Equity

Special U.S. Mid Cap Value Equity Strategy

The strategy aims to deliver long-term capital appreciation by investing primarily in mid-cap companies by using a disciplined, consistent valuation process that evaluates each stock’s upside reward relative to its downside risk.

CPA-based investment process

Through disciplined execution of its unique process, the team seeks to consistently outperform benchmarks and peers while maintaining a low-risk profile.

Rigorous bottom-up research

The bottom-up research process focuses on companies with durable competitive advantages, free-cash-flow generation, and balance sheet flexibility.

Disciplined valuation

The team appraises company reward/risk profiles, investing where this ratio is most favorable and not necessarily where upside is the greatest.

Investment approach

CPA-based approach helps find differentiated sources of alpha.

Accounting expertise and processes guide the team’s decision-making.

The team analyzes companies through a CPA lens to identify meaningful appreciation potential and limited loss of capital in its downside scenarios.

A differentiated approach to security selection can enable long-term capital appreciation.

The team uses a rigorous fundamental approach to identify companies with durable competitive advantages, strong free cash flow, and flexible balance sheets.

Portfolio construction allows security selection to drive compelling returns through a cycle.

Weightings are driven by the best reward/risk opportunities with a culture of risk awareness, reducing downside impacts and minimizing unintended style factor exposures.

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Transcript

John Ognar: Bryant, we just wrapped up the third quarter. And in the small- and mid-cap space, we saw a change in leadership as that rally extended into the third quarter. I just wonder what you were seeing across your strategies.

Bryant VanCronkhite: Yeah, in small- and mid-cap value, we saw high beta outperform low beta and low ROE (return on equity) beat high ROE. And that's what we call a low-quality rally, which is completely standard after a bear market correction, which we had a very brief one at the end of Q1, early Q2. I liken this to going to a children's birthday party where there's a pinata. And the pinata breaks, which in this case, the pinata breaking was the 90-day pause on tariffs. That starts the free-for-all. The kids all run in. They start grabbing as much candy as they can—not really paying attention to what they're grabbing. They grab it all. And that's what we just went through. That is the classic investor behavior after a bear market. You go and grab risk. You grab economic exposure. But we're about to enter the next phase of the economic cycle, which is when the kids sort out the candy, right? They say, well, I don't really like this. Let me throw this out. That's your high beta, low-quality non-earner that investors get rid of. And they say, oh, I really love this. Let me trade for more of this. And that's the high-quality, cash-flowing, good balance sheet companies. And what we're going to see next is the sifting through of what people grabbed in the last few quarters. And the character will change from low quality to more traditional higher quality going forward from here.

John: And I think the other theme we saw in the quarter was a continuation of this narrow focus on the AI theme. As investors look toward the next phase of that AI buildout, how are you approaching that?

Bryant: Yeah, it's especially true as you go up cap to large cap. The AI early winners have dominated the market and that continued into Q3. I don't have any reason to believe they're going to begin to fall off as leaders, but I believe we're going to see a broadening. If AI is the future we all think it's going to be, it's not going to happen without a broadening opportunity for other companies. So, we're going to see more edge devices, more handheld devices, more computers that require AI technology to be created. And we're going to see those companies need different semis and different tests and packaging. We're going to need companies like consultants to help us implement these things. We're going to see the materials companies, like copper producers or chemical producers, require more demand for their products to build more products. We're going to see industrial companies and transportation begin to participate. And so, if AI is what we think it's going to be and we're getting close from buildout to implementation, I don't see how that can happen without a broadening of the market and more companies participating as we go forward.

John: And as we begin the fourth quarter, what do you think are going to be the major events that investors are going to react to, and what's your outlook for the rest of this year?

Bryant: We start the fourth quarter with a government shutdown, which isn't ideal, but the market's not going to care as long as it doesn't go on for very long. So, let's assume that gets taken care of. Then, we head into earnings season. We get an update from corporates as to how things are looking in their view. And where is demand changing? Where is it growing? Where is it shrinking? And that's going to be important. It's especially important this time because expectations are rising. Typically coming into the back of the year, we see expectations falling and setting lower bars. We have the opposite this time, which could create more volatility. And then, beyond that, we really want to listen to companies about how they are going to absorb the benefits of the new One Big Beautiful Bill from a tax situation. And are they going to give us some teasers about how they're going to pass on pricing as tariffs begin to really start to bite when it comes to cost of goods sold? These are the things we're listening for. I expect volatility to continue to grow from here, given the uncertainty and given the higher bar. But that, again, is an opportunity for us to make smart decisions going forward.

John: Thanks, Bryant. Really appreciate your insights, and we look forward to hearing from you next quarter.

Bryant: Sounds good.

Composite performance

Average annual returns

(as of 9/30/2025)

5/1/2001

	1M	3M	YTD	1Y	3Y	5Y	10Y	Inception
Composite (Gross)	-1.44	4.65	6.12	2.37	14.72	14.65	11.22	11.34
Composite (Net)	-1.50	4.47	5.56	1.65	13.89	13.78	10.33	10.33
Benchmark	1.27	6.18	9.50	7.58	15.51	13.66	9.96	9.47

Performance is historical and does not guarantee future results. For more information, please refer to the GIPS composite report found in the documents section.

Calendar year

	2024	2023	2022	2021	2020	2019	2018	2017	2016	2015
Composite (Gross)	12.84	10.35	-3.83	29.73	4.08	36.62	-12.39	12.13	22.69	-1.88
Composite (Net)	12.05	9.50	-4.60	28.72	3.24	35.50	-13.14	11.19	21.66	-2.71
Benchmark	13.07	12.71	-12.03	28.34	4.96	27.06	-12.29	13.34	20.00	-4.78

Performance is historical and does not guarantee future results. For more information, please refer to the GIPS composite report found in the documents section.

Our team

Meet the investment team

The team follows a fundamental approach of identifying companies with competitive advantages, sustainable free cash flow, and flexible balance sheets, helping deliver long-term capital appreciation.

View Team

James Tringas

Co-Head of Special Global Equity

Bryant VanCronkhite

Co-Head of Special Global Equity

Key risks

Market risk: Security markets are volatile and may decline significantly in response to adverse issuer, regulatory, political, or economic developments with different sectors of the market and different security types reacting differently to such developments.

Equity securities risk: Equity securities fluctuate in value and price in response to factors specific to the issuer of the security, such as management performance, financial condition, and market demand for the issuer's products or services, as well as factors unrelated to the fundamental condition of the issuer, including general market, economic, and political conditions.

Small-cap securities risk: If a strategy invests in the securities of smaller-capitalization companies, these securities tend to be more volatile and less liquid than those of larger companies.

Foreign securities risk: If a strategy invests in the securities of non-U.S. issuers, these investments may be subject to lower liquidity, greater price volatility, and risks related to adverse political, regulatory, market, or economic developments and may be affected by changes in foreign currency exchange rates.

Investors should know that this strategy deployed may be subject to additional investment risks. For important information about the investment manager, please refer to Form ADV Part 2.

We look forward to helping you with your investment needs

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