Portfolio Manager since 2004
Small Cap Value
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YTD Return
Return is shown net of fees. See performance below for additional disclosure.
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Total Assets
Profile
The Cambiar Small Cap Value portfolio is a diversified strategy that invests primarily in small-cap companies domiciled in the U.S. This equal-weight portfolio will hold between 45-55 stocks with a starting universe that includes any company with a market cap between $500 million to $5 billion.
Key Facts
- Inception Date
- 11/30/2004
- Minimum
- $5 MM
Portfolio Managers
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Portfolio Manager since 2017
Performance
Inception Date: 11.30.2004. The performance information depicted above represents Cambiar’s Small Cap Value Composite (Institutional). Returns are presented gross (g) and net (n) of management fees. Gross and net returns are reduced by transaction expenses. Net returns are also reduced by actual investment advisory fees and other expenses that may be incurred in the management of the account. Prior to 2014, the gross returns reflect accounts with both gross and “pure” gross performance. From 2014 to present, the composite contains accounts with only gross performance. “Pure” gross returns, applicable to separately managed accounts that are part of broker-affiliated or broker-sponsored programs, including wrap programs, that waive commission costs or bundle fees including commissions (SMA), are not reduced by any expenses, which includes transaction costs, and are provided as supplemental information. Net returns for SMAs are calculated by subtracting actual SMA fees reported by the SMA sponsor. Net of fees performance reflects a blended fee schedule of all accounts within the Small Cap Value Composite (Institutional). SMAs might also incur bundled fees that are charged by brokerage firms which sponsor SMA fee programs and that may include transaction costs, investment management, portfolio monitoring, consulting services, and in some cases, custodial service fees. Cambiar clients and mutual fund investors may incur actual fee rates that are greater or less than the rate reflected in this performance summary. Results are reported in U.S. dollars.
Performance results for the Small Cap Value Composite (Institutional) are evaluated against the Russell 2000® Value Index. The Russell 2000 Value Index is a float-adjusted, market capitalization-weighted index comprised of firms in the Russell 2000® Index that experience lower price-to-book ratios and lower forecasted growth values. The Russell 2000 Index is a float-adjusted, market capitalization-weighted index that measures the performance of the 2,000 smallest companies in the Russell 3000® Index, which consists of 3,000 of the largest U.S. equities. The index assumes no management, custody, transaction or other expenses. The Russell 2000 Value Index is a broadly based index that reflects the overall market performance and Cambiar’s returns may not be correlated to the index. The index is unmanaged and one cannot invest directly in an index. Cambiar’s performance and the performance of the Russell 2000 Value Index include the reinvestment of all income. Performance is preliminary; please contact us for finalized figures. As with any investments, there are risks to be considered. Past performance is no indication of future results.
View Cambiar’s GIPS compliant presentations here.
Composition
Top 10 holdings
Sector Weights (%)
Attributes
RISK STATISTICS
Active Share
Disclosures
Data is provided for a representative account as of September 30, 2020. Portfolio holdings, characteristics, country breakdown, and sector weightings change over time and may differ between clients based upon their investment objectives, financial situations and risk tolerances. Cambiar makes no warranty, either express or implied, that the weightings shown will be used to manage your account. The securities presented do not represent all of the securities purchased, sold, or recommended by Cambiar and the reader should not assume that investments in the securities identified were or will be profitable. The information provided on the page should not be considered a recommendation to buy or a solicitation to purchase or sell any particular security. There can be no assurance that an investor will earn a profit or not lose money. There can be no assurance that the portfolio will continue to hold the same position in companies described herein, and the portfolio may change any portfolio position at any time. As with any investments, there are risks to be considered. Past performance is no indication of future results.
The one year forecast is included for illustrative purposes and accordingly, no assumptions or comparisons should be made based upon these ratios. Risk statistics are based off a five-year time frame. Portfolio characteristics are based upon third-party sources that are deemed to be reliable, however, Cambiar does not guarantee its accuracy or completeness.
Total Assets represents assets under management for the strategy and are subject to change. Minimums represent intended/proposed minimums for institutional clients and are subject to change.
The Russell 2000® Value Index is a trademark/service mark of the Frank Russell Company. Russell® is a trademark of the Frank Russell Company.
Definitions:
Active Share – a holdings-based measure of active management representing the percentage of securities in a portfolio that differ from those in the benchmark index.
Price/Earnings (F1Y) – a calculation that divides the current share price by the estimates of earnings in the next four quarters.
Debt/Equity – Long Term is a calculation that takes interest-bearing, long-term debt divided by shareholder equity.
EPS Growth – Long Term is a calculation that takes the company’s estimated profits for five years divided by the outstanding shares.
