that typically suffer a great deal more in such times, than their larger counterparts. Perhaps somewhat surprisingly, they are actually hanging in there fairly well so far.

The Russell 2000 Index, comprised of small-caps, is down about 5.9% during the past eight days -- not all that far removed from the S&P 500's performance. The Russell Microcap Index has declined 6.1%, which is even more surprising, to me anyway. For its part, the Index's value component (Russell Microcap Value Index) is off 5.8%.

The fact that there is not a greater separation between the performance of large-caps, and the smallest of the small tells me that at this point, this pullback is not even close to the "throw the baby out with the bathwater" stage. That's when you'd see the smaller names, and the more distressed ones, being the first to go as investors raise cash.

In some cases, due to low volume, the damage can be exacerbated due to a lack of liquidity in the smaller names. Already wide bid/ask spreads can widen further, and investors are often willing to take fire sale prices. That's what happened in 2008/2009, when many names were bid so low, that it created some of the greatest investment opportunities of a lifetime. I have no desire to return there, however.

These last several days, I've been looking for the "too cheap to pass up" opportunities in smaller names, that sometimes result from the selloffs but have been coming up fairly empty. No names that I've been interested have been hammered into submission. My deep-value screens have not been revealing much in the way of new opportunities.

Give me Fogo De Chao (FOGO) at $10, Valhi (VHI) (which I recently sold after a nice and fairly quick run up) at $4, Manchester United (MANU) at $15. Give me some new net/nets or double nets.

Give me another perceived sector meltdown (such as specialty retail in August), where some stocks were overly punished through guilt by association, creating great opportunity for those with strong stomachs (or perhaps in my case, weak intellects).

Give me all of this and more, without a bear market correction.

Some pullback this is.

Get an email alert each time I write an article for Real Money. Click the "+Follow" next to my byline to this article.

At the time of publication, Heller had no positions in any securities mentioned.

TAGS: Investing | U.S. Equity | Markets | How-to | Stocks

More from Investing

When it Comes Time to Sell, Will You Act or Will You Freeze?

James "Rev Shark" DePorre
Jan 16, 2021 10:00 AM EST

Why don't more people embrace the ease and power of selling stocks? Why do they freeze and do nothing as losses build?

Cybersecurity Stocks that Lagged in 2020 Could Get Boost from SolarWinds Hack

Eric Jhonsa
Jan 16, 2021 8:00 AM EST

The hack stands to drive an uptick in corporate and government spending to protect both on-premise and cloud assets.

Hungry Traders and Stock Opportunities Aren't Likely to Go Away Soon

James "Rev Shark" DePorre
Jan 15, 2021 4:40 PM EST

It doesn't take much time for stocks with strong momentum to reset and continue on their way.

At What Price Is Ballard Power Systems a Buy?

Bruce Kamich
Jan 15, 2021 3:09 PM EST

Let's check out the latest charts of BLDP.

United Parcel Service Is Testing Key Support

Bruce Kamich
Jan 15, 2021 2:30 PM EST

A look at the charts of UPS.

Real Money's message boards are strictly for the open exchange of investment ideas among registered users. Any discussions or subjects off that topic or that do not promote this goal will be removed at the discretion of the site's moderators. Abusive, insensitive or threatening comments will not be tolerated and will be deleted. Thank you for your cooperation. If you have questions, please contact us here.

Email

CANCEL
SUBMIT

Email sent

Thank you, your email to has been sent successfully.

DONE

Oops!

We're sorry. There was a problem trying to send your email to .
Please contact customer support to let us know.

DONE

Please Join or Log In to Email Our Authors.

Email Real Money's Wall Street Pros for further analysis and insight

Already a Subscriber? Login

Columnist Conversation

  • 09:01 AM EST JAMES "REV SHARK" DEPORRE

    This Weekend on Real Money

    When it's time to sell, will you act or freeze?
  • 08:35 AM EST GARY BERMAN

    Wednesday Morning Fibocall for 1/13/2021

    Lower highs... SPX (Long-Term View) The 1/8/2...
  • 08:07 AM EST GARY BERMAN

    Tuesday Morning Fibocall for 1/12/2021

    Watch if the recent trend of lower highs continues...
  • See More

COLUMNIST TWEETS

  • A Twitter List by realmoney
About Privacy Terms of Use

© 1996-2021 TheStreet, Inc., 225 Liberty Street, 27th Floor, New York, NY 10281

Need Help? Contact Customer Service

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.

TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.

Compare Brokers

Please Join or Log In to manage and receive alerts.

Follow Real Money's Wall Street Pros to receive real-time investing alerts

Already a Subscriber? Login