In the typical situation that attracts us, we engage with management in order to try to get them to rein in spending on failing growth initiatives, refocus on the good core business, improve cash flow, and put in place a greater level of discipline with respect to return on invested capital.
There is growing sentiment that a shareholder perspective in the boardroom is helpful, which was not the case 25 years ago. I'd like to think we've moved past the corporate-raider phase and that most activism today is done professionally with the interests of all shareholders in mind. Companies have also increasingly realized how unproductive it [...]
Our calculated downside price is extremely important in how we size positions. We limit each position to a maximum risk, measured in basis points, to our downside price. In other words, if a stock went to its downside price, we don't expect the fund to lose any more than the maximum risk we've defined for [...]
If you think about the ]ifecycle of a small company, it usually initiallysucceeds in a relatively small niche where it delivers unique value and becomes a market leader. The business inevitably starts to mature producing strong cash flow with a lower growth rate and the natural response from management is to take some of the [...]
In many cases we’re getting involved when a rapidly growing company isslowing down or maturing. There’s a changing of the guard among the shareholder base and as that happens, there’s often a disagreement over how quickly the growth is slowing and whether the slowdown is permanent. When you’re right that the market is overreacting to [...]
invest it in new areas of potential growth. Hopefully these new growthinitiatives are related to the core business and hopefully the company can have some competitive advantage. This pursuit of incremental growth is exactly what management should be doing. One of two things will happen. Either the new initiatives work, everyone’s happy, the stock has [...]