FallFundPerformanceReport| Spring2025
OrganizationOverview
The Investment ManagementAcademy (IMA)is a student-led organization focused on managing a $1.5 million long-only small-cap equity portfolio with the objective of outperforming the S&P 600. The fund targets undervalued companieswithin the benchmark index, aimingto capitalize on theirpotential to generate outsized returns over a 24-month horizon. Maintaining a fully invested strategy, the portfolio typically holds 20 stocks, with minimalcashreservesforliquidityandnouseof margin. This approach mirrors the sector compositionof the S&P600 while emphasizing strategicstock selection
IMA’s investment process is built on rigorous fundamental research and collaborative decision-making. Analysts work in pairs within sector-specific groups to screen for potential investments, conduct comprehensive financial analysis, and build detailed three-statement models to support their recommendations. Each group is overseen by a PortfolioManager (PM) who provides mentorship, sector expertise, and feedback throughout the selectionprocess.Recommendationsarevetted throughateamreviewand classvoting process to ensure alignment with the fund’s goals. Teams continuously monitor portfolio performanceandindustrytrends,adheringtoa structured schedule set by IMA leadership to maintainadisciplinedinvestmentapproach.
To support its operations and enhance its effectiveness, IMA is structured around several specialized committees. The Macro Committee provides weekly insights on economic trends, including inflation, interest rates, and market sentiment, offering essential context for portfolio positioning. The Quant Committee delivers data-driven performanceanalysesand explores quantitative approaches to identify opportunities and enhance decision-making. There are also the Operations, Recruitment, Social, Professionalism, and Education Committees which all play a pivotal role in the functionoftheorganization.
Executive Summary
TheInvestmentManagementAcademyendured achallengingbutopportunity-richenvironment during the Fall 2024 semester, which was characterized by strong economic growth, easing but persistent inflation, and shifting interest rate expectations. The S&P 600 benchmarkrecordedgainsof19.2%fortheyear, reflecting strong performance across various sectors. Meanwhile, small-cap equities saw periods of volatility, with growth stocks outperformingvaluestocks due to the ongoing excitement surrounding artificial intelligence andbroadereconomicresilience.
Investment Strategyand Process
The security selection process is guided by equity research and class voting. Students evaluatecompanieswithintheirassignedsector groups, performing comprehensive fundamental and macroeconomic analysis to develop investment theses, financial models, and price target. An experienced portfolio manager oversees each sector group and provides sector-specific insights and direction to the teams throughout the research process. Additionally, teams monitor the portfolio, stayingupdatedonindustrydevelopments,and maintaining watchlists of potential investment opportunities.
MacroCommittee Update
During the Fall 2024 semester, the Macro Committee actively managed its portfolio in response to the dynamic macroeconomic environment. The team's initial thesis, presented on September 3, 2024, reflected a cautious approach due to the uncertainty surrounding the upcoming election and conflicting economic data. They chose to remain sector-neutral, focusing on individual stock selectionratherthanbroadsectorbets.
As the semester progressed, the team's conviction grew. On October 22, 2024, they revised their thesis, shiftingtoaslightly bullish stance. Thischangewas drivenbya50 bpsrate cut by the Federal Reserve and positive developmentsinthe employmentpicture. They believed that economic strength would favor
small-cap stocks, particularly in cyclical and valuesectors.
By December 5, 2024, the team had weathered the storm of the election and gained a clearer view of the market. They maintained their slightly bullish outlook, anticipating increased businessconfidenceandcapitalinvestments.
As ofDecember5,2024, the macro weightingis asfollowing:
The portfolio's weightings are predominantly alignedwiththeS&P600index,withsomeslight adjustments.
• Overweights (OW) are made in Industrials (17.75% vs. 17.50%) and Communication Services (3.25% vs. 3.00%).
• Underweights (UW) are made in Healthcare (10.75% vs. 11.00%), Real Estate (7.25%vs. 7.50%), andConsumer Staples(3.25%vs. 3.50%).
• Equal weights (EW) are maintained across Energy, ConsumerDiscretionary, Financials,InformationTechnology,and Utilities.
Theseadjustmentssuggestastrategicemphasis on Industrials and Communication Services while marginally reducing exposure to Healthcare, RealEstate, and ConsumerStaples sectors.
