The Intrepid Small Cap strategy invests primarily in underfollowed, high-quality small-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 and minimum investable assets of $3 million.
exposure to U.S. stocks with market caps of $5 billion or less.
seeking a 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 strategy’s benchmark, the Morningstar Small Cap Index, over a full market cycle.
The Small Cap strategy is the predecessor to the Intrepid Endurance Fund and is managed with the same objectives and constraints. It focuses on small-cap 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.
Frequently Asked Questions
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.
Unlike most investment managers, we are content to hold cash if we cannot identify enough undervalued opportunities to be fully invested. Cash has comprised a substantial percentage of the strategy’s assets at times. Cash levels have historically been higher after strong market gains, as we exit holdings that have risen above their fair value, and lower following steep market declines as we add new undervalued holdings.
Portfolios are relatively concentrated and typically own between 15 and 50 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.