Small Cap Growth (SCG) Strategy
We operate by the “Wallet Rule” with the management teams we invest in, always asking ourselves, “how would we feel handing over our wallets to these partners with no questions asked.”
James Gowen, CFA – CIO
John Ragard, CFA
Our Generalist Small Cap team averages 29 years of investing experience. Leveraging expertise in Healthcare, Technology, Energy, Industrials, and Business Services, our goal is to outperform the Russell 2000 Growth over a market cycle. The seasoned team fosters a culture of constant learning, interaction and shared responsibility.
OBJECTIVE: Our strategy takes an institutional, research-based approach to uncovering small cap companies that are Sustainable Future Compounders™, companies undergoing demonstrated business improvements that we believe can provide higher compound earnings, growth, and stock price appreciation.
THOUGHTFUL PORTFOLIO CONSTRUCTION: The team takes a patient, yet opportunistic approach, striving to hold higher quality companies over the longer-term with very low turnover. Portfolios are built from the bottom up, and are diversified by sector, industry and characteristics. Typical positions are 1-3% at cost and market timing is avoided. The firm structure creates alignment of interests, with personal investments alongside clients, with team compensation tied to performance and a single strategy focus with strict assets under management limits.
PROACTIVE RISK MANAGEMENT: Our responsible investment process seeks to limit downside risk through deep, insightful company knowledge and multiple built-in risk controls, including our sell discipline. Our team analyzes management teams, future growth strategies, business models and earnings growth drivers while seeking to minimize exposure to other risks such as ESG factors, commodities, binary models, excessive concentration and litigation risks. Certain businesses are avoided. The team works from the bottom-up to create a portfolio structured to capture long-term growth resulting in higher active share.
“It’s not about ESG scores, it is about understanding ESG risks.”
*Not an employees of Spouting Rock, they provide investment research to Spouting Rock and other investment advisors.