We employ a contrarian, fundamental, relative value investment philosophy. We believe that attractive returns can be earned by constructing diversified portfolios of well-managed, financially strong companies where the stock price is depressed because the company has experienced short-to intermediate-term difficulties.
The firm’s origins began in the early 1980s as a family office, founded and managed by Richard A. Snow. Over the next three decades, the firm opened access to its disciplined investment process for institutional and high net worth clientele, becoming an SEC registered investment advisor1 in 1990. Snow Capital Management, L.P. was formed in 2001 to retain and recruit talented investment management professionals as partners of the firm. Today, there are 32 employees advising and serving $3.6 billion in total client assets2 as a fundamental, bottom-up, contrarian value investment management boutique.
Snow Capital Management employs a contrarian, fundamental, relative-value investment philosophy. We believe that attractive returns can be earned by constructing concentrated, diversified portfolios of well-managed, financially strong companies where the price is depressed because the company has experienced short-to intermediate-term difficulties. The philosophy is consistent with modern behavioral finance research, attempting to take advantage of investors’ overreaction to negative events and looking for catalysts that will lead to a positive re-rating. Therefore, the upside potential may be enhanced by earnings turn-arounds, and more powerfully, the potential expansion of the price-to-earnings ratio that a positive change in behavioral sentiment can generate after an earnings recovery.
The Sourcing of investment Ideas begins with portfolio managers and analysts utilizing various preliminary screening tools for valuation, market capitalization and fundamentals to identify a list of potential companies for further review. Once a company meets our criteria it is subjected to a comprehensive bottom-up analysis of the security, including evaluating the business model, competitive landscape, financial statements, modeling the underlying valuation and upside potential. Developing the investment thesis on a company involves constant collaboration between analysts and portfolio managers. Investments that pass this screening process and make it into our portfolios are reviewed regularly to prevent “Thesis creep” and ensure that valuation targets are on track for producing superior returns for our clients.
We believe that companies in recovery may offer exceptional investment returns due to market dislocations caused by behavioral biases:
Look for: Structurally sound business with positive free cash flow and a strong balance sheet
Goal: A return to quality fundamentals
Look for: Depressed Earnings and poor market sentiment
Goal: Mean Reversion in Earnings
Look for: Low multiple on expected normalized earnings
Goal: A Catalyst for P/E expansion
Free cash flow is the cash a company produces through its operations, less the cost of expenditures on assets.
The price/earnings ratio (P/E) is the ratio of a company's stock price to the company's earnings per share.
Mutual fund investing involves risk; principal loss is possible. Investments in smaller companies involve additional risks such as limited liquidity and greater volatility. Investments in foreign securities involve greater volatility and political, economic and currency risks and differences in accounting methods. These risks are greater in emerging markets. Investments in debt securities typically decrease in value when interest rates rise. This risk is usually greater for longer-term debt securities. The fund may invest in lower-rated and non-rated securities which present a greater risk of loss to principal and interest than higher-rated securities. The fund may invest in other investment companies, and the cost of investing in the Fund will generally be higher than the cost of investing directly in the shares of the mutual funds in which it invests. By investing in the Fund, you will indirectly bear your share of any fees and expenses charged by the underlying funds, in addition to indirectly bearing the principal risks of the funds. The fund also invests in ETFs. They are subject to additional risks that do not apply to conventional mutual funds, including the risks that the market price of an ETF's shares may trade at a discount to its net asset value ("NAV"), an active secondary trading market may not develop or be maintained, or trading may be halted by the exchange in which they trade, which may impact the Fund's ability to sell its shares. The Fund may use options and futures contracts which have the risks of unlimited losses of the underlying holdings due to unanticipated market movements and failure to correctly predict the direction of the securities prices, interest rates and currency exchange rates. This investment may not be suitable for all investors. Small- and Medium-capitalization companies tend to have limited liquidity and greater price volatility than large-capitalization companies.
Before you invest in the Snow Capital Funds, please refer to the Prospectus for important information about the investment company, including investment objectives, risks, charges and expenses. You may also obtain a prospectus by calling 1-877-766-9363. The prospectus should be read carefully before you invest or send money.
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