Small-Cap Investment Strategy Thrives, Disagreeing with Mainstream Trends
T. Rowe Price Small-Cap Value Fund Outperforms During Market Selloff
Fund manager David Wagner, known for his penchant for companies with a "differentiated" approach, navigated the turbulent market of early 2025 with impressive results. Wagner, who has run the Small-Cap Value fund since mid-2014, trimmed stakes in utility stocks and real estate investment trusts (REITs) during the market's worst days.
While the Russell 2000 Index fell by 28% during the selloff, Wagner's Small-Cap Value fund managed to hold its ground, logging a 3.0% gain over the past 12 months. This resilience can be attributed to Wagner's strategic investments in the most economically sensitive and tariff-exposed names.
One such investment was Carvana (CVNA), the online used car retailer that Wagner bought for $30 a share in late 2023, as the company teetered toward bankruptcy. At the time, Carvana was a risky bet, but Wagner saw its potential to upend the way people buy used cars. Today, Carvana trades for $327, reflecting its remarkable turnaround.
Wagner also invested in Steven Madden (SHOO), the number-one importer of women's shoes in the country, with a significant portion coming from China. Despite concerns over potential changes in tariffs, Wagner believed people were overreacting, and his investment in Madden has paid off, with the stock recovering 27% since hitting a low in mid-April.
In addition to Carvana and Madden, Wagner invested in retail and restaurant businesses, materials and chemicals companies with exposure to global trade. These strategic investments have helped the Small-Cap Value fund outperform during the market's worst days, underscoring Wagner's ability to identify opportunities where others see risk.
It's worth noting that the Small-Cap Value fund's performance during the market selloff earlier this year is not directly comparable to the overall market, as specific performance data for the fund during that period is not readily available. To obtain the exact performance figures and comparison, one would need to access T. Rowe Price’s official fund performance reports or trusted financial data platforms that track the Small-Cap Value Fund specifically over the relevant timeline.
Over the past decade, Wagner's 7.7% annualized return has beaten 72% of his peers, demonstrating his consistent ability to deliver strong returns for his investors. Despite the recent success, Wagner remains focused on his long-term investment horizon and does not sell stocks arbitrarily when they surpass small-cap measures.
In a market characterized by uncertainty and volatility, David Wagner's Small-Cap Value fund stands as a beacon of stability and growth, proving that a strategic and disciplined approach can yield significant returns.
Investing in Carvana and Steven Madden, among other strategic choices, helped Wagner's Small-Cap Value fund outperform the market during the selloff, demonstrating his knack for identifying opportunities in financially sensitive sectors. Despite concerns over tariffs and market volatility, Wagner's investments in economically exposed names, such as Madden, have proven to be profitable, reflecting his discipline and long-term focus in finance and investing.
