We believe that by investing in small cap companies that demonstrate long-term attractive business fundamentals, near-term profitability improvement potential, strong finances, capable management, and attractive/low valuation the Small Cap Value strategy can produce superior investment returns and risk control over time.
Strategy overview
Belief that strong absolute risk-adjusted returns can be generated over time by investing in neglected companies with:
- Sound long-term business fundamentals
- Near-term profitability improvement
- Low valuations at the time of purchase
Approach
Investment process
- Begin with universe of approximately 1,500 publicly traded companies with market capitalizations within the range of the Russell 2000 Value Index
- Intelligence pool includes more than 1,000 face-to-face company meetings per year
- In-depth and rigorous long-term fundamental research drives security selection
Portfolio construction
- Well-diversified portfolios holding 70-100 issues
- Majority of returns sought from stock selection
- Maximum in a single security: 5%
- Maximum in a single sector: 2x Russell 2000 Value Index weight
- Fully invested in equities – no market timing
- Low portfolio turnover: 30-50%