Asset Manager of the Year Todd Beiley on Powerful Stock Selection

Kayne Anderson Rudnick’s Small-Cap Sustainable Growth Strategy outpaced the Russell 2000 Growth Index by 22.42% in 2017 thanks to strong stock selection. Credit for this record should go to Los Angeles-based Kayne Anderson Rudnick’s “consistent approach,” which has three main elements, according to Todd Beiley, portfolio manager and senior research analyst.

First, Kayne aims to find businesses “with very durable competitive advantages,” Beiley says. Second, it wants to find them “at attractive prices. Third, it seeks to not “over-diversify the portfolio,” which means it focuses on “the most compelling ideas” it finds.

In 2017, a holding that helped the Kayne team hit it out of the park was Autohome, a Chinese online car business that became part of the portfolio in 2015. “It has the most user-generated reviews, ratings, etc. … There was a network effect, which we thought was very powerful and would protect the business for a long time.”

How did the portfolio team zoom in on this key holding? “We look in places [where] others, hopefully, may not be, and … we do a lot of screening. We go out and visit companies — anyway we can find an idea we are open to it,” Beiley said.