Falcon Capital Management has launched the Falcon Focus SCV Fund, a concentrated, small-cap value fund designed to take advantage of excess return opportunities within the US small-cap value equity universe.
The Fund is targeting institutional and retail, taxable and tax-exempt investors looking for diversification and access to the historical, long-term alpha provided by active management in US small-cap value equities (1).
The Falcon Focus SCV Fund is a fundamentally driven, equity research based product that seeks to deliver superior, long-term investment results. The strategy attempts to exploit inefficiencies in the small-cap universe, where misperceptions and misunderstandings can arise due to a lack of traditional equity research available in smaller companies, potentially leading to mispriced valuations. The Fund strives to benefit investors under any market condition and seeks to outperform a passive allocation to the small-cap value sector.
The Fund incorporates the bottom-up research process of Falcon's 14-year institutional small-cap value strategy, which includes high-level screens, followed by rigorous economic and fundamental analysis, with the goal of obtaining unique insights and differentiated value judgments. Falcon seeks to discover and invest in small-cap stocks with market prices that trade at a significant discounts to their estimate of true worth. The process favours companies with sustainable competitive advantages, attractive valuations and attractive expected returns. Sustainable competitive advantages may be derived from a proprietary product or service offering, a position of financial strength, or an experienced and capable management team with acumen in capital allocation and resource management. Designed to be forward-looking, beyond the short-term time frames of traditional Wall Street research, the fund invests with a typical holding period of three to four years.
Kevin E Silverman (pictured), CFA, Falcon Capital Management's Chief Investment Officer and Portfolio Manager for the Falcon Focus SCV Fundm says: "By focusing on an area of the market that is often overlooked, we have a better opportunity to discover information not yet absorbed into market prices. We can add value by developing proprietary knowledge and value judgments around that information. Doing our own fundamental research with an experienced equity team is the key to our ability to add value." Jason P. Ryder, Partner & Senior Analyst for the Fund added, "We try to go a little deeper than the typical investor, with long term financial projections and a series of both traditional and non-traditional valuation models that incorporate different scenarios into our process. Our research goal is to make the best possible estimate of true worth."
