Ironwood Investment Management, LLC’s Track Record of Success

Ironwood Investment Management, LLC: A Quarter Century of Small Cap Investing

For over 25 years, Ironwood Investment Management, LLC has been a leader in small cap equity investing. Ironwood’s flagship Small Cap Core strategy, launched in 1999, has built a track record of outperformance through multiple market cycles: since inception (1/1/1999), the strategy has returned 11.9% gross of fees in average annual return versus 8.1% for the Russell 2000, the strategy’s benchmark, an outperformance of over 380 bps. 

The firm’s success stems from its disciplined, fundamental approach focused on identifying high-quality small cap companies trading at attractive valuations. The Small Cap Core (SCC) strategy seeks to identify businesses with exceptional management teams, strong competitive positions, and sustainable growth potential. These are the core tenants of the firm’s “High I-Q” company strategy.

By maintaining a long-term perspective and exploiting short-term market volatility, Ironwood has been able to add value through stock selection. The SCC strategy typically holds 60-80 positions, with the goal of mitigating risk and portfolio volatility, as well as capturing positive return potential through any market or economic cycle. 

Long-Term Track Record of Performance

Ironwood Investment Management LLC’s long-term track record is noteworthy given the challenges in the small cap space. Over the 10 years ending March 31, 2024, the SCC strategy returned 10.6% annualized, gross of fees, outpacing the Russell 2000’s 7.6% return by over 300 basis points.

The strategy’s outperformance versus the index has been even more pronounced over 5-year and 3-year periods. For the 5 years through Q1 2024, the SCC strategy delivered 15.3% annualized versus 8.1% for the index. And over the past 3 years, it generated a 6.2% annual return compared to -0.1% for the Russell 2000. 

In the last year, the SCC strategy has beat out its peers to deliver 47.5% annual return, beating the Russell 2000 performance of 19.7% by over 2780 bps. In recognition of this performance, PSN ranked the Small Cap Core strategy as #1 “Top Gun”  within the PSN Small Cap Core Universe for the quarter ending March 31, 2024.

Growth of $1000 versus Russell 2000, since strategy inception

Small Cap Core Strategy, Ironwood Investment Management LLC

Data provided by Nasdaq eVestment Market Intelligence reporting

Importantly, Ironwood has achieved these results while taking less risk than the overall small cap market. The strategy’s beta versus the Russell 2000 has been 0.96 over the past 5 years, indicating slightly lower volatility. It has also demonstrated strong downside protection, with a downside capture ratio of 95.6% over that period.

This combination of positive returns and downside mitigation has resulted in attractive risk-adjusted performance metrics. The strategy has achieved a 5-year information ratio of 0.78.

Consist Strategy Through Market Cycles

One of the hallmarks of Ironwood’s approach has been its consistent fundamental strategy across different market environments. This ability to navigate varied market conditions stems from Ironwood’s balanced approach. 

While short term market movements can push around individual stock prices, the SCC strategy seeks to mitigate this market volatility over the long term by continually seeking High Ironwood Quality (High I-Q) companies in the portfolio. Typically these are companies with strong balance sheets showing ample cash, market leading products, and great management teams. These defining characteristics enable these companies to operate successfully through tough periods, and even take advantage of competitors’ weaknesses. The Ironwood team strongly believes that in the long term, it is the performance of companies that drives returns.

The figure below illustrates the SCC strategy’s performance relative to its peer group over time.

Annualized Returns, Universe Rankings, Shown by Quartile

(Universe: eVestment US Small Cap Core Equity)

Small Cap Core Strategy, Ironwood Investment Management LLC

Data provided by Nasdaq eVestment Market Intelligence reporting

Experienced Team with Aligned Interests

Ironwood’s performance is driven by its experienced investment team led by founder and Chief Investment Officer, Donald Collins. Collins has over 25 years of small cap investing experience and has been managing the Small Cap Core strategy since its 1999 inception.

He is supported by a group of seasoned portfolio managers and analysts, many of whom have been with the firm for over a decade. This continuity and experience are key advantages in the inherently volatile small cap space.

Importantly, Ironwood’s team members invest significantly alongside clients in the firm’s strategies. This alignment of interests helps ensure the team remains focused on long-term outperformance rather than short-term asset gathering.

Looking Ahead

As Ironwood approaches its 30th anniversary, the firm remains committed to its time-tested investment approach. With $240 million in assets under management (as of 3/31/2024), Ironwood still has ample capacity to execute its high-conviction strategy.

The small cap market continues to offer abundant opportunities for skilled active managers. Given ongoing volatility and the inherent inefficiencies in this segment of the market, Ironwood believes its fundamental, long-term oriented approach is well-positioned to continue generating alpha.

