Bank Sector

Strategy Highlights

  • The Bank Sector strategy strategy is benchmarked to the Russell 2000® Value Index Bank Subsector.
  • The Portfolio Manager generally seeks companies that he believes has an upcoming catalyst(s) for outperformance vs. peers.
  • 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 5% cash.
  • Portfolios generally hold between 40 and 60 stocks, with no one stock typically exceeding 5% of a total portfolio.

Objective

The objective of the Bank Sector strategy is to consistently outperform the Russell 2000® Value Index Bank Subsector over a complete market cycle. The Portfolio Manager first identifies companies that have an upcoming catalyst(s) to drive performance. Within that universe, the manager seeks to identify companies where this catalyst(s) is not currently reflected in its valuation as many small/micro cap banks are underfollowed and/or misunderstood by other investors.

Click here to view the current Bank Sector Commentary.

Bank Sector | Annualized Returns as of 3/31/2024

† Not Annualized. Source: Advent APX.

Quarterly Fact Sheet

Download a detailed quarterly strategy fact sheet (pdf). Download PDF

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.  A complete list of all securities recommended by KCM in the preceding year, a fully compliant GIPS composite report, and the list of composite descriptions are available upon request from KCM at 10829 Olive Blvd., Suite 100. St. Louis, MO, 63141.

Kennedy Capital Management LLC (“KCM”) is a Delaware limited liability company headquartered in Missouri. KCM is registered as an investment adviser with the Securities and Exchange Commission under the Investment Advisers Act of 1940. Registration with the SEC does not imply any level of skill or training.  Clients of the Firm include U.S. corporations, pension and profit sharing funds, colleges and universities, trusts, not-for-profit organizations, foundations, and individuals.  KCM claims compliance with the Global Investment Performance Standards (GIPS®).  GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein.  (GIPS®) are a set of standardized, industry-wide ethical principles that provide investment firms with guidance on calculating and reporting their investment results to prospective clients to ensure fair representation and full disclosure of an investment firm’s performance history.

Bank Sector Strategy Composite is invested in securities of value and growth companies that have a market capitalization ranging from microcap to small cap, generally reflective of the Russell 2000® Value Index Bank Subsector. The U.S. Dollar is the currency used to express performance.

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.

Returns are presented gross and net of investment advisory fees and include the reinvestment of all income. Gross of fees returns reflect the deduction of transaction costs and custodian fees but do not reflect the deduction of investment advisory fees.  Net of fee performance is calculated using gross returns less the actual applicable annual management fee applied monthly.  Past performance is not indicative of future results. A client’s return will be reduced by the advisory fees as described in 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 13.32% annual return.  Form ADV Part 2A is available upon request.  

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 third party sources 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. Generally, any such variances are researched and reconciled within thirty days of the period end.

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.  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® Value Index Bank Subsector measures the performance of micro- to small-cap value segment of the U.S. equity universe. It includes those Russell 2000® companies with lower price-to-book ratios and lower forecasted growth values. The Russell 2000® Value Index Bank Subsector is constructed to provide a comprehensive and unbiased barometer for the micro-cap and small-cap value 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 value characteristics. The investment portfolios underlying the Index are different from the investments in the portfolios managed by the Firm. The Russell 2000® Value Index Bank Subsector is defined by FTSE Russell using the Industry Classification Benchmark (ICB) standard. ICB is a globally recognized standard, operated and managed by FTSE Russell for categorizing companies and securities using a detailed and comprehensive structure for sector and industry analysis, facilitating the comparison of companies across four levels of classification and national boundaries. The classification system allocates companies to the Subsector whose definition closely describes the nature of its business as determined from the source of its revenue or the source of the majority of its revenue where available. FTSE Russell is responsible for maintaining ICB, and for the classification of all companies within ICB.

The Russell 2000® Value Index Bank Subsector 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 I the portfolios managed by the Firm. Certain accounts may also use other benchmarks not listed in the GIPS composite report. The Verification and Performance Examination Report does not cover the benchmark returns included in the GIPS composite report.  Investors cannot invest directly in an Index.

Brian Hagler

Portfolio Manager, Research Analyst

BRIAN HAGLER, Portfolio Manager for the firm’s Bank Sector strategies and Research Analyst. As a Research Analyst at KCM, Mr. Hagler is responsible for selecting and monitoring securities within the financials (banks and specialty) sector of KCM’s universe. Prior to joining KCM in November 2004, Brian worked as an equity research analyst for Bank of America Capital Management specializing in banks and thrifts.  Mr. Hagler also held previous roles at Bank of America as a senior financial analyst in the finance group and as an underwriter in the wealth management division. Brian earned a B.S.B.A. in Finance and an M.B.A. from Southern Illinois University at Edwardsville.

Ithiel Turrado, CFA®

Research Analyst

ITHIEL TURRADO, CFA®, Research Analyst, is responsible for selecting and monitoring securities within the financials sector of KCM’s universe. Additionally, Mr. Turrado currently serves as an Adjunct Professor of Finance at Lindenwood University.  Prior to joining KCM in December 2022, Mr. Turrado spent 7 years as an Equity Research Analyst at Argent Capital Management LLC.  Ithiel graduated cum laude and earned his B.A. in Finance and M.S. in Finance from Lindenwood University.