CRIMSON: In a Passive World, These Stockpickers Are Thriving

By April 2, 2024 No Comments

27 March 2024 at 05:00 GMT-4

• By Layan Odeh, Mathieu Dion, and Ye Xie

A handful of funds show that an active approach to managing money can still beat the market—at least for a while.

Even as the investing world increasingly concludes that low-fee passive investing is the most reliable way to build wealth, a handful of active fund managers who embrace unorthodox strategies are beating the market. They typically run lower-profile operations and exhibit a patience that’s rare in today’s market, making big bets on a smallish number of stocks based on intense research and analysis….

Ken Jesudian, co-founder of CRIMSON Asset Management, runs a fund focused on small-capitalization companies that he deems underpriced and overlooked. The fund, which holds about 20 companies such as furniture retailers Lovesac and Wayfair and satellite pioneer Iridium Communications, has returned an average of 10.2% a year since its inception in 2018, almost twice the performance of the Russell 2000 Index of small-cap stocks. “We don’t care about looking different from the index,” he says. “We actually wear it like a badge of honor.”

Ken Jesudian, co-founder and CEO of CRIMSON Asset Management. Photographer: Galit Rodan/Bloomberg

…. A key strategy for Jesudian is finding companies where founders are still part of management, which makes them think like shareholders rather than recently arrived executives who might make “ego-boosting acquisitions just to jack their comp.” To find these stocks, Jesudian has a team of analysts who will move quickly to size up a business and its industry. “Think of a small SWAT team that can go and look for these ideas,” he says, “and doesn’t care about building a portfolio with the index.” – With Derek Decloet