Dear Investors,

After another minor correction to start this latest quarter, the major equity indices again managed to climb back to recover from these losses over the last few months. Concerns about a slowing economy and slight weakness in the labor markets were overcome by the increasing likelihood that the Fed would lead with a more aggressive interest rate cut in September. Once that materialized, with a 50-basis point cut and the declaration that a restrictive policy was no longer appropriate, equities furthered their rebound with a noticeable broadening of participation. We believe that we may have finally reached a point where there will be more sustained interest in smaller companies, as investors are willing to increase their risk profiles now that the Fed is on their side. As for the Funds, we continue to lean into a more aggressive posture in our portfolios with a smaller cap bias than our benchmarks and peers. 

The Jacob Internet Fund added two new positions in the quarter, Coinbase Global and BM Technologies. Founded in 2012, Coinbase was an early cryptocurrency pioneer, providing a comprehensive trading platform for the market. Impressively, they have survived both multiple crypto winters and an unfriendly regulatory environment. Coinbase also has matured as a company in the last several years, with less volatile non-trading businesses accounting for more than 40% of total revenues. Lending, interest income and custody services make up the bulk of this fast-growing segment of its business. Our long-term belief is that cryptocurrencies will become increasingly accepted by both retail and institutional buyers and that Coinbase is by far the best domestically focused company to benefit from this growth. This belief, in addition to a less expensive valuation versus where the company was trading just a few months ago, led us to establish a position. BM Technologies is a name we have owned in the Discovery fund for a while. The company, which provides banking services for college students through its BankMobile software, has struggled in recent years to try to grow its business offering its technology to other non-educational clients. But its core business remains healthy, and the company counts millions of students from hundreds of colleges and universities as customers, which we think is a very valuable under-monetized asset. While the company has begun investing in its technology to maintain and grow that asset more effectively, we also believe a number of acquirers could be interested in purchasing the company at what remains a very low valuation.

The Jacob Small Cap Growth fund also added one new position in the quarter, Powerfleet. A long-time holding in both the Internet and Discovery Funds, Powerfleet has recently made some large acquisitions that not only do we believe will accelerate its emergence as a leader in the mobile asset tracking industry but also make it more appropriate as a holding for the Small Cap Fund as well.

The Jacob Discovery fund did not add any new positions in the quarter.

The Jacob Forward ETF also added a position in Powerfleet in the quarter.

Ryan Jacob
Portfolio Manager
Jacob Internet Fund
Jacob Small Cap Growth Fund
Jacob Forward ETF

Darren Chervitz
Portfolio Manager
Jacob Discovery Fund

www.jacobfunds.com

Jacob Internet Fund, Small Cap Growth Fund and Discovery Fund Risk Disclosures:

Mutual fund investing involves risk. Principal loss is possible. There are specific risks inherent in investing in the Internet area, particularly with respect to smaller capitalized companies and the high volatility of internet stocks. All three funds may invest in foreign securities, which involve greater volatility and political, economic and currency risks, and differences in accounting methods. These risks are greater in emerging markets.  All three funds also invest in smaller companies, which involve additional risks, such as limited liquidity and greater volatility.

The Internet Fund may invest in fixed income and convertible securities. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. The market value of convertible securities tends to decline as interest rates increase and, conversely, to increase as interest rates decline. In addition, convertible securities generally offer lower interest or dividend yields than non-convertible securities of similar quality.

Investments in micro capitalization companies may involve greater risks, as these companies tend to have limited product lines, markets and financial or managerial resources. Micro cap stocks often also have a more limited trading market, such that the Adviser may not be able to sell stocks at an optimal time or price. In addition, less frequently-traded securities may be subject to more abrupt price movements than securities of larger capitalized companies.

Jacob Forward ETF Risk Disclosure:

Investing involves risk; Principal loss is possible. Please see the prospectus for the risks associated with investing in the Fund.

Click here for a link to the Jacob Forward ETF prospectus.

Click here to view the Jacob Funds prospectus.

The information provided herein represents the opinion of Jacob Mutual Funds and is not intended to be a forecast of future events, a guarantee of future results, nor investment advice.

Click here to view the holdings for the Jacob Internet Fund, as of August 31, 2024.
Click here to view the holdings for the Jacob Small Cap Growth Fund, as of August 31, 2024.
Click here to view the holdings for the Jacob Discovery Fund, as of August 31, 2024.
Click here to view the current holdings for the Jacob Forward ETF.

Please note that these fund holdings are subject to change and should not be considered a recommendation to buy or sell any security.

Earnings growth is not representative of the Fund’s future performance.  

The Jacob Funds are distributed by Quasar Distributors, LLC.