Bill Hench on Asset TV’s Small-Cap Masterclass —Royce
article 10-29-2020

Bill Hench on Asset TV’s Small-Cap Masterclass

PM Bill Hench joined Asset TV’s Small-Cap Masterclass to discuss the cultural shifts caused by the COVID-19 crisis, how small-caps have historically performed in similar market environments, and more.


Portfolio Manager Bill Hench joined host Jenna Dagenhart and another investment professional on Asset TV’s Small-Cap Masterclass, which aired October 27, 2020, to discuss finding growth in companies that fit the profile of a value stock, why buying methodically is important with small-caps given how they have historically performed in similar enviroments, and more.

Watch Bill’s appearance here.

Bill explained that his distinct approach to finding growth in companies that fit the profile of a value stock is done by buying good businesses that are going through a difficult time. He added that these companies have strong fundamentals and margins and so should perform well once they work through their difficulties. However, he noted it’s equally important to his approach to know when to sell those stocks.

When asked what advice he has learned over the years about investing in small-caps, Bill noted he believes it’s important to be cheaper than the market and to be diversified. “We always run with a lot of names,” he said. ”In our part of the market, concentration kills, whereas in other parts of the market that's how you make your money, right? By getting attached to big bets that could pay off for a long time. In our part of the market, our job is to buy things that are significantly cheaper than they should be or that they would be if things were going normal. So, we hold things from abnormally low valuations to normal, and that change from sort of really bad to okay is good enough to make a substantial amount of money.”

Watch Bill’s appearance here.

Learn more about Bill Hench here.

Important Disclosure Information

Average Annual Total Returns as of 9/30/20 (%) 

Opportunity 11.11 0.10 -1.11 8.48 8.79 6.91 8.60 10.86 11/19/96
Russell 2000 Value 2.56 -14.88 -5.13 4.11 7.09 4.93 7.40 7.85 N/A
Russell 2000 4.93 0.39 1.77 8.00 9.85 7.03 6.88 7.78 N/A

Annual Operating Expenses: 1.22

1 Not annualized.

All performance information reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 days of purchase may be subject to a 1% redemption fee, payable to the Fund which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at Operating expenses reflect the Fund's total annual operating expenses for the Investment Class as of the Fund's most current prospectus and include management fees and other expenses.

The thoughts and opinions expressed in the video are solely those of the persons speaking as of October 14, 2020 and may differ from those of other Royce investment professionals, or the firm as a whole. There can be no assurance with regard to future market movements.

The performance data and trends outlined in this presentation are presented for illustrative purposes only. Past performance is no guarantee of future results. Historical market trends are not necessarily indicative of future market movements.

Percentage of Fund Holdings As of 9/30/2020 (%)

Opportunity Fund, Inc.


Microsoft Corporation


Alphabet, Inc.


Owens & Minor, Inc.


Home Depot, Inc.


Lowe’s Companies, Inc.


PayPal Holdings, Inc.


Square, Inc.


Rocket Companies, Inc.


Generac Holdings, Inc.


United Rentals, Inc.


Chuy's Holdings, Inc.


BJ's Restaurants, Inc.


JetBlue Airways Corporation


Lithia Motors, Inc. Cl. A


Sonic Automotive, Inc. Cl. A


Company examples are for illustrative purposes only. This does not constitute a recommendation to buy or sell any stock. There can be no assurance that the securities mentioned in this piece will be included in any Fund’s portfolio in the future.

Sector weightings are determined using the Global Industry Classification Standard ("GICS"). GICS was developed by, and is the exclusive property of, Standard & Poor's Financial Services LLC ("S&P") and MSCI Inc. ("MSCI"). GICS is the trademark of S&P and MSCI. "Global Industry Classification Standard (GICS)" and "GICS Direct" are service marks of S&P and MSCI.

Cyclical and Defensive are defined as follows: Cyclical: Communication Services, Consumer Discretionary, Energy, Financials, Industrials, Information Technology, and Materials. Defensive: Consumer Staples, Health Care, Real Estate, Utilities.

Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Russell® is a trademark of Frank Russell Company. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and / or Russell ratings or underlying data and no party may rely on any Russell Indexes and / or Russell ratings and / or underlying data contained in this communication. No further distribution of Russell Data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication. All indexes referenced are unmanaged and capitalization weighted. The Russell 2000 Index is an index of domestic small-cap stocks that measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 Index. The Russell 2000 Value and Growth indexes consist of the respective value and growth stocks within the Russell 2000 as determined by Russell Investments. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index.

This material is not authorized for distribution unless preceded or accompanied by a current prospectus. Please read the prospectus carefully before investing or sending money. The Fund invests primarily in small-cap and micro-cap stocks, which may involve considerably more risk than investing in larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.) The Fund’s broadly diversified portfolio does not ensure a profit or guarantee against loss.



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