Artemis US Smaller Companies
While stock selection is paramount on this fund, the overall shape of Artemis US Smaller Companies will reflect the manager’s view of the US economy. Investing mainly in US small-caps, but also with a tilt to mid-caps, manager Cormac Weldon uses multiple sources of information to generate ideas and to validate and test candidate companies for investment. Cormac and his team have refined their investment process over 16 years and are one of very few US equity teams that has added long-term value.
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Cormac Weldon, Lead Manager Cormac has managed Artemis’ US equity strategies since their launch. He graduated in accounting and finance from Dublin City University in 1987 and began his career at KPMG. After working as a US equity analyst at Provident Mutual, he spent two years as a fund manager for the British Gas Pension Fund. Cormac joined Threadneedle in 1997, where he eventually became head of the North America team and lead manager of three US funds. He moved to Artemis in 2014.
Cormac Weldon, Lead Manager Cormac has managed Artemis’ US equity strategies since their launch. He graduated in accounting and finance from Dublin City University in 1987 and began his career at KPMG. After working as a US equity analyst at Provident Mutual, he spent two years as a fund manager for the British Gas Pension Fund. Cormac joined Threadneedle in 1997, where he eventually became head of the North America team and lead manager of three US funds. He moved to Artemis in 2014.
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Talking Factsheet
Investment process
The team believes that markets are inefficient and slow to price in new information. This gives opportunities for the active investor. The process begins with macroeconomic analysis to understand secular and cyclical trends. The fund is style agnostic and the team will tilt the portfolio to growth or value style to suit prevailing market conditions.
Stock ideas come from company meetings, the team's analysts or sell-side research. These are complemented with data mining and financial analysis. The team is very well resourced: Cormac is supported by a team of seven dedicated sector analysts.
Promising ideas are followed up with detailed research. As part of the analysis the team will evaluate the business model, the financial model, company management and valuation.
In valuing a stock the analysts consider the company’s prospects over a number of years, but confine forecasting to just one year as this is the furthest period which can be modelled with any degree of accuracy. Throughout the valuation process the analysts will model different scenarios and develop a range of outcomes.
Risk
The final portfolio is high conviction and quite concentrated for a smaller companies fund, which means good stock selection is key. Despite its name the fund has a tilt towards mid-caps with the average holding's market cap typically around $7.5bn, but investing in this part of the market can involve more risk than investing in larger more established companies. Sector positions are limited to +/- 10% versus the index and position sizes are limited to +/-5% versus the index.
ESG
ESG - Integrated
Cormac believes that ESG analysis helps to identify risk associated for a stock, as well as identifying potential opportunities, and its inclusion is becoming increasingly impactful to stock valuations. As such, he will look to identify factors that are affecting a stock, then see if they are material to the investment case. If they are determined as material, he will do further analysis, culminating in engagement with the firm to discuss potential issues and setting progress goals for improvement. Artemis as a group has systematically integrated ESG factors into its stock research process since 2020.
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