We focus on high-quality small capitalization stocks, which historical research has shown to outperform larger, lower-quality stocks, and to use a combination of cutting-edge research and extensive experience to select those with the greatest potential. We believe a bottom-up stock selection, based on fundamental and earnings-based characteristics, is the most reliable and repeatable source of long-term, consistent outperformance.The Goal: Consistent Performance Over TimeThere are 3 main building blocks of our investment process: small cap, high-quality, and attractive valuation. We like to own companies that are growing faster than the market, while trading at a significant discount.When we started our firm, we chose a portfolio of 45 companies that met all these criteria, and have steadily managed our holdings. Since inception, our portfolio turnover has been approximately 40% a year.Below is a table that corresponds to the characteristics of the portfolio at year-end 2015, 2016, 2017, and last quarter. The shaded lines show the ratio of the metric in relation to our main benchmark, the Russell 2000.We have maintained a value bias against the benchmark with our PE being lower than the Russell 2000. The ROE of the portfolio and the Earning Growth are both above that of the benchmark. Our Net Debt to Market Capitalization ratio has remained lower than the benchmark.Our disciplined process has enabled us to upgrade our holdings while maintaining an attractive portfolio of stocks.