Category Archives: Stars in the shadows

Small funds of exceptional merit

Brown Advisory Sustainable Growth Fund (BAFWX/BIAWX/BAWAX), April 2019

By David Snowball

Objective and strategy

The managers seek long-term capital appreciation by investing in a concentrated portfolio of 30-40 mid and large capitalization companies that use sustainable business strategies (SBA) to drive future earnings growth.

They focus on finding companies whose sustainability strategies are generating tangible business results such as revenue growth, cost improvement, or enhanced franchise value. Such companies may enjoy competitive advantages from environmentally efficient design or manufacturing or offer Continue reading →

Marshfield Concentrated Opportunity (MRFOX), February 2019

By Dennis Baran

Objective and strategy

MRFOX seeks capital preservation and long-term growth of principal while targeting a pattern of performance that’s at variance with the market, different from it in as many ways as possible, and adds value on a risk-adjusted basis. The managers’ goal of avoiding the “closet index” trap while laying the groundwork for superior performance means

  • owning a thoughtful concentration of approximately 20 stocks
  • holding cash between of 0-25 percent while awaiting well-priced opportunities
  • steering clear of generic “consensus” stocks and
  • being freed from sector and market capitalization constraints

Continue reading →

Provident Trust Strategy Fund (PROVX), December 2018

By Dennis Baran

Objective and strategy

PROVX seeks long-term growth of capital. As a concentrated, non-diversified, bottom-up, multi-cap core growth equity fund, it aims to exceed the S&P 500 Index over full investment cycles, which are typically five to seven calendar years in length and contain both a 30% advance and a 20% decline.

The managers generally prefer to invest in large and medium capitalization stocks (namely, companies with at least $2 billion in market cap) but may also invest a portion in small capitalization companies.

Provident has the Continue reading →

Conestoga SMID Cap Fund (CCSMX & CCSGX), September 2018

By Dennis Baran

Objective and strategy

The managers seek long-term growth of capital favorable to its benchmarks with lower risk – specifically companies with 12-15% earnings growth potential for at least three years. They typically hold 40-60 SMid stocks whose valuations are attractive relative to their growth prospects. SMid caps have market capitalizations between $250 million and $12 billion, and are generally within the range of those in the Russell 2500 Growth Index.
Continue reading →

Zeo Short Duration Income (ZEOIX), July 2018

By Charles Boccadoro

“Perhaps time’s definition of coal is the diamond.”

Kahlil Gibran

Objective and Strategy

The Zeo Short Duration Income Fund (ZEOIX), previously known as the Zeo Strategic Income Fund, is a non-diversified, actively managed, total return, fixed-income fund that seeks …

  • “ … to deliver low volatility, risk-managed solutions for the prudent investor.”
  • “ … low volatility and absolute returns consisting of income and moderate capital appreciation.”
  • “ … long-term capital preservation, income and moderate capital appreciation across market environments.”
  • “ … low volatility, absolute returns in a long-only fixed income portfolio.”
  • “ … to deliver a consistent, low-volatility risk profile suitable for both short and long time horizons.”
  • “ … to deliver low volatility.”

Clearly, ZEOIX’s focus is Continue reading →

LS Opportunity Fund (LSOFX), July 2018

By David Snowball

Objective and strategy

LS Opportunity Fund pursues three goals: preserving capital, delivering above-market returns and managing volatility. “The secret,” says manager John Gillespie, “is to avoid large losses.” They invest, both long and short, in individual stocks; they do not short “the market,” they don’t use esoteric options and they don’t typically use ETFs. They normally will have 20-40 short positions and 50-70 long ones. The long portfolio is both all-cap and value-oriented, both of which are fairly rare. The short portfolio targets Continue reading →

Index Funds S&P 500® Equal Weight NoLoad (formerly Index Funds S&P 500® Equal Weight), (INDEX), June 2018

By David Snowball 

At the time of publication, this fund was named Index Funds S&P 500® Equal Weight.

