SMID Cap Strategy

A Differentiated Approach to ROIC SMID Cap Investing

Our experienced SMID cap equity investment team is driven by the belief that Return on Invested Capital (ROIC) and its byproduct, free cash flow, are the most important drivers of long-term outperformance in the small- and mid-capitalization universe. The team seeks to invest in niche market companies that have defendable competitive advantages and exhibit high or improving ROIC levels. Niche markets and defendable competitive advantages are key to sustaining high or improving ROIC levels, all of which lead to compounding growth in free cash flow and ultimately, an increase in equity value.

Investment Philosophy

Our SMID Cap philosophy is based on four key pillars that, when combined, are designed to generate excess returns. We seek companies that generate high or improving levels of ROIC, serve niche markets with defendable competitive advantages, are guided by strong management teams, and trade at attractive reward to risk ratios. Companies are analyzed for ESG factors to better understand the management team’s goals before being selected for further due diligence.

Strategy Description

The strategy blends value-oriented, improving ROIC companies with growth-oriented, high ROIC companies. The strategy targets companies under $15 billion in market cap, typically holds between 65 to 85 companies, is well-diversified across sectors, and generates moderate turnover.

Our Approach

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ROIC Team at SBH

11 Years of Average Tenure With SBH

23 Years of Average Experience for Portfolio Managers

$510.4M SMID Cap Strategy AUM/AUA*


Portfolio Manager

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Jeffrey C. Paulis, CFA

Senior Portfolio Manager
B.S. in Business Administration, Saint Louis University
MBA from the University of Chicago’s Booth School of Business


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1Source: Furey Research Partners, FactSet. Data as of 03.31.20.

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*As of September 30, 2021. Model UMA assets of $11.4M are included in the AUA portion of the AUM/AUA total. All opinions expressed in this presentation are solely the opinions of Segall Bryant & Hamill. You should not treat any opinion expressed as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of the manager’s opinions. The opinions expressed are based upon information the manager considers reliable, but completeness or accuracy is not warranted, and it should not be relied upon as such. Market conditions are subject to change at any time, and no forecast can be guaranteed. Any and all information perceived from this presentation does not constitute financial, legal, tax or other professional advice and is not intended as a substitute for consultation with a qualified professional. The manager’s statements and opinions are subject to change without notice, and Segall Bryant & Hamill is not under any obligation to update or correct any information provided in this presentation.