managers Mark Dickherber and Shaun Nicholson are small-cap investors who
seek to identify companies that have the potential for significant
improvement in return on invested capital (ROIC).
The idea being that as ROIC improves, each dollar invested in the
business earns an incrementally higher return. Importantly, Dickherber
and Nicholson disaggregate a company’s ROIC down to the business segment
level to understand the drivers (and detractors) of a company’s
profitability. Armed with segment-level return data they seek to
identify companies with low embedded expectations that have
company-specific returns-improving catalysts. (They do not buy stocks
simply because they are cheap.)
Dickherber and Nicholson require that management is ROIC-focused,
financially incentivized to improve returns through appropriate capital
allocation, and able to articulate an appropriate returns-based strategy
to improve profitability. They track management’s progress via
quarterly financials and quarterly management contact. As management
demonstrates a commitment and ability to appropriately improve returns,
Dickherber and Nicholson will build the position.
The co-managers pride themselves on identifying the building blocks
of improved (and diminishing) profitability before it is recognized by
the market. As improved returns are reflected in the stock price,
portfolio holdings are trimmed, and ultimately sold when they reach the
team’s estimate of fair value.
iMGP Fundsʼ investment objectives, risks, charges, and expenses must be considered carefully before investing. The prospectus contains this and other important information about the investment company, and it may be viewed here or by calling 1-800-960-0188. Read it carefully before investing.
Diversification does not assure a profit nor protect against loss in a declining market. Mutual fund investing involves risk. Principal loss is possible.
Potential risks include, but are not limited to, market risk, credit risk, liquidity risk, interest rate risk, and management risk. Outcomes depend on the skill of the sub-advisors and advisor and the allocation of assets among them. References to other mutual funds should not be deemed an offer to sell or solicitation of an offer to buy shares of such funds.