M&A activity in small-caps

Amid recent increased merger and acquisition activity, Mike Morris discusses his team's agnostic view on the various forms of shareholder-friendly activity and Mac Burke speaks to the potentially negative consequences that acquisitions can have.

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we do not do MMA share repurchase or dividends one of those are superior to the other we look for our companies to invest their capital in the most advantageous way for the shareholders and deliver strong returns from a practical standpoint some companies are better at doing Acquisitions than others so I would say at the stock level of there are circumstances where we would prefer a share buyback or dividend over a merger or acquisition ma does have some negative consequences specifically if a company you own choirs another company and they overpay that's a scenario that we don't like to see me so we'd love to see your company's deploy capital in areas that generate very attractive returns but when they stretch too far and they go outside of the circle of competence and try to acquire assets either don't fit within their strategy or they're over paying for them that kind of a very and sometimes disastrous consequences for a company directly and indirectly play we've had a couple companies in the portfolio that have been taken out by a larger acquire and usually taken out of the pretty substantial premium but it's also help to send directly weave anytime a company gets acquired within a space like software you see the rest of the group trade up because typically when the required for premium evaluation center move higher we've also benefit as well from companies that we own that one of their competitors has been acquired and typically what you see is when a competitor gets acquired more specifically in a technology area the tendo sort of lose that serve Soul company focused at R&D focus and competitively they tend to win so it would benefit of some of our underlying companies that have seen competitors get taken out

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