The THB Mid Cap strategy seeks long-term capital appreciation over full market cycles by investing in a concentrated group of companies within the Russell Midcap® Index that THB believes are undervalued, display lower volatility, and have strong operating metrics. Our strategy will hold exactly 30 securities from the 800 securities within the Russell Midcap® Index and will have a high active share.
Philosophy & Process:
THB believes that mid cap companies are relatively inefficient and that a focused portfolio of high-quality securities can offer strong risk-adjusted returns.
We focus on finding companies that have demonstrated a long-term track record of success as measured by their ability to achieve self-funded growth. THB believes growth in revenue, shareholder equity and cash flow should not be achieved at the expense of rising levels of shares outstanding and/or debt.
Stocks must first pass THB’s stringent rejection criteria before being considered for the portfolio. THB’s proprietary Risk Grading and Quality Assessment, company-specific debt levels, retained earnings and earnings consistency are all factors that are used to reject less qualified securities.
We employ a core-based approach which seeks to find the best companies regardless of the “style” classification as we believe style indices are largely driven by sector weighting versus being truly accurate representations of the member companies. Our portfolio is constructed from the bottom up and sector weightings will be reflective of where we are finding the highest risk-adjusted return potential through mid-cap stocks for long-term investment.
We believe strong performance is delivered when risk is embedded in the research process versus managed afterwards. We believe our proprietary Risk Grading of a company can highlight issues missed during typical fundamental analysis. Its disciplined approach to risk at the security level allows THB to create a portfolio which has risk levels similar to large cap indices and lower than the Russell Midcap® Index.
Our investment philosophy and process, with refinements such as full integration of ESG (Environment, Social and Governance) factors, has remained intact throughout the team's existence.