Domestic Equities

Small Cap Value

Leverage proprietary research to uncover investments with the potential to offer consistent returns over the long term and downside protection through market cycles.

Our experienced small cap equity investment team conducts bottom-up research, looking for companies with management teams that are focused on sustainable and/or improving Return on Invested Capital (ROIC) and low embedded expectations. These efficient allocators of capital typically service niche markets and have defendable competitive advantages.

Investment Philosophy

Our Small Cap Value philosophy is founded on the belief that excess returns are achieved by investing in companies at or near inflections in expected ROIC. We seek to identify catalysts of change for improved returns while guarding for risk.

Strategy Description

Our Small Cap Value strategy utilizes a value investment approach and consists of companies with market capitalizations that do not typically exceed the largest market capitalization company in the Russell 2000® Value Index. The strategy typically holds between 70 to 85 securities diversified across industries and generates moderate turnover.

Approach

Return On Invested Capital (ROIC) Focus

During the last 20 years, Russell 2000 companies with the highest ROICs have outperformed their peers on a quarterly basis 72% of the time1. Early identification of catalysts that can improve a company's ROIC is one way we believe we gain our competitive advantage.

Improving Catalysts

We look to identify companies with low embedded expectations that have company specific return-improving catalysts. We do not buy a stock simply because it's cheap. Our process often helps us discover catalysts for change that Wall Street has not identified and may be overlooked by our competitors.

Invest in Niche Market Companies

We focus on companies with a defendable competitive advantage that compete in smaller markets. Niche markets naturally have less competition, allowing more opportunities for growth and value creation.

Invest in Underperforming Companies

We take a contrarian approach to identify out-of-favor companies with the potential to improve ROIC. These companies typically have very attractive valuations, which we believe gives us an early-entry advantage.

Portfolio Managers

Mark T. Dickherber, CFA, CPA

Director of Small Cap Strategies

READ BIO >

Shaun P. Nicholson

Senior Portfolio Manager

READ BIO >

Investment Vehicles

Separate Account

Literature

Recognitions

 

Small Cap Value Manager of the Decade, Small-Mid Value Universe2

Related Insights

Explore the views of our thought leaders on related topics.

Contact an Advisor Solutions team member to learn more

1Represents performance of Russell 2000 companies ranked in the top two quintiles for highest in terms of ROIC. Source: Furey Research Partners, FactSet. As of 3.31.22.

2You can find more information about the PSN Top Guns Award here. Segall Bryant & Hamill did not pay to participate in the PSN Top Guns award. PSN Top Guns Manager of the Decade. As of 12/31/21. Criteria: The PSN universes were created using the information collected through the PSN investment manager questionnaire and use only gross of fee returns. Mutual fund and commingled fund products are not included in the universe. PSN Top Guns investment managers must claim that they are GIPS compliant. Products must have an r-squared of 0.80 or greater relative to the style benchmark for the ten-year period ending December 31, 2021. Moreover, products must have returns greater than the style benchmark for the ten-year period ending December 31, 2021 and also standard deviation less than the style benchmark for the ten-year period ending December 31, 2021. At this point, the top ten performers for the latest ten-year period ending December 31, 2021 become the PSN Top Guns Manager of the Decade.

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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.

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