Ironwood’s quarter-century track record provides strong evidence of the firm’s capabilities. For investors seeking exposure to the long-term growth potential of small cap equities, Ironwood Investment Management LLC may be a suitable option given it’s top-tier performance.

The firm’s combination of experienced leadership, disciplined process, and long-term performance all make it stand out in the competitive world of small cap investing. As Ironwood embarks on its next 25 years, it remains focused on its core mission: delivering  risk-adjusted returns for clients by investing in high-quality small cap businesses.

PERFORMANCE DATA AND DISCLOSURES

Ironwood Investment Management®, LLC (Ironwood) is an independently managed investment advisory firm providing investment advisory services to institutional clients, mutual funds and high-net-worth clients.  The firm is a registered investment adviser with the Securities and Exchange Commission. SEC Registration does not imply a certain level of skill or training. Accounts in the Small Cap Core composite include separately managed, fully discretionary, fee-paying portfolios.  Portfolios are invested in undervalued securities, the  majority of which will have market capitalizations under $2.5 billion at cost, including securities with growth and/or value characteristics.  Securities are considered  undervalued when management believes the current share price does not  accurately reflect the long-term economic value of the underlying company. Ironwood Investment Management, LLC claims compliance with the Global          Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. Ironwood Investment Management, LLC has been independently verified for the periods January 1, 1999 through December 31, 2021. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis.  The Small Cap Core composite has had a performance examination for the periods July 1, 2002 to December 31, 2021.  The verification and performance examination reports are available upon request. GIPS® is a registered trademark of CFA Institute.  CFA  Institute does not endorse or promote this organization, nor does it warrant the accuracy or quality of the content contained herein. The creation date of the composite:  July 2002. Performance inception date of the composite: January 1, 1999. Prior to July 2002, portfolios were included in the composite when at least 75% of the portfolio was invested in equity securities and when at least 75% of the portfolio was invested according to the investment style of the composite. Subsequent to July, 2002, portfolios are included in the composite after the first full month of being fully invested.  Returns are presented gross and net of management fees and include the reinvestment of all income. Net  returns are calculated based on the highest fee of 1.00%. Investment management fees are 1.00% on the first $25 million, 0.90% on the next $25 million, 0.80% on the next $50 million, and 0.75% over $100 million on an annual basis and a client’s return will be reduced by these and   other related expenses. The actual fee charged to an individual  portfolio may vary by size and type of portfolio and may be negotiated. Actual investment advisory fees incurred by  clients may vary. The Russell 2000 Index consists of the 2000 smallest stocks in the Russell 3000 Index that represents approximately 8% of the U.S. equity market capitalization.  The indices have been reconstituted annually since 1989. Ironwood returns and Index performance reflect reinvested interest income and dividends, in U.S. dollars. A list of composite descriptions and a list of limited   distribution pooled fund descriptions are available upon request. Past performance is not indicative of future results. Policies for valuing investments, calculating performance and preparing GIPS Reports are available upon request. Prior to May 2006, the Firm was known as Ironwood Capital Management, LLC.

John Grady

Research & Operations Associate

As Research & Operations Associate, John assists the equity research effort in support of the portfolio managers and works closely with the operations department. Prior to joining the Ironwood team in 2023, John earned his BA in Psychology, from the University of Denver. While studying, John developed several business plans for small businesses in the Denver area for a capstone project for his business minor. Prior to joining Ironwood, John was developing his research skills through an apprenticeship by regularly meeting with management teams, attending investor conferences, and developing investment theses.

Cameron Marshall

Trading & Research Associate

As a Trading & Research Associate, Cameron is responsible for investment portfolio trading and operations as well as conducting equity research in support of the portfolio managers. Prior to joining the Ironwood team in 2022, Cameron earned his BA in Economics, with a minor in Mandarin, from the University of New Hampshire. While studying, Cam held several internships working with investment teams across asset classes in both private and public markets. An active member of his community, Cam has contributed his time and energy to charities including Best Buddies International, Be Positive for CHaD Kids, and Positive Tracks.

Alyssa Wade

Director of Client Relationships

Alyssa Wade is the Director of Client Relationships and assists in the Marketing Department at Ironwood Investment Management, LLC®. Prior to joining Ironwood, Alyssa worked at Boston Technologies and Regan Communications Group. She holds a Bachelor of Arts in Communication with a minor in Education from the University of Massachusetts, Amherst.

