TCW Relative Value Mid Cap Strategy

(Formerly the TCW Value Opportunities Strategy)

Managed Account Division

An aggressive capital appreciation style that generally invests in small- and medium-sized cap companies deemed to be under­valued relative to the equities market.

At-A-Glance

AUM or Committed to Management

$177.3 Million (as of 03/31/18)
 

Investment Team

  • Diane E. Jaffee, CFA

Investment Objective

TCW Relative Value Mid Cap seeks capital appreciation by generally investing in small- and medium-capitalization companies which we believe are inefficiently priced due to transitional issues and have an internal catalyst for cash flow, operating margin, and eventual earnings growth. Through an analytical process of bottom-up fundamental research, our job is to calculate a company’s inherent value and commit funds when the market price is substantially below that value. Because we are buying stocks which typically have depressed historical earnings growth, reaching investment objectives takes time and we generally look through short-term stock fluctuations. We believe this focus on long-term capital appreciation provides superior investment returns over a full market cycle.

We typically invest in securities that meet one or more of our five valuation characteristics: price-to-earnings, price-to-cash flow, price-to-sales, price-to-book, and dividend yield. Positions are sold or reduced when the market fairly values a company’s improved prospects based on its valuation target, when a position becomes larger than a predetermined percentage of the portfolio, or it is determined that the goals of the company cannot be achieved after a fundamental review.

There is, of course, no assurance that this goal will be realized.

Investment Philosophy 

The basic underlying philosophy of the strategy is that every company has an “intrinsic value” based on its inherent assets, its absolute level of recurring earnings, or its earnings growth potential. The stock of a company will often fall below its true market value when it has a period of earnings trauma.

 

Top Ten Holdings (%)

  Portfolio
Jones Lang LaSalle Inc. 3.78
Western Digital Corp. 3.75
Textron Inc. 3.30
Maxim Integrated Products Inc. 3.14
Tapestry Inc. 3.06
KeyCorp. 3.05
Cypress Semiconductor Corp. 2.88
Centene Corp. 2.65
The AES Corp. 2.65
The Manitowoc Co. Inc. 2.65
as of 3/31/2018 (updated quarterly)

Sector Weight (%)

as of 3/31/2018 (updated quarterly)

Legal Disclosures


The source for all charts and tables above is TCW
About Performance
Performance for any period not ending on a calendar quarter end is subject to adjustment at quarter end for accounts that are not present for the entire quarter. Past performance is no guarantee of future results.
About Portfolio Values and Holdings

Portfolio characteristics and holdings are subject to change at any time. It should not be assumed that an investment in the securities listed was, or will be, profitable.


*Source: BNY Mellon Performance and Risk Analytics, based on a managed account Value Opportunities model portfolio. Portfolio characteristics and holdings are subject to change at any time. It should not be assumed that an investment in the securities listed was, or will be, profitable.


**Source: BNY Mellon Performance and Risk Analytics, based on a managed account Value Opportunities model portfolio. Portfolio characteristics and holdings are subject to change at any time. The investment strategy does not target any specific numbers or ranges for these characteristics. Accordingly, these characteristics can vary greatly. The estimates are forward-looking statements based on assumptions. This would include forward earnings estimates and growth rates, among other things, and all associated calculations, including projected price/earnings ratios. Actual results may vary materially from the estimates due to the numerous economic, financial and market conditions. There is no assurance that forecast estimates will be realized.

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Investment Team

  • Photo: Diane E. Jaffee, CFA
    Diane E. Jaffee, CFA
    Group Managing Director

    Ms. Jaffee is the Senior Portfolio Manager for the TCW Relative Value Large Cap, TCW Relative Value Dividend Appreciation, and TCW Relative Value Mid Cap strategies and funds. She joined TCW through the acquisition of SG Cowen Asset Management in 2001. She had been a Senior Portfolio Manager at Cowen Asset Management since 1995 and continues in that role at TCW. She has more than 30 years of investment experience. Before joining Cowen, she was Vice President and Portfolio Manager at Kidder, Peabody & Co from 1986 to 1995. Prior to that, she was Vice President at Lehman Management Company from 1985 to 1986 and an Equity Analyst with Prudential Insurance from 1982 to 1985. In 2007, Ms. Jaffee was named the Separately Managed Accounts Award winner in the Large Cap Equity category by Standard & Poor’s and its award partners Prima Capital and Investment Advisor magazine. The TCW Relative Value Large Cap, Dividend Appreciation, and Mid Cap mutual funds have been each awarded Wall Street Journal’s “Category Kings” in their respective categories, multiple times in 2012, and the TCW Dividend Appreciation Fund was ranked the #1, top performing fund among Lipper Equity Income Funds for 2012. In 2013, the TCW Relative Value Large Cap mutual fund was ranked #1 fund for the first quarter and the #6 fund for the one-year period ending March 31, 2013 among Large Cap Value peers, while the Dividend Appreciation Fund ranked #2 for the quarter and #3 for the one-year period ending March 31, 2013 among Equity Income peers. Ms. Jaffee holds a BA in Economics from Wellesley College (1982). She has completed post-graduate work in Finance and Accounting at Rutgers University Graduate School of Management and is a CFA charterholder. Ms. Jaffee is also a member of the New York Society of Security Analysts, the Economic Club of New York, and the CFA Society.

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