Transactions
During the Fall 2024 semester, the academy navigated a unique economic and political environment while shifting from tracking the Russell 2000 to the S&P 600, resulting in increasedandirregulartradingactivity.Belowis a table including all the trades the team made over the course of the semester (excluding rebalancingtrades).
Fund Performance
In 2024, the SP 600 is up 11.07% and the IMA portfolioisdown -4.04%givingan active return of -15.11. The allocation effect was 0.10 and selectioneffectwas -15.21.IMAoutperformed3 out 11 sectors (Consumer discretionary, Financials andUtilities), with the highestalpha
being 24.05% in consumer discretionary and lowestbeinginindustrials-52.94%.
SelectionEffect
Topperformer: AxosFinancial, Inc. (AX)
Company Description: AxosFinancial, Inc. is a technology-driven,diversifiedfinancialservices companyofferingdigital banking,lending, and securities services across the U.S. With a focus on commercial real estate loans and digital bankingsolutions,Axosleverages afullydigital platform to maintain competitive cost structures and operational efficiencies, positioning itself as a leading player in the digitalbankingandsecuritiesspace.
Investment Thesis: Axos demonstrates strong financialperformance,leveragingitsdigital-first model and diversified revenue streams. Key strengths include:
1. Superior Financial Metrics: Axos outpacespeerswith a21.6%ROE,2.08% ROA, and consistent growth in net interestincome(NII).
2. AI-Driven Efficiency: Implementation of AI in credit risk management and operations has improved margins, reduced loan processing times, and enhancedcustomersatisfaction.
3. Strategic Acquisitions: Opportunistic acquisitions, such as Signature Bank
loans, diversify its portfolioand provide significantgrowthopportunities.
4. Attractive Valuation: The stock is undervalued relative to peers despite robustgrowth prospects.
5. Resilience to Market Volatility: A diversified funding base and limited sensitivity to interest rate fluctuations ensurestability.
Performance Drivers: Operational efficiency drove strong results, with net interest margins expanding to 5.17% in FY24, supported by acquired loans and technology-driven cost management. Strategic acquisitions and partnershipsfurtherstrengthenedofferingsand diversifiedrevenuestreams.
Carriage Services (CSV)
Company Description: Carriage Services is a funeral services company operating in two primary segments: Funeral Home Operations and Cemetery Operations. The Funeral Home Operations segment offers consultations, visitation and memorial services, transportation, and the sale of burial and cremation services. The Cemetery Operations segment provides interment rights and cemetery-related merchandiseandservices.
Investment Thesis: Carriage Services is wellpositionedto executeits recently published10yearstrategicplan,whichhasbolsteredinvestor
confidence,as evidenced bya significantshare priceincrease followingthe decisionto decline a recent take-private offer. The anticipated reduction in leverage is expected to enhance liquidity, enabling growth investments in attractive markets where local manager autonomyisakeydriverofvaluecreation.
Performance Drivers: The Cemetery segment drove stronger-than-expected revenue growth, supported by robust preneed sales. Although theFuneralsegmenthasyettogaincomparable momentum, the broader funeral services market is showing signs of recovery after a declinefollowingtheCOVID-eraspike.
Prestige Brands Holdings(PBH)
Company Description: Prestige Brands Holdings is a leading over-the-counter drug distributor with a portfolio of #1 market share products, including Dramamine, Luden’s, ClearEyes, Chloraseptic, and Debrox. Its assetlight business model leverages third-party manufacturing, enabling industry-leading free cash flow generation and strong leverage metrics.
Investment Thesis:
1. Stable ProductPortfolio:PBHmaintains aportfolioofessentialOTCmedications with leadingmarketpositions,behaving likeconsumerstaples.
2. Growth Potential: The company is pursuing international expansion, ecommerce development,andastrategic focusonitsoralcaresegment.
3. Strong Financials: PBH generates substantialfree cashflowandmaintains high profit margins, positioning it for futureM&Aopportunities.
Performance Drivers: PBH has consistently delivered strong operational results, maintainingEBITDAmarginsinthemid-30sand achieving free cash flow conversion averaging over 100% of sales for over a decade. Despite temporary supply chain disruptions, the companyhasbenefitedfromitsmarket-leading brandsanddomesticconsumerfocus,providing stabilityinavolatilemarketenvironment.
