15800 Bluemound Rd., Suite 250 Brookfield, WI 53005 1-800-765-0157
DANA SMALL
CAP EQUITY
STRATEGY
HIGHLIGHTS
Fully invested, relative
value strategy.
Sector neutral, industry
aware.
Top down risk controls,
bottom up stock selection.
Has consistently outperformed
the benchmark; the S&P 600 Small Cap Index since
inception.
INVESTMENT
PHILOSOPHY
Dana's Small Cap Equity Strategy looks for
companies undervalued relative to the marketplace,
with reasonable appreciation potential in
the near term. By utilizing our proprietary
systematic and fundamental analysis methods
we create a portfolio of companies with improving
earnings outlooks, but undervalued in the
current marketplace. By utilizing a variety
of valuation characteristics, earnings revisions
and sector neutrality we reduce downside risk
by eliminating both overpriced companies and
those that are likely to have negative earnings
announcements, but yet allow exposure to all
sectors of the marketplace.
EQUITY
INVESTMENT PROCESS
Quantitative Analysis
Growth of revenue, earnings and free cash
flow.
Earnings momentum
Positive earnings surprises
Positive estimate revisions
Ratio/ROE analysis
Relative valuation comparison on multiple
valuation metrics
Fundamental Analysis
Earnings quality/consistency
Improving profit margins
Expanding returns on capital
Rising free cash flow generation
Balance sheet strength
Industry trends/ characteristics
Sell Triggers
Unattractive valuation
Negative news
Deteriorating fundamentals
Negative expectations
Persistent underperformance
Portfolio Construction Process
Skeleton portfolio
Equally weighted holdings
Sector neutral
Target portfolio characteristics relative
to benchmark
Market cap neutral
Portfolio Risk Controls
Sector neutral (+/-1%)
Industry aware
Individual concentration (<4%)
PORTFOLIO
CHARACTERISTICS
Value
Growth
Measure
March 2008
Dana
Small Cap
Russell
2000 Cap Weighted
Market Capitalization
($Million)
1,381
1,278
Dividend yield
1.15%
1.82%
Price to Cash Flow
8.3
8.6
Price to Trailing 12 Month
Earnings
14.4
16.4
Price to Projected 1 Year
Earnings Growth
1.0
1.0
Projected 5 Year Earnings
Growth
14.9
16.2%
PORTFOLIO
CONSTRUCTION
By combining factors generated by our models,
we are able to rank the entire filtered universe
of 200 securities from most attractive to
least attractive within each sector. Portfolio
construction begins by determining the approximate
dollars to invest in each sector based on
the weights of the benchmark. Our portfolios
are constructed of essentially equally weighted
security holdings, with a target portfolio
of 50 companies, or about 2% of the portfolio
in each company. We then purchase with the
most attractive companies in each sector until
the benchmark sector weights are attainted.
RESEARCH
PROCESS
The universe for the Dana Small Cap Equity
strategy is the common stocks of the next
2000 largest companies after the largest 1000
companies, by market capitalization, listed
on any of the 3 major U.S. exchanges. We then
use proprietary quantitative models to screen
stocks within each sector. The models rank
companies based on three factors: value relative
to other stocks in the sector, value relative
to growth, and earnings momentum. The screening
takes our 2000 company universe down to filtered
universe of approximately 200 companies.
TOP
10 HOLDINGS
as of 3/31/08
Greif Inc.
Chart Industries Inc
Wabtec Corporation
Navigators Group Inc.
Quanex Corporation
SPSS Inc
Air Methods Corp.
Progress Software Corp.
Diodes Inc.
Emcor Group Inc.
HIGHER RETURNS WITH LOWER VOLATILITY
Average
Annualized Return Since Inception as of 3/31/08
Since
Inception Standard Deviation of Return to
3/31/08
The Dana Small Cap
Equity Strategy has consistently outperformed
the S&P 600 Small Cap Index since inception.
Its use of valuation and earnings revision analyses
limits downside risk by filtering out overpriced
stocks and companies that are likely to have negative
earnings announcements.
SUITABILITY
The strategy is
ideal for clients seeking to outperform the S&P
600 while maintaining a diversified, well-disciplined
investment approach. The fully invested, industry
neutral, stock picking strategy works as an excellent
core equity holding.
Please
"Contact
Us" for additional strategy and performance
information
on the Dana Small Cap Equity product.
