small caps, BIG GAINS
Remember the kid who from age six knows exactly what he wants to do when he grows up—and then grows up and does it? No adolescent angst about a future identity, no senior year what’s next bull sessions in college, no doubts or detours. The things he wants to do in life, as well as the person he intends to be, are completely obvious to him from virtually the moment he becomes conscious of the wider world, and this certainty lends a kind of self-assured serenity that most of us simply do not have.
Chuck Royce has that serenity, not only, it seems clear, because of his extraordinary success and unquestioned wealth, but because he went about doing exactly what he has always wanted to do, never for a moment wanting to do anything else, and he is still doing it daily and joyfully, with appetite and with vigor. What Royce does, of course, is pick stocks. He has been doing it since the 1950s, and he does it very, very well. What is particularly distinctive about him is that he does it so very well in the segment of the stock market inhabited exclusively by small capitalization stocks—small caps, as they are commonly called for the sake of brevity. The standard cliché about small caps is that they are too risky and too vulnerable to fraudulent practices, that they lack quality, and that they comprise a growth-focused niche that does not really outperform companies with higher market capitalizations. Royce gives the lie to every bit of that cliché. ...