SMA Inception Date: 12/31/2007
Objective: Long-term capital appreciation

Why Choose This SMA?

  • As a high active share, small cap growth equity allocation.
  • As an alpha-generating small cap growth position based on strong bottom-up fundamental analysis.
  • Diversification factors include traditional sector and industry as well as across the different stages of the growth life cycle.

Investment Strategy

  • The team seeks to evaluate management’s ability to allocate capital and expand the company’s balance sheet, in addition to the reinvestment opportunities for the capital being produced.
  • The team looks for companies with emerging or expanding moats, as these moats improve cash flow return on investment (CFROI®) and increase the spread over the cost of capital.
  • The portfolio is diversified across all stages of the growth life cycle.
  • The managers use margin of safety analysis, stress testing, and multiple levels of diversification to mitigate risk.
  • Above-average returns can only be achieved by structuring portfolios distinct from market indices. As a result, the strategy typically holds 55-75 companies, concentrated around the managers’ best ideas.

Portfolio Managers

John Rackers

Portfolio Manager and Business Analyst

Chad Hoffman

Portfolio Manager and Business Analyst
CFROI® is a registered trademark of HOLT®, a unit of Credit Suisse.