Burkenroad Small Cap Fund Process

The Burkenroad Small Cap Fund has a unique investment process that starts with a screening process focused on small cap stocks located or doing business in Alabama, Florida, Georgia, Louisiana, Mississippi, and Texas. Once this screen is complete, stocks are filtered based on further quantitative analysis. Favorable stock choices should exhibit strong probability of earnings surprise, favorable relative stock momentum, positive estimate revision, low relative valuation metric (P/E and P/B), and strong cash flow yield. Portfolio sector and industry weightings are derived from the individual stock selection process, which uses both quantitative and qualitative analysis, with heavy emphasis placed on fundamental analysis. The fundamental analysis focuses on company specific and external environment issues that are relevant to the stock decision. The Director of Equities and Chief Investment Strategist have the final say on stock decisions. In addition to our own research, the Burkenroad Small Cap Fund utilizes Tulane University’s BURKENROAD REPORTS for individual company research. The BURKENROAD REPORTS is an educational program on investment research in which selected students at Tulane University’s A.B. Freeman School of Business participate.

  1. The Fund and Horizon Advisers are NOT affiliated with Tulane University or the A.B. Freeman School of Business. Hancock Bank licenses the name “Burkenroad” from Tulane University. Neither Tulane University, the A.B. Freeman School of Business nor the students, faculty and staff of Tulane University have any involvement in the investment decisions, management or operations of the Fund.

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Diversified Income Fund

Historical rates of return and yield data are analyzed using quantitative methods that maximize the total returns while attempting to minimize the total risk of the underlying assets. This provides a basis for determining the percentage of exposure to the various asset classes. Current yield data is then analyzed within the framework to determine the asset mix.

Dividend yielding stocks, non-investment grade bonds, Real Estate Investment Trusts (REITs), master limited partnerships, preferred stocks, are samples of the security types the fund may purchase. The various asset classes are evaluated for relative value to the overall portfolio mix. Depending on the size of the fund and cash flow needs, investment opportunities are evaluated for their contribution to the yield of the portfolio as well as risk. Individual securities may be purchased or a fund vehicle, such as an exchange traded fund or mutual fund, after taking into account concentration and diversification requirements.

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Diversified International Fund Process

The first step in the investment process is to screen the relevant universe of 1700 stocks to identify companies likely to outperform using a proprietary screen called Return Pattern Recognition®. The screen identifies companies currently exhibiting specific financial and economic characteristics that have historically proceeded periods of outperformance for stocks in their respective industries.

The approximately 150 best companies identified in the screening process are put through a second more rigorous review. In this step, EARNEST Partners develops an investment thesis for each company. This thesis must be tested and generally includes conversations with the company's management team and industry specialists, a review of the company's financial reports and condition, and analysis of the industry, competitive landscape and any real time events that might impact the company. EARNEST Partners seeks companies in attractive industries with developed strategies, talented and honest management teams, sufficient funding, and strong financial results. The collective experience and diverse perspectives of their investment team members are an advantage in determining which companies are best positioned to meet or exceed expectations. Any company that does not pass the exhaustive fundamental analysis is eliminated.

The final step in the investment process is to construct a portfolio that includes those stocks that are expected to have the best performance and that effectively manage risk. A statistical approach called downside deviation is used to measure the likelihood of significantly underperforming the assigned benchmark. Using this information, investments are selected that blend together to manage downside risk. The portfolio is reconstructed until downside deviation is within acceptable limits. The result is a portfolio of stocks with high expected excess returns and limited risk of meaningful underperformance.

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Dynamic Asset Allocation Fund

The Dynamic Asset Allocation (DAA) fund follows a series of rules-based steps that aim to deliver an objective, consistent investment process. The strategy examines and attempts to identify trends in over 20 asset classes including, but not limited to: US equities (large cap and small cap), international equities (developed, emerging, and frontier markets; large cap and small cap), US fixed income, international fixed income, commodities, real estate, and master limited partnerships. Exchange traded funds are primarily used in order to gain exposure to various asset classes, while maintaining liquidity and diversification.

