Walrus Partners

Registered Investment Advisors

  • Home
  • About Us
  • Investing Strategies
    • Event Driven Strategy – EDS
    • Special Situations “S2”
    • Dividend Growth Strategy “DGS”
  • Disclosures
    • Privacy Policy
    • Legal Disclaimer
  • Contact Us

Special Situations “S2”

Request A Callback

Special Situations (“S2”) invests in small/micro-cap companies where we can take advantage of opportunities that arise from inefficiencies in a universe that has: a) less analyst research coverage; b) fewer mutual fund/institutional owners; and c) management teams with significant ownership stakes. We seek to identify companies with accelerating growth potential and improving valuation prospects that lead to superior capital gains for our clients.

Objective

The S2 strategy seeks to provide clients superior long-term capital growth by investing in a concentrated portfolio of special situations primarily sourced from the microcap universe where we can identify significant inefficiencies.

Guiding Thoughts

  • We believe that successful investing involves the practice of applying a consistent philosophy and process over time.
  • We believe that earnings growth drives stock prices and that an acceleration in growth due to improving fundamentals drives superior returns in the market.
  • These “post venture, pre-institutional” companies can generate Private Equity-type returns with Public Market-like liquidity.
  • Higher correlation to company earnings means lower market correlation and less beta when compared to most, if not all, investible benchmarks.  We are benchmark agnostic.
  • The microcap universe has structural factors that make it a target rich environment for our direct fundamental research efforts.

Process

  • We employ bottom-up direct fundamental research process with stock selection driving active returns for our clients.
  • We look to “Be there early” – we invest in stocks that are under-followed, under-owned, and overlooked by Wall Street. Our median market cap is typically less than 100 million.
  • We’re investors not traders – core portfolio positions are typically held for 18 months or longer. We have low position turnover during “normal” market conditions – usually less than 40%.
  • We seek to identify an idea that we believe is both, inefficiently priced and has an identifiable catalyst that will drive an acceleration in growth and profitability.

Sell Discipline

  • Excessive valuation
  • Deterioration in company fundamentals
  • Catalyst event fails to drive re-valuation over an acceptable time frame

Investment Team

  • Scott Billeadeau, CFA – Lead Portfolio Manager
  • Russell Last, CFA – Trading
  • Walter Ramsley – Research Consultant to Walrus

 

Risk Management

  • Employ rigorous fundamental analysis to a diversified portfolio of 20-30 equity holdings.
  • Ongoing communications with Management.
  • Actively manage portfolio liquidity.
  • Execute a low turnover strategy – Make fewer decisions with higher conviction!

Characteristics

as of 3/31/2019 (source: FactSet Research Systems)

 Item S2 Partners Russell 2000
 Market Cap (Wtd Avg in $Mil) 126 2,369
 Avg # of Analysts 1.9 8.1
 Avg # of Institutional Holders 46 270
 % Held by Insiders 25% 9%
 Estimated EPS Growth 26% 14%
 P/E Next Year 16.7 14.5
 Gross Margin 38% 40%
 LT Debt to Capital 13% 33%

Top Holdings

as of 3/31/2019 (source: FactSet Research Systems)

 Ticker Description
 MRIC MRI Interventions Inc.
 CLFD Clearfield, Inc.
 FLNT Fluent Inc.
 AKTS Akoustis Technologies, Inc.
 SNOA Sonoma Pharmaceuticals Inc. Com

Performance

Since Inception 10/1997 – 3/2019 (source: FactSet Research Systems)

s2-portfolio-performance-2019-03-31

DISCLOSURES
Past Performance is not a guarantee of future results. Investing involves risk, including the possible loss of principal and fluctuation of value. The returns are based on the Special Situations Composite weighted return. The Strategy seeks to provide capital appreciation, is fundamentally-based and security selection is the main driver of results. The Composite reflects the deduction of advisory fees and any other expenses that a client would have paid or actually paid. The Composite also includes the reinvestment of dividends and capital gains. Performance information for the S&P 500® and the Russell 2000 indices are included for the same time periods. These indices are used for comparative purposes only. The volatility of an index is materially different from that of the strategy’s Full-Discretion Portfolio. The S&P 500® refers to the Standard and Poor’s 500 Index which is a capitalization weighted index of 500 stocks. The index is designed to measure performance of the broad domestic stock market.  The Russell 2000 is a capitalization weighted index of approximately 2000 stocks.  The index is designed to measure the performance of the small capitalization area of the domestic stock market.

 

Address

Walrus Partners, LLC.
8014 Olson Memorial Hwy 55 #615
Golden Valley, MN 55427

Phone

(612) 353-5998

Request A Callback

Links

- For investors of S2 Partners LP, you can access account information ...HERE.

- For investors interested, you can access market quotations via Yahoo Finance ...HERE.

- For investors interested, you can access Bloomberg Business Radio ...HERE.

Copyright © 2021 · Walrus Partners, LLC. · Log in