The Small-Cap Advantage (eBook)

How Top Endowments and Foundations Turn Small Stocks into Big Returns

Brian Bares (Autor)

eBook Download: PDF

2016
John Wiley & Sons (Verlag)
978-0-470-93968-0 (ISBN)

Infos

A world-renowned money manager shares winning strategies for small-stock investing Since forming Bares Capital Management, Inc. in 2000, Brian Bares has shown that above average returns can be generated through the careful selection of small company common stocks. Additionally, he's shown how concentrating capital in a handful of ideas improves the potential for outperformance by increasing the depth of knowledge of each position and allowing each security to have a more meaningful impact on the portfolio. In The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks Into Big Returns, Bares describes how endowment-model investors and aspiring managers can gain meaningful exposure to small stocks while sidestepping many of the obstacles that have historically prevented institutional investment in the asset class. The book also Details the historical outperformance of small-cap stocks Contrasts the various strategies employed by managers in the space Explains how aspiring managers can structure a firm to boost performance and attract institutional capital Describes how endowment-model institutions can evaluate and engage outside managers for their small-cap allocations Summarizes important topics such as liquidity and the research process Bigger is not better. The Small-Cap Advantage reveals that small stocks have historically performed better than large ones, and that lack of competition in small-cap stocks provides diligent managers with a singular opportunity to outperform.

Autor

BRIAN T. BARES, CFA, is a research analyst with Bares Capital Management, Inc. He founded the firm in 2000 with the belief that concentrated portfolios of inefficiently priced small companies could lead to high relative compounding. His firm manages the institutional portfolios of small-cap and micro-cap common stocks in long-only, replicated separate accounts. Mr. Bares began his career by working his way up from the bottom. From compliance and operations, to trading and portfolio management, he garnered experience in nearly all aspects of running a boutique small-cap management company before starting his own company. He graduated from the University of Nebraska with a degree in mathematics. His investment philosophy and strategy have been profiled in Value Investor Insight and the Manual of Ideas: Portfolio Manager's Review. Mr. Bares holds the Chartered Financial Analyst designation and is a member of the CFA Society of Austin. He resides in Austin, Texas, with his wife and two sons.

Inhalt

Introduction xiii

Acknowledgments xvii

CHAPTER 1 The Small-Cap Advantage 1

Two Sources of Outperformance 1

Small-Cap Definitions 2

The Outperformance of Small-Cap Stocks 10

Outperformance within the Small-Cap Space 15

Chapter Summary 19

CHAPTER 2 Small-Cap Disadvantages 21

Research 21

Trading 23

The Small-Cap Graveyard and Reverse Survivorship Bias 28

Capping Assets 29

Chapter Summary 31

CHAPTER 3 Small-Cap Investment Philosophy and Process 33

Institutional Approach 33

Passive and Enhanced Indexing in Small-Cap Stocks 34

Active Management in Small-Cap Stocks 36

Chapter Summary 70

CHAPTER 4 Small-Cap Manager Organization 71

Creating Value for the Manager 71

Launching a Small-Cap Firm 72

Investment Team 86

Chapter Summary 94

CHAPTER 5 The Fund-Raising Process 95

General Marketing Strategy 95

Institutional Clients 98

Foundations and Endowments 104

Consulting Firms 105

Pension Plans 108

High-Net-Worth Individuals 112

Wrap Fee and Other Subadvisory Relationships 114

Databases 115

Third-Party Marketers 116

The Chicken-and-Egg Problem 118

Chapter Summary 119

CHAPTER 6 Fees, Agency Issues, and Other Performance Drags 121

Common Performance Drags 121

Frictional Costs in Small Caps 124

Institution-Manager Agency Issues 129

Agency Issues in Trading 131

Benchmark Tyranny 133

Commingled and Separate Accounts 134

Chapter Summary 138

CHAPTER 7 Small-Cap Managers and the Endowment Model 139

The Endowment-Model Approach to Small Caps 139

Finding an Edge 142

Funding Smaller Managers 145

Funding Emerging Managers 147

Finding Emerging Managers 149

Chapter Summary 151

CHAPTER 8 Evaluating Small-Cap Managers 153

Institutional Due Diligence Teams 153

Assessing Manager Risk 155

Assessing Investment Philosophy 158

Analyzing a Manager's Process 159

Evaluating Firm Principals 167

Assessing Manager Operations 169

Contributions and Withdrawals 172

Chapter Summary 174

Final Thoughts 175

Notes 177

About the Author 183

Index 185

Produkt-Details

• Erscheint lt. Verlag: 3.5.2016
• Reihe/Serie: Wiley Finance
• Reihe/Serie: Wiley Finance Editions
• Reihe/Serie: Wiley Finance Editions
• Zusatzinfo: Tables: 7 B&W, 0 Color; Exhibits: 6 B&W, 0 Color
• Sprache: englisch
• Themenwelt: Recht / Steuern ► Wirtschaftsrecht
• Themenwelt: Wirtschaft ► Betriebswirtschaft / Management ► Finanzierung
• Schlagworte: brian t. bares, brian bares, small-cap advantage, small-cap book, turn small stocks into big returns, endowments, foundations, strategies for small stock investing, small stock investing, bares capital management, above average stock returns, investing in small companies, investing in small stocks, endowment model, endowment models, small-cap allocations, small-cap strategies, small-cap stocks, institutional investing, endowment-model investing, emerging managers, illiquidity, Russell 2000, value investing, • Finance & Investments • Finanz- u. Anlagewesen • Investments & Securities • Kapitalanlage • Kapitalanlagen u. Wertpapiere
• ISBN-10: 0-470-93968-0 / 0470939680
• ISBN-13: 978-0-470-93968-0 / 9780470939680