3Q2022 – U.S. SMID Company Growth Commentary

While the short-term view is uncertain, the long-term picture is far clearer than the market would suggest

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  • Consistent with what we’ve seen for the better part of this year, high inflation, slowing economic growth, tightening monetary policy, and widespread uncertainty have been the dominant narratives driving small cap stocks while company fundamentals have largely been ignored.
  • The top absolute contributors to the Portfolio’s performance over the third quarter included Wingstop, The Trade Desk, and Paycom.  The most significant absolute detractors from performance included Yeti, Goosehead Insurance, and Azenta.
  • We initiated two new positions—Euronet Worldwide and Bumble—and did not eliminate any holdings.  In addition, we opportunistically added and trimmed some existing positions.
  • We believe that maintaining our focus on high-quality growth companies that in our opinion, are well-positioned to drive cash flow and earnings growth over the next 5 years will generate robust long-term performance for the Portfolio, regardless of the volatility in the underlying economy and shorter-term rotations in the market.

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