| 
Strategy: Small Cap Core Strategy
Don Collins is the lead Portfolio Manager for these fully invested separately managed portfolios. Don seeks to identify companies under $1 billion that have undervalued assets and unrecognized potential through the use of original research by the Ironwood Investment Team. The focus of the strategy will be on companies with compelling valuations and attractive relative pricing. Don believes markets react in extremes and exaggerate prices both up and down. The investment team employs a methodical approach to discover and exploit the valuation anomalies created by market volatility. This is an ideal core portfolio for the investor with a timeframe to allow the investment ideas to develop. The portfolio usually holds between 50 and 70 small companies.
For their entire professional careers, the investment professionals at Ironwood Capital have relied on the philosophy that to determine the economic value of a company you have to look at the company from the perspective of a competitor. Stock prices may be undervalued or overvalued depending on events effecting economies and markets but we feel the ?real? value of a company can be determined based on assets and future cash flow (economic value). If the determination of economic value of a company and the stock price in the market are wide enough, the likelihood of appreciation is great over a reasonable timeframe. Determining economic value is key to finding companies that appreciate.
Our approach in this strategy is to conduct thorough company analysis and to construct a portfolio containing 50-70 small company stocks that are priced substantially below the company?s long-term economic value. We will set a target price, take a 2% position in the portfolio and monitor the investment thesis.
The Small Cap Core Strategy employs both a quantitative and qualitative methodology to company research and selection. The goal is to uncover a company with a stock price that is trading at a large discount to the actual economic value of the underlying company. Ironwood?s investment universe is public companies with market capitalization of less than $1 billion. These companies are screened by using numerous value ratio analysis such as price/earnings, price/book, price/cash flow, and debt to capital ranked by sector. This produces a list of companies that are statistically cheap that require additional research to determine if there is an obvious reason for a pricing anomaly.
Those candidates remaining are modeled to determine the long-term economic value of the company and to establish a target price for the stock. Those that are selling at a substantial discount are then examined thoroughly on a company-by-company basis. Meetings with management, calls to competitors, possible on-site visits are then conducted. The resulting securities may then be placed into the portfolio.
By employing this well defined investment approach, we believe it is possible to deliver superior absolute returns throughout a complete market cycle.
| Return to Strategies/Products
|
|  |
About Us
