Bluestone 4ALPHA Core & Enhanced SMID

OBJECTIVE

The Bluestone-4ALPHA SMID Core/Enhanced Strategies is a separately managed account with the objective of maximizing risk-adjusted returns by investing in Smid or small-mid market capitalization domestic stocks. We attempt to do this by taking our extensive investment experience and researching companies in an underfollowed part of the market and that may be at an inflection point to a positive fundamental change in their business.  ETFs and options may be used to help manage risk.

INVESTMENT STRATEGY

This strategy combines the best attributes of small and mid-cap investing. We believe alpha, or excess return relative to the overall US equity benchmark index, can be generated by investing in smaller companies that are less followed, at the cusp of a positive fundamental change in their business, and whose business models have developed to be emerging leaders in a segment with a large and profitable addressable market. The strategy focuses on earnings growth companies that have attractive relative valuations. Additionally, the strategy will at times hold a small percentage in ETFs for the purpose of managing risk, providing quick tactical exposure to a market sector, or as a hedging strategy. The strategy is appropriate for long-term investors.

PORTFOLIO MANAGEMENT

The 4ALPHA SMID product team started the strategy with the key idea of “managing how we invest our own money.”

Greg Travers has 28 years of investment experience. Prior to founding 4ALPHA, Greg spent the prior nineteen years as a partner, portfolio manager/Equity analyst with Kalmar Investments successfully covering numerous sectors focusing on technology, healthcare, and financial services. He is a graduate of Pennsylvania State University with a degree in Finance. In addition, he holds both the CFA and FP&A designations.

Steffen Torres has over 26 years of investment experience. Prior to founding 4ALPHA, Steffen spent the previous nineteen years as a partner, portfolio manager/equity analyst with Kalmar Investments. He has in-depth knowledge of many sectors including cyclicals, consumer discretionary, and energy. Steffen has an MBA from Indiana University’s Kelley School of Business and an undergraduate degree in Economics and International Relations from the University of Delaware.

Rick Gessner has 30 years of investment experience. He has worked in senior positions at Capital One, Kalmar Investments, and GS Capital. He is Chairman of the Board of the Wilmington Land Bank, Chairman of Habitat for Humanity of New Castle County, Treasurer of the Ministry of Caring, and a founder and past President of the Ronald McDonald House of Delaware. Rick has an MBA from the Wharton School of Business of the University of Pennsylvania. In addition, he has a Masters’ degree in Political Science from the University of Delaware and a Bachelors degree in Economics and History from Franklin & Marshall College.

PORTFOLIO INFORMATION

  • Inception June 2018
  • Bluestone 4ALPHA founded by three former colleagues each with over 25 years investment experience.
  • Typical Allocation is 45 to 60 stocks
  • Market Capitalization Range:  $200 million to $12 Billion
  • Average Market Cap:  ~$4.2 Billion
  • Both Products Use ETFs to manage risk, providing quick tactical exposure to a market sector, or as a hedging strategy.
  • Bluestone 4ALPHA Enhanced uses buy-write options to enhance returns, generate income and hedge positions.

PORTFOLIO STATISTICS

P/E CY19:  19x
FY1 Earnings Growth: 28%
PEG Ratio:  0.7x

WHY WE BELIEVE SMID IS THE SWEET SPOT OF MARKET CAP:

  1. More proven business models than small-micro cap
  2. Increased profitability and stronger balance sheets than small cap
  3. Overlooked asset class producing historically higher returns than large-cap
  4. Under-owned asset class

As of 12/1/2018

 SHARES CLASSRUSSELL 2500
Class IBlend*
Inception--
YTD-
2018--

Please contact us at info@bluestonecm.com

*All investments involve risk, including the loss of principal. Past results do not guarantee future performance. Further, the investment return and principal value of an investment will fluctuate; thus an investor’s equity, when liquidated, may be worth more or less than the original cost. This document provides only impersonal advice and/or statistical data and is not intended to meet objectives or suitability requirements of any specific individual or account. This report should not be construed as a solicitation to purchase or sell any security.  Returns are presented in USD net of all fees shown as well as trading costs.  The returns shown are for a composite of accounts assigned to the Bluestone Elite Conservative strategy composite managed by Bluestone Capital Management. The Bluestone Elite Conservative composite includes all Bluestone Elite Conservative strategy accounts not a part of a WRAP program. The Bluestone Elite strategy is a conservative portfolio replacement strategy which seeks to provide superior risk-adjusted returns over a full market cycle.  The S&P 500 is a market capitalization weighted index designed to measure equity performance of US based large capitalization companies while the Barclays US Aggregate measures the performance of the US investment grade bond market. Prospective clients may obtain a GIPS compliant presentation by contacting the firm via the phone or email listed below.
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