Institutional Money Management
BirdRock Wealth was founded in 2006 and is an SEC Registered Investment Advisory Firm based in Austin, TX. We offer long-only domestic equity strategies and private client services. Our firm is 100% employee owned and qualifies as a women/minority owned (MWBE) enterprise. We actively manage our proprietary value-oriented small and large cap investment strategies for institutional investors including separate account platforms, pension funds, sub-advisors, corporations and private clients through both SMAs and model delivery. Please take a moment to learn more about the investment process and philosophy that BirdRock employs to manage our Value Equity portfolio(s). See below for more on our Large and Small Cap strategies.
Investment Philosophy
Our investment philosophy is based on the premise that value investing provides investors with long-term rewards greater than other investment strategies, as well as risk mitigation during times of market turbulence. While we believe that the market is efficient at discounting current information, this is not always the case, especially during extremely volatile conditions like we experienced during 2008-09. Further, that consistent manager out-performance over time, relative to the appropriate benchmark, is only attainable as the result of a consistent, well-defined process successfully executed over multiple market cycles.
As a result:
- We postulate that value investing provides investors with the best risk-adjusted investment returns over the long-term through active portfolio management.
- As a long-only manager, our goal is to avoid large drawdowns during difficult market conditions inherent within complete market cycles.
- Our approach and bias(s) stem from an emphasis to achieve positive return consistency and to generate excess alpha, minimizing downside risks within the portfolio, by utilizing a fundamental bottom-up approach, building our portfolio(s) on a stock by stock basis and borrowing from both “traditional” as well as “relative” value metrics and to avoid “deep value”.
Focused Large Cap Portfolio Strategy
The BirdRock Focused Large Cap Portfolio Strategy is a discretionary equity product that invests in a concentrated (generally 20-30 companies) with a market capitalization greater than $7BN. Our investment process is characterized as rules-based while also employing qualitative screening/research methods utilizing both “traditional” and “relative” value metrics/screens.
Historically, the composite has displayed medium tracking error as well as modest beta and standard deviation vs the Large Cap Value Index. We do not “hug” the index. We prefer exposure to all sectors but not to a stated tracking error mandate. Historically, our “value add” through active management is more attributed to stock selection vs. activity, timing or tactical factors.
Our philosophy is that a focused and disciplined investment approach offer investors some of the highest rates of return on capital over time. This conviction in our best ideas provides investors with attractive risk-adjusted investment returns over the long term through active management. As active investors, we approach the space with a focus on companies with long-term growth potential as well as an experienced management team. Investing within “larger” names with stronger balance sheets doesn’t, in itself, mitigate volatility but coupled with a reasonably diversified portfolio construction, we believe we can add alpha for our clients. We take a forecasted and/or a contrarian approach to quantitative/qualitative information that may be interpreted differently and perhaps incorrectly by other interested parties.
- We look to capture excess alpha with higher-quality companies experiencing revisions to earnings estimates.
- We avoid “deep value” plays and companies capitalized under $7000 BN and prefer value on the move, which implies relative strength. We also look for dividend payers and companies with possible “catalyst amplifier(s)”- the identification of a catalyst is often the transformative impetus to share price appreciation for a “value” company.
- Our Focused Large Cap Portfolio has historically acted as an all-weather strategy capturing alpha since it’s inception date. Given its concentrated structure, investors should expect higher volatility relative to the portfolio’s benchmark.
- A core strength of our strategy is our investment team’s long tenure of working together while managing investment portfolios through multiple economic/market cycles.
- Asset Class: U.S. Equity
- Morningstar Category: Large Value
- Benchmark: Russell 1000 Value Index
Click Here to access the BirdRock Focused Large Cap quarterly performance tear sheet.
Small Cap Value Strategy
This BirdRock Small Cap Value portfolio began in 2004 and is a long-only strategy that comprises 50-60 of the team’s best undervalued small cap ideas. Steve Levy has been managing the portfolio since its inception nearly 20 years ago. BirdRock’s Small Cap Value is GIPS compliant at the firm level by ACA Compliance Group. Our investment process is characterized as bottom up fundamental; employing both quantitative and qualitative screening/research methods utilizing both “traditional” and “relative” value metrics/screens. Historically, our Small Cap Value composite has displayed medium/high tracking error as well as lower beta and standard deviation vs the Small Cap Value Index. We do not “hug” the index. We prefer exposure to all sectors but not to a stated tracking error mandate. Historically, our “value add” through active management is more attributed to stock selection vs. activity, timing or tactical factors.
Our philosophy is that small cap equities offer investors some of the highest rates of return on capital over time; and, that value investing provides investors with the best, risk-adjusted investment returns over the long term through active management. As investors in a volatile asset class, we approach the small cap value space with prudence; investing within “larger” small cap companies with stronger balance sheets. We take a forecasted and/or a contrarian approach to quantitative/qualitative information that may be interpreted differently and perhaps incorrectly by other interested parties.
- We look to capture excess alpha. However, we have a bias in attempting to preserve capital (avoiding large drawdowns) especially in difficult market conditions as reflected with our long-term downside capture metrics.
- We avoid “deep value” play and companies capitalized under $300mm and prefer value on the move, which implies relative strength. We also look for dividend payers and companies with possible “catalyst amplifier(s)”- the identification of a catalyst is often the transformative impetus to share price appreciation for a “value” company.
- Our small cap strategy has acted as an “all weather” value strategy capturing alpha while providing dividend yield with exceptional “manager relative” protection of principal during down markets.
- A core strength of our strategy is our investment team’s long tenure of working together; managing small cap portfolios through multiple economic/market cycles.