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CNBC PRO Talks

Top strategist on why small caps are the best bet

Steven DeSanctis, one of the longest-running and most widely followed small-cap strategists on Wall Street, sat down with CNBC's Mike Santoli for an exclusive discussion about why smaller stocks are the best investment right now and over the long term.

"Large companies need to buy growth. And where are you going to find companies that can grow their earnings? It's down in small and mid-cap," said DeSanctis, explaining that one benefit of small and mid-cap companies is the potential for M&A. "Small-cap, I think, is the most interesting area of the market."

In this wide-ranging conversation, DeSanctis, who currently oversees small- and mid-cap equity strategy at Jefferies, also touches on:

  • How to spot small-cap outperformance cycles vs. large caps
  • The major investment themes that every investor must follow
  • The best way to play the pickup in M&A
  • The shrinking stock market and its effects

Prior to joining Jefferies this year, DeSanctis was the small stock strategist at Bank of America Merrill Lynch for eight years. Before that, he had the same role at Prudential Equity Group for eight years. PRO subscribers can also read the entire transcript of the exclusive interview below.