Valuation dispersion, software pessimism, and shifting capital flows may be setting the stage for a new cycle in small-cap investing.
In this episode, Associate Client Portfolio Manager, Laura Baker speaks with CEO and Portfolio Manager, David Barr about small caps, the reset in software valuations, and how AI is reshaping both risk and opportunity. The conversation explores private market value, capital efficiency, and why today’s uncertainty may present one of the more compelling entry points in years for active investors.
00:05
Small caps have been overlooked: Capital concentration in mega caps and widening valuation dispersion.
03:50
Why survivability, real business models, and balance sheet strength matter most.
08:50
Structural forces behind small-cap underperformance: Passive flows, index concentration, and self-reinforcing momentum.
12:15
Navigating volatility by focusing on intrinsic worth and strategic interest.
15:20
AI’s impact on markets.
18:20
Why pessimism may be creating mispriced growth.
20:10
Where durability still exists in software.
26:40
AI monetization vs. hype
31:05
Lessons from the 2020–2021 IPO boom and bust.
35:10
Knowing when a thesis breaks: Measuring outcomes against underwriting assumptions.
42:30
Recommended reads: Chip War and perspectives on AI strategy.
