Growth With Value: Ford Draper Jr.

I’ve never seen anything like this in terms of volatility, for sure. I have never seen a market that’s so totally captivated by macro and political policy issues. One of the beauties of a style like this is that one can afford to be somewhat more consciously agnostic of those diversions. Since we’re almost exclusively bottom-up oriented, we’ve got a several thousand company universe to pick through for smaller businesses undergoing pretty dynamic change. We can create exciting investment ideas that ought to be able to strive against the whole range of macroeconomic environments. We focus less on trying to puzzle that out and more on the discovery and vetting process that leads to top-notch ideas.

Do you still get out there and kick the tires on these companies?

Absolutely. There are 23 of us here at Kalmar (14 partners, by the way, which is quite unusual). Nine of us are on the full-time research team. I happen to be the team leader. I’m out doing engine diagnostics as well as tire kicking, both internally as well as externally, and everybody on the team is doing the same thing.

Let’s talk performance. How have you done recently over a three- to five-year period?

We’ve been very fortunate over the firm’s 30-year history, through six full market cycles and, who knows, three-quarters of this one. We’ve produced higher returns than the associated asset class and our peer group, with lower risk and volatility. At the moment, we’re modestly positive year-to-date against about a negative 3%, or something like that, for the Russell 2000 Growth Index. On a 12-month basis, we’re similar, except the Russell 2000 Growth Index is off about 4.5% or thereabouts. If you were to look on a peer group basis, you’d find that we’re in the 25th percentile on 3-, 5-, 7- and 10-year basis. So what you get is truly a higher return with a lower risk approach, with lower turnover and volatility, and it makes for a pretty appealing product.