Small Capitalization Growth
Universe: Our investment universe includes growth oriented companies with market capitalizations below $3 billion, including exposure to Emerging Growth opportunities. Emerging Growth is a large, dynamic, undiscovered, under followed, under researched and often under represented universe of small capitalization growth opportunities representing approximately one-third of U.S. exchange traded companies with market capitalizations under $3 billion.
Return Profile: Our fundamentally-based, time-tested investment process has generated favorable risk adjusted returns over a variety of market cycles and environments.
Historically our Small Capitalization Growth portfolios have performed relatively well during periods of stable to declining risk premiums and improving liquidity. In addition, our Growth vs. Valuation and Return vs. Risk framework coupled with an emphasis on solid balance sheets has historically protected capital during market declines.
Our process tends to be less effective when there is a sudden shift in risk premiums or in narrower markets that focus on high growth, high value, and momentum or “story” type stocks. This tends to occur near the end of market cycles when risk premiums reach low levels and liquidity is abundant.
Investment Process: Growing companies create wealth. Revenues and earnings growth drives stock prices and solid foundations provide longer term, sustainable growth and appreciation. Our process includes a thorough analysis of the income statement as well as the balance sheet, cash flows, and capital structure to ensure the company has a solid base from which it can grow.
Investment basis drives the return profile. Small and Emerging Growth stocks can often become mispriced when there is lack of awareness of a company’s growth profile and/or when investor growth expectations are anchored too low providing opportunities to purchase growth at attractive valuations.