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Innovation & Disruption in Consumer-Facing Industries with David King of Palermo Capital

Dave King, CFA, is the Managing Member of Palermo Capital Management, a U.S.-based long/short equity strategy focused on companies disrupting consumer-facing industries. It employs a fundamentally-driven, bottom-up stock selection process, emphasizing market caps below $20B, where innovation is most pronounced.

“We’re still in the early stages of digital adoption across various industries, and a whole host of companies are likely to benefit and drive that transition. At the same time, many companies look positioned to benefit but don't have the right unit economics or the right management teams in place to get that accomplished.

One of the things we do that's critical is we meet with hundreds of companies each year. Not just for investments we're currently making but for everyone in that ecosystem. We're particularly good at reading management teams and figuring out if they're positive on fundamentals and near-term trends or if they are the right team to lead the company as they try to grow from the micro and small cap into midcap or larger cap.

We look to protect capital during downturns, helped by having a really good short book. That’s where wealth is generated over multiple cycles. We use the short book to protect the long book, but also as a profit center in up markets. Being a good short manager is a critical component of a hedged strategy, and I think a lot of managers got away from that in the 2011 through 2020 timeframe.

Short sellers tend to be glass half empty and overly bearish at times. I am generally a glass half full. I try not to be so cynical that I miss the forest through the trees. I'm a big believer in U.S. markets, the U.S. consumer, ongoing innovation, the disruption that we are still in the early stages of, and the role that technology will play over the longer term.”

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David King, Managing Member

Palermo Capital Management is an Investment fund employing a long/short equity strategy focused primarily on the Consumer, Media, & Technology industries.

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