Crabtree Asset Management offers portfolio management for investors who seek exposure to growth equities. Our primary product is the Crabtree Fund, a technology-centric, multi-cap growth-equities model portfolio.
The Crabtree Fund is designed to out-perform the Merrill Lynch Technology 100 Index by providing superior risk-adjusted returns. Crabtree Asset Management clients can invest in the Crabtree model portfolio through Covestor, a Registered Investment Adviser for which Crabtree Asset Management is a sub-adviser.
Barry Randall is the Chief Investment Officer of Crabtree Asset Management and the portfolio manager of the Crabtree Fund. He began his professional financial services career in 1993. In 20 years in the financial services business, he has progressed from junior sell-side analyst to award-winning senior portfolio manager, personally responsible for public and private portfolios of as much as $650 million in assets.
Morningstar has rated the Crabtree Technology model Four Stars (out of Five) for Overall and Trailing 3-Year performance, as of September 30, 2013. Morningstar compares the risk-adjusted return of our model portfolio to the returns of other technology-focused vehicles and strategies in its Separate Account database.
Our Web Site is designed to educate you about our investment process, strategy and philosophy. But we hope you’ll start by viewing our introductory video below:
November 25, 2013
We completed the fourth quarter re-balancing of the Crabtree Fund today.
We sold fourteen positions, bought fifteen new ones, trimmed five holdings and added to three existing holdings.
Sold were Ambarella, America Movil, Anika Therapeutics, Aeroflex, Cambrex, Cynosure, Jiayuan.com International, eHealth, Himax Technologies, M/A-Com Technology Solution Holdings, MagnaChip Semiconductor, Simcere Pharmaceutical, Silicon Graphics and TE Connectivity.
Brand new 2% positions included Marvell Technology, Brocade, QLogic, Finisar, Silicon Motion, Motorola Solutions, , NTELOS Holdings, China Telecom, TakeTwo Interactive, XO Group, KT Corp., Atlantic Tele-Network, ShoreTel, Geeknet and Aspen Technology. All of the new positions, except Aspen Technology, came from our quantitative model.
Trimmed back to 2% positions were CalAmp, Euronet Worldwide, Hexcel, Inteliquent and RigNet.
Raised back to 2% positions were AudioCodes, Catamaran and EnerNOC.
Our mid-November quantitative model yielded 100 candidates, down from 122 when we ran the model in mid-August. This was in-line with expectations considering the recent market-wide price appreciation.
Our valuation parameter is excluding more candidates because the apprciation hasn’t been accompanied, in general, but an increase in operational and share-gain performance. None of this is predictive of the market in general and shouldn’t be interpreted as such.
November 1, 2013
Today we sold our position in The Active Network (ACTV). On September 30, the company, which manages online registration for marathons, business conferences and other events, agreed to be acquired by private-equity firm Vista Equity Partners for about $1.05 billion, or $14.50/share in cash. At the time, this price represented a 27% premium over the closing price on Sept. 27, the most recent trading day. Active’s board endorsed the offer, recommending that all stockholders tender their shares.
This represents the 14th time since the inception of the Crabtree Fund that one of our positions has received a takeover offer. Except in a few instances, we typically sell our shares, rather than wait until deal closure to dispose of the position. After all, we’re equity investment managers, not risk arbitrageurs, so there’s no need to wait around for a marginal improvement in price, at the risk of the deal coming apart and the stock price falling back to its pre-offer level, or worse.
So adieu, Active Network, and we thank you!
August 26, 2013
We completed the third quarter re-balancing of the Crabtree Fund today.
We sold nine positions, bought nine new ones and trimmed six other holdings.
Sold were Audience, American Public Education, Cerner, Demand Media, DSP Group, GenCorp, PhotoMedix, Tetra Technologies and VimpelCom.
Brand new 2% positions included AudioCodes, Digital Generation, Perficient, Turkcell, Inteliquent, Nordion, Stantec, American Movil and The Active Network. All of the new names came from our quantitative model.
Trimmed back to 2% positions were Anika Therapeutics, Cray, eHealth, EPAM Systems, Green Dot and Stamps.com.
Our mid-August quantitative model yielded 122 candidates. This was unusually high for a period of time near a market high. Typically, our “fame” or valuation paramter will exclude a lot of candidates near a market high. In this case, it has been offset by an unusually large number of candidates exceeding our “execution” parameters. This is a testament to how well so many public companies are performing in 2013.
May 28, 2013
We completed the quarterly re-balancing of the Crabtree Fund today.
Sold out of the fund were Accelrys, American Software, Asiainfo-Linkage, Aviat Networks, Bruker, Cabot Microelectronics, CareFusion, IBM, ICU Medical, Magic Software, Mine Safety, MTS Systems, Portugal Telecom, Telenav and XO Group. Asiainfo-Linkage was the target of an M&A transaction and Bloomberg reported in early May that ICU Medical was working with J. P. Morgan Chase to sell itself.
