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“Pessimism creates out-of-favor stocks. We believe out-of-favor stocks are our best source of opportunity. They can be out-of-favor growth stocks or out-of-favor value stocks — we are agnostic as we use both as a source of alpha for our large-cap core product.”

— Guy Pope, Senior Portfolio Manager

Investment Approach

The Columbia Value and Restructuring portfolio seeks to outperform the Russell 1000 Value Index and peer strategies, and to rank solidly in the top quartile over a full market cycle. Our investment process involves active management utilizing a broad universe of candidates, including both out-of-favor value stocks and out-of-favor growth stocks. The intersection of the two places the strategy in the large-cap core category. We seek to deliver strong, risk-adjusted performance over time through astute stock selection coupled with prudent risk budgeting and risk monitoring.

Distinguishing Features

  • Distinct contrarian investment philosophy backed by a disciplined process that is based on the fundamental belief that the best investment opportunities can be found where the market displays an ordinate amount of pessimism
  • The strategy has had a historically strong risk/reward profile under the portfolio manager, who has been with the firm since 1993
  • Portfolio manager is assisted by a highly talented group of fundamental and quantitative analysts

Investment Process

Define and evaluate investable universe

Prioritize candidates for further research

  • Begin with stocks primarily found in the Russell 1000 Value Index with market caps greater than $2 billion
  • Screen for stocks using a proprietary method that seeks to identify value or growth stocks that have fallen out of favor
  • Assess the stocks found by the screen and determine whether the problems are being caused by transitory factors or by negative secular headwinds
Conduct research and valuation analysis

Intensify research efforts on selected candidates

  • Tap various information and alpha sources, including fundamental research, quantitative research and portfolio management teams to gain valuable perspectives on potential candidates
  • Evaluate company based on rigorous bottom-up research
  • Research will derive one of three investment thesis outcomes: Investment has merit, market is efficient or thesis yet to be determined
Construct portfolio and manage risk

Weigh potential for appreciation against downside risk of individual stocks to build a portfolio that seeks above-average returns while balancing risk and reward

  • Price target established and thesis documented at purchase
  • Bottom-up stock selection drives sector/industry weights
  • Continuously monitor price targets and company fundamentals to determine if original thesis remains