Otter Creek Focus Strategy
The Otter Creek Focus Strategy invests in U.S.-listed equity securities of small- and mid-capitalization companies. The Strategy invests primarily in publicly traded stocks of U.S. companies which the Advisor considers to have a small to mid-size market capitalization.
Portfolio by the Numbers
We view our portfolio as a conglomerate of high‐quality businesses where we have ownership positions in real operating business that we believe can compound capital at above‐average rates
3-5 year investment
20-25 positions
3-5% position weights
<25% expected turnover
Valuation Framework
Growth
Sustainable Earnings Growth over 10%
Profitability
Double digit Return on Equity and Capital
Risk
How durable is the company’s growth and profitability outlook? Is it overly dependent on the macro outlook?
Intrinsic Value
3‐5 year double‐digit IRR
Strategy vs. Benchmark
The portfolio represents a conglomerate of companies that, on average have higher profitability, more attractive growth profiles, and high levels of free cash flow than that of alterative benchmarks
Growth
We expect the portfolio companies, in aggregate, to grow about ~400‐500bps more than the indices
Profitability
We expect the portfolio companies, in aggregate, to grow about ~400‐500bps more than the indices
Valuation
Our portfolio is valued approximately in‐line with the broader benchmark despite the portfolio’s better financial profile, enduring competitive positions, and favorable growth outlooks
|
OC MIDCAP
FOCUSED STRATEGY* |
RUSELL
MIDCAP |
S&P 500
INDEX |
|
|---|---|---|---|
|
Average Market Cap
|
$19B |
$25B |
$725B |
|
P/E Ratio
|
18X |
20X |
22X |
|
Operating Margin
|
16% |
9% |
17% |
|
LT EPS Growth
|
16% |
9% |
10% |
|
Return on Equity
|
18% |
12% |
18% |
|
Active Share
|
95% |
0% |
0% |
*Represents composite valuation as of June 30,2023 sourced from Bloomberg
Performance
Strategy Performance (Rolling)
| DATE | Focus Strategy Net* | Focus Strategy Gross | Russell Midcap Index |
|---|---|---|---|
| Current Month | -2.97% | -2.93% | -0.66% |
| Last 3 Months | -5.21% | -5.10% | -3.35% |
| Calendar Year | 13.92% | 14.21% | 4.96% |
| 1 Year | 23.18% | 23.82% | 12.85% |
| 3 Year | 18.88% | 20.60% | 7.21% |
| Since Inception** | 94.84% | 98.89% | 64.18% |
| 1 Year Annualized | 23.18% | 23.82% | 12.85% |
| 3 Year Annualized | 5.93% | 6.44% | 2.35% |
| Since Inception Annualized** | 17.72% | 18.31% | 12.89% |
*Net of 50 basis point fee
**Inception: May 29, 2020
All values represent a composite return for the strategy as of March 31, 2024.
See end of document for more details about calculations.
Resources
Proxy voting available upon request