RMB Capital Management

Overview

Our special situations strategy seeks to exploit pockets of inefficiency that generally occur in securities where limited information is available. These opportunities may be event driven, company specific, or the result of industry or economic conditions that have changed. Through our bottom-up, fundamental approach, we seek to purchase these investments with asymmetric risk/reward profiles.

Performance Objectives

  • Strong absolute and risk-adjusted returns over a full market cycle
  • Returns driven by security selection

Investment Approach

  • Highly flexible and unconstrained mandate
  • Identification of asymmetric risk/reward opportunities

Portfolio Profile

  • Concentrated portfolio of high-conviction ideas (20-25 positions)
  • Average position size generally 5%

Philosophy

With an eye on taking advantage of specific industry, economic, or market conditions, we focus on researching and identifying unique opportunities across the market-cap spectrum. Through our bottom-up, fundamental approach, we search for catalyst- or event-driven investments trading at attractive valuation levels.

Our special situations strategy is distinguished by three key tenets.

Opportunistic Approach

  • Seek to exploit pockets of inefficiency that generally occur where limited information is available
  • Catalyst- and/or event-driven
  • Variable time horizons

Strong Contrarian View

  • Generally under-followed given their idiosyncratic profiles
  • Out-of-favor and/or misunderstood businesses where our fundamental research gives us confidence to invest
  • Under-valued companies with significant upside potential that is being overlooked

Concentrated Portfolio

  • Reflects our deep conviction in holdings
  • Assures our clients’ assets are focused in our best ideas
  • Enables us to conduct rigorous, fundamental research on every holding

Process

We have a disciplined and rigorous approach.

Idea Generation

  • Utilize qualitative and quantitative screening criteria to narrow the universe
  • Draw on previous experience – we follow names regularly and notice price discrepancies
  • Attend conferences, industry events, and management meetings

Fundamental Analysis

  • Examine competitive positioning and industry dynamics (pricing power, stable free cash flow, barriers to entry)
  • Develop rigorous investment thesis that is distinctly differentiated from consensus thinking and thoroughly stress tested

Valuation Criteria

  • Examine both upside and downside potential through scenario analysis
  • Seek investment returns above the level of risk inherent in the security – risk/reward profile of 3:1 or higher
  • Monitor risk/reward profiles relative to other holdings and to new ideas

Reasons We Buy

  • Catalyst- and/or event-driven opportunity with relatively specific time frame
  • Attractive absolute upside potential
  • A risk/reward ratio of 3:1 or higher

Reasons We Sell

  • Determination that key piece of investment thesis is no longer valid
  • Current valuation discounts all potential upside for the next two years
  • A better use of capital presents itself in the form of a more attractive risk/reward profile and/or a greater absolute upside potential