Portfolio Management

Our "Growth-with-Value" portfolios are managed uniformly on an idea by idea basis, specifically keyed to the observations and conclusions of our research. Both research and portfolio management decision making are team-oriented. The intent is to benefit from our team members complementary strengths in a rigorous, disciplined but responsive atmosphere.

All members of the Research/Portfolio Management Team come from strong research backgrounds and are committed to this approach. All are experienced generalists with broad backgrounds of specific industry and company knowledge and, importantly, success as investors. Each performs original, creative research and business analysis including extensive management contact and facility visits, and cross checks with customers, suppliers, competitors and industry consultants. Relevant sources of Wall Street research are also used to complement our in-house effort, including extensive direct analyst contact.

Kalmar's decision-making process as to investment strategy, idea generation, and stock selection employs a combination top-down/bottom-up approach, predominantly emphasizing the latter. Asset allocation is effectively determined by the availability of compelling "Growth-with-Value" ideas. We are not market timers. We keep equity weighting high through the market cycle because of confidence in our stock picking and our true longer term investment orientation (productive companies add business value during down markets). As to individual ideas, top-down thinking is used to identify strategic themes and growth areas to prospect in for companies meeting our "Growth-with-Value" criteria. That said, we are predominantly bottom-up driven, culling specific ideas in the search for nuggets:

Our emphasis is on independent, timely, forward-looking decisions. Through our in-depth research, value consciousness and effective sell discipline, we seek to consistently control risk and create opportunity. We seek strong returns, through intensively-researched, longer term small company ownership, employing a disciplined process and team approach.

A preponderant portion of the investments are in small cap stocks. Investments in small cap stocks involve greater risks than investments in larger, more established companies, are more volatile, and may suffer significant losses. Further, the market for small cap stocks is generally less liquid than the markets for larger stocks, which can contribute to increased price volatility of small cap stocks. Past performance is not necessarily an indication of future results.