The fund seeks primarily capital appreciation in the long term and secondarily income by investing in small-and mid-size companies in the United States.
The investment process starts with a list of companies in the benchmark index and the research team utilizes quantitative techniques and fundamental analysis to identify investment opportunities.
Next, the research team focuses on companies that are trading at significant discounts to their estimate of private market value.
The team evaluates private market value on the basis of estimated future free cash flow.
In addition, the team seeks to identify early signs of potential changes in a company’s ability to generate sustainable free cash flow as well as its potential to grow.
The team also assesses the accounting practices and financial statements of companies.
The research process is driven by fundamental analysis of one stock at a time. In selecting securities for the portfolio, the research team focuses on companies with unique business fundamentals and a competitive edge.
Then the manager constructs a portfolio of stocks from a list of companies favored by the research team and allocates capital based on its conviction level.
Also, the fund may invest up to 20% of its net assets in foreign securities that are traded in U.S. dollars.
