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Shaker Investments Small Cap Growth Update – 1Q 2025

Following a strong post-election rally, equities, particularly small caps, experienced a pullback this quarter. Momentum faded among many recent leaders, including the “Magnificent Seven,” as sentiment-driven growth stocks lagged behind value. This reset appeared healthy, and arguably overdue, after several years of strong post-pandemic gains and economic resilience.

Adding to the uncertainty, the new administration’s early policy moves have raised fresh questions, while the Federal Reserve has shifted into a holding pattern after last year’s rate cuts. Together, these factors have contributed to a more cautious tone in markets.

Earnings expectations have begun to moderate and may soften further, raising questions about whether small caps can regain leadership over large caps in 2025. As a result, small-cap valuations have compressed more meaningfully creating potential opportunities for selective investors as sentiment resets and longer-term fundamentals come back into focus.

Whether this quarter’s pullback proves to be a temporary pause, or the start of a more sustained downturn remains to be seen. Either way, staying patient and opportunistic through periods of volatility remains essential.

Discussion of First Quarter Performance and Positions

During the quarter, the Shaker Small Cap Growth Strategy outperformed its benchmark in a challenging market environment, posting a return of -6.5% versus -11.1% for the benchmark.

Healthcare and consumer staples stood out as bright spots, delivering positive absolute returns. On a relative basis, the strategy outperformed in all sectors except industrials and financials, with especially strong contributions from consumer staples and consumer discretionary stocks driving much of the outperformance.

Top Contributors

Halozyme Therapeutics (HALO) – HALO, a biotech company specializing in subcutaneous drug delivery, benefited from multiple regulatory approvals and favorable headlines during the quarter, supporting momentum.

Sprouts Farmers Market (SFM) – A top contributor for the fifth straight quarter, SFM continues to grow as one of the country’s fastest-expanding grocers. With shares up meaningfully, the portfolio trimmed its position to lock in gains.

Corcept Therapeutics (CORT) – Recently initiated, CORT develops treatments for hypercortisolism and related conditions. Its lead drug earned FDA approval for oncology use, expanding its potential addressable market.

Sportradar Group (SRAD) – Added in late 2024, SRAD is a global leader in real-time sports data and analytics, serving both media and betting industries as demand for live content and integrity services grows.

Casey’s General Stores (CASY) – CASY, a convenience store and fuel retailer across the Midwest and Southeast, continues to deliver steady expansion and operational resilience in a highly competitive space.

Top Detractors

Zebra Technologies (ZBRA) – A leader in automatic identification and data capture technology, ZBRA lowered its 2025 guidance amid rising geopolitical uncertainty, which weighed on sentiment.

Agilysys (AGYS) – This hospitality-focused IT software provider saw softness in point-of-sale product sales, a key growth driver. Despite the shortfall, the company’s long-term growth narrative remains compelling.

Comfort Systems USA (FIX) – FIX continues to benefit from increased AI-related infrastructure demand, but tariff pressures are squeezing margins and dragging on recent performance.

Boot Barn Holdings (BOOT) –  BOOT, which operates a nationwide network of western wear stores, has faced investor concern around margin pressure tied to tariff risk in Mexico and China.

Napco Security Systems (NSSC) – A second straight quarter of underwhelming sales performance from this security tech firm has kept pressure on the stock despite strong underlying industry demand.

Changes in the Portfolio

During the quarter, we added 13 new positions and exited eight, while also making selective trims and additions across the portfolio. Nearly half of the new additions came from the healthcare sector, where we had previously been underweight relative to the benchmark.

One notable addition was Merit Medical Systems (MMSI), a global medical device company with a broad product portfolio. A key catalyst is the FDA approval of WRAPSODY, a vascular access device designed to improve outcomes for dialysis patients. Competing with Gore’s Viabahn and Becton Dickinson’s Covera, WRAPSODY addresses a $600 million U.S. market and is expected to drive incremental growth in revenue and earnings.

We also addressed our underweight in technology by initiating several new positions, including Opera Ltd. (OPRA), a Norwegian-based browser company known for its user-focused features and strong customization. With a three-year sales CAGR above 20%, we believe OPRA is well-positioned for continued growth.

On the sell side, exits were driven by a mix of macro and company-specific factors, including policy shifts, tariff exposure, and deteriorating fundamentals. One example was Kirby Corp. (KEX), a long-time holding that benefited from post-COVID demand normalization but has since shown slowing momentum. We redeployed capital into opportunities with stronger forward outlooks.

