Mid Cap Value

Strategy Highlights

  • The Mid Cap Value Strategy is benchmarked to the Russell Midcap® Value Index.
  • The Portfolio Managers generally seek companies generating returns on invested capital in excess of their respective costs of capital.
  • The Portfolio Managers prefer 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 Managers do 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 40 and 60 stocks, with no one stock typically exceeding 5% of a total portfolio.

Objective

The objective of the Mid Cap Value strategy is to consistently outperform the Russell Midcap® Value Index over a complete market cycle. The Portfolio Managers first identify mid cap companies generating returns on invested capital in excess of their cost of capital. Within that universe, the managers seek to identify companies where the forecasts from our fundamental analysts project cash flows greater than those implied by the equity market.

Click here to view the current Mid Cap Value Commentary.

Mid Cap Value | Annualized Returns as of 3/31/2022

† Not Annualized. Source: Advent APX.

Quarterly Fact Sheet

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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. 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, Inc. (“KCM”) is a Missouri corporation 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.

The Mid Cap Value Composite contains fully discretionary mid cap value accounts that are invested in US equity securities and ADRs with market capitalizations within 80% of the weighted average market capitalization of the Russell Midcap® Value Index. The portfolio manager focuses on companies with a demonstrated ability to generate above-average returns on invested capital. Within that universe, the manager seeks to identify undervalued companies with opportunities to reinvest cash flows at rates of return in excess of their cost of capital. For comparison purposes the composite is measured against the Russell Midcap® Value Index. The U.S. Dollar is the currency used to express performance.

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. The 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. 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 Midcap® Value 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 GIPS composite report. The Verification and Performance Examination Report does not cover the benchmark returns included in the GIPS composite report.

The Russell Midcap® Value Index measures the performance of the mid-cap value segment of the U.S. equity universe. It includes those Russell Midcap® Index companies with lower price-to-book ratios and lower forecasted growth values. The Russell Midcap® Value Index is constructed to provide a comprehensive and unbiased barometer of the mid-cap value market. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and characteristics of the true mid-cap value market.

Gary Kauppila, CFA®

Portfolio Manager

GARY KAUPPILA, CFA®, Portfolio Manager for the Mid Cap Value strategy and Assistant Portfolio Manager for the SMID Cap Value strategy. 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, Mr. Kauppila was affiliated with Chicago Asset Management, Northern Trust and William Blair & Co. Gary joined KCM in 2007 as an assistant portfolio manager.  Mr. Kauppila graduated magna cum laude and earned a B.S. in Finance from Binghamton University.

Frank Latuda, Jr., CFA®

Chief Investment Officer, Portfolio Manager

FRANK LATUDA, JR., CFA®, Chief Investment Officer and Portfolio Manager for the Small Cap Value, SMID Cap Value, Mid Cap Value, and All Cap Value strategies. Frank also serves as a member of the Board of Directors. As CIO, Mr. Latuda is 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. Mr. Latuda joined Kennedy Capital as an equity analyst in 1997 and served as Director of Research from 1998 until 2000.  Frank has been a PM since October of 2000 when he took over the Small Cap Value strategy. Mr. Latuda earned a B.S. in Electrical Engineering from the University of Notre Dame, as well as an M.S. in Electrical Engineering and an M.B.A. from the University of Illinois.