Mid Cap Growth

For clients in our Mid Cap Growth portfolios we invest in a select set of Mid Cap Growth companies.  These businesses demonstrate strong increases in earnings per share.  More significantly, they continually broaden, deepen and enhance their fundamental capabilities, competitive positions, product and service offerings and customer bases.

We invest in, not merely own the stocks of, these distinguished companies for an intermediate time horizon. We initiate investments opportunistically, when the stocks are attractively valued, yet concentrate holdings in companies best positioned for most rapid growth.  Our portfolios focus on a narrow set of such investments.  Chartwell Partners' discipline in applying this philosophy has defined our success.

Our investment process integrates the efforts of several kinds of specialists: quantitative analysts, fundamental analysts and a senior Portfolio Management Team.

• Preliminary appraisal:  Our process begins with prioritizing a universe of securities in a market capitalization range from $1.5 billion to $25 billion companies (Russell Midcap Growth) which our analysts believe possess secular, sustainable growth, a sound economic foundation and proven management. The process continues to evolve as we develop a composite assessment of such companies, combining multiple valuation measures along with price to EBITDA, P/E to growth rate, return on equity and return on invested capital.  Using these broad snapshots avoids the dependence on a single valuation tool, which may unduly focus the portfolio or miss important elements of company fundamentals.
  
  
• Fundamental research: Next, our fundamental research team uncovers the causes of the perceived undervaluation and answer the question, "Is this a high growth company that falls between the momentum and growth at a reasonable price continuum?" Factors that we will consider at this early stage  of our research are the perception of growth potential, valuation relative to market or industry comparables and price opportunity. A clear understanding of the cause is vital; only then can we determine what changes must occur to realize the company's growth potential.  The most decisive element of our research process is an appraisal of the company's growth opportunity, separating those companies real growth potential from those that are merely  companies with high growth valuation metrics.
  
  
• Portfolio Management:  The final portfolio is constructed primarily as a bottom-up residual of stock selection.  We weigh a number of factors including price opportunity, relative valuation and perception of growth when determining portfolio positions.  In symmetry with our buy process, a premium on a P/E to growth rate and/or valuation at the high end of a company's historical range indicates an unfavorable risk/reward profile and therefore a potential sell.  Deterioration in fundamentals or dissipation of the change elements prompts us to sell.

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*5 year relative to the Russell MidCap Growth Index
Statistics as of 12/31/16