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Investment Strategy
Research Process
Sell Discipline
Portfolio Management
Composite Profile Sheet
Our objective is to achieve capital appreciation through a diversified portfolio of emerging growth companies that possess the most dynamic and attractive growth characteristics in the marketplace. We strive to accomplish this goal through active portfolio management and rigorous fundamental research.
Our broadest emerging growth universe begins with approximately 3,000 stocks with market capitalizations ranging from approximately $50 million to $2 billion. We run a number of quantitative
screens on this universe to narrow it down to a more targeted stock universe of about 500 companies. These screens may include historical revenue or earnings growth, upside earnings surprise, and stocks that are trading below historical averages.
With a tightened universe of companies, we then practice fundamental research to identify companies
that possess what we call "qualification criteria." In other words, a set of compelling reasons to own
the company.
These qualification criteria include:
- Revenue growth of 18%;
- Distinct proprietary element;
- Gaining market share;
- Superior margin and profitability growth; and,
- Capable management team.
We want to own companies that possess multiple qualification criteria and are available at what we
consider reasonable valuations.
We consider selling all or a part of a position for a number of reasons, including:
- Deterioration of the growth rate;
- Earnings disappointments;
- The stock hits our upside target;
- The valuation exceeds our targeted level;
- Institutional ownership expands; and/or,
- Company management changes.
The marketplace in which we operate is historically volatile. We seek to manage the volatility by running a broadly diversified portfolio. Typically no single position will exceed 3% of account assets.
James L. Callinan (RS) is the president and senior portfolio manager of the RS Growth Group. He has managed RS Emerging Growth Fund and related separate accounts since 1996 and has been a co-portfolio manager of RS Select Growth Fund (formerly RS Diversified Growth Fund) since May 2007. Prior to joining the firm in 1996, Mr. Callinan was portfolio manager of the Putnam OTC Emerging Growth Fund for two years and served on the investment team of Putnam's growth group for nine years. He received an A.B. in economics from Harvard College, an M.S. in accounting from New York University, and an M.B.A. from Harvard Business School. Mr. Callinan is also a Chartered Financial Analyst.
Stephen J. Bishop (RS) is a co-portfolio manager and an analyst in the RS Growth Group and a principal at RS Investments. He has been co-portfolio manager of RS Technology Fund (formerly The Information Age Fund® since July 2001, of RS Emerging Growth Fund since January 2007, and of RS Select Growth Fund (formerly RS Diversified Growth Fund) since May 2007. He also co-manages related separate accounts. Mr. Bishop joined RS Investments in 1996 as a research analyst, primarily covering the technology sector. Prior to joining the firm, he worked as an analyst in the corporate finance department of Dean Witter Reynolds, Inc. for three years. Mr. Bishop holds a B.A. in economics from the University of Notre Dame and an M.B.A. from Harvard Business School.
Melissa Chadwick-Dunn (RS) has been a co-portfolio manager of RS Emerging Growth Fund since January 2007 and of RS Select Growth Fund (formerly RS Diversified Growth Fund) since May 2007. Before joining the firm in 2001, she was an equity analyst at Putnam Investments for two years. Prior to that, she spent four years in investment banking, working on corporate finance and mergers-and-acquisition transactions for Lehman Brothers and McDaniels S.A. Ms. Chadwick-Dunn holds a B.A. in economics and an M.A. in international relations from the University of Chicago and an M.B.A. from the Wharton School of Business.
Allison K. Thacker (RS) is a co-portfolio manager and an analyst in the RS Growth Group and a vice president at RS Investments. She has been a co-portfolio manager of RS Technology Fund (formerly The Information Age Fund® since April 2003, of RS Emerging Growth Fund since January 2007, and of RS Select Growth Fund (formerly RS Diversified Growth Fund) since May 2007. She also co-manages related separate accounts. Prior to joining RS Investments in 2000 as an analyst covering Internet and consumer discretionary stocks, she worked as a summer associate at Putnam Investments, and, prior to that, she was an analyst in the energy group at Merrill Lynch & Company for two years. Ms. Thacker holds a B.A. in economics from Rice University and an M.B.A. from Harvard Business School.
D. Scott Tracy (RS) has been a co-portfolio manager of RS Emerging Growth Fund and of RS Smaller Company Growth Fund since January 2007 and of RS Select Growth Fund (formerly RS Diversified Growth Fund) since May 2007. Prior to joining RS Investments in 2001, he spent three years at Shoreline Investment Management, the in house asset management arm of Hewlett-Packard. He has also served as an equity analyst at Montgomery Securities. Mr. Tracy holds a B.A. in history from Trinity College and an M.B.A. from the University of California at Berkeley. He is also a Chartered Financial Analyst.
Investing in smaller companies can involve risks such as having less publicly available information, higher volatility, and less liquidity than in the case of larger companies. Overweighting investments in certain sectors or industries increases the risk of loss due to general declines in the prices of stocks in those sectors or industries. Investments in technology companies may be highly volatile.
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