Concentrated Deep Value Strategy

A Private Equity Approach to the Public Equity Markets

How is this similar to private equity investing?

Greater Upside Potential: Portfolio holdings have market prices that are at significant discounts to their fundamental value providing greater opportunity for above average long-term returns. We invest with a “business owner” mindset, searching for investment candidates that have the potential to more than double in market price over a 3 to 5 year time period. Portfolio valuation measures similar to private equity investment valuation levels. Current portfolio characteristics are near 20-year absolute and relative lows to the overall market.  Portfolio valuation measures at a 20%+ discount to Deep Value Strategy.

Truly Actively Managed: On the equity investment spectrum, Concentrated Deep Value is the opposite of index investing, providing differentiated value to investors through lower market capitalization exposure and very high active share (90%+).

What are the benefits for investors?

Our client-focused separately managed accounts offer:

  • No Lock-up/Gates: While we recommend that client’s remain invested to achieve long-term goals, we recognize that investment strategies change.
  • Liquidity: Holdings have historically been in very liquid investments, allowing the portfolio manager that ability to purchase and sell securities to maximize long-term performance for clients.
  • Transparency: Clients are provided quarterly statements detailing portfolio holdings and characteristics. We are happy to discuss your account at any time.
  • Attractive Management Fees: Based upon account value, we believe the fees should align client interests.

3Q 2018 Portfolio Snapshot

All data as of 9/30/2018

Portfolio Statistics

Total # Holdings: 22

% in Top 10 Holdings: 41.8%

Active Share: 99.9%

Valuation Characteristics Concentrated Deep Value S&P 500
Price/Earnings (FY2) 6.9x 16.3x
Price/Book .4x 3.3x
Price/Cash Flow 1.6x 13.4x
EV/EBITDA 5.7x 13.5x
Free Cash Flow (FCF) Yield >30% 6.6%
Weighted Average Market Capitalization $3.2B $247.5B

Equity Sector Breakdown

  • Concentrated Deep Value 
  • S&P 500