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Asset Class/Style: |
U.S. Equity / Growth
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Primary Benchmark: |
Russell 2500™ Growth Index |
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Inception Date: |
10/1/2002 |
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Description and Objectves |
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- Through fundamental research create a portfolio of 70 to 90 small and mid cap companies with superior future growth rates and quality metrics
- Outperform benchmark index on an annual basis
- Rank in top half of investment peer group on an annual basis
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Investment Process |
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- Idea Generation: We search/screen the small and mid cap universe for companies with superior growth rates, earnings consistency, and earnings quality.
- Security Analysis: Sector/industry specialists conduct fundamental research on potential stock candidates; the mispricing of a stock is an important emphasis
- Portfolio Construction: Final evaluation is based on such factors as a risk-reward ratio, conformity with the strategic outlook on the market and economy, and the impact on sector weights and portfolio characteristics
- Portfolio Management: Initial position sizes typically between 0.75% and 1.5% with a 5% maximum position; we limit sector risk by maintaining weights, generally between 50% and 150% of benchmark weight for sectors representing greater than 10% of index, and between 0% and 15% for sectors representing less than 10% of index
- Sell Disciplines: Strong sell disciplines focus on fundamental change alerts, price target monitoring, unfavorable comparison to other stocks, and technical change alerts
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Risk Management |
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- Limit sector risk and position sizes
- Monitor Risk Factors: Continuously monitor correlations between portfolio and economic factors; perform sensitivity analysis (impact of changing factors on portfolio return)
- Maintenance Process: Build a late quarter mosaic view of expectations for each portfolio company and the risks associated with not meeting expectations; analysts prepare a "preview" outlining most important issues for each company; after earnings are reported, a "recap" is compiled summarizing the results
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Investment Team
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