Small/Mid-Cap Absolute Value

The Small/Mid-Cap Absolute Value Strategy includes (FPPTX) and separately managed accounts.

Objective:

The Small/Mid-Cap Absolute Value Strategy seeks long-term growth through investing primarily in carefully selected common stocks and select fixed income securities.

  • Fundamental bottom-up, deep value stock picking with economic and industry point of view
  • Capitalize on best ideas with concentrated portfolios
  • Focus on long term, turnover averaging less than 20% over 20 years

Philosophy:

The Fund's managers believe that the best way to produce substantial returns is to purchase securities on the basis of fundamental value, rather than short-term stock market expectations, and hold them until the full investment potential is achieved. This deep value price-driven equity style attempts to exploit market inefficiencies among stocks of small to mid-capitalization companies. Intense research is required to build the high level of knowledge and confidence necessary to realistically evaluate unpopular situations. Great attention is paid to the minimization of potential risk. The disciplined selection process is designed to minimize business and valuation risk by selecting companies with:

  1. market leadership and long-term histories of profitability;
  2. financially strong balance sheets;
  3. first-rate management teams that have an understandable and successful business strategy;
  4. a deep value price based on normal free cash flows, earnings and balance sheet values.

To purchase superior or potentially superior companies at low valuations requires either that the company or industry is out of favor or the value has not been recognized. Because our holdings generally originate from areas that are out of favor, our holding period of five years approximate the time it takes for them to realize their full earning and valuation potential.