Investment Philosophy

The team seeks to invest in small and midcap companies that have become disconnected from their normalized valuations and have an identifiable catalyst for improvement. The smid cap strategy’s broad opportunity set promotes the potential for an attractive risk/return tradeoff and positions the team to capture the evolution of quality businesses as they grow.

  • Brand

    Transitional Company Focus

    The seasoned management team has deep experience identifying value in companies’ life cycles through all markets.

  • Market

    Catalyst-Driven Value

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

  • Global View

    Volatility Leads to Potential Opportunity

    The smid cap market may create attractive opportunities within security-level volatility due to short-and long-term dislocations in the market for disciplined active investors. It seeks to provide an enhanced risk/return trade-off by combining investment opportunities from both the small and midcap market segments.

Our Process

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

  • 01

    Narrow the Universe

    The team narrows the approximately 4,000 US small and midcap 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
      • Product innovation
      • Margin improvement
  • 03

    Construct Portfolio

    • Selective approach with approximately 70-100 positions
    • Typical holding has a market cap of $4-$7B
    • Annual turnover expected 15%–25%

Competitive Advantage

  • Seasoned team, experienced in identifying value in companies' life cycles through all markets
  • 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. First Eagle U.S. Smid Cap Opportunity Fund commenced on August 15, 2022.

  6. Inception dates shown for the Russell 2500TM Value and Russell 2500TM Indices match that of the U.S. Smid Cap Opportunity Fund.

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  1. Definitions

  2. Russell 2500TM Index is a market-cap-weighted index that includes the smallest 2,500 companies covered in the broad-based Russell 3000 sphere of United States-based listed equities. All 2,500 of the companies included in the Index cover the small- and mid-cap market capitalizations.

  3. Russell 2500TM Value Index measures the performance of small-cap value segment of the US equity universe. It includes those Russell 2500 companies with lower price-to-book ratios and lower forecasted growth values. 

  4. The Russell 3000® Index is an unmanaged index that measures the performance of the 3000 largest U.S. companies based on market capitalization, which encompasses 98% of the total market capitalization of the publicly traded U.S. equity market, and is not available for purchase.

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Fund Management

Our Process

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

  • 01

    Narrow the Universe

    The team narrows the approximately 4,000 US small and midcap 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:
      • Inefficiently valued assets
      • Turnarounds
      • 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
      • Product innovation
      • Margin improvement
  • 03

    Construct Portfolio

    • Selective approach with approximately 70-100 positions
    • Typical holding has a market cap of $4-$7B
    • Annual turnover expected 15%–25%

Competitive Advantage

  • Seasoned team, experienced in identifying value in companies' life cycles through all markets
  • Time-tested, catalyst-driven value approach
  • Experience to find opportunity in short- and long-term dislocations due to volatility