4Q2022 – U.S. SMID Company Growth Commentary

We are utilizing weakness in the period to lean into attractive and favorable risk/reward tradeoff opportunities

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  • In the fourth quarter, the Polen U.S. SMID Company Growth Composite Portfolio (the “Portfolio”) returned -0.01% gross and -0.31% net of fees , respectively, compared to the 4.72% return of the Russell 2500 Growth Index (the “Index”).
  • Geopolitical uncertainty, persistently high inflation, rising rates, and concerns about slower global growth continued to be the main sources of volatility.
  • The top absolute contributors to the Portfolio’s performance over the fourth quarter included Yeti, Five Below, and Fox Factory Holdings. The most significant absolute detractors from performance included The Trade Desk, Alarm.com, and Farfetch.
  • We initiated one new position and added to some existing positions, funded by a trim of an existing holding and an elimination.
  • We favor businesses with strong free cash flow, persistent growth, and high returns on capital, and we always seek to own undervalued businesses relative to their long-term compounding potential. While we can’t predict when markets will recover, we believe that maintaining our focus on high-quality growth companies that are well-positioned to drive cash flow and earnings growth over the next five years will generate attractive long-term performance.

Read the full commentary & disclosures here →