SMID Cap Value Equity
Product Overview
With the SMID Cap Value product, ICM seeks to provide maximum, long-term total return, consistent with reasonable risk to principal, by investing primarily in common stocks of small-to-mid cap companies in terms of revenues, assets and market capitalization.
| Asset Class / Style | U.S. Equity / Value |
|---|---|
| Inception Date: | 9/30/2008 |
| Benchmark 1: | Russell 2500™ Value Index |
| Benchmark 2: | Russell 2500™ Index |
| Total Product Assets: | $2.5 MM as of 6/30/2010 |
Investment Process
The SMID Cap team employs a fundamentally based, bottom-up approach. Macro economic factors and how they will affect a company and its industry are considered when performing fundamental research. Our investment approach leads us to buy quality companies trading at attractive valuations.
Quantitatively, we attempt to narrow the universe of stocks by screening for companies with attractive valuations, positive free cash flow and strong balance sheets. This allows us to focus our fundamental/qualitative analysis on those companies exhibiting the most promising valuation metrics. Generally, Small Cap companies will represent approximately 25% of the portfolio and the universe will be companies between $500MM and $2B in market capitalization; Mid-cap companies will represent approximately 75% of the portfolio and the universe will look for companies in the $2B to $15B range.
From a qualitative point of view, we are attempting to confirm the attractiveness of a firm’s valuation. Absolute and relative price to earnings ratios (relative to the market, company history, and industry peers) and enterprise value to EBITDA (earnings before interest, taxes, depreciation and amortization) are the most important ratios in our determination of value. Most of the companies we hold have long records of good performance. In most cases the companies are leaders in the industries they serve due to product or service excellence. We place emphasis on the quality of management and balance sheet strength. Individual company fundamentals are the most important component of our strategy.
Performance As of 6/30/2010
| Annualized Returns (%) | |
|---|---|
*Since Inception: 09/30/2008 |
The gross returns for the ICM SMID Cap Value Composite are derived from one non fee-paying proprietary account and reflect the deduction of brokerage commissions and the reinvestment of dividends and other income. The net return reflects the gross of fee return reduced by the maximum management fee that would be charged to a fee-paying account. Please refer to the full disclosure found under Additional Information.
Portfolio Highlights
| Portfolio Characteristics | As of 6/30/2010 | ||
|---|---|---|---|
| Characteristic | ICM | Benchmark ¹ | Benchmark ² |
| P/B Ratio ³ | 1.6 | 1.2 | 1.6 |
| Weighted Average Market Cap ($B) | 4.080 | 1.971 | 1.989 |
| Median Market Cap ($B) | 1.429 | 0.506 | 0.530 |
| Trailing 5-Year EPS Growth Rate | 8.0 | 5.4 | 9.1 |
| Weighted Avg Est ROE LTM | 12.8 | 6.1 | 8.7 |
| P/E Est 2009 EPS ³ | 15.3 | 12.5 | 14.8 |
¹ Russell 2500™ Value Index
² Russell 2500™ Index
³ The harmonic average is used when averaging ratios that may produce extreme results due to small relative numbers in the denominator, such as P/E, P/B, etc. The harmonic average by itself does not exclude extreme values (positive or negative), it simply reduces the impact of outliers on the aggregate calculation.
| Sector Weightings* | As of 6/30/2010 | ||
|---|---|---|---|
| Sector | ICM | Benchmark ¹ | Benchmark ² |
| Financial Services | 21.5% | 34.7% | 22.8% |
| Producer Durables | 15.5% | 11.0% | 13.7% |
| Materials & Processing | 13.4% | 7.9% | 8.0% |
| Consumer Discretionary | 12.4% | 10.4% | 15.3% |
| Technology | 8.5% | 7.3% | 12.6% |
| Health Care | 8.0% | 6.0% | 11.5% |
| Consumer Staples | 6.0% | 3.8% | 3.3% |
| Utilities | 5.9% | 12.1% | 7.0% |
| Energy | 5.5% | 6.8% | 5.8% |
| Cash | 3.3% | 0.0% | 0.0% |
¹ Russell 2500™ Value Index
² Russell 2500™ Index
|
* The portfolio is actively managed and holdings are subject to change, and should not be considered as investment recommendations to buy individual securities. |
Additional Information
| Portfolio Materials |
|---|
| 2Q 2010 ICM SMID Cap Value Fact Sheet (PDF) |
| SMID Value Equity GIPS disclosure (PDF) |
