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Quality is the Key to Getting the Shift to Small Cap Value Right

Investment Products

MidCap Value Strategy

MidCap Value

Strategy

Objective
Our objective is to pursue superior returns while we control overall portfolio risk for our clients.

Philosophy & Approach
We believe that:

  • Investing in undervalued, high-quality businesses can generate a return premium resulting in lower absolute downside risk and superior risk-adjusted returns.
  • Superior business models have sustainable competitive advantages that can consistently generate returns on capital in excess of the cost of capital.
  • High quality businesses have better opportunities to reinvest cash flows, pursue M&A and return capital to investors, creating long-term value for shareholders.
  • Quality performs better during periods of volatility resulting in lower downside risk.
  • Identifying the intersection of quality and value requires a fundamental active, multifaceted approach analyzing profitability and financial strength specific across industries.
  • Valuation methods using cash flows and earnings is essential to determine intrinsic value — making valuation critical to realizing the return premium.
  • Typically invests in a high-conviction portfolio of approximately 40 to 60 securities with attractively valued high-quality companies with strong fundamentals.

Vehicles and Minimums

Separately Managed $25M
Other Pooled Vehicles $5M

Key Characteristics
as of 09/30/24

Assets Under Management $20M
Inception Date 06/01/21
Holdings 61
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Performance (%)
as of 09/30/2024

QTDYTD1-Yr Annualized3-Yrs AnnualizedSince Inception
MidCap Value Strategy Gross of Fees9.3514.0626.3210.228.42
MidCap Value Strategy Net of Fees9.1813.5125.529.527.72
Russell Midcap Value Index10.0815.0829.017.395.93
See disclosure

Why Westwood
We have applied the same investment philosophy and core principles since our founding in 1983. Our competitive advantage is centered around our research process and investing where quality and value intersect.

  • High Conviction: Differentiated investment performance starts with differentiated portfolios, focused on high active share and built from a bottom-up process.
  • Emphasis on Downside Risk: The qualitative and quantitative assessment of absolute downside risk is paramount to outperforming over the long term and ensuring the reward justifies our risk when we invest.
  • Team-Based Approach: Both our analysts and portfolio team members maintain a collaborative environment to ensure consistency of our approach over the long term to overcome individual biases during both idea generation and vetting as well as portfolio construction.
  • Our Culture: Employee ownership is a highly valuable component to creating a culture of ownership while driving superior performance.

MidCap Value Strategy
Sector Weight Distribution (%)

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Data as of September 30, 2024. All information provided on this product page is for informational purposes only and is not intended to be, and should not be interpreted as, an offer, solicitation, or recommendation to buy or sell or otherwise invest in any of the securities/sectors/countries that may be mentioned. The chart above shows sector weightings and/or portfolio holdings for the representative account as of the period end date. The representative account was selected by the firm as it was deemed to best represent this strategy. Sector weights and holdings may vary from account to account, subject to any client-imposed restrictions. Westwood's analysts closely monitor the securities held in our portfolios. Should a company's underlying fundamentals or valuation measures change, Westwood may re-evaluate its position and may sell part or all of its positions. The summation of percentages reported may not equal 100% due to rounding discrepancies. The Global Industry Classification Standard (“GICS”) was developed by and is the exclusive property and a service mark of MSCI Inc. (“MSCI”) and Standard & Poor’s, a division of The McGraw-Hill Companies, Inc. (“S&P”) and is licensed for use by Westwood Holdings Group. Neither MSCI, S&P nor any third party involved in making or compiling the GICS or any GICS classifications makes any express or implied warranties or representations with respect to such standard or classification (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability and fitness for a particular purpose with respect to any of such standard or classification. Without limiting any of the foregoing, in no event shall MSCI, S&P, any of their affiliates or any third party involved in making or compiling the GICS or any GICS classifications have any liability for any direct, indirect, special, punitive, consequential or any other damages (including lost profits) even if notified of the possibility of such damages.

MidCap Value Strategy Portfolio Managers

Trip Rodgers, CFA®
Senior Vice President, Portfolio Manager and Senior Research Analyst
Lauren C. Hill, CFA®
Senior Vice President, Portfolio Manager, Research Analyst
Matthew Na, CFA®
Vice President, Portfolio Manager, Research Analyst

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For purposes of compliance with the GIPS standards, the firm (“Westwood” or the “Firm”) is defined as the assets of Westwood Management Corp. and Westwood International Advisors Inc. Westwood Management Corp. is an SEC registered investment adviser under the Investment Advisers Act of 1940 that provides investment supervisory services, managing equity and fixed income portfolios. Westwood International Advisors Inc. is a registered portfolio manager with the Ontario Securities Commission and the Autorité des marchés financiers in Quebec that provides investment supervisory services for global and emerging markets equity portfolios. Westwood Management Corp. and Westwood International Advisors Inc. are wholly owned subsidiaries of Westwood Holdings Group, Inc. (NYSE: WHG). Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request, as is a complete list and description of the Firm’s composites, by contacting [email protected].

Westwood Management Corp. claims compliance with the Global Investment Performance Standards (GIPS®). Unless otherwise stated, performance shown is in U.S. Dollars.

The MidCap Value composite, previously known as the MidCap Value Equity Composite, includes all taxable and tax-exempt, fee-paying fully discretionary accounts invested primarily in equity securities with market capitalizations above $5 billion and having comparable objectives. The minimum portfolio size for inclusion in the MidCap Value Composite is $5 million beginning January 1, 2006. Portfolio returns reflect the reinvestment of dividend and interest income. The MidCap Value Composite is benchmarked against the Russell 1000 Value Index. The Russell 1000 Value Index is an unmanaged market index that measures the performance of those Russell 1000 Index companies with lower price-to-book ratios and lower expected growth values. The Russell 1000 Value Index contains those Russell 1000 companies that have higher book-to-price ratios, and thus a less-than-average growth orientation, than the remaining companies in the Russell 1000 Index that encompass the Russell 1000 Growth Index. The comparative index returns include reinvestment of income but do not include transaction costs or management fees.