During his 16-year career as an equity fund manager, Eric Cinnamond has stuck to using fundamental research to find small-cap companies that can perform consistently for better or worse economic times.
The strategy worked well at Intrepid Capital Management, where his worked won him praise from Morningstar and Lipper. Now he’s bringing that expertise to River Road Asset Management, in Louisville, Kent., where he was named vice president and portfolio manger.
“Typically, we will be focusing on companies that generate meaningful cash flow, sustainable cash flow, that we can value with confidence,” Cinnamond said in a phone interview. “These will be companies that are mature, that have been through many business cycles.”
Grolsch Brewery, established in 1615, is one example. Although SABMiller acquired the beer maker in 2007, Cinnamond says the company has been around long enough for him to confidently determine how much free cash the company can generate under most circumstances.
Though Grolsch is a Dutch company, based in the Netherlands, Cinnamond says the strategy will hold mostly U.S. domestic names, between 90% and 95%. River Road has about 35 names in its independent value strategy currently, and the goal is to have between 35 and 45 companies consistently.
Performance wise, the goal is to balance the fund so that the companies generate 10% to 15% returns on risk, according to Cinnamond. To a lesser extent, he might sometimes also do asset valuations on a company’s balance sheet and attempt to buy assets at a discount. River Road will roll the strategy into a mutual fund later this year, said R. Andrew Beck, River Road’s president, but he could not specify the expense ratios at press time.
River Road Asset Management has been exploring a complement to its institutional strategies for two years, said Beck.
“We have, for some time, believed in below 3% to 4% economic growth,” he said. “To achieve the absolute the absolute returns investors are targeting, they may have to think outside the traditional style box constraints.”
Cinnamond has racked up several notable awards during his career. The mutual fund Cinnamond co-managed at Intrepid, the Intrepid Small Cap, was named best small-cap value fund by Lipper for two consecutive years. Also, Morningstar said the five-star ranked fund was the top performer in its category over the past three years.
Investment manager database eVestment ranks Cinnamond’s composite performance in the top one percentile of all small cap value managers for the prior three- and five-year periods, according to River Road. Eric was also named MarketWatch’s 2008 Stockpicker of the Year.
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Also on the move this week:
Citigroup has named Steve Pitkin as head of investor services for its hedge fund services. He has been global head of investor relations for Citco Fund Services.
Dwight Asset Management Co., of Burlington, Vt., has hired Derek M. Martisus as a vice president and quantitative analyst, with a focus on investment products. Before joining Dwight, he was an actuarial consultant for at Marsh Management Services.
DWS Investments, the U.S. retail division of Deutsche’s global asset management division, has hired Michael Hughes as a director and senior account manager of national accounts. Before joining the company, He worked at Van Kampen, where he was an executive director in national accounts.
Theresa Yoon has joined First Republic Bank in San Francisco, as a senior relationship manager. She was a managing director for the private bank division of Modern Bank, a private bank based in New York City.
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