Bob Fitzpatrick
139 posts
I don’t know who actually reads our quarterly letters front to back but I’m highly confident that I get the greatest value from writing them. It forces me to revisit prior beliefs, provides structure and coherence to months of random and incomplete thoughts, and enables the team to better understand ideas and concerns that I may have poorly communicated previously in more informal settings.
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Nice January swim workout. My favorites are when I am in the pool at the same time as youth teams and I can try to keep up (futile).
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Bob Fitzpatrick retweetledi
A 🧵on small-caps.
For the last 2 years Russell 2000 rallies have been violent but brief. Something has changed. The Russell 2000/1000 climbed above its Oct 15 high, establishing a series of higher lows & higher highs. Unlike last fall the Russell MidCap is participating. 1/5 @NDR_Research
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@marcrandolph Love this. I don’t want my company to be a family. You make a valid analogy, equating your business to a professional sports team. It is a pet peeve of mine when I see junior teams (high school and below) call themselves a family. They are not and should drop the description.
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@EddyElfenbein Kudos, glad to see you are off to a good start for the year.
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Random Xmas eve thoughts:
Inequality will be what brings the bull market down.
The Chiefs getting a $3bn gift from taxpayers while the owners are worth $20bn plus seems strange at best.
The “trump economy” has the exact problem the “Biden economy” had. Good numbers, good stock market, but doesn’t feel ‘good’ to the majority of Americans.
Trump and his team will try very hard to pump the economy into the midterms. Lower rates, more fiscal.
Short $ seems the best expression of that view right now.
Have a wonderful day and “night before Xmas!!”
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I'm finishing up my portfolio changes for 2026. Are there any stocks I should be considering?
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@steveliesman @CNBC Pls ask Fed'l/gov't officials about their use of and insights from these alt data sources. It is not confidence inspiring when some (eg Boston) complain about lack of data when so much other (better?) sources are available. Some officials seem complacent.
Barron's@barronsonline
Spy Satellites, Road Cameras, Phone Trackers. How Alternative Data Companies Are Changing Investing. trib.al/rWGr6xx
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$FIGS This tweet aged well. Stock price is now $12 a year after PE tried to steal it for $6. Public investors are not so fortunate in other cases when buyout prices undervalue the co, perhaps facilitated by passive funds (w/high ownership) not pushing for more.
Bob Fitzpatrick@bobbyfitz33
Amusing [eye roll]: Figs $FIGS goes public in 5/21 at upsized $22, and now Story3 Capital offers in 12/24 a $6 take private so that co can "take the necessary steps to develop confidence around...growth...and op mgn improvement which is constrained by status as a public co...”
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@patrick_oshag LucasFilm. Once pitched business there but was not granted access to much of the office. It helps that it is in the Presidio.
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Visually, what are the most interesting offices in the world? Or, if you could see inside any office, where would you want to see?
Some for me:
- Valve
- Colossus data center
- Huawei
- Pixar
Yours?
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TIL my small cap portfolio returns have outperformed SCGE's returns despite fewer resources (I do it myself) and small cap headwind. My returns vs SCGE: '22, -29% vs -29%; '23 +16% vs +13%; '24 + 15% vs +19%; '25 ytd 9/30 +22% vs +14%. They win on AUM by ~$9bil.
The Wall Street Journal@WSJ
Exclusive: Following a streak of disappointing performance, tension over profit-sharing and complaints about a negative culture, Sequoia’s $9 billion hedge fund is trying a new approach to leadership: “No kings.” on.wsj.com/4phxklt
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Amusing juxtaposition of two headlines in today's WSJ: the consumer is "cranky" with UMich sentiment near historic lows, and investors are optimistic with stocks near historic highs and "anxiety has given way to hope on Wall Street".
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@mario_cibelli Interesting comments. Coincidentally, $ELF looks like it might be a buy after the recent sell-off due to shipment miss despite healthy consumption, etc. Thoughts? Curious if you have thoughts on the Ari podcast given your WWE/TKO investments. Kudos on your good call on $XMTR.
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~5 1/2 years ago a large position of ours, e.l.f. Beauty, was down ~60% peak to trough. Things looked hopeless but they weren't, the seeds for a comeback just weren't visible yet. I can't help but to draw some parallels with another 'hopeless' small cap today - Remitly. $RELY 1/x
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@dmoses34 Classic. JDSU posted $524mil in revs that qtr to NVDA’s $57bil, wow didn’t realize gap so huge. CEO surprisingly, abruptly stepped down and off board, some say so he wouldn’t have restrictions on selling stock. If he sold big, could be one of all time great moves.
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For those who were trading in 1999-2000, today's poor price action (to quote Eddie Vedder "haunting, familiar, yet I can't seem to place it") feels very much like July 26th, 2000 when JDSU (poster child of the fiber optic craze) reported a "beat and raise"
cnet.com/tech/tech-indu…
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Well-written and amusing op-ed about frustrating and puzzling add-on medical charges…
Matthew Hennessey@MattHennessey
Constant exposure to jargon and deflection turns ordinary people into revolutionaries.
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R2 + 10.4% vs S&P600 + 0.9% ytd 10/13/25, quite a yawning gap. Trailing 3yr annualized, +12.5% vs 8.4%. Setback for those who opted for quality in small cap. Likely not a sustainable gap.
Tsachy Mishal@CapitalObserver
Russell 2000/ S&P 600 To be in the S&P 600 you have to be profitable. Recently profitability is a liability
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This illustrates the power of storytelling. Effective and captivating way to communicate. Many of these stories and anecdotes are decades old (still great!) and draw laughter from this crowd which is likely a new generation of investors hearing the stories for the first time.
The Compound@TheCompoundNews
How Peter Lynch Became The Greatest Fund Manager Of All Time | TCAF 211🎙️ @Downtown Josh Brown is joined by Peter Lynch, Vice Chairman of @Fidelity Management and Research to discuss: Peter's legendary career, how individual investors can succeed in the market, the biggest investing mistakes, and more!🔥🐐🆕 YouTube🎦youtu.be/YIlurDigZcY Podcast⏯️podcasts.thecompoundnews.com/show/TCAF/how-… Presented by @Fidelity Investments
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@JeffWeniger R2 outperforming higher quality S&P600 ytd and trailing 3yr also, though not sure how historically significant the performance gap is for those periods.
Bob Fitzpatrick@bobbyfitz33
S&P600 is a higher quality small cap index vs. R2, in part due to better profitability. While good for returns over long term, interesting to see R2 outperforming recently: +7.9% ytd vs +2.3%; +10.2% trailing 3yr vs +7.9%. This, while biotech lagging, a low quality drag on R2.
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Small cap junk stocks have beaten quality stocks so handily that we are at Dot-Com bubble performance gaps. In the last 6 months, the small cap Russell 2000 index, which has a ton of money-losing companies, beat the higher quality S&P 600 by 6.4%. That is equal to April 1999.
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Good valid point. FYI Russell indices push higher than these levels. R2 incl CRDO $24b, BE $16b, RMBS $11b, others. R Mid worse: RBLX $90b, VST $68, GLW $67, HLT $61b….The wtd avg mkt cap for R Mid is ~29b, right at your cutoff. Russell just another reference. Market caps up!
J.C. Parets@JC_ParetsX
This week we decided to officially change the rules. Market-cap inflation is real. And if you’re still pretending a $10 billion company belongs in the “large-cap” bucket, you’re playing a game that no longer exists. We decided that it’s like this now. trendlabs.com/new-sheriff-in…
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