(Scott Priebe, left, and Michelle Picard of Geneva Capital.)
2012 Mid-Cap SMA Manager of the Year:
Geneva Capital Management
Mid-Cap Equity Portfolio
This is an expanded profile of one of Investment Advisor-Prima Capital's 8th annual Separately Managed Account Managers of the Year. View the complete article with all the winners here. Read about the process of choosing this year's winners here.
We recused ourselves from voting in the Mid-Cap Equity category, citing familiarity bias. We featured Milwaukee-based Geneva Capital Management on our cover announcing the awards in April 2009, which at the time was the third year in a row it took home the prize. The firm took a few years off to give other managers a shot, but it’s back with a vengeance in 2012.
“The firm was founded in 1987, and it’s used the exact same investment philosophy ever since,” says Michelle Picard, a principal and portfolio manager at Geneva. “This was before anyone really knew what the mid-cap space was. There were no Morningstar boxes back then, and it’s only in the last decade that it’s come into its own.”
They like mid-cap companies, she explains, because they’re past the volatile, entrepreneurial small-cap stage and management is focused, yet they haven’t reached the large-cap space where growth is harder to achieve due to the law of large numbers.
“We’re dedicated to finding that next great company,” she says. “One that has above-average earnings and growth with a great management focus.”
“We’ve been able to achieve great returns because of our unwavering discipline to our investment philosophy,” adds Scott Priebe, also a principal and portfolio manager at the firm. “Other managers may say they stick to a particular investment philosophy, but their results say something different. Sticking to our philosophy means we perform very well in broad-based bull markets, but not as well in speculative bull markets. But it doesn’t matter; we don’t change what we do. As a result, we outperform significantly over the long term.”
A speculative bull market typically appears near the end of a broad-based bull market, when high-beta, lower quality stocks outperform.
“When you see that large discrepancy between the performances of higher quality versus lower quality stocks is when we begin to lag on a relative basis, like in 1999, 2003 and 2009,” Picard says. “But we still have strong absolute returns so our clients are happy. And we have a solid, long-term track record over 25 years.”
Both Picard and Priebe count the firm’s collegial atmosphere and strong management from founders Amy Croen and Bill Priebe as ingredients in its success.
“We like to have fun, and everyone brings something to the table,” Picard concludes. “We have a high level of respect for each other. We have experienced management, but we also have young, fresh faces that have a different perspective that we find helpful.”
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