Monday, June 22, 2020

LD Micro Small-Cap Activity, June 1–8 Winners & Losers

The LD Micro Index topped 2000 in early June, capping a marathon run that began in March. With that spectacular climb, the index has regained the perch it held before the first coronavirus cases in the United States were reported. This is welcome news for small-cap investors, many of whom might have been losing faith in the sector. But, turning the old adage upside down — what goes down must go up — the bull run shows that small business is still the engine of America’s economic growth.
America is going to need that engine in the coming months. This week, the National Bureau of Economic Research (“NBER”), the organization that calls a recession, did just that. On June 8, the institution declared that economic activity in the U.S. had peaked in February 2020 (http://nnw.fm/T42Rz).
Since then, estimates of gross domestic product (“GDP”), a measure of economic activity, have been falling, according to data provided by the Atlanta Fed (http://nnw.fm/GWlx7). However, there is a silver lining to the dark recessionary cloud. The unemployment rate, which plummeted to 14.7% in April, ticked up slightly to 13.2% in May, the last month for which data is available (http://nnw.fm/9NlHd).
The contraction in economic activity that began in March means that stock indices around the nation have been down. Still, some have been doing better than others. Notably the LD Micro Index has performed better than the iShares Russell 2000 (NYSE: IWM), which also tracks small-cap stocks. While the IWM is down 9.18%, the LD is lower by 8.8%. Given the challenging times, losing less than peers is tantamount to winning.
This year, June is not just for brides and weddings. There is a flurry of activity as the general populace and small business community try to regain their footing.  This first week was extraordinary with Monday, June 8, in particular, producing some startling results. That was the day the top 10 stocks all rose by triple-digit percentages.
There was also one buyout in the first week of June. Finjan Holdings Inc. (NASDAQ: FNJN) is be acquired by affiliates of Fortress Investment Group LLC in a deal valued at approximately $43.9 million. Finjan is a recognized pioneer in the development of cybersecurity technologies. The company will maintain its brand and business model going forward, licensing and enforcing a substantial patent portfolio that has been consistently upheld by courts and patent offices.
For disclosure purposes, employees of LD Micro own shares in Finjan, and Finjan has paid to present at LD Micro conferences over the years.
The week was unusual in other ways. The LD Index mirrored the DJIA, or perhaps it was the other way round.
Regardless, here are the biggest movers and shakers for the week of June 1–8:
For more information on LD Micro, visit www.LDMicro.com.
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