Details

The Small-Cap Advantage

How Top Endowments and Foundations Turn Small Stocks into Big Returns
Wiley Finance, Band 645 1. Aufl.

von: Brian Bares
33,99 €
Verlag:	Wiley
Format:	PDF
Veröffentl.:	03.05.2016
ISBN/EAN:	9780470939680
Sprache:	englisch
Anzahl Seiten:	208

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Beschreibungen

Titelbeschreibung

A world-renowned money manager shares winning strategies for small-stock investing Since forming Bares Capital Management, Inc. in 2000, Brian Bares has shown that above average returns can be generated through the careful selection of small company common stocks. Additionally, he's shown how concentrating capital in a handful of ideas improves the potential for outperformance by increasing the depth of knowledge of each position and allowing each security to have a more meaningful impact on the portfolio. In The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks Into Big Returns, Bares describes how endowment-model investors and aspiring managers can gain meaningful exposure to small stocks while sidestepping many of the obstacles that have historically prevented institutional investment in the asset class. The book also <ul> <li>Details the historical outperformance of small-cap stocks</li> <li>Contrasts the various strategies employed by managers in the space</li> <li>Explains how aspiring managers can structure a firm to boost performance and attract institutional capital</li> <li>Describes how endowment-model institutions can evaluate and engage outside managers for their small-cap allocations</li> <li>Summarizes important topics such as liquidity and the research process</li> </ul> Bigger is not better. The Small-Cap Advantage reveals that small stocks have historically performed better than large ones, and that lack of competition in small-cap stocks provides diligent managers with a singular opportunity to outperform.

Inhaltsverzeichnis

Introduction xiii Acknowledgments xvii CHAPTER 1 The Small-Cap Advantage 1 Two Sources of Outperformance 1 Small-Cap Definitions 2 The Outperformance of Small-Cap Stocks 10 Outperformance within the Small-Cap Space 15 Chapter Summary 19 CHAPTER 2 Small-Cap Disadvantages 21 Research 21 Trading 23 The Small-Cap Graveyard and Reverse Survivorship Bias 28 Capping Assets 29 Chapter Summary 31 CHAPTER 3 Small-Cap Investment Philosophy and Process 33 Institutional Approach 33 Passive and Enhanced Indexing in Small-Cap Stocks 34 Active Management in Small-Cap Stocks 36 Chapter Summary 70 CHAPTER 4 Small-Cap Manager Organization 71 Creating Value for the Manager 71 Launching a Small-Cap Firm 72 Investment Team 86 Chapter Summary 94 CHAPTER 5 The Fund-Raising Process 95 General Marketing Strategy 95 Institutional Clients 98 Foundations and Endowments 104 Consulting Firms 105 Pension Plans 108 High-Net-Worth Individuals 112 Wrap Fee and Other Subadvisory Relationships 114 Databases 115 Third-Party Marketers 116 The Chicken-and-Egg Problem 118 Chapter Summary 119 CHAPTER 6 Fees, Agency Issues, and Other Performance Drags 121 Common Performance Drags 121 Frictional Costs in Small Caps 124 Institution-Manager Agency Issues 129 Agency Issues in Trading 131 Benchmark Tyranny 133 Commingled and Separate Accounts 134 Chapter Summary 138 CHAPTER 7 Small-Cap Managers and the Endowment Model 139 The Endowment-Model Approach to Small Caps 139 Finding an Edge 142 Funding Smaller Managers 145 Funding Emerging Managers 147 Finding Emerging Managers 149 Chapter Summary 151 CHAPTER 8 Evaluating Small-Cap Managers 153 Institutional Due Diligence Teams 153 Assessing Manager Risk 155 Assessing Investment Philosophy 158 Analyzing a Manager’s Process 159 Evaluating Firm Principals 167 Assessing Manager Operations 169 Contributions and Withdrawals 172 Chapter Summary 174 Final Thoughts 175 Notes 177 About the Author 183 Index 185

Autorenportrait

BRIAN T. BARES, CFA, is a research analyst with Bares Capital Management, Inc. He founded the firm in 2000 with the belief that concentrated portfolios of inefficiently priced small companies could lead to high relative compounding. His firm manages the institutional portfolios of small-cap and micro-cap common stocks in long-only, replicated separate accounts. Mr. Bares began his career by working his way up from the bottom. From compliance and operations, to trading and portfolio management, he garnered experience in nearly all aspects of running a boutique small-cap management company before starting his own company. He graduated from the University of Nebraska with a degree in mathematics. His investment philosophy and strategy have been profiled in Value Investor Insight and the Manual of Ideas: Portfolio Manager's Review. Mr. Bares holds the Chartered Financial Analyst designation and is a member of the CFA Society of Austin. He resides in Austin, Texas, with his wife and two sons.

Back cover copy

The historical returns of small-cap stocks have exceeded those of mid-cap and large-cap stocks over long time periods. The additional return experienced by small-cap investors has occurred despite inherent disadvantages in the asset class. The excess return available from small-cap stocks can help large foundations, endowments, and other similar institutional investors overcome the drag of inflation and the drain of annual spending. These institutional investors are in a unique position to fund new and often untested managers who are in the best position to benefit from the return premium of small-cap stocks and from the relative lack of professional participation in the space. The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns is a must-have book for aspiring and existing small-cap managers and the institutions that would hire them. It is an insider's account of institutional small-cap investing. The book details the investment, fundraising, and operational challenges encountered by small-cap managers. It also: <ul> <li>Describes the evaluation issues encountered by institutions in their small-cap manager due diligence</li> <li>Reveals why small-cap stocks are a fertile hunting ground for investors seeking high returns over long time periods</li> <li>Details how top foundations, endowments, and other institutional investors can procure exposure to small-cap stocks through allocations to specialist managers</li> <li>Explores the reasons for small company outperformance and reveals how returns can be further enhanced through the careful avoidance of problem companies</li> <li>Explains why the small-cap space is ideal for active management and why passive indexing may not be an optimal strategy for this asset class</li> </ul> The Small-Cap Advantage helps aspiring small-cap managers understand the state of the institutional investment management industry. It debunks the notion that small-cap managers who lack long track records or high levels of assets under management are undeserving of institutional funding. It explains the fundraising process for aspiring small-cap managers and how they can handle many of the challenges that come with successfully increasing strategy assets. The Small-Cap Advantage provides endowment-model institutions with a deeper understanding of the unique issues faced by specialist boutique managers who focus on the small-cap space. It will also assist institutional due diligence teams in their evaluation of small-cap managers.