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Shaker Investments Small Cap Growth Update – 4Q 2024

Despite a volatile end to the year, small-cap stocks managed to close out 2024 with their second consecutive positive quarter, gaining 0.3% in Q4. However, unlike in Q3, small caps lagged their large-cap counterparts, which posted a 2.7% gain for the quarter. Notably, U.S. equity returns followed a bowl-shaped pattern, with small caps reaching a new peak on November 25—more than three years after their previous high in November 2021. This marked the third-longest gap between record highs in the index’s 45-year history.


Even with December’s weak performance, 2024 was a strong year for small-cap stocks on an absolute basis, with the small-cap index advancing 11.5%. However, it also marked the eighth consecutive year of underperformance relative to large caps.

While the wait for sustained small-cap leadership has been long, we see encouraging signs on the horizon. In Q4, five of the 11 sectors in the small cap index posted gains, with Technology, Industrials, and Consumer Discretionary leading the way, while Health Care, Materials, and Energy were the largest detractors. Additionally, stock breadth is improving, with 60% of companies in the S&P 1500 (a larger population of companies) now trading above their 200-day moving average, which is a positive sign for markets.

Discussion of Fourth Quarter Performance and Positions

For the quarter, the Shaker Small Cap Growth Strategy underperformed its benchmark. The strategy decreased 1.9% versus the benchmark’s positive 1.7%. The majority of this underperformance was due to technology holdings that failed to keep up with the relatively strong sector and due to negative news affecting a few key holdings.


Sectors that led performance for the strategy during the quarter were consumer staples, energy, financials and real estate while technology and health care were the sectors that detracted most from performance.

Top Contributors

Sprouts Farmers Market (SFM) – On the top contributor list for the fourth quarter in a row, SFM is one of the nation’s fastest growing grocers with an open layout experience that inspires wellness. As the stock continued to appreciate, some profits were realized during the quarter.

Axos Financial (AX) – AX is a branchless financial institution involved in commercial and consumer banking. Axos is a long-term holding that we know well, and we have great confidence in its management team. 

Argan (AGX) – AGX designs and builds power generation plants. As energy demand picks up, AGX is well positioned for growth.

Sportradar Group (SRAD) – Initiated in September and added in October, SRAD is a leader in sports data services for sports betting and media industries.

Agilysys Inc (AGYS) – AGYS is a SaaS company offering innovative software for POS, payments, reservations, etc. in the hospitality industry.

Top Detractors

Monolithic Power Systems (MPWR) – MPWR is a semiconductor company specializing in high-performance power solutions for a variety of industries. A miss in AI datacenter estimates sent the stock lower this quarter.

Installed Building Products (IBP) – IBP is one of the nation’s largest new residential insulation installers, offering a streamlined one-stop-shop value chain of product offerings.

ICON PLC (ICLR) – A Clinical Research Organization, ICLR has seen negative pressures in bookings from small biotechnology and large pharmaceutical companies. Changes in the political environment have also impacted this stock and we are watching it closely.

Lantheus Holdings (LNTH) – LNTH is a leader in the radiopharmaceutical space, continuing to be a pioneer in expanding their product lines in both therapeutic and diagnostic products.

M/I Homes Inc (MHO) – One of the nation’s leading homebuilders, MHO is suffering from margin compression and slower unit order growth.

Changes in the Portfolio

This quarter, our portfolio management team initiated nine new positions while exiting nine positions. This repositioning continues to be driven by a shift in the improved outlook for growth-oriented companies and new opportunities within the small-cap space.

Among our new holdings, Warby Parker (WRBY) and Doximity (DOCS) stand out as high-conviction names that align well with our growth objectives. WRBY is a retailer of eyewear and contact lenses, operating over 250 stores in 47 states, which only accounts for 0.6% of optical shops in the US, leaving room for ample growth. Growing at 18% 5-year CAGR, WRBY’s insiders own about 26% of the company’s outstanding stock, a characteristic important to Shaker.

DOCS is the leading social network for medical professionals. One could think of it as LinkedIn for medical professionals, with over 80% of US physicians using the platform. It is a place for members to connect with colleagues in their field, access practice-specific news, stay up to date on the latest research, access telehealth, and to search for or post job openings. The platform is supported by advertising revenue from health systems and pharmaceutical companies. Over the last five years, revenue has grown at a rate of over 40% per year and Adj. EBITDA at a rate of over 80% per year.

We exited our long-term position in CoStar Group (CSGP), a mid-tier holding in our portfolio for over six years. While CSGP has been a strong performer, fundamental shifts in the company, along with its transition beyond the small-cap index, prompted our decision. Operating across a broad spectrum of real estate information and service industries, CSGP continues to invest heavily in its expansion. However, given its high valuation and slowing earnings growth, we have opted to step aside for now.

