Page 34 - Investment Advisor July/August 2021

2021 Asset Managers and Strategist of the Year Awards

Small/Mid Cap Asset Manager of the Year
RMB Asset Management

RMB SMID Cap Core Managed Account/RMB SMID Cap Fund

MB Asset Management’s SMID “The key in it to me is what we call
R Cap Core Managed Account/RMB our Life Cycle approach to investing,”
SMID Cap Fund is a winner of the 2020 Faber says. “What that basically means
Envestnet/Investment Advisor Manager is our analytical team is trained to look
of the Year award for its category out at the market as a place where the com-
of 200 largely due to its ability to adapt petition for capital is a violent place, and
quickly to the volatile market conditions companies are constantly progressing
caused by the pandemic. through a life cycle of development,
Despite all that volatility, the strat- growth, maturity and decline. And our
egy outperformed its benchmark Russell job is to identify the winners in the com-
2500 Index by 578 basis points last year petition for capital and avoid the losers,”
(25.77% vs. 19.99%), Envestnet analysts he explains.
said. The investment team at RMB One important factor is that the “path
accomplished that while sticking to Jeffrey Madden of wealth creation is slightly different
the same investment philosophy since and unique depending on where a com-
the strategy’s inception at IronBridge Title: Co-portfolio manager pany is in its life cycle,” according to
Capital Management before the firms Years with present firm: Faber, who says that “triggers key ques-
merged in 2017. Four (since RMB merged with tions that our team seeks to answer to
For Jeffrey Madden, co-portfolio IronBridge Capital) get a unique perspective on long-term
manager, one key to the RMB strategy’s Years in financial services: 20 value creation and valuation.” The port-
success last year was that the invest- (all with IronBridge) folio owns stock in companies “across
ment team was prepared. the entire life cycle,” from speculative
“Every once in a while, the stock growth to deep value, he says.
market, being a complex system, has Investment/asset class focus: SMID “What’s unique about how we apply
market-clearing events, which was Asset management firm: RMB that to investing in a company is that
certainly the case in March” last year, Asset Management we built a proprietary value creation
he says. framework focused on how companies
But the RMB team was prepared Firm’s headquarters: Chicago allocate capital, depending on what life
with what are traditionally called Year firm was founded: 2005 cycle they’re in,” Faber says. “When
growth stocks and what the firm Number of employees: 59, including we define capital, we talk about not
calls “Rockets” (high-growth early 9 partners just physical capital in the traditional
stage companies with innovative accounting sense, but also human capi-
new products, services or business AUM as of Dec. 31, 2020: $3.5 billion tal and intangible capital.”
processes) and “Golden Goodies” The team has not done much tweak-
(Rockets that have survived and have long-term business ing of its portfolio in recent months. “Our portfolio generally
models, while tending to grow faster than the overall mar- has pretty low turnover,” Faber says. “However, at the mar-
ket), Madden explains. gin, we’ve recognized that risks of inflation are increasing
Another reason the strategy did so well was the “deploy- and we’ve bought companies that would do well in that kind
ment of capital in the springtime of 2020 into what tradition- of environment,” including PotlatchDeltic and Royal Gold,
ally people call value businesses [and] what we would call he said.
‘corks’ — companies that have economic returns close to the Looking ahead to the next 12 to 18 months, Madden says,
equity discount rate,” he says. “Those businesses were priced “One thing that we’re observing is higher dispersion in
for a long recession, if not depression, and I’m talking about, the market, going back to the depths of the bear market in
specifically, commercial banks and material companies.” March of 2020 to today … which is good for active manag-
For Chris Faber, co-portfolio manager, the strategy’s success ers so long as you are right on the businesses that you own.”
comes down to the team’s investment philosophy. —Jeff Berman

32 INVESTMENT ADVISOR JULY/AUGUST 2021 | ThinkAdvisor.com