Regina Wiedenski

Co-Portfolio Manager
Value Investment Partners (VIP) Strategies

Regina Wiedenski is Co-Portfolio Manager for the VIP strategies at Ironwood Investment Management, LLC®. Ms. Wiedenski has an MS in Management with a concentration in finance from the Sloan School at M.I.T. and a BS from M.I.T. Prior to joining Ironwood to manage VIP portfolios, she was a Portfolio Manager at J.L. Kaplan Associates. Previously she was an equity analyst at Advest, Inc. and had spent nine years as an analyst at Adams, Harkness & Hill covering healthcare, specialty chemical, instrumentation and publishing companies. She began her career as a financial analyst at Morgan Stanley.

Paul Weisman

Co-Portfolio Manager
Value Investment Partners (VIP) Strategies

Paul Weisman is Co-Portfolio Manager for the Value Investment Partners (VIP) strategies at Ironwood Investment Management, LLC®. Mr. Weisman has an MA in Industrial Organization (Applied Microeconomics) from Boston University and a BA from Haverford College. Prior to joining Ironwood as the head of the V.I.P. team in 2009, Mr. Weisman was Chief Investment Officer at J.L. Kaplan Associates which he joined in 1986. From 1983 to 1986 he was an investment analyst at Delphi Management.

Ravi Jain, Ph.D., CFA

Partner

Ravi Jain, Ph.D., CFA is a Partner at Ironwood Investment Management, LLC®. Dr. Jain has a Ph.D. in Finance from the University of Missouri Columbia (doctoral thesis on corporate spinoffs), a Master of Finance and Bachelor of Commerce from the University of Delhi. He is also a Chartered Financial Analyst® (CFA). Dr. Jain is an Associate Professor of Finance at the University of Massachusetts Lowell where his research focuses on capital markets and corporate finance.

Warren Isabelle

Portfolio Manager

Warren Isabelle, CFA is a Portfolio Manager at Ironwood Investment Management, LLC®. Prior to forming Ironwood Investment Management, LLC® in 1997, Warren was the Head of Domestic Equities at Pioneer Management Company and the Portfolio Manager of more than $3 billion in small cap assets including the Pioneer Capital Growth Fund (later renamed Pioneer Mid-Cap Value Fund), Pioneer Small Company Fund and several institutional portfolios. Warren has received national attention for his research efforts and results.  He has also appeared in feature articles in Barron’s, Business Week, Forbes, Fortune, Money and The Wall Street Journal and has appeared on “Wall Street Week with Louis Rukeyser.” Prior to joining Pioneer, Warren was an Analyst at The Hartford Insurance Company.  He earned a BS in Chemistry from Lowell Technological Institute, an MS in Polymer Science and Engineering from the University of Massachusetts, and an MBA in Finance from the Wharton School of the University of Pennsylvania.

Paul Anderson

Executive Managing Partner

Paul Anderson, CFA is Executive Managing Partner of and leads investor relations, business development and management activities for Ironwood and is a member of the management committee.  Paul joined Ironwood in December 2020 after 12 years at Natixis Investment Managers where he developed and led the U.S. institutional distribution group at Natixis Distributors L.P. Over the course of his 30 years in the industry, Paul has held roles in investment research, sales and management.  Paul holds a Bachelor of Arts in Economics from the University of New Hampshire, and an MBA from Vanderbilt University.  He is a member of the Committee on Investor Responsibility at UNH advising the UNH Foundation on sustainable investment practices.

Shantelle Reidy

Executive Managing Partner
Chief Financial Officer
Chief Compliance Officer

Shantelle Reidy is Executive Managing Partner and the Chief Financial Officer and Chief Compliance Officer for Ironwood Investment Management, LLC®. Shantelle is a member of the management committee and has served Ironwood in various capacities since joining the firm in 1998, including as Executive Director of Trading and Operations from 2001 to 2014. Prior to joining Ironwood, Shantelle was an Investor Relations Analyst at Talbots, Inc. where she conducted research for the company and managed the firm’s communication with investment analysts. Shantelle holds a Bachelor of Arts degree in Economics and Political Science from Boston University and a Master of Business Administration in Marketing and Finance from the Boston University School of Management.

Donald Collins, CFA

Executive Managing Partner
Portfolio Manager

Donald Collins, CFA is an Executive Managing Partner and Portfolio Manager at Ironwood Investment Management, LLC® and is a member of the management committee. Prior to joining Ironwood in 1998, Don was a portfolio manager with Boston Advisors where he managed portfolios for institutions and high net worth clients.  During his tenure at Boston Advisors, Don participated in the management of the Advest Advantage family of mutual funds and managed the Advantage Special Fund.  Don began his career as a Manager for Burgess & Leith.  He earned his BA in Geology from Boston University and studied at the Boston University School of Business.  In addition, Don is the Director and Investment Committee Chairman for the Abelard Foundation, Chairman and Commissioner of Trust Funds for the Town of Lincoln, MA and Director and Chief Financial Officer at Igan Biosciences.