Replacing these 15 companies were new positions in MaxLinear, Simcere Pharmaceutical Group, Electronics for Imaging, Euronet Worldwide, M/A-Com Technology Solutions, Telecom Argentina, Sagent Pharmaceuticals, Greet Dot Corp., Spirit AeroSystems, VimpelCom, TE Connectivity, DSP Group, Himax Technologies, ICON plc., and inContact. The first 13 of these new names were from our quantitative model and the last two were exceptions that we reserve for deserving firms that possess the three Crabtree attributes, but which our model won’t select, typically because they have premium valuations.
Additionally, six existing positions that had appreciated substantially, were trimmed back to standard 2% positions. These were Ambarella, CalAmp, Gencorp, Measurement Specialties, RigNet and Virtusa.
Overall, our mid-May quantitative model contained 88 names, down slightly from the mid-February model. The Crabtree Fund itself continues to hold 50 names, as always.
February 25, 2013
Today we completed our quarterly re-balancing of the Crabtree Fund.
Sold out of the fund were Broadridge Financial, Bio-Reference Labs, CONMED, Spansion, CoStar Group, Computer Task Group, Liquidity Services, OSI Systems and Teleflex.
Added to the fund were Hexcel, Cabot Microelectronics, Portugal Telecom, Aeroflex, Silicon Graphics, Aviat Networks, Jiayuan.com, Telenav, Ambarella and Mine Safety Appliances.
Additionally, we trimmed three positions that had growth substantially, making them once again roughly 2% of the portfolio: Audience, EnerNOC and Shutterfly. And we added more to names in which we are confident, but whose performance had recently dropped them below 2%: Demand Media, eHealth and LSI.
As usual, we don’t anticipate making any further changes until our next re-balancing in May.
December 19, 2012
Today we sold our position in TNS Inc., which on December 11 accepted on offer to be bought by Siris Capital Group for $21/share in cash. Because Crabtree Asset Management is not a risk arbitrage firm, we have elected to take $21.80/share, forgo the $0.20/share arbitrage return and absorb the transaction cost of the sale.
In the past, we have sometimes chosen to hold an acquired Crabtree position until the transaction closing date, but only in instances where the M&A history of the acquiror (e.g. SAP, IBM, Thoma Bravo) was of sufficient quality to virutally guarantee deal closure. Siris Capital may be well-intentioned, but it is not IBM.
We expect to re-deploy the cash raised in this transaction in another holding shortly, bringing the total number of holdings in the Crabtree Fund back to its standard 50-position limit.
December 11, 2012
Today, Crabtree holding TNS, Inc., a maker of networking products, agreed to be acquired by an investor group led by Siris Capital Group. Siris, a private-equity firm, has offered to pay $21 a share in cash for TNS. This represents a 43% premium over the closing price on December 10 and a 47 percent premium over the stock’s average price over the past month. The companies expect the deal to close in the first quarter of 2013.
This represents the twelfth time that a Crabtree Fund holding has been purchased in an M&A transaction since the Fund’s inception on April 1, 2009. Most recently, Mediware Information Systems was acquired by private equity firm Thoma Bravo on November 9, 2012.
December 4, 2012
Today we completed the quarterly re-balance of the Crabtree Fund.
Sold out of the Fund were AeroVironment, Comtech Telecom, Amdocs, Entegris, Globecomm, Kongzhong, Medidata Solutions, Mentor Graphics, Pericom Semiconductor, Perfect World and RR Donnelly. Additionally, we trimmed our positions in Computer Task Group and eHealth. These positions had appreciated and we simply trimmed them back to our standard 2% position size.
New additions to the Fund included American Public Education, Asiainfo-Linkage, Audience, Broadridge Financial, Bruker Corp., Cerner, CoStar Group, Cray, Demand Media, Echostar, Spansion and Virtusa. All of these qualified for inclusion in the fund by virtue of passing our quantitative screen; none were exceptions.
October 26, 2012
We’ve just completed the first two weeks of Q3 earnings season, and we’re generally pleased with the performance of our holdings that have reported so far. Companies reporting their September quarters have included ICU Medical, Computer Task Group, OSI Systems, Cynosure, Entegris, LSI Corp., CONMED, Teledyne Technologies, eHealth and Stamps.com.
We’re especially pleased with the performance of eHealth, which we added to the Crabtree Fund just last month. The company beat expectations for Q3, offered a solid Q4 outlook and the stock rose nearly 9% the day after its earnings release.
While the economic sluggishness has slowed the order flow for many companies, including the ones mentioned, none of our reporting companies has (so far) needed to materially scale back expectations for the fourth quarter. So while it’s early, and there is more research to be done, all of the aforementioned companies seem likely to survive the forthcoming mid-November re-balancing.
September 12, 2012
Crabtree Fund holding Mediware Information Systems (MEDW) announced today that it had reached a deal to be taken private by Thoma Bravo LLC for close to $195 million.
Mediware shareholders will receive $22 for each share they own, which is a 40 percent premium to the previous closing price of $15.75.
The deal was unanimously approved by Mediware’s board and we expect it will be approved by shareholders of the company.
This take-out represents the 11th time a Crabtree holding has been bought since the Fund’s inception on April 1, 2009. Most recently, Ariba was purchased in an all-cash transaction by German software company SAP in May of this year.