Wasatch Small Cap Value Fund® (WICVX)  Invest in this Fund 

Investor Class | Institutional Class
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The Small Cap Value Fund is focused on undervalued small companies with future growth potential.

What is this fund's objective?

The Small Cap Value Fund invests in undervalued smaller companies to achieve long-term growth of capital. Income is a secondary objective, but only when consistent with long-term growth of capital. Currently, we do not expect this fund to generate substantial income.

What kind of companies does this fund hold?

We seek companies we believe are temporarily undervalued but have significant potential for stock price appreciation.  As we analyze small cap companies, we are most interested in finding:
  • Low valuation as measured by P/E, price-to-sales ratio, etc.
  • Catalysts for improved earnings growth
  • New products/services that may increase revenue and market share
  • An experienced management team with a substantial stake in the company’s future
  • Potential to generate improved financial performance

How do we find them?

We use a bottom-up process of fundamental analysis to look for individual companies that we believe are temporarily undervalued. To determine that a company has these characteristics, we take the following approach:

Using financial databases, he screens for companies of which Wall Street is not recognizing the long-term potential. He typically looks for:

  • Absolute or historically low valuation (using a variety of valuation metrics)
  • Improving trends in ROA, ROE, Cash Flow, etc.

Deep Due Diligence
We research a company’s value from the ground up looking for an identified catalyst for improved earnings growth.  We use a thorough and collaborative process to understand the companies in which we invest.  We study the company, its competitors, and its industry.  We talk with management to verify the quality of the leadership and gain deeper insight for the company’s prospects and risks.  We call competitors, suppliers, and customers to make sure we have a complete picture of the landscape.  Meanwhile, we are constantly talking with other Wasatch portfolio managers and analysts in order to leverage the knowledge, perspective, and insight of the broader Wasatch team in every investment decision.

Earnings Models
We build proprietary earnings models in order to analyze a company’s key growth drivers. Our models help shape our projections of a company’s potential for earnings growth and what we believe to be a low price for the stock.

We consider a variety of appropriate valuation metrics (e.g. Price to Earnings, Enterprise Value to EBITDA, Price to Book, etc.) to assess the potential return and the risk/reward trade-off of each stock.  Valuation is an important component of every investment decision.

Performance for the Institutional Class prior to 1/31/2012 is based on the performance of the Investor Class.  Performance of the Fund's Institutional Class prior to 1/31/2012 uses the actual expenses of the Fund's Investor Class without any adjustments. For any such period of time, the performance of the Fund's Institutional Class would have been substantially similar to, yet higher than, the performance of the Fund's Investor Class, because the shares of both classes are invested in the same portfolio of securities, but the classes bear different expenses.

Investing in small or micro cap funds will be more volatile and loss of principal could be greater than investing in large cap or more diversified funds.

Investing in foreign securities, especially in emerging markets, entails special risks, such as currency fluctuations and political uncertainties, which are described in more detail in the prospectus.

Investments in value stocks can perform differently from other types of stocks and from the market as a whole and can continue to be undervalued by the market for long periods of time. Loss of principal is a risk of investing.