Page 30 - Investment Advisor July/August 2022

2022 Asset Manager of the Year

Small/Mid Cap Equity Manager of the Year

Tributary Capital Management
Tributary Small Cap

ributary Capital Management is a
Twinner of the Small Cap Equity 2021
Manager of the Year award thanks to
the strong performance of its Tributary
Small Cap, which Envestnet said was
“driven by a combination of strong stock
selection and factor tailwinds.”
The outperformance of Tributary’s
Small Cap was especially impressive
when one factors in the patience needed
to stick with an investment process that
had been challenged significantly in the
past, especially in 2020, according to
Envestnet.
Tributary has been managing the
Small Cap portfolio since 1996 and did
not change its strategy in 2021 despite Mark Wynegar
unprecedented performance struggles, surges of speculative activity,” Wynegar
Envestnet noted. Title: Manager said. One example came in January
Tributary’s Small Cap separate Years with present firm: 12 2021, with the meme stocks rally that
account composite returned 34% in (another 11 before that, when included “a lot of short squeezes related
2021, outpacing the Russell 2000 Index the firm was a division of First to GameStop and AMC,” among other
by 19.2%. The team’s “process is bottom- Investment Group) stocks, he recalled, saying those “fits and
up fundamentals and valuation-driven,” starts of highly speculative activity were
according to Mark Wynegar, president Years in financial services: 28 challenging.”
and portfolio manager, who said “it’s However, “they ultimately proved
really a stock by stock decision-making Investment/asset class focus: temporary as the year [went] along and,
process” that the team uses. U.S. Small Cap Equity at the end of the year, the company
For example, Wynegar said one stock results from our portfolio were good.”
they owned in the portfolio, home Asset management firm: Looking ahead to the rest of the year
health care company LHC Group, was Tributary Capital Management and the next 12 to 18 months, Wynegar
“performing very well in 2020.” Then, in Year firm founded: 2010 said: “We certainly pay close attention
2021, its stock “hit a weak patch where Number of employees: 13 to all of the issues that are weighing on
some things related to staffing, also the market and the litany of things. You
some COVID trends, were impacting the AUM as of Dec. 31: $2.41 billion; can rattle them off between inflation and
company’s results and the stock weak- assets under advisement: $2.9 interest rates, labor shortages, supply
ened considerably,” he recalled. But “on billion overall; $1.9 billion for Small chain issues, rate issues, Ukraine, COVID
those pullbacks, we were adding to the Cap alone. surges. You go down the list. There’s a lot
stock at much lower prices than we had of things to keep our eyes on.”
sold it and then, in early ’22, as it happened, UnitedHealthcare However, Wynegar said: “At the end of the day, we’re look-
made an offer to buy the company and so we exited the posi- ing at individual businesses, analyzing their results and placing
tion with a nice premium on a takeout.” a value on those companies. And I would say that the thing that
Tributary’s goal is to “take businesses we own, businesses we’re probably starting to look at right now is there’s been a lot
we can competently value, and let that drive and guide our of volatility in the market, and it may be starting to create some
decision-making,” he said. “And that’s an example that worked opportunities for investors that are really focused on valuation
out well for us over the last couple of years.” and really have an in-depth understanding of the businesses
What was difficult about last year was “there were some they’re investing in.” — JB

28 INVESTMENT ADVISOR JULY/AUGUST 2022 | ThinkAdvisor.com