This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Paradigm Opportunity Protects Investors in Tough Times

Ronovech stayed the course and focused on the investment process that had produced positive returns over previous time periods. "There wasn't any real material changes in terms of portfolio strategy or positioning," he says. "Based on our conversations with companies through that time period and what we saw on a micro level, you weren't seeing the panic or concern that existed on the macro level. So while it was frustrating that the market and small caps were selling off, it was a compelling time as an investor to get excited and see the disconnect."

One such example of Ronovech's successful stock picking was his bet on Men's Wearhouse (MW), which he purchased below book value in August 2010. Shares of the company are up nearly 50% over the past year, well outpacing the broader market as well as the Russell 2000 Index.

"You saw a little bit of a slight improvement in the economy coupled with a fashion upgrade cycle in men's wear," Ronovech says. "They made the right moves during the recession to reposition the business in a new environment. When you saw just a little bit of an improvement in demand in 2011, the sales were up substantially. They picked up market share."

Small-cap stocks have been outperforming in 2012, a sharp turnaround from 2011. After falling 4.2% in 2011, the Russell 2000 is up more than 11% this year, outpacing the S&P 500 Index of the largest U.S. companies. As such, Ronovech's fund has risen sharply, with the net asset value climbing from a low of $25.14 on Jan. 4 to a high of $27.89 set on Feb. 16.

The bounce in small caps is troubling to Ronovech, however. He notes that major structural problems, such as the European debt crisis, is still unresolved. Instead, stocks have been running higher on very accommodative central bank activity, which has provided a significant amount of liquidity and stimulus to the system. That's causing people to move back into the riskier assets like small-cap stocks.

"With that type of environment as a fundamental value investor, you get a little cautious as valuations move up substantially without any real change in the underlying fundamentals. We're certainly more keenly focused on the risk side of things."
3 of 4

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
MW $17.68 1.49%
CVG $26.63 0.00%
QLGC $13.21 0.00%
AAPL $93.64 0.00%
FB $118.57 0.00%


Chart of I:DJI
DOW 17,891.16 +117.52 0.66%
S&P 500 2,081.43 +16.13 0.78%
NASDAQ 4,817.5940 +42.2360 0.88%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs