The Intrepid Select strategy invests primarily in underfollowed, high-quality small- and mid-cap US stocks and seeks to protect and grow your capital by generating strong risk-adjusted returns over a full market cycle.
Is This Strategy for You?
an investment horizon of at least 5-7 years, a moderate to high risk tolerance, and minimum investable assets of $3 million.
exposure to U.S. stocks with market caps of $10 billion or less.
seeking a highly concentrated, cash-constrained portfolio with differentiated holdings and a low correlation to market indexes.
maintain a long-term focus and tolerate underperforming the major indexes in the short run.
Our goal is to provide positive absolute returns and to outperform the fund’s benchmark, the S&P MidCap 400, over a full market cycle.
The Select strategy is managed with the same objectives and constraints as the Intrepid Select Fund. It focuses on small- and mid-cap US company stocks that we think are misunderstood and not efficiently priced by the market.
Our process is designed to capitalize on market fear, volatility, and the investment bargains that irrational and emotional investor behavior inevitably generate.
The strategy’s holdings often have significant overlap with the Small Cap strategy and Disciplined Value strategy, but with larger position sizes and less cash than other Intrepid strategies. Cash is targeted at no more than 10% of portfolio assets. The strategy is targeted at advisors and individuals who strictly want exposure to Intrepid’s rigorous equity selection. As a result, returns for the strategy may be more volatile than Intrepid strategies that incorporate cash more heavily into the portfolio.
We want to own businesses that are understandable and that we can value with a high degree of confidence. These companies are typically mature, established leaders in their industries, generate consistent cash flows, have strong balance sheets, and are run by management teams with a history of adding value and acting in the best interests of shareholders. Often, the stock prices of these companies become depressed when the market unfairly punishes them for issues that we believe are temporary or fixable, which creates an opportunity for us to buy at a discount to intrinsic value.
Portfolios are relatively concentrated and typically own between 15 and 35 holdings. We believe this allows our highest conviction ideas to contribute meaningfully to performance while still providing adequate diversification.
Investments are typically reduced in size as the share price approaches intrinsic value and sold when the price exceeds intrinsic value. We may also sell if our estimate of intrinsic value is revised such that the current price no longer represents a discount, or if a holding exceeds our maximum position size.