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Wasatch Small Cap Growth Strategy

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Wasatch Small Cap Growth Strategy
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Strategy Overview

Highlights
  • Blend of core-growth and high-growth holdings provides balance and upside potential
  • Core Growth: highest-quality, stable growing companies
  • High Growth: companies with minimum annual earnings growth of 25%
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 50-75 positions

Portfolio Managers
JB Taylor JB Taylor Lead Portfolio Manager
10 years on strategy
27 years at wasatch
Ken Korngiebel Ken Korngiebel Portfolio Manager
6 years on strategy
8 years at wasatch
Ryan Snow Ryan Snow Portfolio Manager
6 years on strategy
23 years at wasatch
22 Cumulative PM years on strategy

We focus on high-quality companies that we believe will take market share and grow sales and earnings for long periods of time.”

—JB Taylor, Lead Portfolio Manager

Performance

Total Returns AS OF 06/30/23 AS OF 08/31/23
Quarter-End Month-end
1 Month
3 Month
ytd
1 yr
3 yr
5 yr
10 yr
Small Cap Growth Composite (Gross)
-2.79%
12.91%
17.80%
9.31%
0.24%
7.32%
10.98%
Small Cap Growth Composite (Net)
-2.97%
12.68%
17.09%
8.43%
-0.58%
6.43%
10.00%
Russell 2000® Growth Index
-5.21%
7.45%
12.68%
6.78%
2.67%
2.46%
8.17%
Russell 2000® Index
-5.00%
9.00%
8.96%
4.65%
8.12%
3.14%
7.96%

Returns for periods less than one year are not annualized.

Calendar Year Returns (%) NET OF FEES (AS OF 12/31/22)
Small Cap 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 Growth Composite contains fully discretionary equity accounts following the Small Cap Growth style.  The composite primarily invests in small growth companies 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 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 06/30/23
Portfolio
Index
Number of Holdings
57
1089
Average Market Cap
($ Weighted)
$4.86B
$3.39B
Median Market Cap
$2.97B
$1.29B
EPS Growth (%, est. 5 yr)
22
19
P/E (Forward)
26
18
Portfolio Turnover (%)
31.19
N/A
Active Share (%)
95
N/A
Performance Statistics AS OF 06/30/23
5 yr
Alpha
5.33
Beta
1.04
R-Squared
0.92
Standard Deviation
26.34
Upside Capture
129.84
Downside Capture
99.10
Top 10 Holdings AS OF 06/30/23
Company
% of Net Assets
Nova Ltd. (Israel)
3.9%
Ensign Group Inc/The
3.8%
Medpace Holdings Inc.
3.5%
SiteOne Landscape Supply Inc.
3.3%
HealthEquity Inc.
3.1%
Euronet Worldwide Inc.
3.0%
Cyber-Ark Software Ltd/Israel (Israel)
2.9%
RBC Bearings Inc.
2.9%
Five Below Inc.
2.9%
Neogen Corp.
2.8%
57 Number of holdings
95% Active share
Sector Allocation AS OF 06/30/23
Sector
Portfolio
Index
Health Care
23.4 %
23.6 %
Consumer Discretionary
21.9 %
10.8 %
Information Technology
19.4 %
21.1 %
Industrials
16.3 %
20.1 %
Financials
10.2 %
5.9 %
Consumer Staples
3.8 %
4.2 %
Cash & Cash Equivalents*
3.1 %
N/A
Communication Services
1.9 %
2.1 %
Energy
0.0 %
4.5 %
Materials
0.0 %
4.3 %
Utilities
0.0 %
1.6 %
Real Estate
0.0 %
1.6 %
Country Allocation AS OF 06/30/23
Portfolio (%)
Developed
96.9%
United States
87.6%
Israel
9.2%
87.6% 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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