Investment Philosophy

The team focuses on small and micro-cap companies with characteristics such as inefficiently valued assets, turnarounds, accelerating growth and overlooked leaders, that can potentially benefit from catalysts such as new management, a more favorable business cycle, product innovation, and/or margin improvement. The team believes fundamental research can uncover opportunities to invest in companies that are attractively valued and have the potential to benefit from catalysts for future earnings recovery.

  • True Small Cap Specialists

    The seasoned management team has deep experience leveraging opportunities offered by small and micro-cap companies across market cycles.

  • Catalyst-Driven Value

    The Small Cap Opportunity Fund employs in-house fundamental research in an effort to identify temporarily mispriced companies with potential catalysts for earnings-growth normalization.

  • Volatility Leads to Potential Opportunity

    Small cap market inefficiencies can create attractive opportunities for disciplined active investors, and broad portfolio diversification helps mitigate potential downside in a volatile investment universe.

  1. *Price/Earnings Ratio is calculated using weighted median method.

  2. **Active share measures the percentage of a fund’s portfolio holdings differing from its benchmark. Active share can range from 0% (index fund) to 100% (no commonality with the benchmark index).

Our Process

The team uses a bottom-up process, building the portfolio stock by stock.

  • 01

    Narrow the Universe

    The team narrows the approximately 3,000 US Small Cap Stock Universe using their historical investment experience, by attending management meetings, conference calls, investment conferences, and by following industry trade journals.

  • 02

    Conduct Fundamental Research

    The team aims to identify companies that have low multiples and a potential catalyst for improvement.

    Low Multiples
    • The team seeks to uncover companies that they believe are trading at a significantly discounted price/book or price/sales.
    • Holdings typically fall into at least one category below:
      • Turnarounds
      • Inefficiently valued assets
      • Accelerating growth
      • Overlooked leaders

    Catalyst for Improvement
    • Utilizing the team’s analysis and deep institutional knowledge of competitors, industry and existing holdings used for comparisons, they seek to determine the likelihood of execution success.
    • Some potential catalysts the team look for that could lead to a company’s return to normalized earnings are:
      • New management
      • More favorable business cycle
      • Margin improvement
      • Product innovation
  • 03

    Construct Portfolio

    • Diversified with approximately 180–300 holdings
    • Typical holdings less than $3bn market cap (at purchase)
    • Annual turnover expected 35%–45%

Competitive Advantage

  • Seasoned team of true small cap specialists
  • Time-tested, catalyst-driven value approach
  • Experience to find opportunity in short- and long-term dislocations due to volatility
  1. Disclosures

  2. Diversification does not guarantee investment returns and does not eliminate the risk of loss.

  3. The above are not investment guidelines or restrictions and are subject to change without notice.

  4. Not all companies held in this Fund will meet the criteria listed.

  5. Small Cap Opportunity Fund Inception dates: A Shares 07/01/2021, I Shares 04/27/2021, R6 Shares 07/01/2021.

  6. Inception date shown for the Russell 2000 Value and Russell 2000 Indices matches the Small Cap Opportunity Class I shares, which have the oldest since inception date for the Small Cap Opportunity Fund.

  1. Definitions

  2. Russell 2000® Index: The Russell 2000® Index is an unmanaged index that measures the performance of the 2000 smallest companies in the Russell 3000 Index and is not available for purchase.

  3. Russell 2000® Value Index: Russell 2000® Value Index measures the performance of small-cap value segment of the US equity universe. It includes those Russell 2000 companies with lower price-to-book ratios and lower forecasted growth values.