Small Cap Equity 2011 SMA Manager of the Year
The London Company
Small-Cap Core Strategy
Throughout the month of April, AdvisorOne will focus on separately managed accounts: the money manager options advisors have, the platforms through which they can gain access to those managers, how they can conduct due diligence on those managers, and how advisors are using SMAs in client portfolios.
We begin our coverage by presenting the Investment Advisor-Prima Capital seventh annual Separately Managed Account Managers of the Year. In a feature article in the April 2011 issue of Investment Advisor, seven managers in six different asset classes were chosen as "A Class Apart."
(See the complete calendar of our Special Reportfor past and upcoming coverage.)
In this article, we focus on Richmond-based The London Company’s Small-Cap Core Value strategy, winners in the small-cap equity space.
The philosophy: Viewing equity ownership in the same pragmatic manner in which a conservative, rational businessman would, if he were buying the entire company..
The portfolio: Investing in what the management team considers its best low-beta small-cap ideas, with above-average downside protection. For the portfolio, the team seeks profitable, financially stable companies that consistently generate free cash flow and high returns on unleveraged operating capital, trade at rational valuations, and are run by shareholder-oriented management.
The performance: 2010 performance (company supplied).
Strategy composite return (gross): 24.3%
Strategy composite return (net): 23.7%
Russell 2000: 26.9%
Russell 2000 Value: 24.5%
S&P 500: 15.06%
Return (net) since inception (9/99-12/10): 15.4%
Russell 2000 return since inception: 6.9%
Total firm AUM (12/31/10): $1.94 billion
Total assets in strategy: $1.48 billion (See firm’s Form ADV Part II.)
The people: Investment Advisor Editor John Sullivan spoke in March with Stephen Goddard, CFA, founder, managing director and portfolio manager, and Jonathan Moody, CFA, principal and portfolio manager. Team members include J. Wade Stinnette, Jr., portfolio manager, and J. Brian Campbell, CFA, portfolio manager.