The strategy follows a systematic approach that rebalances periodically by purchasing exchange traded securities displaying positive trends and selling assets that show negative trends. The objective method utilizes numerous technical indicators in order to determine the trend of an asset class and whether the asset class is “over-bought” or “over-sold.” By weighting the factors based on the effectiveness in previous time periods, the quantitative process can overweight or underweight certain factors.

The Dynamic Asset Allocation fund aims to manage volatility and enhance total portfolio returns by maintaining diversification across a wide array of asset classes and systematically investing where it identifies opportunities.

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International Small Cap Fund

Using a company-by-company approach, we analyze balance sheets, income statements, and assess each company’s future earnings and cash flow stream. From this financial information, we build our fundamental stock selection disciplines to identify the most attractive stocks. We use a formal system to rank the entire international small cap equity universe, from most attractive to least attractive, emphasizing the following bottom-up, fundamental measures:

  • Business Improvement – Focus on companies exhibiting accelerating business conditions as an early sign of growth.
  • Management Quality – Evaluate long-term sustainability of a company’s fundamental improvement by analyzing its operating performance and management’s skill in increasing shareholder wealth.
  • Relative Value – Recognize business improvement early by buying and holding companies significantly below their fair market value given their growth prospects.

All new buy ideas come from the highest ranked securities and sell candidates are identified from a drop in rank. Anytime a wide shift in rank occurs for an existing holding, the investment team will conduct a review to ensure we understand the change. Starting with theses ranks, the investment management team then evaluates the relevant current events, liquidity, and growth and valuation measures to ensure that each stock matches our philosophy and process. Once consensus is reached by the investment team, the buy/sell decision is made.

As a result of our process, the international small cap equity portfolio will consistently hold companies with higher short-term forecasted growth rates purchased below or at approximately a market P/E.

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Louisiana and Mississippi Tax-Free Income Funds Process

The tax-free investment process begins with a bottom–up analysis that seeks to leverage our extensive knowledge of the local economies of Louisiana and Mississippi. Our local presence provides us with firsthand knowledge of the events that impact our state and local governments and how our municipalities will be affected. Utilizing this information we seek out high-quality, undervalued bonds which are exempt from state and federal income taxes.

We are a "top down" fixed income manager. Macro-economic outlook guides our overall strategy. The economy, interest rates, inflation, monetary policy, fiscal policy, and the shape of the yield curve are primary factors which influence our sector diversification, duration strategy and yield curve structure. Historical spread relationships versus risk free returns, and inflation are analyzed in search of undervalued securities. Self-imposed issuer and duration limits (for example, the maximum range from our duration target is 35%) further guide and control our process. Economic meetings are held monthly and involve our Chief Investment Strategist, the Director of Fixed Income, the Director of Equity Research, and staff.

Investments are selected based on our fundamental analysis of individual securities and their issuers in light of the following:

  • Issuers' financial strength and stability
  • State and local economic environment
  • Overall municipal bond market conditions
  • Political events
  • Regulatory climate
  • Yield vs. sector average

Factors we consider include:

  • An instrument's credit quality
  • Collateral characteristics
  • Indenture provisions
  • Issuer's management ability
  • Capital structure
  • Leverage
  • Ability to meet current obligations
  • Ability to raise revenues or increase taxes
  • Anticipated or actual budget deficits

Portfolio targets are employed regarding issuer diversification, sector concentration, quality rating and liquidity.

The result is a well diversified investment grade portfolio of municipal bonds engineered to produce an attractive level of current income exempt from state and federal income tax.

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Microcap Fund

The Microcap Fund’s investment process starts by screening for companies within the Russell Microcap Index with a market capitalization of 25MM to 750MM. We run a proprietary quantitative model ranking the individual stocks within their respective sectors based on various value, growth, and momentum factors including, but not limited to, the following fundamental characteristics: Book to Price, Cash Flow Yield, Free Cash Flow to Price and Relative Price Momentum. We then use fundamental analysis to look for reasons why we shouldn’t buy a highly ranked stock, such as low liquidity, pending litigation or legislation, or any other company specific issues. We end up with a portfolio of 50 to 70 small cap stocks that we believe will provide the best returns over the long run.

