Invest, Don't Trade

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facilities now dinosaurs? Also, what if oversized corporate offices in expensive locations potentially become out of fashion for corporations as a symbol for expressing their status versus creating a more flexible, happier, remote and distributed office (suburban) workforce? We believe trends and fundamental changes in e-commerce, digital business and consumer behavior is why, over the past 15 years, earnings per share for the Russell 3000 Growth Index has more than doubled relative to the Russell 3000 Value Index (see Figure 2). Given the stock market is a “weighing machine” over the long term, as Warren Buffett’s teacher Ben Graham said, it is no surprise that investors have rewarded growth stocks with superior performance. Have Your Cake and Eat it Too Too often, we hear investors referencing value stocks when they really mean cyclical stocks that can benefit from a potential economic recovery and expansion. At Alger, we believe we can potentially have our growth cake and eat the recovery too by investing in high-quality, market share gaining companies whose end markets could recover with widely available vaccines. Examples of these types of companies could include travel and leisure stocks such as Booking.com, Uber and Planet Fitness or restaurant stocks

like Shake Shack or Wingstop, retailers such as Nike, Louis Vuitton Moët Hennessy, or Ollie’s Bargain Outlet, or even certain commercial real estate companies like CoStar and energy companies like Core Laboratories. We believe that by pursuing such opportunities, we may not have to sacrifice quality and long-term growth potential when anticipating a rebound in depressed areas of the economy. Conclusion We believe the lesson is to beware of the powerful structural forces that have driven the underperformance of value and the outperformance of growth stocks over the long term because they are still very much intact. Value may be a trade at certain points in the cycle, but in our view, real wealth is built over time through investing in winning growth stocks. At Alger, we believe we can potentially have our growth cake and eat the recovery too by investing in high-quality, market share gaining companies whose end markets could recover with widely available vaccines.

Figure 2 EPS Growth

Brad Neuman, CFA Senior Vice President Director of Market Strategy

Daniel C. Chung, CFA Chief Executive Officer Chief Investment Officer Portfolio Manager

15 Years Ended December 2020

134.8%

0.3%

Russell 3000 Growth

Russell 3000 Value

Source: FactSet.