The evolution of small cap investing

Leah Zell is the Founder and Portfolio Manager of Lizard Asset Management. In 2000 she was written up in Forbes as being the 'Queen of Small Caps' and is widely regarded as being one of the most successful investors on global small and mid cap companies. This interview covers the changes she has seen in the industry, how the opportunity set in small caps is evolving and why she believes capacity constraints are necessary for small and mid cap fund managers. Zell says, "The world has become very globalised and the asset management industry has become very globalised. The number of stocks that trade globally has exploded and 90% of them are small to mid caps." With 80% of each additional dollar allocated in the US being directed to 'mega cap' managers, the shear size of these funds rules them out of small cap stocks - creating an under researched set of opportunities. Leah says it is critical for small cap managers to have a strong research capability and talks through a recent portfolio addition to illustrate the types of opportunities available in the global small cap universe. Watch the full interview here: