Winning Market Strategy

" Despite all the recent volatility in the markets our next guest is not a role this year since the march bottom. Heard this again what is this when he Google trademarked how. Anyway thanks -- an account as small catalog is up nearly 90% joining us -- his winning strategy jobs and portfolio manager of the five star. Morningstar rated T have as. Ball cap fund. Stop by surveillance. I -- are having me on. You know my my incredibly powerful law powers of deduction probably. You're like small caps."

" Yeah I was suddenly do. I was so historically is if you look at the small cap performance versus large cap in the US as small crabs -- from the large cap hide something like 6% a year over the last hundred years or so. Started kind of runs in cycles thousand definitely so in these aren't being some very long time period so most people's investment horizons are. That long it is risky yeah. I I I I in fact. They can be hard pressed to find anyone whose investment horizon as a hundred years that's right. A guy is so what does -- do for -- sales were five to ten years. So the goal of the CFS small cap fund is to outperform the small cap index which is which we take to be the Russell 2000 index. And the way we do that is to find market inefficiencies that that are on correlated to their general -- general movements of the market. So the way we take stock is use computer models these are developed on I 1020 years of historical data. And you're -- for miss priced stocks hot what what are some of the things you looked -- to find that miss price. So did the fact -- look at can be broken out into basically two categories one is valuation now these are things that everybody looks that you know how. Cheaper expense of -- stock is. You know historically value stocks outperformed growth. And they're different way to measure valued usually you'd divide price by a book value our earnings or cash flow. So we definitely use those factors and we are seeing some momentum factors and market sentiment factors. But the important thing is how we use those factors to develop models. And I think the key is to have a very rigorous and objective. Testing process in Avalon -- has periods so that you know how the model performs in different market conditions."

" Now I know that you're saying you're not going by kind of liking accompany -- and I are going off of these. A quantitative measures that help overall what that's -- your portfolio to be now is overweight and in technology and materials. They're few names that that stick out -- technologies. Happily communications. Some of these may -- new names of people."

" That's okay yeah I want to highlight a few names that are. It's brother in the relatively large. Sports -- holdings I just illustrated that you know our investment principles and like you said is true we don't pick stocks individually rather we take. Stocks based on some characteristics of these stocks I picked. First of all they stand arranger of sectors. And also but they do share. Some qualities a tad -- having a low price. Book multiple in having good cash flow and so on. But also another key point is that. Even though he's a large holdings compared to it to -- the others in my -- in our fund they only comprise about 3% of the finding total. So the performance of the fund doesn't depend on any individual stocks doing well but it it's really houses these these strategies for. And how many stocks -- are any of those I've only 3% of the total -- stocks you have in the -- We know between 30400 positions in the fight and look at our mornings are holding the -- go to Morningstar and look at different mutual fund holdings you see that. Compared to the other top -- performing funds we are a much more diversified and in that we have made the about 7% of the top. Tackling bad names are so and so so it you know other funds have maybe 90%. So did this also points that fact that we are very different from the way traditional fund management is not -- jobs and thank you very much sir."