Finding Quality Growth
With a high-conviction portfolio of approximately 50 stocks, Matthew Weatherbie, George Dai and Joshua Bennett, managers of Alger Weatherbie Specialized Growth Fund (formerly Alger SMid Cap Focus Fund), believe they have found the right spot to benefit from diversification, while concentrating on their best ideas. Specializing in smaller cap growth stocks, an under-researched part of the market, the fund is able to uncover growth opportunities early through intense research and a focus on quality. Finding Quality Growth What is the history of the fund? The Alger Weatherbie Specialized Growth Fund has existed since the early 2000s and was managed by Jill Greenwald for many years. In late 2016, Greenwald retired from the firm. At approximately the same time, Weatherbie became a wholly owned subsidiary of Alger. Weatherbie’s mandate was to assume the management of the Alger Weatherbie Specialized Growth Fund and make it similar to our Weatherbie Specialized Growth strategy, a portfolio available to institutional investors for more than 20 years. How does your fund differ from its peers? At heart, we are high-quality, smaller cap growth investors and we have the flexibility to buy across the small and mid cap universes. We buy companies that we believe can grow into mid cap growth companies when they are still small. By design, our average market cap is lower than the market cap of the funds in the mid cap category. Also, we “fish in a different pond” because we look for high-quality companies not only in dynamic growth areas, such as health care and technology, but also in mundane industries, where we find stocks that meet our criteria for quality and growth but may have been overlooked by other smaller cap growth investors. Another differentiating factor is the sheer experience and the full-time focus that Weatherbie Capital has in the asset class. We have five investment professionals, who have worked together for 11 years and each have about 20 years of experience in the business. Specialized growth investing is all that we have done throughout the existence of Weatherbie Capital. Finally, our unique approach to portfolio construction and portfolio management is another differentiating factor. What core beliefs drive your investment philosophy? As growth investors, we believe that earnings and earnings growth ultimately drive stock prices. We build a high-conviction portfolio of smaller cap growth companies that we call the Weatherbie 50. Over time, we believe the underlying earnings growth of these companies drives their stock prices higher. That’s the fundamental concept of our investment philosophy. Another of our core beliefs is that smaller cap stocks represent the most exciting area to add value because they are less heavily researched. By focusing exclusively on this part of the marketplace and by being experienced and highly motivated to perform well, we believe we can identify these opportunities early to the benefit of our clients. As we look for attractive growth, we tend to find stocks that fit two main categories. The first category is what we call foundation growth, which represents at least two thirds of the portfolio. It includes highly predictable, easily understood companies, often from mundane industries. The other category is what we call opportunity growth, which represents up to one third of our assets. An example of such a stock would be a biotech company that could eventually earn the status of a foundation growth stock. An opportunity growth stock could also be a later-stage company in a new, dynamic growth phase. It could be driven by a new management, a new product cycle or a new market.
Matthew A. Weatherbie, CFA CEO, Co-CIO
Matthew Weatherbie founded Weatherbie Capital, LLC in November 1995 and is Chief Executive Officer and Co-Chief Investment Officer of Weatherbie Capital. Matt is a Portfolio Manager on the Alger Weatherbie Specialized Growth Fund. Matt has 46 years of investing experience. Prior to founding Weatherbie Capital, Matt was Managing Director and the Portfolio Manager of the Putnam Voyager Fund from October 1983 through April 1995 at Putnam Investments. Prior to his tenure at Putnam, Matt was a securities analyst and portfolio manager at MFS Investment Management in Boston. Matt graduated from the University of Toronto and received his M.B.A. from Harvard Business School. He is a CFA charterholder and is a member of both the CFA Society Boston and the CFA Institute.
H. George Dai, Ph.D. Senior Managing Director, Co-CIO
George Dai is Senior Managing Director and Co-Chief Investment Officer of Weatherbie Capital,LLC. George is a Portfolio Manager on the Alger Weatherbie Specialized Growth Fund, the Alger Dynamic Opportunities Fund, the Weatherbie Specialized Growth Strategy and the Weatherbie Long/Short Strategy. Additionally, George maintains research responsibilities in the diversified business services, healthcare, and technology areas. George joined Weatherbie Capital in March 2001 and has 21 years of investment experience. Prior to joiningWeatherbie, he was an equity analyst with 1838 Investment Advisors. George received his M.B.A .from the Wharton School, University of Pennsylvania, (Director’s List), and his Ph.D. in chemistry from Johns Hopkins University. Previously, he earned a B.S. from the University of Science and Technology of China and was a pharmaceutical research scientist at Procter & Gamble.
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