• Experienced, cohesive research team; internally generated proprietary research drives superior stock selection
• Long-term investment perspective identifies opportunities overlooked by other institutional investors and results in low portfolio turnover and reduced transaction costs
• Disciplined adherence to risk controls in company selection, valuation parameters and portfolio management
• Portfolio companies are typically market leaders with a proven product or service, sustainable competitive advantages and sound finances - limiting long-term fundamental risk
• Company research focuses on potential catalysts for improving profit margins (often from cyclical troughs) and accelerating earnings above consensus expectations. Accelerating earnings and cash flow drive stock prices

Investment Process
The Small Cap Core Equity investment process is driven by bottom-up fundamental research. The process begins with a universe of approximately 2,300 publicly traded companies with market capitalizations ranging from $200 million to $1 billion. Potential new purchase candidates are identified through two channels, direct analyst contact and quantitative screening.

The investment team engages in excess of 1,000 face-to-face contacts with company managements annually, supplemented by e-mail and telephone communication. These interactions highlight changing company and industry dynamics that may provide attractive investment opportunities.

The team also conducts quantitative screens spotlighting profitability and valuation characteristics of potential investments. Profitability screens compare a company's current profitability to historic peaks, troughs and averages to identify businesses with currently depressed profitability and the potential for improvement. Valuation screens compare a company relative to its history, other firms in its industry and the overall market to identify undervalued stocks.

Potential new purchase candidates that are identified are then subjected to intensive and comprehensive fundamental research by individual members of the investment team.
The focus of fundamental analysis is the long-term competitive strengths and weaknesses of a company's business franchise, the company's profitability potential, its market valuation and the catalysts for near-term performance improvement above consensus expectations. When a team member endorses a stock for purchase, the entire team meets to critically discuss the recommendation. Subsequent to this team analytical process, the portfolio manager makes the final decision as to whether to buy the stock, at what price and in what quantity. New positions are usually initiated at 1.0% -1.5%.

Portfolio risk controls include diversification in 50-80 different equity holdings, limiting the exposure to any single equity security to less than 5% of the total portfolio value, limiting exposure to any industry sector to no more than two times the Russell 2000 Index weighting and being fully invested in equities at all times.