Micro Cap Equity
To consistently outperform the Russell Microcap® Index over a full market cycle (typically 3-5 years) with less than commensurate risk
Granite’s investment philosophy is a fundamental and research driven approach to investing in a concentrated portfolio of high quality companies that offer distinct and sustainable competitive advantages over their peers. Granite is devoted to finding companies with strong management teams and superior business models that can also benefit from catalysts expected to drive gains in discretionary free cash flow, revenue, earnings and returns on invested capital. This accounts for 25-75% of the portfolio holdings in Granite’s Micro Cap Equity strategy. The balance of the portfolio is comprised of special situations that are unique to micro cap companies under $400M in market capitalization. These special situations include: companies without sell side coverage, delisted securities, companies selling under $1/share, companies requiring recapitalization and companies that come public via either a SPAC or a reverse merger process. In many cases these companies have improving fundamentals and are selling below their intrinsic values.
- Process: Portfolio typically contains a mixture of equity securities selected using the firm’s defined research process and equities chosen to take advantage of special situations
- Concentrated: Portfolio typically holds 60-90 stocks
- Market Capitalization: Market cap range at time of purchase $10 million to $500 million
- Diversified: Broad diversification across industries and sectors
- Fully Invested: Not greater than 5% cash position generally