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“We believe value investing can outperform over time because investors tend to overestimate a company’s upside potential when fundamentals look their best and underestimate the true value of a company when fundamentals look their worst. We use a disciplined approach to exploit this inefficiency and reap the benefits for our shareholders.”

— Value Strategies Team

Investment Approach

The Columbia Mid Cap Value portfolio seeks to deliver capital appreciation and income through an actively managed portfolio of mid-sized company stocks. Our management team combines fundamental and quantitative analysis with risk management techniques to construct a portfolio of undervalued, misunderstood mid-sized companies whose stocks may deliver superior performance over time.

Distinguishing Features

  • Seasoned, stable investment team provides skilled management through varied market environments
  • Focus on near-term path to improvement has historically provided strong investment performance
  • Integrated, real-time risk management promotes consistent risk-adjusted returns

Investment Process

The Columbia Mid Cap Value portfolio features a three-step process:

  1. Define and evaluate investable universe

    Prioritize candidates for further research

    • Concentrate on U.S. companies with approx. $2b–$12b in market cap, inclusive of the Russell Midcap Value Index, Mid-cap ADRs and existing holdings
    • Leverage proprietary systematic model built in collaboration with Columbia Quantitative Research Group
    • Focus on least expensive 40% of investable universe, resulting in approximately 400 stocks
  2. Conduct fundamental research

    Identify inexpensive stocks exhibiting positive fundamental improvement

    • Focus on three types of value opportunities: current operating margins below normalized, cyclical opportunities and unrecognized asset value
    • Search for inexpensive stocks on the path to improvement
  3. Construct portfolio and manage risk — 90 – 130 companies

    Determine risk budget and allocate risk to maximize alpha

    • Through understanding of risk, allows the team to assess risk and allocate it to stock selection
    • Eliminate unintended bets, increase consistency of return, ensure style integrity