Verdence Capital Advisors, a private wealth advisory firm, believes that higher investment returns can be found in smaller companies rather than large tech companies.
Leo Kelly, Chief Financial Officer at Verdence Capital Advisors asserts that large tech companies are overvalued and will rarely fulfill the expected growth projections that are estimated.
"If you look at the numbers needed to achieve to current valuations, they're absurd. They're staggering. One in 1,000 will actually execute on that kind of growth outcome," Kelly said.
Instead, smaller companies are invested in for longer periods of time. As of now, Kelly has invested primarily in industrial companies, medical based companies, ed tech companies and real estate. Kelly avoids investing in trends and focuses on the firm’s business model, management style and evaluation of recent revenue and cash flow growth.
Additionally, Kelly believes that investing his clients’ money in fixed income securities is also wise. More specifically, he believes there will be favorable returns when investing in shorter duration high quality bonds and in international fixed income securities.
Avoiding overvalued large companies during a year with many flashy IPOs, while focusing on smaller overlooked companies is the primary strategy that Kelly employs in managing the $2 billion of his clients’ wealth.