SMID Cap Growth

Distinguishing Characteristics

Thought Process

A process that emphasizes the direction of growth opposed to the absolute level of growth

Fundamentals

We focus on actual fundamental improvement rather than speculating on anticipated improvement

Disclipine

Disciplined analysis concentrated on the magnitude and sustainability of the key fundamental drivers

The Way We Think

The market often underestimates the magnitude and duration of a company’s change in fundamentals. We believe inefficiencies can be found in the way investors analyze change. These established behavioral biases allow us to identify those companies undergoing fundamental changes that are meaningful, sustainable and mispriced in the marketplace.

We Believe In:

Risk Management

The failure rate is high for smid-cap growth companies which elevates the importance of risk management

Overcoming Biases

Smid-cap growth market participants underprice the magnitude and duration of change due to behavioral biases

Collaboration

A broad investment knowledge coupled with a highly collaborative decision-making process is a powerful combination

Sustainability

Alpha generation is directly linked to the magnitude and sustainability of changes in financial metrics

Process and Portfolio Construction

Our investment process seeks to identify companies undergoing positive change driven by new management, new products, restructuring, acquisition, or changes in the secular growth rate that are not fully discounted by the marketplace. We demand tangible improvements in the fundamentals that are explainable and sustainable, with a valuation that is understandable. This leads to a construction of a diversified portfolio of 85-110 companies that display these characteristics.

Balancing Company and Factor Risk

Use fundamental analysis to understand company specific risk
- Understanding the business allows for a better assessment of the company specific risk of failure/disruption

Use traditional factor analysis to evaluate sources of stock price volatility
- Momentum, growth, size, valuation, etc

Utilize our proprietary factor model to evaluate exposures to macroeconomic variables that can/might change
- Inflation
- Optimism
- Economic Growth

Investment Strategy

We optimize the best attributes of a collaborative culture, fundamental and quantitative analysis while maintaining a differentiated definition and view of growth and risk.

Strategy: CastleArk U.S. SMID Growth

Index: Russell 2500 Growth*

Available Vehicles: Separately Managed Account, Collective Trust

Inception Date: 3/31/2013

A process that emphasizes the direction of growth over the absolute level of growth

A focus on actual fundamental improvements vs. anticipated improvements enhance our success rate

A disciplined analysis focused on the magnitude and sustainability of the driver of fundamental improvement

View Fact Sheet

Composite Performance as of September 30, 2024*

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_{The Russell 2500 Growth Index represents a segment of the Russell 2500 Index that display signs of above average growth. The Russell 2500 Index is an index measuring the performance of approximately 2,500 U.S. small and mid-cap companies.}

_{Composite Performance reflects reinvestment of all income and capital gains and is shown in US dollars and after the deduction of transaction costs. Returns for periods greater than 1 year are annualized. Composite Performance is shown gross and net of actual management fees charged. Actual investment advisory fees incurred by clients may vary. Additional information on the calculation methodologies used herein is available upon request. Indexes are unmanaged, do not incur management fees and cannot be invested in directly. The Composite and index returns are net of any foreign withholding taxes on dividends, interest, and capital gains.}

_{Past performance is not indicative of future results. Performance during certain periods reflect strong stock market performance that is not typical and may not be repeated.}