As each day unfolds, the current run of market volatility is looking more and more similar to what we experienced in the fourth quarter of 2008. It's not quite there yet, but on its way. In the past 33 trading days, the S&P 500 has moved up or down at least 1% (a "volatile" day) 29 times. The move for nine of those days was greater than 5%, and for 16 days it was greater than 4%. Thankfully, there have been enough big "up" days, including four +5% or more, that the Index is down "just" 21% during that stretch.
All of the volatility has been shaking the value tree a bit, although not as much as I might have imagined under the circumstances. There's been one new addition to my Benjamin Graham inspired "Stocks for the Defensive Investor" -- lighting and building management name Acuity Brands (AYI) , which is down 37% year-to-date, and 25% since the volatility started in late February.
AYI has had three consecutive earnings misses, so damage this year is not all due to the pandemic. It trades at about 11x next year's consensus estimate (and 13x next year's low estimate in the consensus, a reference I'll be adding for perspective in this market environment). The company ended its latest quarter with $381 million, or about $9.63 per share in cash, and $406 million in debt.
Meanwhile, microcap land has not surprisingly been hit much harder than larger names. The Russell Microcap Index is down 34% since late February. It's even worse for value names in the Index as the Value Index is down nearly 37%.
One of the more interesting ways to get microcap exposure in a single security, closed end fund Royce Micro-Cap Trust (RMT) is down about 34%. Interestingly, RMT currently trades at a 15% discount to its net asset value (NAV). While it is not all that uncommon for a closed end fund to trade at a discount, RMT's current discount is well in excess of it's 3-year average discount of 10.5%. As of year-end, RMT held 312 names in the portfolio, so it provides good exposure to microcaps, for those who want some skin in the game, but don't want to buy individual names in the "wild-west" of U.S. markets.