Progyny,Inc. (PGNY)
Company Description: Progyny, Inc. provides fertility and family-building benefits for large, self-insuredemployers.Withover450corporate clients,itsmainservicesincludetheSmartCycle Program (personalized fertility treatment bundles) and Progyny Rx (fertility medications and pharmacy benefits). The company has established itself as a leader in the fertility benefits space, serving Fortune500 customers suchasGoogleandMicrosoft.
Investment Thesis: The fertility benefits industry is poised for growth, driven by rising
infertilityrates and demand forcomprehensive benefits.Progyny isamarketleaderwith strong client retention (95% renewal rate) and a growing addressable market. While the loss of its largest client caused a stock price drop, the team believes this is a one-off event and remains confident in Progyny’s long-term growth potential.
Performance Drivers: Revenue grew 2% yearover-year to $286.6 million, driven by client expansion.However,gross profitdeclined 5.4% dueto fewertreatments performedperperson, and net income fell, driven by risingcosts and the impact of losing a major client. Despite these challenges, the company expanded partnerships, introduced new services, and initiated share buybacks, signaling confidence initslong-termpotential.
Chord Energy Corporation (CHRD)
Company Description: Chord Energy is an oil exploration and production company focused on the WillistonBasin. Formed in2022 through a merger, it operates over 2,700 wells and focuses on holding oil production flat while reinvesting cash flows into acquisitions, buybacks,anddividends.
InvestmentThesis:IMAinvestedinChordforits shareholder-focused strategy, operational efficiencies, and long-term viability in the Bakken Formation.Thecompany’s productivity
gains, driven by innovative drilling techniques such as extended lateral wells, position it for capital efficiency and growth. The team also anticipates earnings growth from the recently acquiredEnerplusCorp.
Performance Drivers: While Chord delivered gains early in the investment period, the stock declined~30%fromhighsduetoweakoilprices and its high sensitivity to spot prices. The company’s asset-light model and debt-funded acquisitions amplify volatility. However, with a recent recovery in oil prices, Chord has rebounded 15% from lows, and IMA remains optimisticaboutitslong-termpotential.
Rapid7 (RPD)
Company Description: Rapid7 is a cybersecurity software firm providing subscription-based security products and services, including threat detection, cloud security, andAI riskmanagement.Operatingin a highly competitive market, Rapid7 faces challenges from larger players and internal issues.
Investment Thesis: Rapid7’s lack of a competitive moat and reliance on the SMB market expose it to significant risks. Despite revenue growth and improved analyst sentiment, investor confidence is undermined by high debt levels, insider trading, and management concerns. The team remains
cautious about its ability to compete in the crowded cybersecurityspace.
Performance Drivers: Rapid7’sstockfell30%in 2024, reflecting internal issues and broader marketweakness.Investigations into securities law violations and insider trading have raised concerns.Whilethecompanycontinuestogrow revenue, poor performance of new product rollouts and high debt levels weigh on profitability,limitingupsidepotential.
GMS Inc.(GMS)
Company Description: GMSis aleadingNorth American distributor ofconstruction materials, operatingmore than 300distribution centersin the U.S. and select regions of Canada. Its core product lines include, ceilings, steel framing, and a growing portfolio of complementary products, enablingaone-stop-shopexperience for both commercial and residential contractors.
Investment Thesis: GMS is an attractive opportunity due to its proven track record of strategic acquisitions and organic growth, including recent expansions into adjacent product categories. The Company’s diversified revenue base provides a natural hedge against marketcycles, while an undersuppliedhousing market and potential interest rate cuts could furtherboostdemand forrenovationsand new construction.
Performance Drivers: Despite a soft patch in multifamily residential demand, strong institutional and manufacturing activity has supported GMS’s commercial segment. Complementary product sales continue to grow, aided by new greenfield locations and bolt-on acquisitions that enhance geographic reach. As managementexecutes on integrating these expansions and taps into an expected housing rebound, IMA remains confident in GMS’slong-termgrowthtrajectory.
