Investment Management

Seeking an Edge in Mid-Cap Value

Investors are always looking for an edge. In the mid-cap value space, a consistent research process and analyst sector expertise may have the potential to provide it.

Video Transcript

Mike: Hi everyone, Mike Corcoran with Institutional Investor. We’re back with Matt Fleming. Matt is a portfolio manager for William Blair’s small- to mid-cap value equity strategies. Everybody’s always looking for an edge, and I wonder if you could talk a little bit about how you personally, your team, the firm, endeavor to provide investors with an edge in this space.

Matt: Sure, Mike. I really think our competitive edge is our repeatable and consistent research process that allows us to quickly and rigorously identify very high-quality companies that are temporarily mispriced. And the way we’re able to do that is a combination of factors.

The first is our deep domain expertise. We have a very talented bench of research analysts who are what we call career sector analysts who have, in many cases, spent their entire career sometimes within an industry at various points, looking at these investment sectors. And so they bring together just a very deep understanding.

The second piece of it is just a very long-tenured institutional history. We’ve been doing this for a very long time. We’ve owned many of these companies. We’ve worked with management teams of these companies, often several times and in various different iterations. So we not only understand the fundamentals through that domain expertise, but we really understand how the stocks trade and how the market appreciates the fundamentals.

We’ve worked together for a very long time. On average, the research team has worked together for 10 years. So we not only know our names, but we also understand how each other thinks, which allows for a very collaborative dialogue. It allows for rigorous debate and really gets to the heart of the matter of trying to find what we think are the key investment issues, and what are the critical valuation points of doing this.

You put a team together with unified philosophy in a collaborative environment, and you’ve done it for a long period of time, and we think the result is very attractive risk-adjusted returns over a wide variety of market conditions.

Mike: Okay, we’ve been talking with Matt Fleming, portfolio manager for William Blair’s small- to mid-cap value equity strategies. This wraps up our conversation with Matt. Thanks for joining us today.

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