Advisory Research Managing Director Jonathan Brodsky focuses on the small-cap international space. Is he crazy, off-balance, a masochist, maybe?
Brodsky responds with a world-weary sigh; he’s obviously gotten the question before, given the extreme volatility small caps have experienced in the past few years (even for small caps), which, combined with all that’s happening in Europe, China and elsewhere, makes for a brave or suicidal play, depending on one’s viewpoint.
“People freak out when they hear ‘small-cap international,’ but it’s something I’m heavily interested in and an area of my expertise,” he said Thursday at the 2012 Morningstar Investment Conference in Chicago. “If it’s done right, Fama and French and many others have proven that the small-cap space, and specifically small-cap value, outperforms their larger counterparts.”
By “area of expertise,” Brodsky meant a degree in international relations, a stint at the Securities and Exchange Commission under the reign of William Donaldson and time spent living in China (he speaks Mandarin), so he knows the areas in which he invests.
“I also spent time earlier in my career as a banker in San Francisco,” he added. “I was in the investment business there right as the dot-com bust happened, so I learned about the destruction of value, which was tough. That’s why I’m now so focused on the creation of value.”