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Shaker Investments Small Cap Growth Update – 2Q 2025

U.S. equities rebounded in the second quarter of 2025, reversing course from a sluggish start to the year. The Russell 2000 gained 8.5%, with growth stocks outpacing value. Easing macro pressures and renewed interest in cyclical areas helped drive the shift, with small-cap stocks benefiting from improved sentiment and a more favorable outlook for rate-sensitive sectors. Even with a strong quarter, small caps still trail their large cap peers year-to-date, with the Russell 2000 down 1.8% through June 30 compared to a 6.1% gain for the Russell 1000.

Leadership within small-caps was uneven, but we see encouraging signs for the asset class. A potential shift in Federal Reserve policy, alongside historically wide valuation discounts relative to large caps, has created an attractive backdrop selective investors. M&A activity remains another key theme, with many high-quality small companies trading at levels that could draw interest from strategic buyers.

Periods of muted performance and low investor expectations have often set the stage for long-term opportunity in small caps. Many companies in our universe are emerging from multi-year earnings headwinds, just as the broader market begins to look further down the economic runway. In this environment, we believe the real risk lies in being underexposed during key turning points.

Our team remains focused on identifying companies with strong balance sheets, durable growth drivers, and management teams that can execute through uncertainty. While volatility is inherent in small-caps, history shows that being consistently invested, rather than trying to time short-term moves, as often the difference between capturing potential upside or missing it altogether.

Discussion of Second Quarter Performance and Positions

The Shaker Small Cap Growth Strategy rose 9.4% during the quarter, modestly trailing its benchmark. Strong stock selection in technology, consumer staples, and consumer discretionary sectors contributed meaningfully to returns, and our positioning in consumer-related areas outperformed on a relative basis. Additionally, our lack of exposure to the real estate sector provided a small tailwind. While results in other sectors lagged the benchmark, we remain confident in the long-term prospects of the companies we own and continue to focus on high-conviction ideas supported by strong fundamentals

Top Contributors

Argan Inc. (AGX) – Engineering and construction firm focused on power plants and industrial facilities. AGX’s stock rose as infrastructure and data center power demand boosted contract activity and backlog growth.

Axos Financial Inc. (AX) – Tech-enabled bank offering consumer and business banking, lending and investment services. AX gained on continued revenue and earnings momentum ahead of anticipated strong Q2 results.

Comfort Systems USA Inc. (FIX) – Provider of HVAC, electrical, and mechanical contracting services for commercial and industrial buildings, FIX beat earnings driven by record backlog, margin expansion, and accelerating data center buildout demand.

Sportradar Group (SRAD) – SRAD is a sports data and analytics company serving media, betting operators, and leagues globally.

Duolingo Inc (DUOL) – Language-learning platform, DUOL offers gamified lessons via its top-rated mobile app. Shares climbed on strong user growth, improved margins, and expanding AI-driven product efficiencies.

Top Detractors

Halozyme Therapeutics (HALO) – Another top contributor in the 1Q, HALO is a biotech firm known for its drug delivery platform and partnerships with large pharma.

Corcept Therapeutics (CORT) –  A top contributor in the 1Q, and remains outperforming the benchmark for the year, CORT is a biotech focused on therapies that modulate the effects of cortisol.

ServisFirst Bancshares (SFBS) – Commercial-focused regional bank, SFBS struggled with weaker than expected revenue and realized losses in the securities portfolio.

Merit Medical Systems (MMSI) – Medical device maker, MMSI is focused on cardiology, radiology, and endoscopy procedures. Despite stable fundamentals, shares slipped as the company lowered FY EPS guidance and margins remained under pressure. 

Omnicell Inc (OMCL) – Provider of automated pharmacy and medication management systems, OMCL shares declined following margin pressure and reduced full-year guidance, driven by tariffs and supply chain uncertainty.

Changes in the Portfolio

The gap between our portfolio winners and laggards has been especially wide over this past year. As our research team continues to identify the best opportunities, and as time reveals which holdings are not meeting our expectations, portfolio turnover has increased. This quarter we exited 14 positions and added 14 new ones, a higher-than-usual level of activity for our strategy.

Notably, five of the new additions came from the technology sector, a sector we have struggled to find companies that offer reasonable valuations, sustained growth, and solid profitability.  A new name added was CACI International, a provider of technology and intelligence solutions to U.S. defense and government agencies. CACI’s position in mission-critical national security programs, combined with a strong contract backlog, made the company a compelling addition to our portfolios.

We also initiated on three new positions in the utilities sector. While our exposure has historically been limited in this sector, recent market dynamics presented what we believe are attractive, defensive growth opportunities in select names. Our allocation remains small but intentional.

On the sell side, we exited positions across nearly every sector. One longer-term holding we fully liquidated was Globant (GLOB), a digital consultancy and IT services firm. While the company has been a strong contributor over time, we saw a slowdown in demand trends and reassessed our forward expectations accordingly.

We also trimmed positions in several top-performing stocks; Comfort Systems (FIX), Sprouts Farmers Market (SFM), Argan (AGX), and Duolingo (DUOL)—not due to changes in conviction, but based on position size and valuation discipline.

This quarter’s activity reflects the ongoing evolution of our portfolio and our commitment to staying nimble, investing in what we believe are the most compelling opportunities while maintaining the discipline to adjust when the outlook changes.

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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®

Director of Client Services

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. As Director of Client Services, she plays a key role in deepening relationships with existing clients while driving new relationship opportunities for the firm.

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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