Brew Markets: "Small-Cap Stocks Are Having A Run: What to Know"
January 23, 2026
Host: Ann Berry
Guest: Manny Weintraub, Principal and Portfolio Manager at Cannell and Spears

Episode Overview

In this episode, Ann Berry and guest Manny Weintraub explore the resurgence of small-cap stocks in early 2026, discussing why investors should care about this overlooked segment, how to identify quality small-cap investments, and navigating potential pitfalls—especially when using ETFs. The conversation weaves between the quirks and opportunities in small caps, investing strategies, sector highlights, and tips for retail investors aiming to outsmart Wall Street.

Key Discussion Points & Insights

1. Resurgence of Small-Cap Stocks

• Small caps’ comeback: After years dominated by mega caps and big tech, small-cap stocks are seeing early 2026 momentum—potentially signaling a rotation in investor attention.
• Undercoverage creates opportunity: Small caps often have less Wall Street analyst coverage, making them ripe for diligent individual investors willing to do homework.
  • “Small cap stocks can be volatile…But if the company produces a lot of free cash flow, they can benefit from it and shrink their cap. And you as a shareholder will ultimately benefit.” — Manny Weintraub (06:03)

2. Defining "Small Cap"

• Market Cap Threshold:
  • Manny defines small caps as companies with a market cap “$10 billion and below” (05:24), acknowledging this is generous but reflective of today’s markets dominated by trillion-dollar megacaps.
  • “We almost live in a world where you're like trillions or not…and I want everyone to be involved with winning stocks.” — Manny Weintraub (05:31)

3. Investing Criteria and Sectors

• Qualities Manny seeks:
  • Free cash flow generation and strong returns on invested capital
  • Companies paying dividends: “It shows that an alignment between management and shareholders that you sometimes don’t see in small caps.” — Manny Weintraub (07:14)
  • Avoids most speculative biotech; prefers health insurers, physical therapy providers, and home healthcare.
• Industrials and the AI Angle:
  • Manny highlights industrial companies using AI to boost margins, citing Lear (auto seats and wiring):
    • “They were able to use AI to get organized around tariffs, changing all things in 10 days, while consultants would have just gotten their pitch deck together.” — Manny Weintraub (09:44)
• Distribution and Tech Examples:
  • Points to companies like “Synix,” an IT distributor, as benefiting from consistent free cash flow with minimal capital intensity. Brunswick (boats) noted for their resilience and healthy inventory dynamics (11:06).

4. Hunting for Winners: Research Strategies

• 52-week high list approach:
  • Manny prefers buying stocks that are “going up” rather than bargain hunting beaten-down names.
    • “I find a lot of my ideas off the 52-week high list…there’s also an easier way I find to make money, which is to find companies…just starting to work and hitting still have a reasonable valuation.” — Manny Weintraub (12:35)
• Do-it-yourself research:
  • Ann and Manny both emphasize using company filings (10Ks, 10Qs), investor relations sites, and independent analysis over simply following the news or analyst reports.
  • “You take [management’s discussion and analysis] information, you combine that with AI, and you care…you can make some money.” — Manny Weintraub (15:37)
  • Ann jokes about scouring Edgar (the SEC site): “It’s the ugliest website you’ve ever seen…But you go in there and it’s tons and tons of information.” (16:02)

5. Retail Investor Tips vs. Institutional Tools

• Boots on the ground:
  • Manny is skeptical about the necessity for site visits or “boots-on-the-ground” retail diligence, arguing numbers and stock trends provide clearer signals:
    • “I have made more money not visiting companies than I have visiting companies.” — Manny Weintraub (17:14)
  • Retail investors benefit from access to information that used to be reserved for professionals, especially with AI's help.

6. Understanding Small-Cap ETFs and the Russell 2000

• Caution on ETFs:
  • Many ETFs and the Russell 2000 include a large percentage of unprofitable, speculative, or biotech stocks (“30% of it is not profitable; 10% is biotech” — 18:24), diluting potential returns.
  • Passive strategies may force ETFs to sell winners and buy losers due to index rebalancing rules (22:21), making individual stock picking potentially more rewarding for small caps.
• Why Small Caps Now?:
  • Combination of interest rate cuts, AI adoption in traditional sectors, and institutional investors rotating out of overvalued mega caps is creating tailwinds (19:42).

7. Touching on Asset Allocation: Gold and Bitcoin

• Gold: Manny notes increased allocations from international investors, likening early small-cap enthusiasm to earlier gold adoption (20:19).
• Bitcoin: Skeptical, but open-minded for the future:
  • “People I respect are very interested in all sorts of cryptocurrencies. I don’t get it yet…I wish everyone the best of luck with that one.” — Manny Weintraub (23:09)

Notable Quotes & Memorable Moments

• On the importance of US-centric revenue:

  • “Small cap stocks…are what power America…you’re going to have a much higher concentration of revenue based in the United States.” — Manny Weintraub (02:41)

• On AI changing the industrial landscape:

  • “With AI, the physical world matters more than ever, whether it’s electricity or filters.” — Manny Weintraub (03:23)

• On stock screening and behavioral bias:

  • “Maybe your natural inclination is to like look at things that are really beaten down…there’s an easier way…find companies…just starting to work.” — Manny Weintraub (12:55)

• On research accessibility:

  • “Regulations that require companies to distribute information widely make that a lot easier than it was…I love the management’s discussion and analysis segment of these filings.” — Manny Weintraub (15:36)

• On the pitfalls of small-cap ETFs:

  • “I think it’s uniquely not suited for an ETF…they are going to have to buy the losers.” — Manny Weintraub (21:59).

• Bit of personal history:

  • “I started as a retail analyst and I met my wife on a Goldman Sachs retail [trip]…” — Manny Weintraub (17:05)

Key Timestamps

• [02:41] – Manny defines small caps and their unique role in the US economy
• [05:24] – $10 billion and below: how Manny demarcates small caps
• [07:13] – On why he likes dividend-paying small caps
• [09:44] – How AI is improving margins for industrial companies
• [12:35] – The 52-week high list as a stock idea filter
• [15:36] – Using public filings and AI for individualized research
• [18:24] – The structure and risks within the Russell 2000 small cap index
• [21:59] – Why ETFs may not be the ideal vehicle for small cap investing
• [23:09] – Quick thoughts on Bitcoin as part of the asset allocation puzzle

Final Takeaways

• Small caps are gaining momentum in 2026 and may represent a new area of opportunity for investors previously focused on mega caps.
• Diligent, independent research—especially using company filings and tools like AI—can give individual investors an edge where Wall Street isn’t looking.
• Not all small-cap exposure is created equal: Investors should scrutinize ETFs and passive vehicles, as index construction quirks may dilute returns or miss emerging winners.
• Sector variety and quality matter: Look beyond the most popular (or speculative) segments to find stable, cash-generative small caps, especially in underappreciated industrials and distributors.
• Retail investors have more tools than ever before—and by using them smartly, can tap into opportunities once reserved for the pros.