Radnor Capital Management’s Small Cap Program invests in socially responsible, small-to-mid cap stocks for clients that include religious and charitable organizations, foundations and other institutions.
Small Cap Management Approach
The Program uses a valuation-based, repeatable, process that generates a concentrated portfolio of 40 to 50 positions. The enduring trademark portfolio characteristics include: low-to-no balance sheet debt, and a discounted normalized P/E relative to the Russell 2000; that is, above average profitability, accomplished with an underleveraged balance sheet, selling at a discounted price. Radnor Capital Management employs price disciplines that attempt to position the risk-reward tradeoffs in the client’s favor. Further, it uses time and relative price performance to identify and eliminate underperforming issues, truncating capital losses. The portfolios do not own REITs. Our goal is to have low portfolio turnover and tax efficiency.
Origins and Team
The Radnor Small Cap Program commenced at RCM in 1996. The original portfolio manager was Douglas Pyle. As the assets under management grew, the team was joined by long-term Radnor employees Elisabeth Schwan, quantitative studies and research analyst; and Jennifer Byrne, co-portfolio manager/analyst. Andrea Funk joined the team in an administrative role in 1999. With the exception of Jennifer’s tour with U. S. Trust/Bank of America, the team has been together for more than 20 years despite several sales and divestitures which left the team managing the same fund under different company names.
Fund & Team History
The original Radnor 1.0 was sold to U. S. Trust in 1999, where the team gained the assignment to manage U. S. Trust’s small cap mutual fund. U. S. Trust was acquired by Schwab, then sold to Bank of America where the team and the fund became resident in BoA’s fund group, Columbia Management. Bank of America subsequently sold the Columbia Management Group to Ameriprise Financial. Doug resigned from Ameriprise to start Radnor 2.0 in May 2012. The entire team followed. All of the Radnor 1.0 separate accounts also followed. Radnor 2.0 still manages the first small cap account signed at Radnor 1.0.
We recognize that to some outside observers, the firm, with $500 million in assets under management, and the Small Cap Program, is seen as new – just over four years old with only a handful of small cap accounts. That belies the reality of a 20-year-old program that, at its peak, handily managed $2 billion in assets and maintained the same experienced portfolio management team with an accomplished performance record achieved through pursuing a consistently applied philosophy and disciplines.