Ashford Capital Management Article 2018

1. When Ashford Capital Management Founder Ted Ash-
ford retired and left the firm fully in the hands of his
son Ted Ashford III late last year, the younger Ashford
set his eyes on elevating the family business to new
heights.
After a recent bolstering of the firm’s internal and
external resources, now is the time to make a broader
push into the institutional client marketplace with the
firm’s domestic small-cap growth equity strategy while
staying true to his father’s vision, Ashford III said.
“My father’s true passion in life, before I became
cio and ceo, was investing in inefficient parts of the
market. He loved to identify smaller growth companies
and to find them early when they’re misunderstood and
largely undiscovered,” he said. “We have been doing
that as part of this business since inception.”
Ted Ashford, who founded both the small-cap
growth business and institutional consulting firm Ash-
ford Consulting in 1979, retired from the Wilmington,
Del.-based firm in October. Its seasoned team, with
many members who have been together for more than
a decade, understand that the firm’s success has been
dependent upon their ability to rise above challenges.
Senior Investment Officer Cliff Short III, who
joined the Ashford team in 2011, noted that the firm’s
first two decades were fairly rosy, characterized by
good returns, a solid track record and proud reputa-
tion, allowing for an easier capital raising environment.
But the 2000s ushered in a completely new era with a
much more competitive landscape of managers, which
required a new approach to attracting capital, he said.
“We came to the conclusion, probably over the last
five years, [that] our returns have always been there
and we want to remain focused on that,” Short said.
“The evolution is about where we want to be as an op-
eration and business; we are poised to productively and
efficiently increase our institutional investor [base].”
Amid a record stock market bull run and a more
congested marketplace of managers, things have only
intensified, pushing the firm to take a more proactive
approach to marketing than ever before as it looks to
secure institutional quality clients.
But rather than “reinvent the wheel internally,” Ash-
ford III and the firm elected to partner with third-party
marketing firm ARK Global in the fall to bring the firm
up to speed from an institutional perspective, relay its
message and bolster the cybersecurity side of the busi-
ness. Ashford III said this has allowed his investment
team to focus on what it does best: investing in small-
cap growth companies while streamlining and bolster-
ing internal processes.
“The team has enhanced their institutional pro-
cess quite a bit in terms of how they implement their
process—the depth of the investment com-
mittee’s weekly activities and engaging the
whole team into the process,” ARK Global
CEO Sandra Powers Murphy said, noting
that the firm has also gone through the
GIPS verification process. “The invest-
ment acumen was always there, but now
the organization is fully prepared to meet
institutional due diligence protocol and to
take in institutional mandates of size more
seamlessly.”
The firm’s six-member advisory board,
with each member required to be invested
into the firm, as well as the Jan. 1 promotion
of Joseph Petko to co-cio have also helped
to shore up the firm’s depth, according to
Ashford III.
“This is an organization with a deep, deep history,”
Powers Murphy said. “We wanted to pay reverence to
that story and build on that legacy. At this point we are
now just beginning to reach out to institutions and they
are responding to the many differentiators that make
Ashford unique.”
It is Ashford Capital’s hope that the combination
of ARK Global’s efforts and the firm’s performance his-
tory will help to broaden its base to more institutional
investors.
“They have more critical mass,” Short said of in-
stitutional investors. “We’re not looking to have 500
different investors. We’re looking to have a smaller in-
vestor base with more dollars.”
The firm’s fundamental approach to its small-cap
growth strategy includes between 35 and 45 holdings
with a market cap between $500 million and $3 bil-
lion and a 20% growth with long-term hold averaging
three-plus years, according to the firm, which foresees
a soft close of $1.2 billion. The fund currently holds
around $480 million.
The returns on the firm’s small-cap growth port-
folio should prove agreeable to investors interested in
the space as it has returned 12.43% since December
1996 against 7.01% over the same time period from the
Russell 2000 Growth Index, according to the PSN In-
forma database.
The numbers have been even more impressive
over shorter time periods, as the strategy has returned
28.41%, 30.03% and 20.29% over the one-, two- and
three-year time periods ending Dec. 31 against 22.17%,
16.62% and 10.28%, respectively, from the index over
the same time frames, the PSN Informa database shows.
“Our main number one focus every day we come
Ashford Capital Ramps Up Marketing On Small-Cap Equity Strategy
Emerging Manager Monthly, March 2018 13
Ted Ashford III
Continued on Next Page
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2. in the building is managing the assets, man-
aging the process and keeping our focus on
that,” Short said.
That process is generally focused on
original research that is integral to helping
the investment team uncover and invest
in companies that are differentiated from
the small growth companies in competing
portfolios, Ashford III said.
“We don’t tend to look at stocks as
much as businesses,” Ashford III said.
“When you’re invested in businesses you’re
not just asking what the business is worth
on a given day. You are trying to under-
stand why this is a good business rather
than why the stock moved on a specific
day; your perspective is different.”
Ashford’s team, which also includes
Senior Investment Officer Jeffrey Rollins,
Senior Analyst David Wickard, Senior Trad-
er and Analyst Daniel Dziados and Trader
and Risk Analyst Joseph Dziados, sources
under-the-radar companies using a num-
ber of proven techniques, he said.
“We find small growth companies in
all different ways. There’s no one set way,”
Ashford III said, adding that the firm un-
covers companies via networking as well as
attending trade shows and through due dil-
igence of its own portfolios, including iden-
tifying competitors and other businesses in
the same sector as one of its current com-
panies.
In addition to the small-cap growth
strategy, the firm also runs a mid-cap
growth strategy that will reach a three-year
track record in September, he added.
“We’re long-term investors. What we
noticed in some of our accounts was that
some of our biggest winners we continue to
hold. We still hold a handful of those across
accounts that were excellent companies
but simply didn’t meet the threshold we
have set for small company growth holdings
in terms of growth any longer,” Ashford III
said of the impetus to launch the mid-cap
portfolio.
Each holding in the firm’s mid-cap
product represents a company that Ashford
has previously invested in and every hold-
ing has at least $1 billion in market cap, he
added.
The overall track record has served as
an asset for Ashford Capital, with many cli-
ents having a long history of success with
the firm, showing that investors who stick
with the firm will be rewarded.
“One of the things that we’re proud
of is more than 60% of the client base has
been with us over 10 years,” Ashford III said.
“Our clients believe in our hands-on funda-
mental approach and the results it produc-
es. They have also seen our team stick with
our investment process and disciplines
regardless of the market climate. We are
highly committed to process here.”
Emerging Manager Monthly, March 2018 14
ASHFORD: Long-Time Manager Targeting Institutional Investors
Continued From Previous Page
When you’re invested in businesses, you’re not
just asking what the business is worth on a given
day. You are trying to understand why this is a good
business rather than why the stock moved.
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