Mid/Small Cap Equity Strategy

Bradley, Foster & Sargent developed its small and mid-cap equity discipline in 2005. We define small capitalization equities as companies with a market capitalization of less than $2 billion and mid-cap equities as companies with less than $8 billion in market capitalization. Since 2005, our client assets in this discipline have grown to $22 million, as of December 31, 2020.

Our investment strategy is to seek long term appreciation through growth of principal and income. Our approach is to focus on best of breed companies that meet our quality standards and to invest in these companies at opportune moments and at favorable prices.

In our investment process, we use quantitative analysis to identify quality companies, focusing on high or rising return on equity, above average margins, consistent free cash flow and earnings growth and appropriate leverage. Fundamental analysis is also employed to find companies with a competitive edge, pricing power and good management teams.

We seek to purchase small and mid-cap equities after an “opportunistic” event has occurred, which often can increase the investment return or lower the risk profile of a given company. Such a catalyst includes a corporate restructuring, a new product introduction, improved industry dynamics or a change in management.

Although portfolio sector weightings are heavily influenced through the process of individual stock selection, our strategy emphasizes broad diversification across industries and companies. Portfolios consist of 25-40 stocks with a typical initial investment of 3% of the portfolio.