Focused Small Cap Value Strategy
Strategy Overview
HIGHLIGHTS
We Believe that the blend of Core and Deep Value companies provides alpha potential with a less volatile return stream compared to Deep Value only investors
- Core Value: highest quality, strong return profiles, sustainable competitive advantages, and strong management teams
- Deep Value: negative market sentiment, defensible franchise value, and high expected return potential
INVESTMENT APPROACH
We use a bottom-up approach that seeks to identify businesses where expectations are irrationally low, leading to significant undervaluation, based on our independent research. Both Core and Deep Value companies exhibit:
- Strong balance sheets
- Market overreaction short-term events
- Key Thesis Points™ (long-term catalysts) that will improve fundamentals
Primarily invests in companies with market caps of less than $4 billion at the time of purchase
Concentrated portfolio of 25-35 positions
Quick Look
as of 9/30/2024
Total Assets
Mutual Fund
$8 mm
Separate Accounts
$10 mm
Model Delivery
$18 mm
Total
$36 mm
Inception Date
4/1/2016
Separate Account Minimum
$2mm
Primary Benchmark
Russell 2000 Value Index
Investment Team
Ryan Batchelor, CFA
PORTFOLIO MANAGER & CIO, PRINCIPAL
David Passey, CFA
RESEARCH ANALYST, PRINCIPAL
Matthew Davis
RESEARCH ASSOCIATE
Performance
Average Annual Total Returns
as of 9/30/2024
*Returns for periods less than one year are not annualized
Calendar Year Returns
as of 12/31/23
No Data Found
Portfolio performance and statistics presented are the results of the Clifford Capital Focused Small Cap Value (“FSCV”) Composite. The FSCV Composite combines high-quality (Core Value) stock investments, opportunistic (Deep Value) stock investments and cash. The FSCV Strategy offers exposure to US Value equities of small sized companies (by market capitalization). The inception date for the FSCV Composite is April 1, 2016. Composite returns are shown after the deduction of transaction costs and include the reinvestment of all income including capital gains. Net of fees returns are calculated after the deduction of the actual advisory fees paid by clients. Gross of fees returns do not reflect the deduction of advisory fees. A client’s returns will be reduced by investment advisory fees and other expenses that may be incurred during account management.
The FSCV Composite’s benchmark is the Russell 2000 Value Total Return Index, which tracks the performance of small-capitalization U.S. equities that exhibit value characteristics. The benchmarks may have different composition, volatility, risk, investment philosophy, holding times, and/or other investment-related factors than the Composites. Therefore, an investor’s individual results may vary significantly from the benchmark’s performance. An index is unmanaged, does not incur fees or expenses, and cannot be invested in directly. Past performance is not indicative of future returns.
Performance Statistics
as of 9/30/2024 – 5yr
Statistics definitions found in “Important Disclosures” below
Characteristics
as of 9/30/2024
FSCV
R2000V
Number of Holdings
32
1438
Average Market Cap ($ Weighted)
$3.4 B
$2.9 B
Median Market Cap
$2.1 B
$0.8 B
Price / Earnings (trailing)
12.4
12.9
Price / Cash Flow
6.2
7.2
Price / Book
1.7
1.3
Turnover (LTM)
46.5%
n/a
Active Share
98%
0%
Top 10 Holdings
as of 9/30/2024
Company
FSCV
Solventum
4.8%
NCR Atleos
4.2%
Pitney Bowes
4.1%
EVERTEC
4.1%
Dolby Labs
4.1%
Western Union
4.0%
Allison Transmission
3.9%
HNI
3.8%
Seneca Foods
3.7%
Winmark
3.6%
Top Ten Holdings only shows securities held and does not include any cash or cash equivalent positions in the portfolio. The holdings information presented is based on a representative portfolio and should not be considered a recommendation to purchase or sell any security. There is no assurance that any securities presented herein will remain in the portfolio at the time you receive information or that securities sold have not been repurchased. The securities discussed do not represent an account’s entire portfolio and in the aggregate may represent only a small percentage of an account’s portfolio holdings. It should not be assumed that any securities transactions or holdings presented were or will prove to be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities presented herein. Other portfolios will vary in composition, characteristics, and will experience different investment results.
