The good folks at Verdad do quantitative work that exceeds our personal time commitment to the quantitative. So they are part of our read widely depot.

We have noted this before, but we would argue pieces like this apply toward large capital allocators who are making the decision as to whether or not to passively allocate “billions” to smallcap investing. And therein lies the problem, in that it is difficult to give someone like Cove Street $4 billion to invest in 30 smallcap names. Which leaves you with the quantitative indices, which as noted, can be loaded with unprofitable crap that has been languishing since I wore a yellow tie with a white collar and cuff shirts.

We would suggest there is another way. It is hard to allocate $4 billion into real smallcap investing, which means many have given up, which means wide open fields for those who don’t have to place $4 billion. You don’t need exposure to 1300 pieces of paper that happen to be under x billion market cap. Owning a relative handful of profitable, cash flowing companies with management teams that are generally interested in engagement with living and breathing owners does not have to be “labeled” as anything but – a money-making venture.