EQUITY STRATEGIES

US Small Cap Growth

why invest in uS small cap
Offers investors attractive opportunities for capital appreciation and diversification within a less-widely-followed market segment. Small-cap companies typically demonstrate higher revenue and earnings growth potential than larger companies.
our edge

Why Nicholas US Small Cap

Focus: specialize in dynamically growing small- and mid-cap companies
Insights: invest in both equities and convertibles for a holistic view of company
Discipline: combine breadth of quantitative tools with traditional fundamental equity and credit analysis
Alignment: constrain capacity to add value and invest alongside clients
Experience: principals have been managing portfolios for over 30 years
LEAD PORTFOLIO MANAGER
Catherine Nicholas
PORTFOLIO MANAGER
John Wylie
our approach

Investment Philosophy

We believe that dynamic change often creates a disconnect between a company’s future earnings power and its stock’s valuation. Growth catalysts are often not fully understood and expectations tend to be adjusted upwards gradually. We seek to exploit this inefficiency by investing in dynamic companies exhibiting signals of change that will lead to an acceleration in revenue and/or earnings growth in which our research confirms the company’s growth is sustainable and its stock is a timely investment. 

Portfolio Construction

Portfolios are actively managed to continually drive to the strongest investment ideas. Position sizes are based on the conviction in the investment thesis of each company relative to other portfolio holdings and risk exposures. Early warnings signs that suggest deterioration in company fundamentals or earnings strength lead to timely sell decisions.

Risk Management

Risk analysis is essential to minimize uncertainties and enhance potential long-term gains for client portfolios. To understand intended and unintended sources of risk, our investment team leverages quantitative tools with experience, judgment and deep knowledge of the holdings within a portfolio on a daily, weekly and monthly basis.

Typical Investment Policies

Number of Positions     90–110
Geography                       US-listed public equities
Capitalization                  $100M to 2x max of Russell 2000 Growth Index 
Security Max                   5%
Sector Max                      35% or 2x max of Russell 2000 Growth Index 
Cash                                 Transactional, typically <5%

Driver of Expected Return

Bottom up, research-driven stock selection. Industry and sector weights and factor exposures are a residual of the stock-selection process.