The Microcap Core Equity strategy seeks to provide superior long-term investment returns compared to the Russell Microcap Index, while taking a low risk approach to microcap investing. We believe that portfolios of neglected microcap companies with low valuations, long-term attractive business fundamentals and near-term profitability improvement potential should produce superior absolute and risk-adjusted returns over time.
Strategy overview
Belief that strong absolute risk-adjusted returns can be generated over time by investing in neglected companies with:
- Strong long-term business fundamentals
- Near-term profitability improvement
- Low valuations at the time of purchase
Our approach
Investment process
- Begin with universe of approximately 3000 publicly traded companies with market capitalizations within the range of the Russell Microcap Index
- Emphasis on companies in the lower end of the market cap scale, between $50 and $500 million, with little analyst coverage and not as efficiently valued
- In-depth and rigorous long-term fundamental research drives security selection
Portfolio construction
- Well diversified portfolios: 60-90 issues
- Majority of returns from stock selection
- Maximum in a single security: 5%
- Maximum in a single security: 2x Russell Microcap Index weight
- Fully invested in equities; no market timing
- Low portfolio turnover: 30-50%