The Opportunity

Throughout the world there has been a seismic shift away from active value investing towards passive index investing. While this trend provides many investors with a simple and cost effective way to gain exposure to markets, it has had the unintended effect of reducing the capital available to small companies overlooked by indexes and passive asset managers. Over the same period new banking regulations have reduced lending to small and mid sized enterprises. The combination of these trends provides an excellent opportunity for dedicated value investors to allocate capital across the capital structure in companies neglected by traditional sources of finance.