The quality value team relies on a primary-source approach to investing in smaller cap companies. In short, the team searches for strong, stakeholder-friendly businesses with a durable competitive advantage that are trading at a discount to intrinsic value. Characteristics of these businesses include sustained, high returns on invested capital, consistent free cash flow generation, and compounding of net book value over time. This approach brings a long-term, private equity mindset to investing in public companies. The team becomes intimately familiar with each company it owns by performing on-the-ground due diligence and developing a relationship with the leaders of each business.

Portfolios are constructed with the team's best ideas, resulting in a high-conviction portfolio with the goal of solid upside participation and extraordinary downside protection. The portfolio is built one stock at a time (bottom-up), but the portfolio team spends a considerable amount of time determining how each incremental business fits into the overall portfolio before a purchase or sale is initiated.

The investment universe is comprised of all small-cap businesses listed on US exchanges with market caps between $50 million and $5 billion. Due to the breadth of this smaller-cap universe (>3,000 companies), fewer investors and Wall Street analysts focus on this space, allowing the portfolio managers to uncover businesses that fly below the radar. Ideas are generated through multiple sources, including prior research, industry knowledge, and discussions with company management teams.