Ken Jesudian, co-founder and chief executive of Crimson Asset Management in Toronto, was quoted by the foreign news agency as saying that a new risk facing this year is the possibility of a spike in Inflation.
Thanks to last year’s economic rebound, Jesudian’s trading outperformed the U.S. small-cap index. He said in an interview with a foreign newspaper that consumers have money to spend and most banks’ balance sheets are in good shape. These factors make this period more likely to push up inflation than the post-financial crisis period, when loose monetary policy coupled with a large fiscal deficit led to expectations of inflationary problems, but then the expectations did not come true.
Global markets are signaling a pickup in inflation, with commodity prices such as oil and corn rising and government bond yields reaching their highest levels in nearly a year. He expects that the rapid spike in inflation is likely to be the “biggest surprise” of the year, and in such an environment, investors should hold stocks of companies with pricing power, lower capital expenditures and lower debt levels.
Last year, Crimson Capital Growth Fund LP returned 39.2%, more than twice the 18% total return of the Russell 2000 Index in Canadian dollars. The fund, which invests in U.S. small-cap stocks, posted annualized returns of 15.8% from its inception in 2018 to the end of last year, outperforming the index’s 6% gain in Canadian dollar terms.
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