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%