Launch Alert: RiverPark Next Century Growth Fund

By David Snowball

On June 30, 2023, RiverPark Funds launched the RiverPark/Next Century Growth Fund (RPNCX/RPNIX) in collaboration with Next Century Growth Investors, LLC. The Fund’s stated objective is to seek long-term capital appreciation by investing primarily in small-capitalization U.S. equity securities.  NCG was founded in 1998, is headquartered a bit northwest of the Twin Cities in Plymouth, Minnesota, and manages $1 billion in assets. About 40% of those assets are in their small-cap strategy, which the new RiverPark fund embodies.

The fund will be managed by Thomas Press, founder, CEO, and long-ago Jundt Associates manager (Jundt was a premier small growth fund manager in the ‘90s); Robert Scott, president and lead on their micro-cap strategy, which has beaten its benchmark by 1000 bps a year for 20 years; Peter Capouch, chief operating officer; Kaj Doerring, formerly of ThinkEquity Partners; and Tom Dignard, a relatively new member of the team. Mr. Press, like my son, has a degree from the University of St. Thomas. The rest are getting by with credentials from places like Harvard, Yale, and Concordia.

Next Century pursues a sort of quality growth strategy. Their explanation is pretty clear:

We seek to invest in the fastest-growing and highest-quality companies in America. We believe a portfolio of high growth companies, combined with a strong sell discipline, will lead to a compounding of portfolio value over time.

“Quality” is a combination of a strong competitive position, a solid balance sheet, and a strong management team. “Growth” focuses on consistent 15%+ organic revenue growth. In addition, the portfolio has an ESG screen. They typically have 40-60 holdings in fast-growing sectors, typically have small initial positions, and limit position size and sector overweights.

The strategy has a splendid long-term record. The small cap strategy has returned 12.3% annualized over the past 20 years. If that record were recorded by a mutual fund, it would be the second-best performing small cap growth fund among the 142 in existence. The only better performing small growth fund is a microcap, which is a different asset class. Accepting that argument, this quite likely would have been the best small growth fund of the 21st century.

The 20-year number appears not to be a fluke. NCG’s small cap composite has outperformed its benchmark for the past 1-, 3-, 5-, 10-, 15-, and 20-year periods, as well as since inception in 1999. In addition, all four of NCG’s strategies report substantially higher performance than their peers over very long periods.

  20-year APR 20-year benchmark  
Small Cap 12.3% 9.2% Russell 2000 Growth Index
Micro Cap 16.4% 6.6% Russell Microcap Growth Index
SMid Cap 13.0% 10.3% Russell 2500 Growth Index
Large Cap 12.9% 11.5% Russell 1000 Growth Index

RiverPark was launched by alumni of Baron Partners, a premier small cap growth investor. They began with two growth funds (one sub-advised by Wedgwood) and one conservative income fund (short-term high yield, subadvised by Cohanzick). In seeking a market niche, they imagined themselves having provided “alternative strategies for the mass affluent.” That latter strategy was pretty much disastrous, at least judged by the number of funds that RiverPark has had to liquidate. As such, it’s sort of encouraging to see them return to a focus on a straightforward growth strategy.

The fund’s homepage is understandably sparse, and the Next Century Growth site is not notably richer, which might reflect their greater reliance on person-to-person contact when discussing their strategies. The most useful doc might be the Small Cap Strategy factsheet, which is at strategies / small cap.

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About David Snowball

David Snowball, PhD (Massachusetts). Cofounder, lead writer. David is a Professor of Communication Studies at Augustana College, Rock Island, Illinois, a nationally-recognized college of the liberal arts and sciences, founded in 1860. For a quarter century, David competed in academic debate and coached college debate teams to over 1500 individual victories and 50 tournament championships. When he retired from that research-intensive endeavor, his interest turned to researching fund investing and fund communication strategies. He served as the closing moderator of Brill’s Mutual Funds Interactive (a Forbes “Best of the Web” site), was the Senior Fund Analyst at FundAlarm and author of over 120 fund profiles. David lives in Davenport, Iowa, and spends an amazing amount of time ferrying his son, Will, to baseball tryouts, baseball lessons, baseball practices, baseball games … and social gatherings with young ladies who seem unnervingly interested in him.