Alpha – a measure of risk-adjusted performance.
Beta – a measure of risk in relation to the market or benchmark.
R-Squared – a measure of how closely a portfolio’s performance correlates with the performance of a benchmark index
Sharpe Ratio – a direct measure of reward-to-risk and is calculated by subtracting the risk-free rate from the rate of return for a portfolio and dividing the result by the standard deviation.
Standard Deviation – a statistical measure of historical volatility; a measure of the extent to which numbers are spread around their average.
Commentary
Domestic Markets – 3Q20 Review
U.S. equities continued their ascent in the third quarter, with the S&P 500 Index posting a 9% gain. Small-cap stocks (defined as the Russell 2000 Index) climbed 5%, illustrating the broad-based nature of the rally. The gains in the quarter would have been greater were it not for a pullback in September on concerns that a rise in COVID-19 cases (largely associated with back-to-school openings) could hinder the pace of the economic recovery.
Each of Cambiar’s domestic strategies performed well in the quarter relative to their primary benchmarks, widening their year-to-date (and longer timeframe) excess return differentials. Given the portfolios’ emphasis on quality and downside protection, we were encouraged that the bulk of the 3Q alpha was sustained in the September drawdown. Cambiar remains focused on consistent execution in the underwriting of new positions, maintenance of existing holdings, and selective avoidance of industries/companies that do not meet our investment criteria.
Growth vs. Value – Still Going…
Once again, growth stocks outpaced their value counterparts in the quarter – prompting the Energizer Bunny reference from the early 1990s. The Russell 1000 Growth Index gained 13.2% in 3Q and has now returned 24.3% in 2020. In contrast, the Russell 1000 Value Index gained 5.6% in the quarter and has a year-to-date return of -11.6%. The YTD spread of 3600 basis points is the widest divergence on record – including the dotcom bubble in the late 90s. The market’s preference for all things growth may not yet be at euphoric levels, but when stocks rally by 50% (e.g., Tesla, Apple) after announcing a stock split – we have to be getting close. At a minimum, clients who embrace the concept of buy low/sell high should consider a rebalance to their value allocations, given the high multiples now assigned to many growth companies.
Recognizing that our clients have likely reached a level of fatigue with the value vs. growth narrative that has dominated this cycle, Cambiar would argue that this dynamic grows in relevance each day these spreads continue to widen. There is no question that the pandemic accelerated a number of trends that favor growth stocks. But there are logical limits to prices, no matter how strong the underlying fundamentals. Financial gravity is a very real investment concept, despite the growth at any price behavior that has currently overtaken the market.
The sentiment around value stocks could not be much worse than it is today. Despite the extended out-of-favor status currently ascribed to value, Cambiar continues to believe that buying companies using a price-sensitive approach remains a key variable to compounding capital over time. If outperformance is a function of exceeding expectations, shouldn’t one be inclined to look in areas where expectations are low? The key here is to avoid the false positives that often accompany a process that is overly enamored by low valuations. A traditional low Price/Book philosophy was successful in the industrial age but has been less effective as the world transitions to a digital economy. Cambiar’s relative value discipline seeks companies that are trading at reasonable valuations – but we attempt to avoid value traps by prioritizing quality over statistically cheap stocks. Quality can take on various meanings; Cambiar attempts to remove subjectivity by evaluating metrics such as leverage, free cash flow, and return-on-equity/return-on asset metrics. We then determine an appropriate price level to attach to these attributes, with the goal of providing both a margin of safety as well as an attractive upside return over a forward 1-2 year timeframe.
Certain information contained in this communication constitutes “forward-looking statements”, which are based on Cambiar’s beliefs, as well as certain assumptions concerning future events, using information currently available to Cambiar. Due to market risk and uncertainties, actual events, results or performance may differ materially from that reflected or contemplated in such forward-looking statements. The information provided is not intended to be, and should not be construed as, investment, legal or tax advice. Nothing contained herein should be construed as a recommendation or endorsement to buy or sell any security, investment or portfolio allocation. Securities highlighted or discussed have been selected to illustrate Cambiar’s investment approach and/or market outlook. The portfolios are actively managed and securities discussed may or may not be held in client portfolios at any given time, do not represent all of the securities purchased, sold, or recommended by Cambiar, and the reader should not assume that investments in the securities identified and discussed were or will be profitable.
Any characteristics included are for illustrative purposes and accordingly, no assumptions or comparisons should be made based upon these ratios. Statistics/charts are based upon third-party sources that are deemed reliable; however, Cambiar does not guarantee its accuracy or completeness. As with any investments, there are risks to be considered. Past performance is no indication of future results. All material is provided for informational purposes only and there is no guarantee that any opinions expressed herein will be valid beyond the date of this communication.