US Small Cap Strategy

Inception Date: MAY 01, 2021

Seeks attractive risk-adjusted returns versus the Russell 2000 Value Index over a full market cycle.

Strategy at a glance

  1. The above are not investment guidelines or restrictions and are subject to change without notice.

  2. The information provided is not to be construed as a recommendation or an offer to buy or sell or the solicitation of an offer to buy or sell any fund or security.

Investment Philosophy

The team’s US small cap strategy focuses on characteristics such as inefficiently valued assets, turnarounds, accelerating growth and overlooked leaders, that may benefit from catalysts such as new management, a more favorable business cycle, product innovation, and/or margin improvement.
The team believes fundamental research can uncover opportunities to invest in companies that are attractively valued and have the potential to benefit from catalysts for future earnings recovery.

 

Strategy Highlights

  • True Small Cap Specialists

    The seasoned management team has deep experience leveraging opportunities offered by small and micro-cap companies across market cycles.

  • Catalyst-Driven Value

    Employs in-house fundamental research in an effort to identify temporarily mispriced companies with potential catalysts for earnings-growth normalization.

  • Volatility Leads to Potential Opportunity

    Small cap market inefficiencies can create attractive opportunities for disciplined active investors, and broad portfolio diversification helps mitigate potential downside in a volatile investment universe.

Strategy at a glance

  1. The above are not investment guidelines or restrictions and are subject to change without notice.

  2. The information provided is not to be construed as a recommendation or an offer to buy or sell or the solicitation of an offer to buy or sell any fund or security.

Our Process

Our disciplined investment approach is executed by an experienced team, which is critical in an asset class where volatility and a lack of efficiency provide an opportunity for active investors.

Learn More

  1. Risk Disclosures

  2. All investments involve the risk of loss of principal.

  3. The value and liquidity of portfolio holdings may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the United States or abroad. During periods of market volatility, the value of individual securities and other investments at times may decline significantly and rapidly. The securities of small and micro-size companies can be more volatile in price than those of larger companies and may be more difficult or expensive to trade.

  4. There are risks associated with investing in securities of foreign countries, such as erratic market conditions, economic and political instability and fluctuations in currency exchange rates.

  5. A principal risk of investing in value stocks is that the price of the security may not approach its anticipated value or may decline in value. “Value” investments, as a category, or entire industries or sectors associated with such investments, may lose favor with investors as compared to those that are more “growth” oriented.

  6. Disclosures

  7. These are not investment guidelines or restrictions and will be subject to change. Actual portfolio will differ.

  8. FEF Distributors, LLC (“FEFD”) (SIPC), a limited purpose broker-dealer, distributes certain First Eagle products. FEFD does not provide services to any investor, but rather provides services to its First Eagle affiliates. As such, when FEFD presents a fund, strategy, or other product to a prospective investor, FEFD and its representatives do not determine whether an investment in the fund, strategy or other product is in the best interests of, or is otherwise beneficial or suitable for, the investor. No statement by FEFD should be construed as a recommendation. Investors should exercise their own judgment and/or consult with a financial professional to determine whether it is advisable for the investor to invest in any First Eagle fund, strategy, or product.

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  • Suzanne Franks Headshot

    Suzanne Franks

    Associate Portfolio Manager
    Industry start:  
    2004
    Year joined:  
    2021
  • Bill Hench Headshot

    Bill Hench

    Head of Small Cap Team and Portfolio Manager
    Industry start:  
    1992
    Year joined:  
    2021
  • Rob Kosowsky Headshot

    Rob Kosowsky

    Associate Portfolio Manager
    Industry start:  
    2002
    Year joined:  
    2021
  • Adam Mielnik Headshot

    Adam Mielnik

    Senior Research Analyst
    Industry start:  
    2014
    Year joined:  
    2021

Our Process

The team uses a bottom-up process, building the portfolio stock-by-stock.

  • 01

    Narrow the Universe

    • Universe of approximately 3,000 US small cap stocks
    • Ideas sourced from management meetings, industry data, conferences, historical investment experience
    • Seek companies with low price/book and price/sales

  • 02

    Fundamental Research

    Identify companies facing transitory or fixable issues, such as:

    • Inefficiently valued assets
    • Turnarounds
    • Accelerating growth
    • Overlooked leaders

    Determine Catalyst

    • New Management
    • More favorable business cycle
    • Product innovation
    • Margin improvement

  • 03

    Portfolio Construction

    • Diversified with 180-300 holdings
    • Typical holdings under $3B market cap (at purchase)
    • Annual turnover expected to be 35-45%
Risk Management Portfolio Level
ESG Considerations

  1. Risk Disclosures

  2. All investments involve the risk of loss of principal.

  3. The value and liquidity of portfolio holdings may fluctuate in response to events specific to the companies or markets, as well as economic, political or social events in the United States or abroad. During periods of market volatility, the value of individual securities and other investments at times may decline significantly and rapidly. The securities of small and micro-size companies can be more volatile in price than those of larger companies and may be more difficult or expensive to trade.

  4. There are risks associated with investing in foreign investments (including depositary receipts). Foreign investments, which can be denominated in foreign currencies, are susceptible to less politically, economically and socially stable environments, fluctuations in the value of foreign currency and exchange rates, and adverse changes to government regulations.

  5. A principal risk of investing in value stocks is that the price of the security may not approach its anticipated value or may decline in value. “Value” investments, as a category, or entire industries or sectors associated with such investments, may lose favor with investors as compared to those that are more “growth” oriented.

  6. Disclosures

  7. These are not investment guidelines or restrictions and will be subject to change. Actual portfolio will differ.

  8. Environmental, social and governance (ESG) issues may be factors, among many, that are considered as part of our fundamental research process. We do not seek to invest in companies based on ESG criteria.

  9. FEF Distributors, LLC (“FEFD”) (SIPC), a limited purpose broker-dealer, distributes certain First Eagle products. FEFD does not provide services to any investor, but rather provides services to its First Eagle affiliates. As such, when FEFD presents a fund, strategy, or other product to a prospective investor, FEFD and its representatives do not determine whether an investment in the fund, strategy or other product is in the best interests of, or is otherwise beneficial or suitable for, the investor. No statement by FEFD should be construed as a recommendation. Investors should exercise their own judgment and/or consult with a financial professional to determine whether it is advisable for the investor to invest in any First Eagle fund, strategy, or product.

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