As long-term investors, we prioritize building a resilient portfolio designed to perform across all market conditions. We continuously adjust our holdings, strategically reallocating capital to high-quality companies with strong growth potential in the current economic environment.

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Andrew Frye

Senior Research Analyst

Andrew first joined Shaker in 2022 as an intern on the research team. Following his internship, Andrew accepted a full-time position with Shaker Investments as a Research Analyst. Andrew was promoted to Senior Research Analyst in 2025. Andrew’s primary role is to work with the Portfolio Managers on monitoring existing ideas, tracking competitors, and new idea generation. Andrew brings an analytical approach to modeling companies.

Prior to joining Shaker Andrew worked as a summer analyst intern with Progressive Insurance in the Real Estate Control Group. Andrew received his BA in Economics, Political Science, and Business Management and his Masters of Business Analytics and Intelligence from Case Western Reserve University.

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Ashley Arsena, CFP®

Senior Business Development and Client Service Officer

Ashley's journey with Shaker began in 2016 where she quickly established herself to be an integral part of the team. From handling operations to executing trades and providing top-notch client services, Ashley has showcased her versatile skill set. Currently, a vital member of the Business Development and Client Services team, she dedicates her days to building strong relationships with both existing and potential clients.

Ashley is a CERTIFIED FINANCIAL PLANNER™ professional. She has earned a Certificate in Financial Planning from New York University School of Professional Studies and received her BA in Business Management from Baldwin Wallace University with a minor in Human Resources.

Ashley was recognized on AdvisorHub's 100 Women Advisors to Watch in 2024 (#29) and Top 50 Woman Advisors to Watch in 2023 (#48). She has also been recognized as a Five Star Wealth Manager by Five Star Professional in 2024.

Ashley currently serves on the board of Hope for Kids Geauga. She is also an active member of CFA Society of Cleveland, serving as a member of the Women's Advisory Committee.

Ashley lives in Bainbridge with her wife Jessica and young children Connor and Avery.

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Chris Hemmelgarn

Portfolio Manager and Research Analyst

​Chris is a Portfolio Manager and Research Analyst at Shaker Investments. He is responsible for researching new and existing investments as well as portfolio management at Shaker Investments. He joined Shaker in 2017 and covers a range of companies and sectors with a focus on technology, financial services, energy, and utilities.

Prior to joining Shaker Investments, Chris worked in Sell-Side Research as a Vice President at Barclays covering Semiconductors. His primary responsibilities included company and market analysis and forecasting, publishing research, client marketing, and relationship management of company and industry contacts. He also worked as an Associate at Morgan Stanley developing and analyzing business management metrics.

Chris earned his MBA (with Distinction) specializing in Finance and Corporate Finance at the NYU Stern School of Business. He also received his BSFS in International Politics from Georgetown University.

Chris is an avid golfer and cook, and is learning the joy of maintaining a 100-year-old home after a decade plus in Manhattan apartments.

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Sasha A. Kostadinov, CFA

Portfolio Manager and Research Analyst

Sasha is co-manager of the Small Cap Portfolio and conducts research on consumer discretionary, consumer staples, materials, and health care sectors for all of the portfolios at Shaker Investments. He has spent more than twenty years working in the equity markets, the last nineteen with Shaker Investments.

Prior to joining Shaker Investments, he was a research analyst at Clarion Group, a Cleveland, Ohio-based long-short hedge fund. Prior to that, he was a research analyst at KeyBanc Capital Markets (formerly McDonald Investments). Prior to that, Sasha was a Financial Consultant at Smith Barney.

Sasha is a holder of the Chartered Financial Analyst designation and received his BA in Economics and Political Science and MA in Economics at Cleveland State University.

He and his wife, Ruthann, reside in Lakewood with his guitars.

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Raymond J. Rund

Managing Director, Senior Research Analyst

Ray is the Senior Research Analyst and has been covering the technology and industrials sectors since joining Shaker Investments in 1996. 

Prior to joining Shaker Investments, Ray was a General Partner in an early-stage venture capital partnership for nine years, where he organized the first round of venture funding for RF Micro Devices and served on their board for six years prior to the company’s IPO. In 2015 RF Micro merged with Triquint Semiconductor to become Qorvo, a leading supplier of integrated circuits used in wireless communications.  Ray also headed marketing at Keithley Instruments, was a consultant at McKinsey & Company, and worked in engineering and marketing for Intel. Early in his career Ray worked as an engineer for Combustion Engineering and Westinghouse Electric in Pittsburgh.

Ray currently serves on the Investment Committee of the Harvard Business School Club of Northeast Ohio, is a member of the Finance and Investment Committee of the Jewish Federation of Cleveland, and serves on and was former chair of the Retirement Fund Committee for the Jewish Federation of Cleveland.

