SMid Growth Strategy
Investment Team
Don Bisson, CFA is the Portfolio Manager for the SMid Growth separate account strategy. Don is supported by 4 equity analysts, and 2 equity traders.
Investment Philosophy
The SMid Growth investment philosophy is based on the premise that capital will flow to sectors of the market where returns on invested capital (ROIC) are above average and/or rising. Century believes that the small and mid cap segments of the market are inefficient and provide opportunities to utilize fundamental, bottom-up research to identify what we believe are high quality growth companies and misvaluations. The SMid Growth investment approach is fundamental, bottom-up in nature.
Investment Focus
The SMid Growth investment universe consists of roughly 3500 companies with a market cap range of $500 million to $7 billion (80% of the portfolio typically is invested in companies with market capitalizations in the $800M – $6B range). The portfolio manager constructs a diversified portfolio of 50-65 companies with what he regards as above average growth potential. Position sizes typically range from 1-3%.
The SMid Growth strategy invests in 3 types of investment opportunities; 1) “Core Companies”, which have a strong competitive advantage, above average margins and returns on capital, above average earnings per share and sales growth, 2) “Underestimations”, where the opportunity set is large and/or expanding rapidly, earnings estimates and returns on capital are typically rising, and we believe the market has underestimated revenue and earnings potential for the company, and 3) “Temporary Overreactions” (or “Fallen Angels”), where a growth company has experienced a temporary setback. Typically, companies identified as “core growth” and “underestimated growth” represent approximately 95% of the portfolio, with neither type representing more than 60% of the portfolio overall. “Temporary overreaction” companies generally represent less than 5% of total portfolio holdings. While fundamental research is the cornerstone of the investment process, quantitative tools also are utilized to augment the fundamental, bottom-up approach including a proprietary relative strength model.
Buy decisions result from the company matching one of the three types of growth opportunities we emphasize. Valuation is an important part of the buy process with each company put through a rigorous, proprietary intrinsic valuation analysis.