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U.S. Small & Mid-Cap Equity

Philos Partners small-to Mid-Cap Equity invests in a select group of out-of-favour and/or under-followed small- and mid-cap companies without using leverage or shorting. The strategy typically invests in eight to fifteen businesses over a three- to five-year period. When the value of an investment exceeds its estimated intrinsic worth*, it is usually sold.

Using stringent criteria, we use a systematic investment process to identify a collection of well-positioned firms that are selling at a significant discount to our estimate of underlying value. We conduct extensive due diligence on each portfolio company and concentrate our investments in companies and industries with which we are familiar, such as information and software, outsourced business services, cable television and programming, consumer product manufacturers or distributors, and financial services. Through regular discussions with industry participants and active communication with the company's management team, we keep track of our investments after they've been made.

Investment Criteria

We believe that companies with the following business, managerial, financial, and valuation characteristics are well positioned to create value for shareholders in a wide range of economic and market conditions. 

Characteristics of Business 

  • Products and services that arenecessary
  • Customer satisfaction is high.
  • Long-term Competitive advantages
  • Consistent revenue
  • High rates of return on investment

Management Qualities

  • Reliableservice providers
  • Appropriate capital allocation

Financial Specifications

  • A healthy balance sheet and free cash flow 

Valuation Characteristics

  • The intrinsic value* was calculated using conservative estimates.

*Philos's estimate of the present value of cash that a company can generate and distribute to shareholders over the remainder of its life.
-The strategy may take large positions in a few issuers, increasing the risk of price volatility.
-Investing in small or medium-sized businesses is riskier and more volatile than investing in larger, more established businesses.

NOT FDIC INSURED   NO BANK GUARANTEE   MAY LOSE VALUE