Investment Style / Philosophy
The philosophy emphasizes companies with superior growth potential. A company’s sales growth must be due to a strong demand for its unique products/services, thereby driving earnings growth. We focus on niche-oriented, high quality industry leaders.

Our investment strategy is to identify companies in the early stages of rapid growth that are trading at attractive price-to-earning multiples, thereby maximizing upside potential while limiting downside risk. In this way, our investments benefit two-fold from the underlying earning-per-share growth and an expanding P/E multiple.

Portfolios are constructed stock by stock. Country and sector weightings are a function of where we find the most attractive growth companies and are not structured to mirror an index.

Targeted investments are highly competitive, rapidly growing companies primarily in developed markets. We concentrate our investments around themes and trends that are taking place globally, regionally or in a specific country and identify the leaders that stand to benefit the most. We look for dynamic companies that have a leading product or service with a catalyst sparking sales and earnings growth. Additionally, we place a heavy emphasis on the quality of management, which includes a proven track record of success and clearly defined goals and strategies for future growth.

Investment Process
Pinnacle’s international investment process is predominantly bottom-up driven. Country and sector weightings are a reflection of where we are finding the most attractive growth ideas from a company standpoint. We focus our investments in themes, or pockets of growth, and identify the companies that benefit upstream and downstream. Many times it is the “tail wagging the dog” and we find one fast growing company that leads us to many other opportunities within a larger trend.

Pinnacle has been investing in smaller foreign companies for more than a decade. International small caps are a specialized asset class that requires a more intensive bottom-up company analysis in order to reduce risk. Our research is supplemented by an external worldwide network of analysts, the majority of who work exclusively in small caps within their particular market or area of expertise.

We focus on high-quality growth companies with the strongest fundamentals that are operating in a sound macroeconomic environment and within a longer-term sustainable trend. We avoid speculative situations where future sales/earnings growth and operating margins are less predictable with lower visibility. We strive to find those companies that we can invest in for the longer-term to participate in the growth and success of their unique products/services.

 

Client Communications
We encourage client meetings as frequently as needed in order to build the trust that is essential in any client-advisor relationship. We generally have met with clients one or two times a year, depending on the client’s needs. Also, conference calls, written updates, etc., are important elements of our client communication strategy.

Team
The International Small Cap Portfolio is managed by David Dineen and Johnathan Mark.