SMID Cap Core

Information as of 9/30/2017

Strategy Highlights

  • The SMID Cap Core portfolios are benchmarked to the Russell 2500™ Index.
  • Portfolios generally demonstrate valuations below and growth characteristics at or above those of the Russell 2500™ benchmark.
  • The Portfolio Manager seeks companies that he believes generate superior cash-flow returns on invested capital.
  • Portfolios are actively managed using a bottom-up investment approach, and the Portfolio Manager does not attempt to time the markets.
  • Companies in the portfolios generally have relatively lower analyst coverage and institutional ownership than other comparable companies in the benchmark.
  • Portfolios are typically fully invested, generally holding less than 10% cash.
  • Our approach seeks to minimize risk through diversification. Portfolios generally hold between 95 to 125 stocks, with no one stock typically exceeding 5% of a total portfolio.

Objective

The objective of the SMID Cap Core strategy is to consistently outperform the Russell 2500™ Index over a complete market cycle. Portfolios are comprised of a combination of smid cap growth and smid cap value stocks, resulting in portfolios with characteristics in-line with those of the Russell 2500™ benchmark. Many smid cap companies have solid growth prospects, stable cash flows and strong balance sheets, but lack Wall Street sponsorship or are misunderstood by other investors. This creates pricing inefficiencies, and the Portfolio Manager seeks to exploit these opportunities.

SMID Cap Core | Annualized Returns as of 9/30/2017

† Not Annualized. Source: Advent APX.

Quarterly Fact Sheet

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

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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 2500™ Index measures the performance of the small to mid-cap segment of the U.S. equity universe, commonly referred to as “smid” cap. The Russell 2500 Index is a subset of the Russell 3000® Index. It includes approximately 2500 of the smallest securities based on a combination of their market cap and current index membership. The Russell 2500 Index is constructed to provide a comprehensive and unbiased barometer for the small to mid-cap segment. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true small to mid-cap opportunity set.

The Russell 2500™ 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 Independent Verifier’s Report does not cover the benchmark returns included in the Annual Disclosure Presentation.

Donald Cobin, CFA®

Portfolio Manager, Director

Donald Cobin, CFA®, a Vice President and Director, is the Portfolio Manager for the Small Cap Core and SMID Cap Core strategies. Don began his investment career in 1993 and served as Director of Research at Delaware Investments and prior to that as an investment analyst at Conseco and WR Huff. From 2002 until 2007, Don was one of five senior investment professionals at Matador Capital Management, a value-focused hedge fund with long/short equities and limited distressed debt investments. Don joined KCM in February 2007 as an analyst and later became Portfolio Manager in November 2007. Mr. Cobin earned a BA from Emory University and his MBA from the Wharton School of the University of Pennsylvania.

Christian McDonald, CFA®

Portfolio Manager, Asst. PM, Research Analyst

Christian McDonald, CFA®, is the Portfolio Manager for the ESG Impact Strategy. He also serves as the Assistant Portfolio Manager for the Micro Cap and SMID Cap Core strategies. In addition, Chris serves as a Research Analyst at KCM, primarily responsible for selecting and monitoring securities within the industrials sector of KCM’s universe. He joined KCM in November 2005. Prior to joining KCM, Chris spent six years in various finance functions at The Boeing Company.  He graduated summa cum laude with a BS in Finance and Operations Management from Washington University in St. Louis and earned an MBA from the UCLA Anderson School of Business.

Patrick Kelley

Head Equity Trader

Patrick Kelley is the Head Equity Trader responsible for overseeing administration, technology, and management issues for the trading department. Pat is responsible for coordinating the trading requirements for all client accounts and supervising the quality of broker executions and services. He also reviews order directions on the results of such monitoring. Pat is the principal Equity Trader for the Small Cap Value, Small Cap Core, SMID Cap Value, SMID Cap Core, Mid Cap Value, and All Cap Value strategies. Before joining KCM, Pat was both a listed block trader and an OTC trader for four years with KeyBanc Capital Markets in Cleveland, Ohio. Pat has passed the General Securities Representative, the Uniform Securities Agent State Law, and the Equity Trader Limited Representative examinations. He received his BSBA in Finance and Management Information Systems from Ohio University.