Growth: Small Cap Fundamental Growth

Information as of 3/31/2017

Strategy Highlights

  • The Small Cap Fundamental Growth strategy is benchmarked to the Russell 2000® Growth Index.
  • Companies in the portfolio typically have a growing investment base with strong or improving cash flows.
  • The Portfolio Manager seeks companies, that in his opinion, have a sustainable competitive advantage, intrinsic value in excess of the market and a favorable macro environment.
  • Portfolios generally demonstrate a higher level of cash-flow return on investment and a greater spread to the cost of capital than the Russell 2000® Growth Index.
  • Portfolios are actively managed using a bottom-up investment approach and the Portfolio Manager does not attempt to time the market, generally holding less than 5% cash.
  • The Portfolio Manager’s approach seeks to balance the risk/reward aspect of investing through portfolio construction, monitoring and diversification. Portfolios hold between 55-90 stocks with no one stock typically exceeding 5%.

Objective

To outperform the Russell 2000® Growth index by identifying small cap companies with a growing asset base and a stable or growing return on invested capital. We seek to identify these companies at valuation levels that allow for significant price appreciation.

Small Cap Fundamental Growth | Annualized Returns as of 3/31/2017

† Not Annualized. Source: Advent APX.

Quarterly Fact Sheet

Download a detailed quarterly strategy fact sheet (pdf) which includes the Annual Disclosure Presentation.

Download PDF
External Link

Although the statements of fact and data in this report have been obtained from, and are based upon, sources that the Firm believes to be reliable, we do not guarantee their accuracy, and any such information may be incomplete or condensed. All opinions included in this report constitute the Firm’s judgment as of the date of this report and are subject to change without notice. This report is for informational purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security. Past performance is not a guarantee of future results.

Performance returns presented Gross of Fees do not reflect the deduction of investment advisory fees. A client’s return will be reduced by the advisory fees as described in the Form ADV Part 2A and other expenses incurred by the account. For example, an annual advisory fee of 1% compounded quarterly over 10 years will reduce a gross 14.44% annual return to a net 13.24% annual return. Form ADV Part 2A is available upon request. Past performance is not indicative of future results.

The performance figures reported herein are unaudited, may be based upon information obtained via electronic data sources (“feeds”) and may be subject to change. Data feeds from many of KCM clients’ selected custodians are obtained through a third party, and are used to compare custodial data to KCM’s client account records as frequently as daily. Monthly, KCM reviews clients’ account holdings along with cash and share quantities against the custodial statements. In some instances, variances may exist between final audited custodial information and the information KCM obtains via such data feeds. All variances are typically reconciled to the applicable account no later than each month-end.

Composite specific data provided within this presentation has been calculated from accounts that are discretionary as defined in this paragraph. The assets shown are derived only from discretionary accounts. Non-discretionary accounts, as defined by KCM, are accounts that are not included in the composite due to one or any combination of the following criteria: there were significant cash inflows or outflows within the account; the account’s asset level did not meet the minimum requirement to remain in the composite; the account assets are managed by others using our non-discretionary model. The temporary removal of such an account occurs at the beginning of the month and the account re-enters the composite the month after the criteria has been met.

Russell Investment Group is the source and owner of the Russell Index data contained or reflected in this material and all trademarks and copyrights related thereto. The presentation may contain confidential information and unauthorized use, disclosure, copying, dissemination or redistribution is strictly prohibited. This is a presentation of Kennedy Capital Management, Inc. Russell Investment Group is not responsible for the formatting or configuration of this material or for any inaccuracy in Kennedy Capital Management’s presentation thereof.

The Russell 2000® Growth Index is used as the benchmark. The Index is unmanaged and represents total returns including reinvestment of dividends. The benchmark is used for comparative purposes only and generally reflects the comparable risk or investment style of the Firm’s strategy. The investment portfolios underlying the Index are different from the investments in the portfolios managed by the Firm. Certain accounts may also use other benchmarks not listed in the Annual Disclosure Presentation. The Composite Disclosure Presentation does not cover the benchmark returns included in the Annual Disclosure Presentation.

The Russell 2000® Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. It includes those Russell 2000® companies with higher price-to-value ratios and higher forecasted growth values. The Russell 2000® Growth Index is constructed to provide a comprehensive and unbiased barometer for the small-cap growth segment. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small-cap opportunity set and that the represented companies continue to reflect growth characteristics.

John Rackers

Portfolio Manager

John Rackers is the Portfolio Manager of the Small Cap Fundamental Growth, SMID Cap Growth, and Mid Cap Growth portfolios. John began his investment career in 1991 and joined KCM in May 2012. In 2007, prior to joining KCM, he was a senior portfolio manager at Missouri Valley Partners, a subsidiary of Stifel Financial Corporation. In 2003, John co-founded Pearl Street Capital Group as the managing partner and portfolio manager. He received a BSBA degree from the University of Missouri – Columbia and an MBA from the University of Notre Dame. He has also passed the Uniform Investment Advisor Law examination.

Chad Hoffman

Assistant Portfolio Manager, Research Analyst

Chad Hoffman is the Assistant Portfolio Manager for the Small Cap Fundamental Growth, SMID Cap Growth, and Mid Cap Growth strategies. He also serves as a Research Analyst at KCM, responsible for selecting and monitoring securities within the information technology sector of KCM’s universe. He joined Kennedy Capital in May 2012. Chad began his investment career in 1998, and prior to joining KCM he worked as an equity research analyst for 8 years and as an analyst and co-portfolio manager on Small Cap Growth for an additional 3 years at Missouri Valley Partners, a subsidiary of Stifel Financial Corporation. He received a BS, summa cum laude, in Business Administration with a concentration in Finance from Saint Louis University and has passed the Uniform Investment Advisors Law examination.

Garrett Brinton

Equity Trader

Garrett Brinton, is the principal Equity Trader for the Micro Cap, Small Cap Fundamental Growth, SMID Cap Growth, ESG Impact, and Mid Cap Growth strategies. Prior to joining KCM in 2016, Garrett was a Portfolio Manager Associate with Commerce Trust Company for two years.  Before joining Commerce Trust, he was a Corporate Banking and Financial Credit Analyst at Commerce Bank, Inc.  He earned his BSBA from the University of Missouri - Columbia with an emphasis in Finance and Banking along with an emphasis in Real Estate.