Transamerica ‘Smid’ Value Wins Lipper Award for Best Small-Cap Fund

The Transamerica Small/Mid Cap Value Fund was recognized as the best small-cap core fund at the annual Lipper Fund Awards dinner Wednesday in New York City.

The fund received the rating based on its total and consistent return over a three-year period ending Dec. 31, 2007, and exceeded the Russell 2500 Value Index benchmark for small- and mid-cap funds by 3300 basis points in 2007.

The fund also won Lipper’s top honor for the five-year period in its classification.

“Finding these kinds of opportunities can be tricky,” said Michelle Stevens, chief investment officer for value equity at Transamerica Investment Management, LLC and the lead portfolio manager of Transamerica Small/Mid Cap Value, told MME. “You can’t scan price/earnings ratios the way most people do.”

Stevens said her fund is currently invested in seaborne transportation stocks and dry bulk shipping companies because she believes they are undervalued and underfollowed. They have been particularly busy of late shipping iron and other construction and building supplies, Stevens noted.

Market forecasters were predicting that DryShips, one of the fund’s core holdings, would have an annual increase of 15 cents per share, but Stevens thought that was far too low. Her gamble paid off incredibly well when DryShips earned $9.50 per share.

“If you can forecast a trend correctly, you can see tremendous momentum,” she said. “We are always asking ourselves where consensus was wrong. We also look for ‘double delta opportunities’ where there’s the chance of upwards revisions in earnings and growth rates much better than expected.”