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Wasatch Small Cap Core Growth Strategy

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Wasatch Small Cap Core Growth Strategy
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Strategy Overview

Highlights
  • A concentrated, yet diversified growth portfolio of high-quality companies
  • Highest-quality, stable growth companies
  • Most valuation sensitive Wasatch growth strategy
Investment Approach

We use a bottom-up approach that seeks to identify companies with outstanding long-term growth potential. We look for companies with:

  • Strong financials
  • A sustainable competitive advantage
  • Industry-best management teams
  • Earnings growth in good and bad economic environments

Primarily invests in U.S. companies with market caps of less than $5 billion at the time of purchase

Approximately 40-60 positions

Portfolio Managers
Paul Lambert Paul Lambert Lead Portfolio Manager
19 years on strategy
23 years at wasatch
Mike Valentine Mike Valentine Lead Portfolio Manager
6 years on strategy
7 years at wasatch
JB Taylor JB Taylor Portfolio Manager
23 years on strategy
27 years at wasatch
48 Cumulative PM years on strategy

We search for companies with defensible business models and great management teams. We believe these companies should be able to grow at superior rates through both good and bad economic environments.”

—JB Taylor, Portfolio Manager

Performance

Total Returns AS OF 12/31/23 AS OF 01/31/24
Quarter-End Month-end
1 Month
3 Month
ytd
1 yr
3 yr
5 yr
10 yr
Since
Inception
Small Cap Core Growth Composite (Gross)
-3.05%
22.11%
-3.05%
14.11%
3.37%
14.14%
13.16%
13.99%
Small Cap Core Growth Composite (Net)
-3.15%
21.86%
-3.15%
13.15%
2.55%
13.30%
12.28%
12.78%
Russell 2000® Growth Index
-3.21%
18.25%
-3.21%
4.46%
-6.03%
6.17%
7.00%
7.75%
Russell 2000® Index
-3.89%
17.62%
-3.89%
2.40%
-0.76%
6.80%
7.03%
9.04%

Returns for periods less than one year are not annualized. Since inception performance is calculated from 12/31/1986.

Calendar Year Returns (%) NET OF FEES (AS OF 12/31/23)
Small Cap Core Growth Composite
Russell 2000® Growth Index

Performance is preliminary and subject to change. Past performance is not indicative of future results. Wasatch Global Investors is an independent registered investment advisor. Registration does not imply a certain level of skill or training. Wasatch claims compliance with the Global Investment Performance Standards (GIPS®). GIPS® is a registered trademark of CFA Institute. CFA Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of content contained herein. To receive a complete list and description of composites and pooled funds and/or a GIPS Composite Report, e-mail inforequest@wasatchglobal.com. The U.S. Dollar is the currency used to express performance.

The Small Cap Core Growth Composite contains fully discretionary equity accounts following the Small Cap Core Growth style.  The composite primarily invests in smaller growing companies at reasonable prices with the goal of long-term growth of capital.  Income is a secondary objective, but only when consistent with long-term growth of capital.  For comparison purposes the composite is measured against the Russell 2000 Growth TR and the Russell 2000 TR indices.

The Russell 2000 Growth TR Index measures the performance of Russell 2000 Index companies with higher price-to-book ratios and higher forecasted growth values.

The Russell 2000 TR Index represents the smallest 2,000 companies in the Russell 3000 Index, ranked by total market capitalization.

The Fund has been developed solely by Wasatch Global Investors. The Fund is not in any way connected to or sponsored, endorsed, sold or promoted by the London Stock Exchange Group plc and its group undertakings (collectively, the “LSE Group”). FTSE Russell is a trading name of certain of the LSE Group companies. All rights in the Russell Indices vest in the relevant LSE Group company which owns the Index. Russell ® is a trademark of the relevant LSE Group company and used by any other LSE Group company under license. TMX® is a trademark of TSX, Inc. and used by the LSE Group under license. The Index is calculated by or on behalf of FTSE International Limited or its affiliate, agent or partner. The LSE Group does not accept any liability whatsoever to any person arising out of (a) the use of, reliance on or any error in the Index or (b) investment in or operation of the Wasatch Core Growth Fund or the suitability of the Index for the purpose to which it is being put by Wasatch Global Investors. Indexes are unmanaged, and investors cannot invest directly in an index.