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Andrew Frye

Senior Research Analyst

Andrew first joined Shaker in 2022 as an intern on the research team. Following his internship, Andrew accepted a full-time position with Shaker Investments as a Research Analyst. Andrew was promoted to Senior Research Analyst in 2025. Andrew’s primary role is to work with the Portfolio Managers on monitoring existing ideas, tracking competitors, and new idea generation. Andrew brings an analytical approach to modeling companies.

Prior to joining Shaker Andrew worked as a summer analyst intern with Progressive Insurance in the Real Estate Control Group. Andrew received his BA in Economics, Political Science, and Business Management and his Masters of Business Analytics and Intelligence from Case Western Reserve University.

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Ashley Arsena, CFP®

Senior Business Development and Client Service Officer

Ashley's journey with Shaker began in 2016 where she quickly established herself to be an integral part of the team. From handling operations to executing trades and providing top-notch client services, Ashley has showcased her versatile skill set. Currently, a vital member of the Business Development and Client Services team, she dedicates her days to building strong relationships with both existing and potential clients.

Ashley is a CERTIFIED FINANCIAL PLANNER™ professional. She has earned a Certificate in Financial Planning from New York University School of Professional Studies and received her BA in Business Management from Baldwin Wallace University with a minor in Human Resources.

Ashley was recognized on AdvisorHub's 100 Women Advisors to Watch in 2024 (#29) and Top 50 Woman Advisors to Watch in 2023 (#48). She has also been recognized as a Five Star Wealth Manager by Five Star Professional in 2024.

Ashley currently serves on the board of Hope for Kids Geauga. She is also an active member of CFA Society of Cleveland, serving as a member of the Women's Advisory Committee.

Ashley lives in Bainbridge with her wife Jessica and young children Connor and Avery.

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Chris Hemmelgarn

Portfolio Manager and Research Analyst

​Chris is a Portfolio Manager and Research Analyst at Shaker Investments. He is responsible for researching new and existing investments as well as portfolio management at Shaker Investments. He joined Shaker in 2017 and covers a range of companies and sectors with a focus on technology, financial services, energy, and utilities.

Prior to joining Shaker Investments, Chris worked in Sell-Side Research as a Vice President at Barclays covering Semiconductors. His primary responsibilities included company and market analysis and forecasting, publishing research, client marketing, and relationship management of company and industry contacts. He also worked as an Associate at Morgan Stanley developing and analyzing business management metrics.

Chris earned his MBA (with Distinction) specializing in Finance and Corporate Finance at the NYU Stern School of Business. He also received his BSFS in International Politics from Georgetown University.

Chris is an avid golfer and cook, and is learning the joy of maintaining a 100-year-old home after a decade plus in Manhattan apartments.

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Sasha A. Kostadinov, CFA

Portfolio Manager and Research Analyst

Sasha is co-manager of the Small Cap Portfolio and conducts research on consumer discretionary, consumer staples, materials, and health care sectors for all of the portfolios at Shaker Investments. He has spent more than twenty years working in the equity markets, the last nineteen with Shaker Investments.

Prior to joining Shaker Investments, he was a research analyst at Clarion Group, a Cleveland, Ohio-based long-short hedge fund. Prior to that, he was a research analyst at KeyBanc Capital Markets (formerly McDonald Investments). Prior to that, Sasha was a Financial Consultant at Smith Barney.

Sasha is a holder of the Chartered Financial Analyst designation and received his BA in Economics and Political Science and MA in Economics at Cleveland State University.

He and his wife, Ruthann, reside in Lakewood with his guitars.

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Raymond J. Rund

Managing Director, Senior Research Analyst

Ray is the Senior Research Analyst and has been covering the technology and industrials sectors since joining Shaker Investments in 1996. 

Prior to joining Shaker Investments, Ray was a General Partner in an early-stage venture capital partnership for nine years, where he organized the first round of venture funding for RF Micro Devices and served on their board for six years prior to the company’s IPO. In 2015 RF Micro merged with Triquint Semiconductor to become Qorvo, a leading supplier of integrated circuits used in wireless communications.  Ray also headed marketing at Keithley Instruments, was a consultant at McKinsey & Company, and worked in engineering and marketing for Intel. Early in his career Ray worked as an engineer for Combustion Engineering and Westinghouse Electric in Pittsburgh.

Ray currently serves on the Investment Committee of the Harvard Business School Club of Northeast Ohio, is a member of the Finance and Investment Committee of the Jewish Federation of Cleveland, and serves on and was former chair of the Retirement Fund Committee for the Jewish Federation of Cleveland.

Ray earned his BS, magna cum laude in Engineering & Applied Science at Yale University, an MS in Electrical and Computer Engineering at Carnegie Mellon University, and an MBA from Harvard University.

