Bridge City Capital Small Cap Growth Fund
The Bridge City Capital Investment Philosophy
The Bridge City Capital (BCC) investment philosophy focus is on quality companies with proven track records, strong financial characteristics and above average growth prospects at attractive valuations can lead to strong relative returns over the long run.
The BCC Investment Process
Our investment team employs a disciplined investment process that quantifies our investment philosophy, and, through internal research, generates a numeric score to measure relative attractiveness. This process provides a disciplined and consistent framework for decision making and helps filter meaningful information. Our investment process is primarily fundamental, bottom up, investment analysis.
Our investable universe consists of all companies in the Russell 2000 Growth Index and those companies with similar characteristics. Those companies that are expected to score well are run through the entire investment process. Investment ideas deemed as appropriate for investment are reviewed and acted on by the investment team collectively.
The BCC Quality Scorecard
Portfolio buy and sell decision-making is guided by the investment process. We numerically rank each company based upon four characteristics – Qualitative, Profitability & Growth, Financial Strength and Valuation. The score for each of the first three characteristics comprises the Quality Score. The Valuation Score is earnings yield, with the earnings component, an internally developed forward earnings projection.
The critical factors which help identify attractive securities include historical performance, future expected performance, returns on equity, assets and invested capital, margin trends, balance sheet strength and working capital metrics, cash flow generation, management team and employee base experience and stability, market share and expectations by other investors.
The Quality Score is analyzed separately from the Valuation score. Our belief is that quality companies often trade at a premium valuation and that it is acceptable to own, what we feel is, the best company in a sector even though its valuation may be higher than its competitors. Each company is assigned a total score, with the higher total scores reflecting higher relative attractiveness.
The BCC Sell Discipline
The Bridge City Capital Small Cap Growth Fund investment seeks to maintain low turnover. We are investors, preferring to be an owner for the long-term.
Reasons to reduce or eliminate a position:
- Fundamental change in the Quality Score
- Loss of conviction
- Exceeds market capitalization threshold (approximately $5 billion market cap)
- Exceeds 3% position size
The BCC Competitive Edge
We believe our competitive advantage resides in the experience and skills of our Investment Team and the consistent application of our investment process. We are long-term, "patient" investors with knowledge and skills to consistently and effectively apply and understand our investment process.
Regarding portfolio construction, the Fund is to be target sector neutral to the benchmark, and as such we do not strategically or tactically make sector allocation bets. The Fund is fully invested, sector neutral, diversified within sectors and avoids large position sizes. The maximum position size is 3%, with an average size in the 1% to 1.5% range.
For complete information about the Bridge City Capital Small Cap Growth Fund including investment objectives, risks, fees and expenses, please go to prospectus, or call (888) 982-2279. Read the prospectus or summary prospectus carefully before you invest or send money.