Ray earned his BS, magna cum laude in Engineering & Applied Science at Yale University, an MS in Electrical and Computer Engineering at Carnegie Mellon University, and an MBA from Harvard University.

Ray is a long time Clevelander, and an avid Lake Erie sailor. He and his wife Jeanne live in Shaker Heights where they enjoy being close to their three adult children and grandson. 

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Kacie Wick

Chief Compliance Officer

Kacie joined Shaker Investments in 2011 as the company’s controller. In 2022, Kacie was promoted to Chief Compliance Officer. She brings over 20 years of professional experience in operational and financial management for various for-profit and non-profit organizations in Boston and Cleveland.

Prior to joining Shaker Investments, she was Director of Clinical Research Administrative Operations in the School of Medicine at Case Western Research University where she managed a research grant portfolio of over $40 million. She has also worked as the Director of Finance for the Weatherhead School of Business at Case Western Reserve University, Director of Operations at Village Preparatory School; Operations Manager at Northeast Ohio Council on Higher Education; and Center Financial Manager at Education Development Center.

Kacie received her Masters of Accounting from Case Western Reserve University, where she graduated magna cum laude and her BS in Management from Babson College in Wellesley, MA. Kacie is currently working towards her Investment Advisor Certified Compliance Professional (IACCP) designation.

Kacie currently serves as a trustee for the Tod Homestead Cemetery in Youngstown, Ohio and is a former treasurer for her local girl scout Troop 70204 and the Onaway PTO. She lives in Shaker Heights with her two daughters.

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Brandon A. Hemmelgarn

Co-Chief Investment Officer and Portfolio Manager

Brandon is the co-Chief Investment Officer at Shaker Investments. With over 14 years of industry experience, Brandon leads the investment team at the firm. He is also responsible for researching new and existing investments and portfolio management for all three of the firm’s strategies. Prior to being promoted to co-Chief Investment Officer in 2020, Brandon was a Portfolio Manager and Research Analyst at the firm for 8 years. He covers a range of companies and sectors including technology, consumer products and services, industrials, and materials.

Prior to joining Shaker, Brandon worked on the investment team at Audax Group, a Boston-based private equity firm focused on growing middle market companies.

Brandon is a former board member of the Washington Association of Money Managers and the Private Equity Association of Boston.

Brandon received his BA, summa cum laude, in Economics from Princeton University and is a Registered Investment Advisor Representative (FINRA Series 65). He and his wife, Shelby, reside in Arlington, Virginia, with their sons Thomas and Ted. When time permits, Brandon still enjoys lacing up his skates and taking to the ice rink.

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Bradley Wheeler

President

Brad Wheeler is the President of Shaker Investments.  With more than twenty-five years of experience in the financial service industry, he is responsible for overseeing the firm’s strategy, business development and operations.  Prior to being named President, Brad served as Vice President and Head of Business Development for Shaker.  He has spent over twenty years in the financial service industry calling on endowments, pension funds and institutional investors.

Prior to joining Shaker Investments, Brad was a founding partner at Cleveland Research Company where he developed institutional relationships with clients in Boston and opened the firm’s London office.  Prior to that, Brad was a partner with FTN/Midwest Research and worked at US Bank in commercial banking.

Brad is currently a member of the Association for Corporate Growth in Greater Cleveland.  He is the prior President of the Shaker Youth Hockey Association and Shaker Heights High School Sports Boosters.

Brad received his BA in Public Finance from Miami University and an MBA from Case Western Reserve University, Weatherhead School of Management.

He and his wife, Laura, reside in Shaker Heights and have two adult children.

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Edward P. Hemmelgarn

CEO & Co-Chief Investment Officer

Edward Hemmelgarn is the CEO and Co-Chief Investment Officer at Shaker  Investments. Edward’s primary focus is leading the investment team as well as portfolio management for all three of Shaker’s strategies. His research focus includes healthcare, financial services, and real estate.

Prior to founding Shaker Investments in 1991, Edward was the Chief Financial Officer of Retail Banking at Ameritrust Corporation (now KeyBank). Prior to that, Edward worked at Ernst & Young focusing on mergers and acquisitions and strategic and financial management consulting.

He received a BA in Chemistry and a MBA from the Case Western Reserve University, where he also served as an instructor for numerous courses. Mr. Hemmelgarn is a former CPA.

Edward is currently a board member at the Cleveland Museum of Art. Edward is also on the Visiting Committee of Case Western Reserve University’s College of Arts and Sciences. He is a past recipient of the Outstanding Alumni Award from Case Western Reserve University’s Weatherhead School of Business. He was named Accounting Alumnus of the Year in 2003, and a recipient of Case Western Reserve University’s Department of Chemistry’s Distinguished Alumnus Award in 2016.

Edward and his wife, Jan, reside in Shaker Heights.

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