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April 11, 2012 at 05:24 AM
(Jon Christensen of Kayne Anderson Rudnick)
2012 Small-Cap Equity Manager of the Year
Kayne Anderson Rudnick
Small-Cap Growth 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.
To say it’s been a wild ride in the small-cap space is an understatement, which makes Kayne Anderson Rudnick’s victory in the small-cap equity category all the more impressive.
“We’ve weathered it well,” says small- and mid-cap manager Jon Christensen matter-of-factly. “Research is our life blood; we view ourselves as analysts as well as portfolio managers, and because of our position, we usually talk directly with CFOs at the companies we buy on a consistent basis.”
Christensen and his team (which includes co-managers Bob Schwarzkopf and Todd Beiley) look for 25 to 35 stocks that have a sustainable competitive advantage and can develop, protect and nurture their market share.
“We like them to have niche dominance and be self-financing, which leads to high cash flow and low amounts of debt,” he adds. “This allows them to generate good returns in good market cycles as well as bad.”
And of course he looks for a strong, competent management team, people who are good stewards of cash.
“A lot of these firms have a large amount of cash, and how they handle that cash is very important to us,” Christensen says. “There are typically a few things they can do; declare a dividend, buy back shares, reinvest in the business or look for acquisitions. Reinvesting to grow the business is most important to us while acquisitions are the least.”
