- Strong bounce-back by cheap small-caps from the corona crash
- Lockdown trading has caused the screen to lose its way
- The stock that meets all its criteria looks of interest and exploits an often overlooked 'economic moat'
Regular readers of this column may have picked up on the fact that I’m having to help a number of the screens I cover box clever around the Covid-19 crisis. The nature of the economic upset that has accompanied the pandemic means many of the fundamentals sought by the screens have been temporarily thrown off kilter. Given that trading in 2020 is likely to prove an aberration for many companies rather than being reflective of a longer-term trend, I think adapting screens to the circumstances is the right thing to do.
But I am only prepared to take changes to screens so far. Essentially, I think the criteria used needs to stay true to the broad objective of the strategy a screen is trying to embody. That being the case, I’ve hit a bit of a brick wall with my Cheap Small Caps screen, which is based on the investment approach of famous American contrarian investor David Dreman.