Objective and strategy

The fund equally weights all of the stocks in the S&P 500 index and rebalances its portfolio quarterly.

Adviser

The Index Group, headquartered in Colorado Springs, Colorado. While they are legally permitted to Continue reading →

Prospector Opportunity (POPFX), May 2018

By David Snowball

Objective and strategy

The Opportunity Fund seeks capital appreciation. They apply a value-oriented discipline to micro-, small- and mid-cap stocks in the US and other developed markets. In general, the managers look for companies with long, consistent, predictable track records of free cash flow yield generation and healthy organic growth. They identify undervalued securities by starting with balance sheet strength but they also consider qualitative factors (e.g., quality of the management) and the presence of a Continue reading →

Guinness Atkinson Global Innovators (IWIRX), April 2018

By David Snowball

Objective and strategy

The fund seeks long term capital growth through investing in what they deem to be 30 highly innovative, reasonably valued, companies from around the globe. They take an eclectic approach to identifying global innovators. They read widely (for example Fast Company and MIT’s Technology Review, as well as reports from the Boston Consulting Group and Thomson Reuters) and maintain ongoing conversations with folks in a variety of industries. That leads them to identify a manageable set of themes (from artificial intelligence to clean energy) which seem to be driving global innovation. They then identify companies substantially exposed to those themes (about 1000), then weed out the financially challenged (taking the list down to 500). Having identified a potential addition to the portfolio, they also Continue reading →

FAM Value (FAMVX/FAMWX), March 2018

By David Snowball

Objective and strategy

The managers seek to maximize long-term return on capital. They can invest in firms of any size, but mostly invest in mid- to large-cap US firms and invest through both common stocks and convertibles. They pursue a patient value approach to investing which favors companies which meet at least one of these three criteria Continue reading →

Fuller & Thaler Behavioral Small-Cap Equity (FTHNX), November 2017

By David Snowball

Objective and strategy

FTHNX pursues long-term capital appreciation. The managers invest in a diversified US small cap equity portfolio. The managers seek out stocks where other investors are likely to make behavioral mistakes. If they conclude that an investor mistake is likely and the company has solid fundamentals, the portfolio managers generally buy the stock. They sell when the misbehavior has run its course, which tends to lead to a high turnover portfolio. That said, they do not automatically buy or sell based on a single security’s characteristics; they impose a risk management overlay that helps control exposures to sectors, size, and other characteristics. The fund currently holds Continue reading →

Evermore Global Value (EVGBX/EVGIX), August 2017

By David Snowball

Objective and Strategy

Evermore Global Value Fund seeks capital appreciation by investing in a global portfolio of 30-40 securities. The Fund’s special situations strategy is to identify companies trading at substantial discounts to their estimates of intrinsic value, and where catalysts exist to close these gaps.  Although they are opportunistic investors and can buy securities of any market capitalization, their sweet spot has been in micro to mid-cap opportunities.  They also have the ability to invest beyond the equity market in “less liquid” investments, such as distressed debt, can hold short positions in merger/arbitrage situations or to hedge market risk, and are willing to hold a up to 15% in cash.

Adviser

Evermore Global Advisors, LLC. Evermore was founded Continue reading →

RiverPark Short Term High Yield Fund (RPHYX/RPHIX), May 2017

By David Snowball

This is an update of a profile first published in July 2011.

Objective

The fund seeks high current income and capital appreciation consistent with the preservation of capital, and is looking for yields that are better than those available via traditional money market funds. They invest primarily in high yield bonds with an effective maturity of less than three years but can also have money in short term debt, preferred stock, convertible bonds, and fixed- or floating-rate bank loans. 

Adviser

RiverPark Advisers. Executives from Baron Asset Management, including Continue reading →

Northern Global Tactical Asset Allocation (BBALX), April 2017

By David Snowball

Objective

The fund seeks a combination of growth and income. Northern Trust’s Investment Policy Committee develops tactical asset allocation recommendations based on economic factors such as GDP and inflation; fixed-income market factors such as sovereign yields, credit spreads and currency trends; and stock market factors such as domestic and foreign earnings growth and valuations. The managers execute that allocation by investing in other Northern funds and ETFs. As of 12/31/2016, the fund held two Northern funds and nine ETFs.

