Small Cap Value Q3 2018

U.S. markets performed well in the third quarter, propelled by strong corporate profits and economic growth.

Marking a reversal from trends witnessed earlier in the year, large capitalization stocks outpaced smaller ones and market volatility abated. The Russell 2000® Value Index (RUJ) returned 1.60% in the third quarter, building on its very strong showing last quarter. Beneath the surface, though, the Energy saw both absolute and relative weakness following pronounced strength in Q2, while Real Estate holdings also surrendered a portion of last quarter’s gains in response to rising interest rates.

40 to 60

companies in our fully invested, concentrated portfolio

10

year track record

$1.0

billion Small Cap Value assets under management as of 9/30/2018

110%

upside market capture ratio since inception (8/1/08)

74%

downside market capture ratio since inception (8/1/08)

  • Guides

    Philosophy

    • Fundamentals drive stock prices
    • Capital preservation improves returns
    • Culture shapes investment decisions
  • Shapes

    Process

    • Thorough, proprietary research by career analysts
    • Focus on valuation and risk controls
    • Team environment – group discussion/analyst decision
  • Generates

    Portfolio

    • Concentrated and diversified
    • Long-term/low turnover
    • Fully invested/limit on cash
  • Performance

    • Consistent pattern of results
    • Objective: Outperform the benchmark over the longer term

Small Cap Value

Quarter 3 2018

Equity Composite Performance

  • Cooke & Bieler - Gross of fees
  • Cooke & Bieler - Net of fees
  • Russell 2000® Value Index
Returns as of 9.30.2018. Returns greater than one year are annualized. Source: FactSet and Russell® Past performance is not indicative of future results. All investing involves risk, including loss of principal. Taxable client returns may vary from the results above due to tax-efficient portfolio management and higher fee schedules that result from lower portfolio minimums. Click for additional C&B Small Cap Value Performance Disclosures

Quality Characteristics1

  • C&B Small Cap Value
  • Russell 2000® Value Index*
ROC 5 Year Avg Cash Interest Coverage Debt/EBITDA Forecasted P/E** P/Normalized Earnings**
11.5% 8.4x 2.3x 15.7x 13.1x
6.8% 5.1x 3.4x 19.4x -
ROC 5 Year Avg 11.5% 6.8%
Cash Interest Coverage 8.4x 5.1x
Debt/EBITDA 2.3x 3.4x
Forecasted P/E** 15.7x 19.4x
P/Normalized Earnings** 13.1x -
Period Ending: 9.30.2018 * Median ** Weighted Harmonic Mean Source: FactSet and Russell®

Portfolio Attributes1

  • C&B Small Cap Value
  • Russell 2000® Value Index
# Holdings Market Cap ($B) Range Market Cap ($B) Wtd Avg Annual Turnover
43 0.4 - 7.5 3.4 41%
1,387 0.1 - 6.0 2.1 -
# Holdings 43 1,387
Market Cap ($B) Range 0.4 - 7.5 0.1 - 6.0
Market Cap ($B) Wtd Avg 3.4 2.1
Annual Turnover 41% -
Source: FactSet and Russell®

Top 10 Holdings1

Helen of Troy Ltd. 4.7%
Gildan Activewear Inc. 4.4%
Steelcase Inc. 4.0%
Syneos Health Inc. 3.9%
Colfax Corp. 3.8%
Schweitzer-Mauduit Int’l Inc. 3.5%
TCF Financial Corp. 3.0%
Quanex Building Products 3.0%
RenaissanceRe Holdings Ltd. 2.9%
Woodward Inc. 2.7%

Top 10 Holdings1

Helen of Troy Ltd. 4.7%
Gildan Activewear Inc. 4.4%
Steelcase Inc. 4.0%
Syneos Health Inc. 3.9%
Colfax Corp. 3.8%
Schweitzer-Mauduit Int’l Inc. 3.5%
TCF Financial Corp. 3.0%
Quanex Building Products 3.0%
RenaissanceRe Holdings Ltd. 2.9%
Woodward Inc. 2.7%

Sector Weights1

  • C&B Small Cap Value
  • Russell 2000® Value Index
  • Consumer Discretionary

    C&B Small Cap Value
    20.1%
    Russell 2000® Value Index
    11.6%
  • Consumer Staples

    C&B Small Cap Value
    0.7%
    Russell 2000® Value Index
    2.5%
  • Energy

    C&B Small Cap Value
    1.2%
    Russell 2000® Value Index
    7.5%
  • Financials

    C&B Small Cap Value
    18.0%
    Russell 2000® Value Index
    28.2%
  • Health Care

    C&B Small Cap Value
    10.5%
    Russell 2000® Value Index
    5.0%
  • Industrials

    C&B Small Cap Value
    27.4%
    Russell 2000® Value Index
    12.1%
  • Information Technology

    C&B Small Cap Value
    6.2%
    Russell 2000® Value Index
    10.5%
  • Materials

    C&B Small Cap Value
    8.5%
    Russell 2000® Value Index
    4.4%
  • Real Estate

    C&B Small Cap Value
    1.9%
    Russell 2000® Value Index
    11.5%
  • Telecommunication Services

    C&B Small Cap Value
    Russell 2000® Value Index
    0.7%
  • Utilities

    C&B Small Cap Value
    Russell 2000® Value Index
    6.0%
  • Cash

    C&B Small Cap Value
    5.4%
    Russell 2000® Value Index
Source: FactSet and Russell®

Additional Cooke & Bieler Small Cap Value Disclosures