Westwood SMidCap Value
Westwood’s SMidCap strategy is an extension of the 25+ year process utilized in the LargeCap strategy. We find value in companies when we expect future profitability to be significantly higher than what the current prices discount. SMidCap focuses on investing in approximately 50-65 small and midcap securities, which are well diversified among sectors. Total portfolio risk is targeted to be less than the market.
Buy discipline
The SMidCap portfolio limits the selection universe to companies with market capitalizations between $100 million and $8 billion. 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
Sell discipline
Companies are reviewed for sale when:
- The stock achieves the price objective
- Fundamental change in company or industry that negatively impacts original investment thesis
- Market Capitalization exceeds $10 billion
- 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
More information
Please contact us to learn more about this and other Westwood portfolios or to set up a meeting with a member of our team.
Subadvisor
