Westwood SmallCap Value
The Westwood SmallCap Value strategy invests in approximately 50-70 companies with market capitalizations between $100 million and $2 billion at the time of purchase. The portfolio team seeks high quality companies with attractive valuations and expectations for future profitability to be significantly higher than what the current prices discount. The objective is to outperform the Russell 2000 Value Index over a market cycle while incurring less volatility.
Westwood’s investment process is designed to generate superior risk-adjusted returns through bottom-up, value-based stock selection. Analysts focus on ideas that have limited downside risk and the opportunity to generate earnings/cash flows that are higher than what the current stock price implies. Companies are monitored and factors considered in analyzing securities include:
- Improving ROE (return on equity)
- A declining debt/equity ratio
- Positive cash flow
- Positive earnings surprise without a corresponding increase in Wall Street earnings estimates
Companies are reviewed for sale when:
- The stock achieves the price objective
- Fundamental change in company or industry that negatively impacts original investment thesis
- Changes to the company’s fundamentals that make the risk/reward profile unattractive
- A formal review is conducted if a name is down 20% or more over any 30-day period
Please contact us to learn more about this and other Westwood portfolios or to set up a meeting with a member of our team.