Calamos Timpani Small Cap Growth Fund Has the Discipline to Sell When It’s Time

July 29, 2019

Brandon M. Nelson, Senior Portfolio Manager, is responsible for the portfolio management of Calamos Investments LLC’s small- and smid-cap growth strategies.

He draws upon more than 22 years of experience in small- and smid-cap growth equity investing, utilizing the same philosophy and process employed by Calamos Timpani Small Cap Growth Fund (MUTF:CTSIX) today.

He is also a member of the Calamos investment committee, which is charged with providing a top-down framework, maintaining oversight of risk and performance metrics, and evaluating investment process.

Mr. Nelson joined Calamos Investments following its 2019 acquisition of Timpani Capital Management, the company he co-founded in 2008, where he served as Chief Investment Officer and Portfolio Manager of the Timpani strategies since inception. Previously, he was a Managing Director and Senior Portfolio Manager at Wells Capital Management since 2005.

In this wide ranging 4,398 word interview, Mr. Nelson reveals his investing methods and the reasoning behind several of his current top picks.

“Our philosophy is to invest in companies with fundamental momentum. We seek companies with a sustainable and underestimated growth profile, and then, we overlay that approach with an unemotional, value-added sell discipline.

And the key is to find companies that have both sustainable growth and underestimated growth. One without the other can be OK, but both together tend to be much more powerful because valuation metrics usually expand when this happens.

To elaborate a little bit more, if you don’t mind, part of the reason why I think the process is successful and repeatable is because we’re exploiting some common behavioral errors that other investors and analysts make.”

This discipline leads to several sell signals for the portfolio.

“We sold a stock called Green Dot Corp. (NYSE:GDOT). We were seeing fatigue. We sold this in the March quarter; our average sale price was around $69. I think it’s a good example of a stock that we owned for a couple of years. It was in beat-and-raise mode for most of those quarters.

They were consistently showing strong growth, actually accelerating growth. For several quarters, they were exceeding analyst expectations, and the stock was a great performer for that year and a half to two years.

Beginning in the December quarter, we started to see fatigue show up in the fundamentals. ”

Get more insight into owning winners that Mr. Nelson has identified by reading the entire 4,398 word interview, only in the Wall Street Transcript.