Experience
Stocks are selected by a highly experienced investment team whose members average more than 25 years of industry experience.
A core solution
Focused on uncovering the best opportunities across the traditionally underfollowed small- and mid-cap market.
Risk controls
A daily review of the portfolio’s risk exposures ensures alpha is driven by stock selection.
We believe that markets misprice securities. Among the various sources that can lead to mispricing include a market overreaction or underreaction to news, earnings reports, sell-side analysts' upgrades or downgrades, management changes, regulatory developments, and macroeconomic events. Our mission is to exploit market inefficiencies and seek to generate superior, long-term risk-adjusted returns for our clients. We aim to accomplish this through the integration of fundamental research and proprietary quantitative modeling, and a differentiated portfolio construction process.
End-to-end investing
- We invest from the bottom to the top of the market cap range and across the style spectrum. From companies that are high growth to deep value and everything in between, we build a true core portfolio.
Active can add alpha
- Small- and mid-cap companies have the potential to deliver significant returns because of a number of factors, including mispricing resulting from lack of analyst coverage. This inefficiency can allow a skilled manager to deliver strong investment growth over time.
Focused on stock selection
- Our approach combines fundamental, research driven analysis with a risk-controlled portfolio construction process to minimize sector and factor risks, allowing stock selection to drive returns.
Our approach focuses on stock selection – not sector or factor bets – and combines fundamental, bottom-up research with a risk-controlled portfolio construction process. We select securities based on sector- and industry-specific valuation measures. Valuation methodologies used in our fundamental analysis will differ by sector or industry and will be based on the capital intensity, growth profile, cash generation, and capital structure of the company. In addition, company-specific observations will be incorporated into financial models for forward estimates of earnings and cash flow in order to build a complete valuation picture. Ultimately, we are looking to identify a catalyst that will revalue the company’s stock price higher.
We review portfolio-level factor exposures on a daily basis to ensure that the final portfolio maintains characteristics and a risk profile similar to the benchmark. We do this to avoid the creation of unintended portfolio risk exposures that could prevent our stock selection from reaching the bottom line of portfolio performance, as we expect stock selection to drive returns.
01 | Opportunity universe screen
- Russell 2500® Index
- Proprietary quantitative model ranks stock per sector
- Valuation
- Expectations
- Quality
02 | Fundamental research
- Competitive position
- Financial statement analysis
- Sector-specific valuation analysis
- Catalyst to revalue
- Set price target
03 | Portfolio construction
- Risk-controlled exposures
- Stock specific
- Sector (+/- 2%)
- Factor guardrails
- Build portfolio – stock by stock – from the bottom up
04 | Sell discipline
- Target price achieved
- Breakdown in the quantitative data
- Changes in company's fundamental outlook
- Better relative opportunity
- Market cap exceeds Russell 2500® Index
The Russell 2500® Index measures the performance of the small- to mid-cap segment of the US equity universe. The Russell 2500® Index is a subset of the Russell 3000® Index, representing approximately 2,500 of the smallest securities based on a combination of their market cap and current index membership.
For more information on our equity capabilities
Risks
The value of the portfolio may fall as well as rise, and you may not receive back the amount invested.
As a class, equities carry higher risks than bonds or money market instrument.
Investments in small and/or medium-sized companies typically exhibit greater risk and higher volatility than larger, more established companies.
Liquidity risk is the possibility that securities cannot be readily sold within seven days at approximately the price at which a fund has valued them.
IBOR risk is the risk that changes related to the use of the London interbank offered rate (LIBOR) or similar rates (such as EONIA) could have adverse impacts on financial instruments that reference these rates. The abandonment of these rates and transition to alternative rates could affect the value and liquidity of instruments that reference them and could affect investment strategy performance.
Natural or environmental disasters, such as earthquakes, fires, floods, hurricanes, tsunamis, and other severe weather-related phenomena generally, and widespread disease, including pandemics and epidemics, have been and can be highly disruptive to economies and markets, adversely impacting individual companies, sectors, industries, markets, currencies, interest and inflation rates, credit ratings, investor sentiment, and other factors affecting the value of the Strategy’s investments. Given the increasing interdependence among global economies and markets, conditions in one country, market, or region are increasingly likely to adversely affect markets, issuers, and/or foreign exchange rates in other countries. These disruptions could prevent the Strategy from executing advantageous investment decisions in a timely manner and could negatively impact the Strategy’s ability to achieve its investment objective. Any such event(s) could have a significant adverse impact on the value and risk profile of the Strategy.
Index performance returns do not reflect any management fees, transaction costs, or expenses. Indices are unmanaged, and one cannot invest directly in an index.
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