Small
Cap Value
Strategy Overview
Growth
- Strong competitive position in stable, expanding industry
- Opportunity for an increase in revenue and earnings growth
Profitability
- Better relative earnings, free cash flow, and earnings growth
- Established profit margins
Franchise
- Management focused on core business and aligned with stakeholders’ interests
- Prudent use of debt and leverage
Valuation
- Evaluate relative to history, peers, and economic conditions
Performance
Risk/Return Analysis
(as of 06/30/2024)
Upside vs. Downside Capture
(as of 06/30/2024)
Trailing Returns
(as of 06/30/2024)
Average Annualized Performance %
(as of 06/30/2024)
| QTD | YTD | 1 Yr | 3 Yrs | 5 Yrs | 10 Yrs | Since Inception (11/1/10) | |
|---|---|---|---|---|---|---|---|
| Small Cap Value (Gross) | -4.3 | 0.5 | 15.1 | 3.0 | 10.1 | 7.4 | 11.3 |
| Small Cap Value (Net) | -4.5 | – | 14.0 | 2.0 | 9.1 | 6.4 | 10.2 |
| Russell 2000 Value | -3.6 | -0.8 | 10.9 | -0.5 | 7.1 | 6.2 | 8.8 |
Sources throughout this presentation: Congress Asset Management, Factset, Russell Investments and Morningstar Direct. The information throughout this presentation is for illustrative purposes and is subject to change at any time. Holdings and sector weightings are subject to change and should not be considered investment advice or a recommendation to buy or sell a particular security. Actual holdings may vary by client. Past performance does not guarantee future results. Gross performance shown does not reflect the deduction of investment management fees and certain transaction costs, which will reduce investment performance. This information is supplemental to the GIPS Report. Performance returns of less than one year are not annualized. Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Netiher Russell nor its licensors accept any liablity for any errors or omissions in the Russell Indexes and/or underlying data contained in this communication. No further distribution of Russell data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication.
Risk/Return(as of 06/30/2024)
| Small Cap Value (Gross) | Small Cap Value (Net) | Russell 2000 Value | |
|---|---|---|---|
| Standard Deviation % | 19.35 | 19.34 | 19.59 |
| Beta | 0.96 | 0.96 | 1.00 |
| Sharpe Ratio | 0.59 | 0.54 | 0.47 |
| Alpha | 2.54 | 1.59 | – |
| Upside Capture % | 101.6 | 99.6 | 100.0 |
| Downside Capture % | 92.2 | 93.8 | 100.0 |
Growth of $100,000(as of 06/30/2024)
Portfolio
Characteristics
(as of 06/30/2024)
| Representative Small Cap Value Account |
Russell 2000 Value | |
|---|---|---|
| P/E – Trailing | 14.3x | 12.6x |
| Active Share | 90.1 | – |
| Market Cap (Wtd Avg) | $3.8BN | $2.9BN |
| Number of Equity Holdings | 85 | 1402 |
| 1 Yr. Turnover % | 21.6 | – |
| Return on Equity % | 11.8 | 5.6 |
Top 10 Active Holdings
(as of 06/30/2024)
| Western Alliance Bancorp | 3.3 |
|---|---|
| Mueller Industries, Inc. | 2.8 |
| Modine Manufacturing Company | 2.7 |
| Patrick Industries, Inc. | 2.5 |
| UMB Financial Corporation | 2.5 |
| Wintrust Financial Corporation | 2.3 |
| ACV Auctions, Inc. Class A | 2.2 |
| Range Resources Corporation | 2.1 |
| Bancorp Inc | 2.1 |
| Group 1 Automotive, Inc. | 2.0 |
| Total | 24.4 |
GICS Sector Allocation vs. Benchmark % ex Cash
(as of 06/30/2024)
| Communication Services | Consumer Discretionary | Consumer Staples | Energy | Financials | Health Care | Industrials | Information Technology | Materials | Real Estate | Utilities |
|---|---|---|---|---|---|---|---|---|---|---|
| 1.0 | 11.8 | 4.4 | 9.6 | 23.8 | 10.1 | 13.6 | 5.4 | 4.1 | 9.6 | 6.6 |
| 2.4 | 10.5 | 2.2 | 10.4 | 26.2 | 8.7 | 14.4 | 6.4 | 5.0 | 9.9 | 3.9 |
Investment Committee
Materials
Holding and portfolio characteristics data pertain to the Small Cap Value representative account. Performance and risk data pertain to the Small Cap Value Composite. Congress Asset Management claims compliance with the Global Investment Performance Standards (GIPS®). This information is supplemental to the GIPS report.
