Philosophy

12th Street Asset Management believes that managing concentrated, high active share portfolios is the best way to consistently add value.

Superior investment returns can be achieved by investing in a limited selection of good, undervalued companies, and then managing risk by focusing on margins of safety at the individual stock level and making capital preservation a priority.

• We have a best idea approach in which a select number of companies are identified that meet our investment criteria which seeks good businesses trading at significant discounts to intrinsic value estimates.

• The process yields concentrated portfolios typically holding 10-25 positions.

• We have a benchmark agnostic approach to investing. Our portfolios are not constructed or managed to mimic or outperform a particular index.

• Risk is reduced by investing with a margin of safety and focusing on preservation of capital.

• We have a willingness to hold cash when bargains are not available.

Ours is a four-pronged investment process:

Identification - We first identify potential investments via industry conferences, financial reports and SEC filings, independent discovery, business networks, sell-side research, and peer networks. Given the benchmark agnostic approach, we strive to find good businesses trading at attractive valuations, but do not attempt to cover the whole market.

Stock Selection - Company-specific, fundamental analysis drives our stock selection. Companies with strong management teams, solid financial statements, leading brands, and strong business plans are identified and carefully considered. Once identified, companies with attractive risk/reward characteristics may make it into the portfolio, while attractive businesses with neutral risk/reward characteristics are cultivated on our watch list.

The buy decision is based on an attractive expected value, a sufficient margin of safety, stable or improving fundamentals and a catalyst for market recognition.

Risk Management - A concentrated portfolio provides us competitive advantage to continuously evaluate risk on each investment rather than on the portfolio as a whole. We consider risk characteristics that are company-, industry-, and market-specific to guide our risk/return calculus for each position.

Sell Discipline - Sell decisions are framed by changes in a company’s fundamentals, as well as changes in industry and market conditions or pricing that require us to reconsider our investment thesis, risk/reward calculation, and/or our expectations for the business going forward.

LP Strategy

12th Street’s LP strategy is a concentrated, all cap portfolio that provides the flexibility to invest in any securities that meet our investment criteria. It is available for investors that approach 12th Street directly and have a longer-term investment horizon.

Opportunity Managed Account

12th Street’s Opportunity Managed Account strategy is a concentrated, all cap portfolio that provides the flexibility to invest in any securities that meet our investment criteria. It is available for investors that access the strategy through a broker or other investment platform.

Small Cap Value Strategy

12th Street’s Small Cap Value strategy is a concentrated, long-only portfolio of equity securities with a market capitalization of less than $5 billion at time of purchase. It is available for investors that approach 12th Street directly or through another RIA or broker platform.