VMF Capital LLC
Location: Cedar Rapids, Iowa
Principals: Donald Flynn, president; Thomas Myers, managing partner, portfolio manager
Style: Small- and midcap growth
AUM as of June 30: $330 million
Midcap equity portfolio
Three-year annualized return: 3.04%
Benchmark (Russell Midcap Growth) return:
Three-year alpha: 12.65
Small-cap core equity
Three-year annualized return: 11.17%
Benchmark (Russell 2000 Growth) return: -16.67%
Three-year alpha: 18.55
VMF's investment team, working from Cedar Rapids, managed the equity business for Aegon Group, the Hague, until they took off on their own in 1998. VMF was acquired by West Bancorporation Inc., Des Moines, Iowa, Oct. 1, but will maintain its name and continue to employ its investment strategies.
The small-cap strategy uses both quantitative screens and fundamental research to help reduce the portfolio to 45 companies. The key, emphasized David Kaplan, portfolio manager for the small-cap equity strategy, "is to find companies that generate positive margins and sell at a discount to their intrinsic value." Currently he's overweight in consumer discretionary, and slightly overweight in financials and consumer staples. He likes Fresh Del Monte Produce Inc., Oriental Financial Group and JetBlue Airways Corp.
The midcap strategy identifies businesses profiting from positive long-term demographics, the economy and cultural trends. Thomas Myers and his team identify the companies through research, Mr. Kaplan said. That portfolio is overweight in health care, financials and consumer discretionary. Favored stocks include Best Buy Co., Boston Scientific Corp. and UT Starcom Inc.
Mark Wiktor, investment representative in the Chicago office of Lehman Brothers' wealth and asset management unit, said: "We like them because their investment process provides for good returns in good markets and bad. They limit the downside and maximize the upside."