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Portfolio

Characteristics AS OF 12/31/23
Portfolio
Index
Number of Holdings
53
1074
Average Market Cap
($ Weighted)
$7.42B
$3.85B
Median Market Cap
$5.19B
$1.27B
EPS Growth (%, est. 5 yr)
19
17
P/E (Forward)
29
19
Portfolio Turnover (%)
27.38
N/A
Active Share (%)
94
N/A
Performance Statistics AS OF 12/31/23
5 yr
Alpha
7.44
Beta
0.95
R-Squared
0.91
Standard Deviation
24.24
Upside Capture
118.92
Downside Capture
93.08
Top 10 Holdings AS OF 12/31/23
Company
% of Net Assets
RBC Bearings Inc.
3.7%
Trex Company Inc.
3.3%
Ensign Group Inc/The
3.1%
Guidewire Software Inc.
3.1%
Hamilton Lane Inc.
2.9%
Balchem Corp.
2.8%
HealthEquity Inc.
2.8%
Globant SA
2.8%
Kadant Inc.
2.7%
Five Below Inc.
2.7%
53 Number of holdings
94% Active share
Sector Allocation AS OF 12/31/23
Sector
Portfolio
Index
Information Technology
21.5 %
21.7 %
Financials
17.1 %
6.3 %
Consumer Discretionary
16.8 %
11.1 %
Industrials
16.1 %
20.0 %
Health Care
14.9 %
22.4 %
Materials
6.2 %
4.1 %
Consumer Staples
3.8 %
4.5 %
Real Estate
2.3 %
1.7 %
Cash & Cash Equivalents*
1.4 %
N/A
Energy
0.0 %
4.5 %
Communication Services
0.0 %
2.2 %
Utilities
0.0 %
1.5 %
Country Allocation AS OF 12/31/23
Portfolio (%)
Developed
98.6%
United States
92.2%
Israel
3.8%
Ireland
2.6%
92.2% United States

Country weights are calculated as a percentage of total portfolio including cash & cash equivalents.

Commentary & Literature

News & Updates

After a Rough Year, Do Small-Caps Deserve a Closer Look?

January 13, 2023

Equity markets sold off broadly in 2022, but the pain was particularly…

Read More >

Market Scout – Valuations and Stock-Price Trends May Forecast a Parting of Clouds in 2023

January 10, 2023

Equity markets sold off broadly in 2022, but pain was particularly acute…

Read More >

Important Disclosures

Past performance does not guarantee future results. Performance results are net of transaction costs and reflect the reinvestment of dividend and other earnings. Net performance data was calculated using actual management fees. Actual fees may vary depending on, among other things, the applicable fee schedule and portfolio size. See Wasatch Global Investors Form ADV Part 2A for more information on fee schedules. Some portfolio net-of fees returns may be net of performance-based fees. Current performance may be lower or higher than the performance data quoted.

Portfolio holdings are subject to change. References to individual companies should not be construed as recommendations to buy or sell shares in those companies. Wasatch analysts closely monitor the companies held in the portfolio. If a company’s underlying fundamentals or valuation measures change, Wasatch will reevaluate its position and my sell part or all of its holdings.

Portfolio Characteristics, Allocations and Top Ten Holdings are derived from a representative account. A representative account is selected based on accounts with substantially similar investment policies, objectives, and strategies that closely resemble, or are most representative of, the strategy it represents.

Est. 5-year EPS Growth %: Estimated percentage increase in earnings per share (EPS) per year of the fund's holdings over the next 5 years. Returns are not guaranteed and may be higher or lower. Source: Wasatch and FactSet. P/E Ratio (forward and trailing): Sum of stock prices of the fund's holdings divided by the aggregate earnings per share of those holdings for the next 12 months (forward), or past 12 months (trailing), calculated as a weighted harmonic average. P/E to Growth Rate: Forward 12-month P/E ratio divided by the estimated 5-year EPS growth rate. Portfolios with a number less than 1.0 would be considered undervalued, around 1.0 would be considered fair valued and significantly greater than 1.0 would be considered overvalued. Weighted Average Market Cap: Average market capitalization of companies held by the fund, weighted by their percentage of fund net assets. Portfolio Turnover: A measure of trading activity in a fund's portfolio over the past 12 months expressed as a percentage of the fund's average total assets. Alpha measures a fund's risk/reward potential. A positive alpha means the fund outperformed the index. A negative alpha means the fund underperformed the index. Beta measures a fund's risk in relation to the market. A beta of 0.8 means the fund's total return is likely to move up or down 80% of the market change; 1.25 means total return is likely to move up or down 25% more than the market. R-Squared measures (from 0 to 1.0) how closely a fund's movements are correlated with movements of its benchmark. An R-squared of 1.0 would mean that the fund's movements are completely correlated with the movements of its benchmark. Active Share measures the difference between portfolio holdings and the benchmark. It is the sum of the absolute values of the different weightings of each holding in the fund versus each holding in the benchmark, divided by 2. Standard Deviation measures the degree to which a fund's performance has varied from its average performance over a particular time period. The greater the standard deviation, the greater a fund's volatility (risk). Upside Capture explains how well a fund performs in time periods where the benchmark's returns are greater than zero. Downside Capture explains how well a fund performs in time periods where the benchmark's returns are less than zero.

Wasatch Advisors LP, trading as Wasatch Global Investors ARBN 605 031 909, is regulated by the U.S. Securities and Exchange Commission under U.S. laws which differ from Australian laws. Wasatch Global Investors is exempt from the requirement to hold an Australian financial services licence in accordance with class order 03/1100 in respect of the provision of financial services to wholesale clients in Australia.

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