Small Cap Value Investment Process

Small Cap Value portfolio is a disciplined value strategy typically investing in companies with market capitalizations below $2 billion at the time of purchase. The value strategy includes seeking out companies that are attractively priced on a valuation basis (i.e. Price/Earnings, price/free cash flow, Price/Book, etc.) with specific opportunities to grow earnings, cash flow and compound value over time. The composite can invest up to 20% in international American Depository Receipts although historically, the level has been between 3%-5%.

Large Cap Value Investment Process

The BirdRock Large Cap Value portfolio is a concentrated, disciplined value strategy typically investing in companies with market capitalization above $5 billion at the time of purchase. The value strategy seeks out companies that are attractively priced on a valuation basis (i.e. Price/Earnings, price/free cash flow, Price/Book, etc.) with specific opportunities to grow earnings, cash flow and compound value over time. The composite can invest up to 20% in international American Depository Receipts although historically, the level has been between 3%--5%. Because the market for large cap stocks is fairly well researched, we believe in a focused and intensive search for the mispriced helps us add value over time while not simply mirroring the benchmark.

The goal of both investment strategies is to add alpha by identifying key features and attributes often overlooked and under appreciated by the marketplace. We analyze the relative valuations of the sub sectors we follow and invest in what we believe to be the leaders of those under appreciated companies. The approach is both quantitative and qualitative. Quantitative in that we screen a large universe of companies to narrow the field to those with attractive valuations; qualitative because we are looking for quality franchises, solid management teams, an under appreciated niche market, a strong brand or perhaps a turnaround story.

The sell discipline is strict and limits style drift to preserve the integrity of the portfolio. Debt and liquidity screens limit risk. Red flags may be a concentration of ownership, prospective litigation - always a potential red flag for small cap or large cap companies, or off balance sheet items. Price targets are established and constantly monitored and declining fundamentals may precipitate a liquidation of the position.