Philosophy

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.

More simply put, 12th Street Asset Management believes that concentrated, high active share portfolios are the only way to consistently add value.

The portfolio manager seeks companies that are:

• under-followed

• misunderstood

• misperceived and consequently,

• mispriced.

It is 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.

12th Street’s portfolios are not constructed or managed to mimic a particular index.

Risk is reduced by investing with a margin of safety and holding cash when bargains are not available.

12th Street Asset Management process yields concentrated portfolios of our best ideas with 10-25 holdings.

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

Stock Selection - Attractive businesses with neutral risk/reward characteristics are cultivated on our watch list. From there, 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.

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. 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 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 follows the same approach as our other products. The LP strategy is differentiated by a longer-term investment horizon, making it unsuitable for index-focused investors or those seeking consistent income.

Opportunity Managed Account

12th Street’s LP strategy follows the same approach as our other products. The LP strategy is differentiated by a longer-term investment horizon, making it unsuitable for index-focused investors or those seeking consistent income.

Small Cap Value Strategy

The principal investment objective of the 12th Street Small Cap Value is to execute our firm-wide investment process by investing in equity securities with a market cap of less than $5 billion at the time of purchase.