The materials are being provided for illustrative and informational use only. Performance returns of less than one year are not annualized. Prior performance results are based on accounts that do not participate in a wrap delivery program with investment and operational differences such as account size and/or level of customization. There may be other reasons why the performance results differ from those of an individual account managed in the same or a substantially similar investment strategy. For example, individual accounts may differ from the strategy when applying client-requested restrictions.
There is no guarantee that the wrap portfolio will continue to hold any particular security and securities are held in varying percentages. Holdings are subject to change since the portfolio is actively managed. Holdings are intended to illustrate the composition and characteristics. Across client portfolios, there may be variations in holdings, characteristics and performance information as dictated by reasons such as diversification needs, specific client guidelines, account size, cash flows, the timing and terms of execution of trades, and differing tax situations.
This strategy involves risk, may not be profitable, may not achieve its objective, and may not be suitable or appropriate for all investors. Investors should consider the investment objectives, risks, and fees of this strategy carefully with their financial professional before investing. Principal loss is possible. Past strategy returns are dependent on the market and economic conditions that existed during the period. Future market or economic conditions can adversely affect the returns.
Index Information
The Russell 2000 Value Index measures the investment results of an index composed of small-capitalization U.S. equities that exhibit value characteristics. You cannot invest directly in an index.
Frank Russell Company (“Russell”) is the source and owner of the trademarks, service marks and copyrights related to the Russell Indexes. Neither Russell nor its licensors accept any liability for any errors or omissions in the Russell Indexes and/or underlying data contained in this communication. No further distribution of Russell data is permitted without Russell’s express written consent. Russell does not promote, sponsor or endorse the content of this communication.
Definitions
P/E Ratio is the ratio of a company’s share price to the company’s earnings per share.
Market Capitalization measures the number of outstanding common shares of a given corporation multiplied by the latest price per share.
Weighted Average Market Capitalization represents the average value of the companies held in the portfolio. When that figure is weighted, the impact of each company’s capitalization on the overall average is proportional to the total market value of its shares.
Return on Equity is equal to a company’s net income for a full fiscal year, divided by total shareholder equity.
Active Share is a measure of the stock holdings in a portfolio that differ from the stated benchmark index.
Standard Deviation is a measure of the dispersion of a set of data from its mean. It is used by investors as a gauge for the amount of expected volatility.
Sharpe Ratio is a risk-adjusted measure, calculated using standard deviation and excess return to determine reward per unit of risk. The higher the Sharpe Ratio, the better the portfolio’s historical adjusted performance.
Alpha is a measure of the difference between actual returns and expected performance, given the level of risk as measured by Beta, where Beta measures sensitivity to benchmark movements.
Beta is a measure of the volatility, or systematic risk, of a security or a portfolio in comparison to the entire market or a benchmark.
Upside Capture Ratio measures the manager’s overall performance to the benchmark’s overall performance, considering only months that are positive in the benchmark. An Upside Capture Ratio of more than 100% indicates a manager who outperforms the relative benchmark in the benchmark’s positive months.
Downside Capture Ratio is the ratio of the manager’s overall performance to the benchmark’s overall performance, considering only months that are negative in the benchmark. A Downside Capture Ratio of less than 100% indicates a manager who outperforms the relative benchmark in the benchmark’s negative months and protects more of a portfolio’s value during down markets.