Portfolio Manager Spotlight: Tributary Capital Management
Omaha, Nebraska is famous for being the home of one of the world’s most renowned investors, Warren Buffett. Indeed, the Oracle of Omaha, as he’s known, put the city on the map in the 1980s, causing bigger and more popular financial hubs like New York City and Chicago to sit up and take notice.
These days, Buffett’s Berkshire Hathaway is a titan of the financial industry, recognized by all far and wide.
But another firm just down the road in Omaha, Tributary Capital Management, remains a hidden gem. And that’s just fine by their fundamentals-focused portfolio managers.
Mark Wynegar joined Tributary’s predecessor in 1999. His colleague, Mike Johnson, joined in 2005. Together, they manage the Azzad Small-Cap Value Portfolio, a strategy that has looked good in otherwise choppy markets since the beginning of the year.
Both portfolio managers eschew individual accolades and attention-seeking behavior, preferring instead to ply their trade in the service of investors. The Small-Cap Value Portfolio has performed well of late, owing to Wynegar and Johnson’s time-honored practice of looking for good businesses trading at a fair price.
Managing a value strategy and sticking to halal investing requirements that prohibit too much leverage or debt is not an easy task. That’s because value companies tend to be distressed, with high leverage and high uncertainty of cash flow. But that hasn’t hurt the Small Cap Value Portfolio, which invests in companies that can enhance shareholder value over time and provide downside protection in challenging markets.
“We are active managers,” Wynegar said in a recent interview with Morningstar magazine. “[We] want all our picks to contribute to performance, but we want to manage company-specific risk.”
One example is Littelfuse, which is a longtime holding. The manufacturer of circuit protection products has benefited from the increase of electronics usage in general, but specifically in automobiles, which behave more like computers every day. Littlefuse benefits not only from being in a fast-growing industry; it’s outpacing its competitors, as well.
“It’s a well-known, great brand name that has relationships with the manufacturers of the ultimate products, as well as distributors. The other thing is that they make a product that is really low cost for an auto company, and also very important,” Johnson told Morningstar. Littelfuse has been one of the biggest contributors to outperformance for the Azzad Small-Cap Value Portfolio in recent years.
And the Small-Cap Value Portfolio as a whole has outperformed its benchmark across all reporting periods since inception. It’s an important part of the Azzad Ethical Wrap Program. And it’s why Tributary Capital Management is this month’s featured portfolio manager.
Past performance cannot guarantee future results.