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| Quarter | Letter Date | Fund Name | QTD | YTD | Tickers | Themes | Quick Take |
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Buyside Digest is not affiliated with, and does not endorse, Sawgrass Asset Management – Small Cap Quality Growth. This analysis is provided for institutional research purposes only and is not investment advice.
"Small Cap Quality Growth outperformed by 590bps in Q1 through volatility minimization and quality factor selection. Growing evidence supports large-to-small cap leadership switch based on trough relative valuations, mega-cap concentration, and historically long large cap cycle."
Sawgrass Asset Management's Small Cap Quality Growth strategy outperformed significantly in Q1 2025, declining 5.2% versus the Russell 2000 Growth's 11.1% loss, marking the 14th quarter of outperformance in the past 17 quarters. The strategy benefited from minimizing exposure to price volatility, which was the strongest return contributor as high-volatility loss makers were severely punished. Quality factors dominated performance including higher ROIC/ROE, lower leverage, positive cash flow, and dividend payers. Security selection was positive across most sectors, with Financials and Technology leading contributions. Top performers included ADMA Biologics with strong guidance, Corcept Therapeutics with successful Phase III results, and StoneX Group with record results. The manager sees growing evidence for a large-to-small cap leadership switch based on three key linchpins: trough relative valuations, mega-cap concentration levels, and the second longest large cap leadership cycle in U.S. history. Additional supportive factors include healthy high yield markets and normalizing GDP, positioning the quality-focused strategy for potential historical small cap appreciation.
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