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Quantitative Long/Short Fund Process

Using the S&P 1500 as the universe of stocks we choose from, our quantitative model ranks stocks according to their relative attractiveness based on the following factors:

  • Company Buybacks
  • Financial Strength
  • Analyst Earnings Estimates
  • Earnings Quality
  • Economic Value Added (EVA)

After the model has ranked each individual stock in the universe, we use the same information to rank industries. Our strategy is to focus on buying the highest ranked stocks in the highest ranked industries and to “short” the lowest ranked stocks in the lowest ranked industries. Parameters are in place to maintain appropriate diversification among sectors and industries to reduce risk.

We also conduct a qualitative overview of each stock held in the portfolio using fundamental research and technical factors such as relative price strength.

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Horizon Advisers serves as investment advisor for the Hancock Horizon Family of Funds. The Hancock Horizon Family of Funds are distributed by SEI Investments Distribution Co. (SIDCO),Oaks, PA 19456, which is not affiliated with Hancock Whitney Corporation, or any of its affiliates. Check the background of SIDCO on FINRA’s BrokerCheck.


Carefully consider the Funds' investment objectives, risks, charges and expenses before investing. This and other information, including performance, can be found in the Funds' full or summary prospectus, which may be obtained by clicking here for a prospectus or by calling 1-800-990-2434 or writing to Hancock Horizon Funds, 2285 Lakeshore Drive, Building 4, New Orleans LA, 70122 for a prospectus. Please read the prospectus carefully before you invest or send money.

Mutual fund investing involves risk including loss of principal.

Investments in smaller companies typically exhibit higher volatility. Microcap companies have a higher risk of failure and typically experience a greater degree of volatility. Investing in microcap companies may not be appropriate for all investors.

International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from social, economic or political instability in other nations. In emerging markets, these risks are heightened.

Bonds and bond funds are subject to interest rate risk and will decline in value as interest rates rise. Bond funds focusing on a single state may be subject to higher volatility. High yield bonds involve greater risks of default or downgrade and are more volatile than investment grade securities, due to the speculative nature of their investments.

REIT investments are subject to changes in economic conditions, credit risk and interest rate fluctuations.

Narrowly focused investments typically exhibit higher volatility. Investments in commodities are subject to higher volatility than more traditional investments.

Mortgage-backed securities are subject to prepayment and extension risk and therefore react differently to changes in interest rates than other bonds. Small movements in interest rates may quickly and significantly reduce the value of certain mortgage-backed securities.

MLP's interests are all in a particular industry and the MLP will be negatively impacted by economic events adversely impacting that industry. The risks of investing in a MLP are generally those involved in investing in a partnership as opposed to a corporation, such as a limited control of management, limited voting rights and tax risks. MLP's may be subject to state taxation in certain jurisdictions, which will have the effect of reducing the amount of income paid by the MLP to its investors.

With short sales, your risk paying more for a security than you received from its sales. The risk of loss from a short sale is unlimited because the Fund must purchase the shorted security at a higher price to complete the transaction and there is no limit for the security price.

The use of leverage, options, swaps or derivatives has the potential to significantly increase the volatility and potential losses.

The Dynamic Asset Allocation fund’s investments in Underlying ETFs will subject it to substantially the same risks as those associated with the direct ownership of the securities held by such Underlying ETFs, and the Fund's investments in Underlying ETNs will subject it to credit risk.

Diversification may not protect against market loss.

The Hancock Horizon Family of Funds are available to U.S. investors only and are not available in all states.

The Hancock Horizon Family of Funds is distributed by SEI Investments Distribution Co. (1 Freedom Valley Drive, Oaks, PA 19456), which is not affiliated with Hancock Whitney Corporation, or any of its affiliates.