The Artisan Small Cap Fund recently made a bold move, selling off its shares of Dutch Bros (BROS). This decision was made as part of the fund’s commitment to valuation discipline, a strategy that focuses on buying and selling stocks based on their perceived value. While this may seem like a risky move, there are some key insights that retail investors can take away from this decision.
Firstly, it’s important to understand why the Artisan Small Cap Fund initially invested in Dutch Bros. As a small-cap company, Dutch Bros had shown strong growth potential, with its stock price nearly doubling since its IPO in September 2021. This made it an attractive investment for many funds and retail investors. However, the Artisan Small Cap Fund recognized that this growth may have been overvalued and decided to sell its shares.
This brings us to the key takeaway for retail investors: the importance of valuation discipline. While it can be tempting to jump on the bandwagon of a popular stock, it’s crucial to assess its true value and potential for growth. As the saying goes, “buy low, sell high.” By following a valuation discipline strategy, investors can avoid getting caught up in hype and make more informed decisions about their investments.
In the end, the Artisan Small Cap Fund’s decision to sell Dutch Bros may have been a smart move. The stock’s price has since dropped significantly, proving the fund’s valuation concerns to be valid. As retail investors, it’s important to learn from this and approach our investments with a critical eye, rather than blindly following the crowd. By doing so, we can improve our chances of making profitable decisions and achieving our financial goals.