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July 30, 2010
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Investment Focus & Products
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For almost 30 years, THB has specialized in the smaller capitalization
range of the US equity market. THB has maintained its specialized,
entrepreneurial approach to portfolio management while fully resourcing
our investment team with the personnel and analytical tools typically
available to larger organizations. As a result, THB offers clients
competitive, focused investment products delivered with the responsive,
personalized client service that is the hallmark of our firm.
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Consistent Investment Philosophy
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The investment philosophy, with refinements reflecting the institutionalization
of the marketplace, has remained intact throughout the existence of the firm
and focuses on the team-based, bottom-up construction of actively managed,
broadly diversified portfolios.
The strategy is characterized by representation in five major economic
sectors (Consumer, Industrial, Financial, Energy, and Technology) and
reflects the analysis of securities indigenous to their respective
sector and industry. A disciplined investment approach which blends
both qualitative and quantitative methods is employed to construct a
portfolio of companies that possess superior operating metrics, yet
have comparable valuation, to the index.
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Proven Investment Approach
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THB utilizes both qualitative and quantitative methods to find new
investment opportunities. Qualitative sources such as conferences,
trade shows, management meetings, and industry contacts are responsible
for approximately 65% of new idea generation. Approximately 30% of new
ideas are generated via our quantitative processes. The remaining 5%
of ideas come from externally generated research primarily sourced from
industry specialists at regional boutique firms.
Qualitative research is a by-product of the extensive cumulative sector
expertise of the portfolio managers, dialogue with corporate management
and industry specialists, attendance at conferences and trade shows, and
subscription to various professional services. A strong preference is shown
not only for depth and quality of the management team, but also for their
economic alignment with shareholders.
The quantitative stock selection process begins by screening the universe
with tools that allow us to uniquely combine fundamental and valuation factors
that are consistent with our investment approach, and have been extensively
back tested for high price predictability.
Our approach is bottom-up in nature and attempts to identify securities where the market has:
- Undervalued the potential of the company with regards to operating structure and profitability;
- Failed to recognize the inherent value on a cost replacement basis;
- Overlooked the resulting synergies available with respect to potential acquisition.
Candidate companies must possess distinguishing characteristics hat help define
them as leaders within their respective industries, while also demonstrating some
form of identifiable positive change in either the underlying business or corporate
structure. We aim to anticipate how such positive changes may effect the income
statement, balance sheet, or market perception of that particular company.
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Benchmarks:
The Russell 2000 Index (Index) is used as a benchmark to measure the portfolio's
performance. The Index is used to measure the performance of U.S. small company
stocks. The benchmark is for illustrative purposes only and is not intended to imply
the portfolio's past or future performance. The Index assumes dividend reinvestment
but does not include investment advisory fees or other expenses or transaction costs.
The Index is unmanaged and not available for direct investment. The Russell 2000
Index measures the performance of the 2,000 smallest companies in the Russell 3000
Index, a broad based index that represents approximately 98% of the value of the
investable U.S. Market. However, the index makes up only about 8% of the total market
capitalization of the Russell 3000 Index. The benchmark is used for comparative
purposes only and may not reflect the risk or investment style of THB's strategy.
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