2012 - Q4 - Snapshot, Focused Growth

2012 - Q4 - Snapshot, Focused Growth

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  Granahan Investment Management,Inc. Small Cap Focused Growth Product December 31, 2012 At a Glance Performance Small Cap Focused Growth Russell 2000 Growth Product Assets ($mil): $26.45 25 23.4 Minimum Investment : $3 million 21.2 Small Cap Focused Growth Status: Open Net of Fees 20 December 31, 2012 Inception Date: August 1, 2007 Benchmark: Russell 2000 Growth 14.6 Capitalization: Typically, $200 Mil - $2 Bil at purchase 15 12.8 Portfolio Manager: Andrew L. Beja, CFA 10.3 Typical Number of Holdings: 30-40 10 7.6 Distinguishing Factors 5 3.5 3.8 • Experienced portfolio manager with a demonstrated record of success. • Seeks capital appreciation through investment in a 0 limited number of sustainable growth companies 1-Year 3-Year 5-Year Since Inception using a strict risk/reward discipline. Annualized (Aug 2007) • Research centered on the manager’s areas of expertise. Investment Philosophy Granahan Investment Management (GIM) believes that Selected Portfolio Statistics small dynamic companies provide the greatest potential Trailing 3-years through 12/31/2012 for superior long-term performance. Granahan Focused Growth product invests using a bottom up approach to Quarterly Returns - Gross of Fees researching companies and a strict risk/reward discipline for selecting stocks and managing the portfolio. The net Annualized Alpha 8.97% result is a portfolio of 30-40 attractively priced stocks of Upside Capture 113.74% some of the most exciting and innovative companies in Downside Capture 84.21% the economy. Tracking Error 6.17 Investment research for the product concentrates on Information Ratio 1.55 areas of the portfolio manager’s core competency, including technology services, internet, consumer, and Source: Informais business services. The Focused Growth investable universe is approximately 100 companies that enjoy large, open-ended opportunities, sound business models based on sustainable competitive advantages, strong financials, and superior management teams. LifeCycle Diversification: Adds Stability Company analysis is combined with a rigorous ongoing valuation and portfolio construction discipline centered on expected return and risk/reward. The net result is a Pioneer portfolio that has generated consistent, strong risk- 34% adjusted returns over time. Core Growth 48% Firm History Founded in 1985, Granahan Investment Management, Inc. is a 100% employee-owned firm specializing in Cash smaller cap equity investments for large institutions and 1% wealthy individuals. The firm utilizes fundamental, bottom-up research to uncover and invest in fast Special Situation growing companies under $6 billion in market cap. The 17% firm has grown to nearly $3 billion in assets under management representing several large institutional clients. The three founding principals have consistently added to the investment team which now totals eleven professionals. Graphs and Statistics are Supplemental Information. Please reference fully compliant GIPS Presentation on reverse side.
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  Granahan Focused GrowthComposite December 31, 2012 Date GIMI Russell 2000 Firm Small Cap Focused Growth Composite Growth Index Assets Net 3-Yr. Composite Non-Fee 3-Yr. $ Mil $ Mil # Accts Gross Return Return Std. Dev. Dispersion Assets Return Std. Dev. 2012 $3,049.4 $26.5 <5 24.55% 23.36% 21.23 NA 2% 14.59% 20.72 2011 $2,741.5 $0.4 <5 13.19% 12.07% 23.12 NA 100% -2.91% 24.31 2010 $5.4 8 30.06% 28.81% 29.56 0.15 7% 29.08% 27.70 2009 $4.2 8 53.80% 52.33% NA 0.06 10% 34.47% 24.85 2008 $1.9 6 -46.34% -46.91% NA NA 10% -38.54% 21.26 2007* $.4 <5 18.24% 17.76% NA NA 100% 3.28% 14.23 NA – Dispersion information is not statistically meaningful due to an insufficient number of portfolios in the composite for the entire year; Standard deviation information has fewer than three years’ data. *Partial year performance: August 1, 2007 through 12/31/2007 Composite Footnotes Granahan Investment Management claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Granahan Investment Management has been independently verified for the periods January 1, 1993 through September 30, 2011. Verification assesses whether (1) the firm has complied with all the composite construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are designed to calculate and present performance in compliance with the GIPS standards. GIM is an independent, SEC- registered investment firm that oversees small and mid-cap equity portfolios for large institutions and wealthy individuals. The Small Cap Focused Growth product utilizes fundamental, bottom-up research and analysis to invest in companies in the small cap sector of the market that exhibit sustainable high earnings growth, with a focus on the technology services, internet, consumer, and business services sectors. The benchmark for the Small Cap Focused Growth product is the Russell 2000 Growth. The composite, created in December 2011, is calculated by asset-weighting the performance of each account on a monthly basis. The composite includes returns from the portfolio manager’s prior firm, from inception of August 1, 2007 through December 30, 2011. Accounts are included beginning with the first full month under management and terminated accounts are included in the composite. Performance calculations, expressed in U.S. dollars, produce a total return including cash and the reinvestment of dividends and interest. The dispersion is a standard deviation using equal-weighted total returns for accounts in the composite the entire year. The three-year annualized standard deviation measures the variability of the composite and the benchmark returns over the preceding 36-month period. Leverage is not utilized. Policies for valuing portfolios, calculating performance, and preparing compliant presentations are available upon request.. Returns are gross of investment management fees, which when included, reduce investment returns. Net of Fees returns are calculated by applying the fee schedule below to all accounts in the composite. The fee for accounts managed in the Small Cap Focused Growth style is payable quarterly in arrears and is calculated by applying the following ANNUAL percentages to the average value of the assets in an account on the last day of each month in the quarter: First $15 million 1.00%, next $35 million 0.80%, next $50 million 0.60%, above $100 million 0.73%. Fees are collected quarterly, which produces a compounding effect on the total rate of return net of management fees. Market value is based on trade date and security pricing is supplied by Telemet. A complete list and description of all of the firm's composites is available upon request. Past performance is no guarantee of future results. Top Ten Holdings December 31, 2012 Small Cap Russell 2000 December 31, 2012 Focused Growth Growth Median Market Cap 1.03 bil 0.59 bil Name % Weighted Avg. Market Cap 1.60 bil 1.48 bil Constant Contact 6.9 Est. 3-5 Year EPS Growth 19.9% 15.6% Monotype Imaging Holdings 6.8 ATMI Inc 5.9 Forward P/E Ratio 25.7X 19.3X Angie’s List 5.9 Dividend Yield 0.16% 0.97% Dick’s Sporting Goods 5.7 Long Term Debt to Capital 6.6% 30.8% LivePerson, Inc 5.1 Average Price/Book 4.12 3.11 Advisory Board 5.1 Source: FactSet American Public Education 4.9 SciQuest Inc. 4.9 SPS Commerce 4.3 Holdings and Characteristics are Supplemental Information. Please reference fully compliant GIPS Presentation above. Granahan Investment Management, Inc. Specialists in Small Cap Equity Management 275 Wyman St., Suite 270, Waltham MA 02451 781-890-4412 www.granahan.com [email protected]