Adviser

Northern Trust Investments is part of Northern Trust Corp., a bank founded in 1889. The parent company provides Continue reading →

iMGP Alternative Strategies Fund (formerly Litman Gregory Masters Alternative Strategies), (MASFX/MASNX), April 2017

By Charles Boccadoro 

At the time of publication, this fund was named Litman Gregory Masters Alternative Strategies.

Objective and Strategy

The Litman Gregory Masters Alternative Strategies Fund seeks to provide attractive “all-weather” returns relative to conservative benchmarks, but with lower volatility than the stock market. It seeks this objective through a combination of skilled active managers, high conviction “best ideas,” hedge fund strategies, low beta, and low correlation to stock and bond market indices.

The fund’s risk-averse managers, asset allocations, and hedging strategies position it as an alternative to traditional 80/20% or 60/40% bond/stock portfolios for conservative or Continue reading →

Grandeur Peak Global Stalwarts/Grandeur Peak International Stalwarts (GGSYX/GISYX), April 2017

By Samuel Lee

Objective and strategy

Grandeur Peak calls fast-growing, high-quality stocks with market capitalizations above $1.5 billion “stalwarts”. They are too big for Grandeur Peak’s small- and micro-cap funds, but too good to let go, so Grandeur Peak rolled out two funds to hold them.

It is a little appreciated fact that most of the gains in the stock market are driven by a handful of runaway winners; most stocks earn sub-par returns. Grandeur Peak’s strategy is to try to find them when they’re small—the tinier, the better—and ride them up. Founder Robert T. Gardiner made an ungodly sum of money applying this strategy for the lucky shareholders of Wasatch Micro Cap (WMICX) from 1995 to 2006. Continue reading →

Homestead Growth (HNASX), March 2017

By David Snowball

Objective and strategy

The fund seeks long-term capital appreciation by investing, primarily, in domestic large cap growth stocks. The portfolio is diversified (typically 60-75 names) but not sprawling. Direct foreign investment is currently about 5.6%, which is modest but also above-average for its Morningstar peer group.

In general, the fund’s subadvisor T. Rowe Price targets:

  • companies with characteristics that support sustainable double-digit earnings growth and
  • high-quality earnings, strong free cash flow growth, shareholder-oriented management, and rational competitive environments

Their preference is for firms with a lucrative and defensible niche which allows them to Continue reading →

Pin Oak Equity (POGSX), March 2017

By David Snowball

Objective and strategy

Pin Oak is a concentrated, all-cap fund. The portfolio currently holds 35 securities with much more exposure to small- and mid-cap stocks than its peers Portfolio construction begins with macro-level assessments of the economy, proceeds to analyses of industries and sectors, and then ends by buying and holding the most attractive stocks in the most attractive sectors. Oak Associates has a long and adamant tradition in favor of buying-and-holding just a few best-of-class stocks, so turnover is generally below 20%. Half of the portfolio’s 35 current stocks have been there for between five and 15 years.

Adviser

Oak Associates, ltd. Founded in 1985 and headquartered in Continue reading →

AMG GW&K Global Allocation Fund (formerly AMG Chicago Equity Partners Balanced), (MBEAX), February 2017

By David Snowball 

At the time of publication, this fund was named AMG Chicago Equity Partners Balanced.

Objective and strategy

The managers aim to provide “high total investment return, consistent with the preservation of capital and prudent economic risk.” The fund normally holds 50-75% in equities with the remainder in bonds and cash. The equity sleeve is mostly mid- to large-cap US stocks; direct foreign investment is minimal. The income sleeve is mostly high quality, intermediate-term bonds. The managers have the freedom to invest up to 25% in high-yield securities or in longer maturity bonds but, mostly, don’t.

Adviser

AMG (Affiliated Managers Group) advises Continue reading →