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Wasatch Small Cap Value Strategy

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Wasatch Small Cap Value Strategy
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Strategy Overview

Highlights
  • Seeks to exploit the inefficiency when a growth stock becomes a value stock
  • Goal is to capture multiple expansion and earnings growth
  • Blend of fallen angels, undiscovered gems, and quality value holdings
Investment Approach

We use a bottom-up approach that seeks to identify undervalued companies with future growth potential. We look for the following types of companies:

  • Fallen Angels: growth companies that have suffered a temporary setback
  • Undiscovered Gems: growth companies trading at value prices
  • Quality Value: statistically cheap, slower growing companies

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

Approximately 45-65 positions

Portfolio Managers
Jim Larkins Jim Larkins Lead Portfolio Manager
22 years on strategy
26 years at wasatch
Austin Bone Austin Bone Associate Portfolio Manager
1 year on strategy
5 years at wasatch
Quick Look
As of 09/30/21
Total Assets*
$2,793M
Mutual Fund
$1,688M
Separate Accounts
$1,105M
Inception Date
12/17/97
Account Minimum
$1m
Primary Benchmark
Russell 2000® Value Index

*Total strategy assets across all vehicles and composites

Documents
Fact Sheet
Commentary
23 Cumulative PM years on strategy

There’s an inefficiency that exists when a growth stock becomes a value stock, and we try to exploit this inefficiency.”

—Jim Larkins, Lead Portfolio Manager

Performance

Average Annual Total Returns AS OF 09/30/21 AS OF 09/30/21
Quarter-End Month-end
1 Month
3 Month
ytd
1 yr
3 yr
5 yr
10 yr
Since
Inception
Small Cap Value Composite (Gross)
-2.47%
-3.14%
18.33%
54.00%
12.72%
15.10%
16.28%
14.20%
Small Cap Value Composite (Net)
-2.49%
-3.27%
17.75%
52.97%
11.87%
14.20%
15.31%
13.05%
Russell 2000® Value Index
-2.00%
-2.98%
22.92%
63.92%
8.58%
11.03%
13.22%
8.64%
Russell 2000® Index
-2.95%
-4.36%
12.41%
47.68%
10.54%
13.45%
14.63%
8.46%

Returns for periods less than one year are not annualized. Since inception performance is calculated from 12/31/1997.

Calendar Year Returns (%) NET OF FEES (AS OF 12/31/20)
Small Cap Value Composite
Russell 2000® Value 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 of composite descriptions of Wasatch composites 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 Value Composite contains fully discretionary equity accounts following the Small Cap Value style.  The composite primarily invests in small 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 Value TR and the Russell 2000 TR indices.

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

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

All rights in the Russell Indexes vest in the relevant London Stock Exchange Group plc (collectively, the “LSE Group”), which owns these indexes. Russell® is a trademark(s) of the relevant LSE Group company and is used by any other LSE Group company under license. These indexes are 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 Fund or Separate Account. The LSE Group makes no claim, prediction, warranty or representation either as to the results to be obtained from the Fund or Separate Account or the suitability of these indexes for the purpose to which they are being put by Wasatch Global Investors.

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Portfolio

Characteristics AS OF 09/30/21
Portfolio
Index
Number of Holdings
60
1429
Average Market Cap
($ Weighted)
$3.80B
$2.89B
Median Market Cap
$2.96B
$1.09B
EPS Growth (%, est. 5 yr)
17
15
P/E (Forward)
16
13
Portfolio Turnover (%)
51.91
N/A
Active Share (%)
97
N/A
Performance Statistics AS OF 09/30/21
5 yr
Alpha
4.15
Beta
0.96
R-Squared
0.92
Standard Deviation
22.21
Upside Capture
103.23
Downside Capture
92.13
Top 10 Holdings AS OF 06/30/21
Company
% of Net Assets
Altra Industrial Motion Corp
3.7%
Fabrinet
3.3%
Kadant Inc.
3.2%
Webster Financial Corp.
2.6%
Magnolia Oil & Gas Corp
2.6%
Axos Financial Inc.
2.6%
Ensign Group Inc/The
2.5%
Bank OZK
2.5%
National Storage Affiliates Trust
2.4%
LGI Homes Inc.
2.3%
60 Number of holdings
97% Active share
Sector Allocation AS OF 09/30/21
Sector
Portfolio
Index
Financials
22.6
26.2
Industrials
20.1
14.8
Consumer Discretionary
17.8
8.0
Information Technology
15.0
5.4
Materials
6.8
4.6
Health Care
6.4
11.2
Energy
3.9
7.1
Real Estate
2.4
11.1
Communication Services
2.2
4.3
Consumer Staples
1.5
2.8
Cash & Cash Equivalents*
1.5
N/A
Utilities
0.0
4.6
Country Allocation AS OF 09/30/21
Portfolio (%)
Developed
98.6
United States
94.6
Israel
1.9
Ireland
1.2
Canada
0.9
94.6% United States

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

Commentary & Literature

Commentary
Fact Sheet
News & Updates

Wasatch Small Cap Value Fund to Close to New Investors

March 3, 2021

Wasatch Global Investors announced today that effective at 4:00 p.m. EDT on…

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Views From a Value Manager in a Growth Shop

September 24, 2019

What’s it like being a value manager in a shop focused on…

Read More >

Important Disclosures

Portfolio Characteristics, Allocations and Top Ten Holdings are derived from a representative account.

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.

Portfolio holdings are subject to risks and may change at any time.

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