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Small Cap

Small Cap Commentary – 1Q22

20 April 2022

Today we are experiencing one of the most significant workforce evolutions since World War II. An article in Forbes noted that more people quit their jobs in April 2021 than in any single month in nearly a century. After dealing with the challenges of COVID-19, many people are looking for a change. As illustrated in the chart below, more and more workers have continued to work remotely after the pandemic. According to projections by Ladders, a job search site, 25% of all professional jobs in North America will be remote by the end of 2022.

 

Mobile and remote work is here to stay, but with it brings many technical challenges. The obvious challenge is cybersecurity. But, beyond cybersecurity, IT departments need to make certain there is a seamless experience for workers needing to access diverse systems and networks. Remote work has quickened the necessity for better and more secure digital tools but also IT talent to deal with the increasing technical demands. According to a survey by McKinsey, a management consulting company, one of the top skill gaps that companies face is IT. As shown in the chart below, the U.S. IT staffing market is expected to grow at a compound annual growth rate of 5.1% during 2022-2027.and remote work is here to stay, but with it brings many technical challenges. The obvious challenge is cybersecurity. But, beyond cybersecurity, IT departments need to make certain there is a seamless experience for workers needing to access diverse systems and networks. Remote work has quickened the necessity for better and more secure digital tools but also IT talent to deal with the increasing technical demands. According to a survey by McKinsey, a management consulting company, one of the top skill gaps that companies face is IT. As shown in the chart below, the U.S. IT staffing market is expected to grow at a compound annual growth rate of 5.1% during 2022-2027.

One company benefiting from this growing need for IT talent is ASGN Incorporated. We added ASGN to the Argent Small Cap portfolio in the summer of 2019. ASGN is a leading provider of IT and professional services in the technology, digital, creative, healthcare technology, engineering, life sciences and government sectors. The jump in demand for technology has put a strain on companies. In order to meet the need for specific skillsets, many are using ASGN to draw from its outsourced professional IT services. The ability to fill this demand has translated into growth for ASGN. The company is targeting $6 billion in revenue for 2024, representing a compound annual growth rate of 15.4%. As the increasing need for qualified IT professionals in the economy grows, it is likely to translate into higher demand for ASGN’s staffing solutions.

We are 100% employee-owned and we thank you for your business and your interest. In addition, if you like our market letters, videos by Ward Brown and podcasts by Ken Crawford, we hope you will share them with friends. For information on our five successful equity strategies–Large Cap U.S., Dividend Select, Mid Cap U.S, Small Cap U.S. and SMID Cap U.S., please contact [email protected].

Peter Roy

Portfolio Manager

See PDF Version: Small Cap Commentary 1Q21

Performance results are net of fees. Past performance is no guarantee of future results. This is supplied as supplemental information to the composite disclosures presented later in this document. The information provided in this report should not be considered a recommendation to purchase or sell any particular security. You should not assume that investments in any securities were or will be profitable. A list of stocks recommended by Argent in the previous year is available upon request. Views expressed herein represent the opinion of the portfolio manager as of the date above and are subject to change.