Market Overview

Small Cap Stocks Can Benefit From Tax Reform, Says Portfolio Manager

Small Cap Stocks Can Benefit From Tax Reform, Says Portfolio Manager

When President Donald Trump won last November, it created an expectation of tax reform, according to a Needham analyst. 

The Expert

Chris Retzler, a portfolio manager with Needham Growth Fund.

The Strategy

Small cap stocks are beginning to benefit from tax reform policy.

The Thesis

Trump's tax reform agenda has no doubt taken longer than many had initially hoped for, but there are signs of meaningful progress, Retzler said during CNBC's "Squawk Box" segment. Small cap stocks in particular are benefiting from increased "clarity" from the White House, as repatriation of foreign cash will likely result in some small cap names being acquired by their much larger peers, he said. 

Companies like Cisco Systems, Inc. (NASDAQ: CSCO) will be tempted to use cash to "buy growth which really exists in the small-midcap area," he said. As a whole, software security companies are a "hot-spot," as companies aren't "protected enough," Retzler said.

The portfolio manager singled out FireEye Inc (NASDAQ: FEYE) as a security company that could be bought out given a strong management team led by its CEO, who places "his heart in the company," Retzler said. 

Price Action

Shares of FireEye were trading higher by more than 2 percent early Tuesday morning.

Related Links:

Fund Manager: When It Comes To Tax Reform, Investors Need To Be 'Thinking About The Changes Under The Hood'

Morgan Stanley CEO Gives Trump's Corporate Tax Plan A Thumbs-Up

Posted-In: Chris Retzler CNBC Donald Trump small cap stocks Squawk BoxPolitics Media General Best of Benzinga


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