SMID Cap Value

Information as of 6/30/2017

Strategy Highlights

  • The SMID Cap Value strategy is benchmarked to the Russell 2500™ Value Index.
  • The Portfolio Manager seeks companies that he believes generate superior cash-flow returns on invested capital.
  • The Portfolio Manager prefers companies that are reinvesting in their businesses.  As a result, portfolios regularly have a lower dividend yield than that of the benchmark.
  • Portfolios generally demonstrate valuations below and growth characteristics at or above those of the benchmark.
  • Portfolios are actively managed using a bottom-up investment approach, and the Portfolio Manager does not attempt to time the markets.
  • Portfolios are typically fully invested, generally holding less than 10% cash.
  • Our approach seeks to minimize risk through diversification. Portfolios generally hold between 80 and 120 stocks, with no one stock typically exceeding 5% of a total portfolio.

Objective

The objective of the SMID Cap Value strategy is to consistently outperform the Russell 2500™ Value Index over a complete market cycle. The Portfolio Manager first identifies small and mid cap companies generating above-average cash returns on invested capital. Within that universe, the Portfolio Manager seeks to identify companies that may be undervalued because they are under followed and/or misunderstood by other investors and the forecasts from our fundamental analysts project cash flows greater than those implied by the equity market.

SMID Cap Value | Annualized Returns as of 6/30/2017

† 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™ Value Index measures the performance of small to mid-cap value segment of the U.S. equity universe. It includes those Russell 2500™ companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2500™ Value Index is constructed to provide a comprehensive and unbiased barometer for the small to mid-cap value market. 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 and that the represented companies continue to reflect value characteristics.

The Russell 2500™ Value 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.

Frank Latuda, Jr., CFA®

Chief Investment Officer, Portfolio Manager, Director

Frank Latuda, Jr., CFA®, a Vice President, Director, and the Chief Investment Officer (CIO), is Portfolio Manager (PM) of the Small Cap Value, SMID Cap Value, Mid Cap Value, and All Cap Value strategies. As CIO, Frank also serves as the Chairman of the Investment Policy Committee. Frank began his investment career in 1992 and prior to joining Kennedy Capital, he was an analyst with Burns, Pauli, Mahoney Company. Frank joined Kennedy Capital as an equity analyst in 1997 and served as Director of Research from 1998 until 2000.  He has been a PM since October of 2000 when he took over the Small Cap Value strategy. Mr. Latuda earned a BS in Electrical Engineering from the University of Notre Dame, as well as an MS in Electrical Engineering and an MBA from the University of Illinois.

Gary Kauppila, CFA®

Assistant Portfolio Manager

Gary Kauppila, CFA®, is the Assistant Portfolio Manager for the Small Cap Value, SMID Cap Value, and Mid Cap Value portfolios. Gary began his investment career in 1995 and prior to joining Kennedy Capital, he served as an analyst, PM and CFO at Timeless Investment Management. Prior to his stint at Timeless Investment Management, Gary was affiliated with Chicago Asset Management, Northern Trust and William Blair & Co. He joined KCM in 2007 as an assistant portfolio manager. He graduated magna cum laude with a BS in Finance from Binghamton University.

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.