Overview

Our small cap growth strategy focuses on identifying high quality companies in emerging industries and defensible growth niches that have open ended growth potential. We seek to buy the stocks of such companies before they are discovered or when investors are very skeptical about future prospects, and capture compound earnings growth over time.

Account Details

In our separately managed equity accounts, clients own a portfolio of securities. For these accounts we are able to customize each portfolio based on individual needs such as equity exposure levels, legacy positions, specific investment restrictions, income needs, etc. that may not be met by a mutual fund.

Performance

Small Cap Growth Composite (as of 6/30/20)

  QTD YTD 1 YR 3 YR 5 YR 7 YR 10 YR INCEP
(7/1/2006)
Small Cap Growth Composite (gross) 45.75% 26.07% 23.88% 24.00% 16.09% 17.74% 19.10% 15.55%
Small Cap Growth Composite (net) 45.44 25.53 22.73 22.79 14.95 16.58 17.93 14.41
Russell 2000 Growth Index 30.58 -3.06 3.48 7.86 6.86 10.03 12.92 8.45
Swipe Table for Full Data

Philosophy

We believe using a strict valuation discipline to build a concentrated portfolio of high-quality companies with rapid and sustainable revenue growth along with long-term profits should generate outperformance over time.

We define quality as companies with the following four characteristics: (1) a distinct proprietary advantage; (2) a leading position in the industry; (3) potential for margin expansion; and (4) the presence of a strong management team. We view rapid revenue growth as organic growth that averages 30% annually.

Valuation discipline is a critical component of our approach. We look for opportunities with at least 100% potential upside using an industry appropriate multiple that does not exceed 30x P/E for companies that we believe fit our portfolio. This not only helps us to identify fast growing companies that we believe are potentially breaking new barriers in their respective industries but plays an important role in managing portfolio risk.

Investment Team

James L. Callinan

Chief Investment Officer – Emerging Growth

James L. Callinan

Chief Investment Officer – Emerging Growth

Jim Callinan was the Co-Founder & Chief Investment Officer at RS Investments. He also co-founded the RS Growth Group LLC in 1996 and managed the RS Emerging Growth Fund from 1996 until 2010. In 1999 Mr. Callinan was named Morningstar’s Domestic Stock Manager of the Year*.

He served as portfolio manager for the Putnam OTC Emerging Growth Fund from 1994 to 1996 and began his career at Putnam Investments as an equity research analyst in 1987. He joined Osterweis Capital Management in 2016 and brought with him the Emerging Growth Partners, LP, a concentrated small cap growth strategy he founded at RS.

Mr. Callinan is an Executive Committee member of the Weatherbie Capital (an Alger Company) Advisory Board and the Friends of Harvard Football Board.

He is equity owner in the firm and a Portfolio Manager for the emerging growth strategy. He is also a Portfolio Manager for the flexible balanced strategy.

Mr. Callinan graduated from Harvard College (B.A. Economics), New York University (M.S. Accounting) and Harvard Business School (M.B.A.). Mr. Callinan holds the CFA designation.

*Morningstar Managers of the Year are determined by a combination of qualitative research by Morningstar’s manager research analysts; risk-adjusted medium- to long-term performance track records; and performance in the calendar year.

Matthew C. Unger

Vice President & Analyst

Matthew C. Unger

Vice President & Analyst

Prior to joining Osterweis Capital Management in 2016, Matt Unger spent three years at RS Investments as a Research Associate covering small cap growth companies in the medical technology and industrial sectors. Before graduate school, Matt worked at Platte River Capital covering the medical device sector from 2008-2010.

He is an equity owner in the firm and an Analyst for the emerging growth strategy.

Mr. Unger graduated from Trinity University (B.S. Finance, cum laude) and Southern Methodist University, Cox School of Business (M.B.A.). Mr. Unger holds the CFA designation.

Bryan Wong

Vice President & Analyst

Bryan Wong

Vice President & Analyst

Prior to joining Osterweis Capital Management in 2014, Mr. Wong was a member of the investment team managing the endowment of the David and Lucile Packard Foundation. Before that, Mr. Wong was an Analyst from 2005 to 2009 at two long/short hedge funds.

He is an equity owner in the firm and an Analyst for the emerging growth strategy.

Mr. Wong graduated from Yale University (B.A. in Political Science and International Studies with distinction) and the University of California Berkeley, Haas School of Business (M.B.A., Investment Management Fellow). Mr. Wong holds the CFA designation and is a member of the CFA Society of San Francisco.

Account Access

Past performance is not a guarantee of future results.

Rates of return for periods greater than one year are annualized. The information given for this composite is historic and should not be taken as an indication of future performance. Performance returns are presented both before and after the deduction of advisory fees. Portfolio returns are calculated daily, reflecting a time weighted return method. Portfolio returns reflect the reinvestment of dividends and other income and the deduction of brokerage fees, other commissions if any, and foreign withholding taxes. For the period 10/1/2012-12/31/2015, gross and net portfolio returns reflect the deduction of custodial, administrative, audit, legal, operating, and other expenses. Composite returns are calculated monthly by weighting portfolio returns by the beginning market value. For the period 7/1/2006-3/31/2014, composite net returns reflect the monthly deduction of an annual model advisory fee of 1.00%. Effective 4/1/2014, the composite net return is calculated using actual management fees.

Performance for the periods 7/1/2006-9/30/2012 and 10/1/2012-3/31/2016 represents the results of portfolios managed by the investment team while at RS Investment Management Co. LLC and Callinan Asset Management LLC, respectively, and employing the same investment strategy being used at OCM.

The Russell 2000 Growth Index is a market capitalization weighted index representing those stocks within the approximately 2000 smallest companies in the universe of U.S. equities that exhibit growth characteristics.

Clients invested in separately managed emerging growth accounts are subject to various risks including potential loss of principal, general market risk, small and medium-sized company risk, foreign securities and emerging markets risk and default risk. For a complete discussion of the risks involved, please see our Form ADV Brochure and refer to Item 8.

The Small Cap Growth Composite includes all fee-paying separately managed accounts, limited partnerships, and mutual funds that are predominantly invested in a concentrated selection of the equity securities of small and medium capitalization companies that can rapidly grow revenues and earnings. Portfolios normally remain primarily invested in equity securities except in times of unusual market stress when a more defensive allocation may be deemed prudent. The non-equity portion may be invested in holdings such as cash, cash equivalents, short-term debt securities, mutual funds, and ETFs. The benchmark is the Russell 2000® Growth Index.