Ray is a long time Clevelander, and an avid Lake Erie sailor. He and his wife Jeanne live in Shaker Heights where they enjoy being close to their three adult children and grandson. 

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Kacie Wick

Chief Compliance Officer

Kacie joined Shaker Investments in 2011 as the company’s controller. In 2022, Kacie was promoted to Chief Compliance Officer. She brings over 20 years of professional experience in operational and financial management for various for-profit and non-profit organizations in Boston and Cleveland.

Prior to joining Shaker Investments, she was Director of Clinical Research Administrative Operations in the School of Medicine at Case Western Research University where she managed a research grant portfolio of over $40 million. She has also worked as the Director of Finance for the Weatherhead School of Business at Case Western Reserve University, Director of Operations at Village Preparatory School; Operations Manager at Northeast Ohio Council on Higher Education; and Center Financial Manager at Education Development Center.

Kacie received her Masters of Accounting from Case Western Reserve University, where she graduated magna cum laude and her BS in Management from Babson College in Wellesley, MA. Kacie is currently working towards her Investment Advisor Certified Compliance Professional (IACCP) designation.

Kacie currently serves as a trustee for the Tod Homestead Cemetery in Youngstown, Ohio and is a former treasurer for her local girl scout Troop 70204 and the Onaway PTO. She lives in Shaker Heights with her two daughters.

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Brandon A. Hemmelgarn

Co-Chief Investment Officer and Portfolio Manager

Brandon is the co-Chief Investment Officer at Shaker Investments. With over 14 years of industry experience, Brandon leads the investment team at the firm. He is also responsible for researching new and existing investments and portfolio management for all three of the firm’s strategies. Prior to being promoted to co-Chief Investment Officer in 2020, Brandon was a Portfolio Manager and Research Analyst at the firm for 8 years. He covers a range of companies and sectors including technology, consumer products and services, industrials, and materials.

Prior to joining Shaker, Brandon worked on the investment team at Audax Group, a Boston-based private equity firm focused on growing middle market companies.

Brandon is a former board member of the Washington Association of Money Managers and the Private Equity Association of Boston.

Brandon received his BA, summa cum laude, in Economics from Princeton University and is a Registered Investment Advisor Representative (FINRA Series 65). He and his wife, Shelby, reside in Arlington, Virginia, with their sons Thomas and Ted. When time permits, Brandon still enjoys lacing up his skates and taking to the ice rink.

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Bradley Wheeler

President

Brad Wheeler serves as the President of Shaker Investments, overseeing the firm’s strategy, business development, and operations. With more than 25 years of experience in the financial services industry, Brad has built a career focused on advising institutional investors, endowments, and leading financial institutions.

Before being named President, Brad was Vice President and Head of Business Development at Shaker. Prior to joining the firm, he was a founding partner of Cleveland Research Company, where he established institutional client relationships in Boston and led the firm's international expansion by opening its London office. Earlier in his career, Brad was a partner at FTN Midwest Research and worked in commercial banking at US Bank.

Brad previously served as President of both the Shaker Youth Hockey Association and the Shaker Heights High School Sports Boosters.

He holds a B.A. in Public Finance from Miami University and an MBA from the Weatherhead School of Management at Case Western Reserve University.

Brad and his wife, Laura, live in Shaker Heights and have two adult children.

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Edward P. Hemmelgarn

CEO & Co-Chief Investment Officer

Edward Hemmelgarn is the CEO and Co-Chief Investment Officer at Shaker  Investments. Edward’s primary focus is leading the investment team as well as portfolio management for all three of Shaker’s strategies. His research focus includes healthcare, financial services, and real estate.

Prior to founding Shaker Investments in 1991, Edward was the Chief Financial Officer of Retail Banking at Ameritrust Corporation (now KeyBank). Prior to that, Edward worked at Ernst & Young focusing on mergers and acquisitions and strategic and financial management consulting.

He received a BA in Chemistry and a MBA from the Case Western Reserve University, where he also served as an instructor for numerous courses. Mr. Hemmelgarn is a former CPA.

Edward is currently a board member at the Cleveland Museum of Art. Edward is also on the Visiting Committee of Case Western Reserve University’s College of Arts and Sciences. He is a past recipient of the Outstanding Alumni Award from Case Western Reserve University’s Weatherhead School of Business. He was named Accounting Alumnus of the Year in 2003, and a recipient of Case Western Reserve University’s Department of Chemistry’s Distinguished Alumnus Award in 2016.

Edward and his wife, Jan, reside in Shaker Heights.

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