Sector Allocation
as of 9/30/2024
No Data Found
Weights are calculated as a percentage of net assets including cash & cash equivalents. Sector information is based on a representative account as of the date shown and subject to change.
Commentary & Literature
Important Disclosures
Information about Risk
Investing in the securities of small-cap and mid-cap companies generally involves substantially greater risk than investing in larger, more established companies. Because the strategy invests primarily in value stocks (stocks that the manager believes are undervalued), the portfolio’s performance may at times be better or worse than the performance of strategies that focus on other types of stock strategies (e.g., growth stocks), or that have a broader investment style.
The strategy generally holds stocks of between only 25 and 35 companies. The strategy may invest a larger portion of its assets in the securities of a single issuer compared to a more diversified strategy. Focusing investments in a small number of companies may subject the strategy to greater volatility and therefore a greater risk of loss because a single security’s increase or decrease in value may have a greater impact on the portfolio’s value and total return.
Portfolio Characteristics
Price/Earnings Ratio (trailing): Sum of stock prices of the fund’s holdings divided by the aggregate earnings per share of those holdings for the past 12 months, calculated as a weighted harmonic average. Price/Book Ratio: weighted average of the stocks’ price divided by book value per share. Book value per share is defined as common equity, including intangibles, divided by shares outstanding times the adjustment factor. Price/Cash Flow Ratio: a ratio used to compare a company’s market value to its cash flow. It is calculated by dividing the company’s market cap by the company’ operating cash flow in the most recent fiscal year (or the most recent four fiscal quarters); or, equivalently, divide the per-share stock price by the per-share operating cash flow. Median Market Cap: the midpoint of market capitalization of the stocks in a portfolio. Half the stocks in the portfolio will have higher capitalizations; half will have lower. Market Cap is the aggregate value of all of a company’s outstanding equity securities. Dividend Yield: a financial ratio (dividend/price) that shows how much a company pays out in dividends each year relative to its stock price. Active Share is a measure of the percentage of stock holdings in a manager’s portfolio that differs from the benchmark index.
Performance Statistics
Alpha measures a portfolio’s risk/reward potential. A positive alpha means the fund outperformed the index. A negative alpha means the portfolio underperformed the index. Beta measures a portfolio’s risk in relation to the market. A beta of 0.8 means the portfolio’s total return is likely to move up or down 80% of the market change; 1.25 means total return is likely to move up or down 25% more than the market. R-Squared measures (from 0 to 1.0) how closely a portfolio’s movements are correlated with movements of its benchmark. An R-squared of 1.0 would mean that the portfolio’s movements are completely correlated with the movements of its benchmark. Standard Deviation measures the degree to which a portfolio’s performance has varied from its average performance over a particular time period. The greater the standard deviation, the greater a portfolio’s volatility (risk). Upside Capture explains how well a portfolio performs in time periods where the benchmark’s returns are greater than zero. Downside Capture explains how well a portfolio performs in time periods where the benchmark’s returns are less than zero. Sharpe Ratio calculates the amount of portfolio return in excess of the risk-free rate per unit of risk (standard deviation) taken by the portfolio. Sortino Ratio calculates the amount of portfolio return received in excess of the risk-free interest rate per unit of “downside” risk (standard deviation of negative returns) taken by the portfolio. Information Ratio is used to evaluate the skill of a portfolio manager at generating returns in excess of a given benchmark. A higher information ratio result implies a better portfolio manager who’s achieving a higher return in excess of the benchmark, given the risk taken.
All rights in the Russell Indexes vest in the relevant London Stock Exchange Group plc (collectively, the “LSE Group”), which owns these indexes. Russell® is a trademark(s) of the relevant LSE Group company and is used by any other LSE Group company under license. These indexes are calculated by or on behalf of FTSE International Limited or its affiliate, agent or partner. The LSE Group does not accept any liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the Index or (b) investment in or operation of the Fund or Separate Account. The LSE Group makes no claim, prediction, warranty or representation either as to the results to be obtained from the Fund or Separate Account or the suitability of these indexes for the purpose to which they are being put by Clifford Capital Partners
