Romano Sala Tenna, Portfolio Manager at Katana Asset Management, says the differential in the valuations of large vs small cap industrial companies (see chart) has thrown up one of the more interesting scenarios to go looking for new opportunities. “It’s not necessarily a record level of cheapness of small to mid caps but on a comparative basis with the top end of the market we are now seeing a record differential.”

Sala Tenna says he is seeing a lot of opportunities in this space and as a result is spending a lot of time trolling through those opportunities. In this short video (1:30) (VIEW LINK) he outlines two companies that he says stand out and have caught his attention in particular.

Microcaps vs All Ordinaries Index 1974-2015

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