No Respite for Pricey Small Caps After Brexit

The domestic-facing nature of small-cap stocks won’t save companies in the Russell 2000 Index from bearing the brunt of investor selling after Britain voted to leave the European Union, says Jefferies Group LLC’s Steven DeSanctis. “Despite having less overseas exposure than large, small should get hit harder over the next days and weeks,” DeSanctis wrote in a note Monday. The small-cap gauge trades at 19.4 times positive trailing 12 month earnings, compared with the S&P 500 Index’s 18.2 multiple, and has lagged the large-cap benchmark this year.

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