DycomIndustries, Inc.(DY)
Company Description: Dycom is a Floridabased specialty contractor focused on telecommunications and utility infrastructure. Founded in 1969, it operates through over 40 entities nationwide, offering engineering, construction, and maintenance services for wired and wireless networks.With a significant share of revenue tied to telecom construction, Dycom partners with major carriers (AT&T, Verizon, Frontier) as well as emerging overbuilders, positioning it at the forefront of expanding fiber-to-the-home and data center projects.
Investment Thesis: IMA invested in Dycom for its concentrated exposure to accelerating broadband demand and AI-driven network expansion. Long-term contracts with top telecom providers, supported by government initiatives like the BEAD (Broadband Equity,
Access, and Deployment) program, point to sustainedrevenue and earningsgrowth. Strong margins, an expanding backlog, and Dycom’s specialized expertise underscore its advantage over more diversified contractors, offering a compelling upside given anticipated increases indataconsumptionandwirelessinfrastructure needs.
Performance Drivers: Dycom’s backlog, which covers several quarters of revenue, provides a robust foundationastelecomproviders race to improve andextendconnectivity.AIdatacenter construction and the ongoing shift to higherspeed networks further enhance its growth outlook.Withhealthyfinancialsandahistoryof surpassing consensus estimates, IMA remains confident in Dycom’s capacity to capture new opportunities.
Moog,Inc.(MOG.A)
Company Description: Moogis agloballeader in high-performance motion control systems, foundedin1951andheadquarteredinElma,NY. The Company serves aerospace, defense, industrial, and medical markets through three segments: aircraft controls, space and defense controls, and industrial systems. Its products servovalves, actuators,electronics, andmore enableprecisemotioncontrolforaircraft, space vehicles,andindustrialmachinery.
Investment Thesis: Moog is known for its strong defense and commercial aerospace pipeline, robust free cash flow potential, and growth in space and industrial automation markets. Moog’s strategic R&D efforts, costmanagement initiatives, and proven track record ofsecuringlong-termcontracts(e.g., F35 program, Hawaiian Airlines) position it favorablyagainstindustrypeers.
Performance Drivers: Moog’s diversified revenue streams and broad geographic footprinthedgeagainst sectorvolatility. Recent cost-reduction programs and facility consolidationsshouldbolstermargins and free cash flow conversion, while partnerships with NASA, ULA, and major OEMs (Original Equipment Manufacturers) support ongoing demand. Finally, disciplined capital deployment through dividends, share repurchases,andtargeted acquisitions affirms management’s commitment to delivering sustainableshareholderreturns
Sealed Air Corp.(SEE)
Company Description: Sealed Air is a global leaderinpackagingsolutions,offeringproducts that preserve food, protect goods, and automate packaging processes. Its core segments are food, which delivers vacuum packaging and modified atmosphere systems for the food and beverage industry, and protective packaging, providing solutions such
as bubble mailers and foam inserts for ecommerce, industrial, and medical applications.
Investment Thesis: Sealed Air is a stable yet undervaluedplayerinthepackagingspace.The foodsegmentcontinuestodemonstratereliable performance, while a new CEO has begun restructuring the underperforming Protective business. Coupled with the Company’s threeyear CTO2Grow program aimed at generating $140-160 millionin annualcostsavings, Sealed Air is well positioned to improve margins and revitalize itsoperations.
Performance Drivers: Near-termgrowth stems from the protective packaging segment’s turnaround efforts, which include portfolio optimization and strategic hires. Longer-term, cost efficiency from the CTO2Grow initiative shouldbolster operating leverage and mitigate downside risksfromweaker end markets.With valuations below industry peers and strong fundamentalsinthe foodsegment,SealedAir’s ongoing restructuring provides substantial upsidepotentialunderthenewleadership.
Green Brick Partners, Inc.(GRBK)
Company Description: Green Brick is a diversified homebuilder and land developer specializinginentry-leveltoluxurysingle-family homes.The Companyoperatesprimarilyin the high-growthU.S.SunbeltmarketsofDallas-Fort
Worth (DFW), Atlanta, and Port St. Lucie. Its flagshipbrandinDFW,TrophySignatureHomes, now contributes the majority of revenue, highlighting Green Brick’s focus on procuring anddevelopingdesirablelandwhileoverseeing theentire build-and-saleprocessin-house.
Investment Thesis: GreenBrickhasdisciplined operations, strategic capital allocation, and high-marginapproach tolanddevelopmentand home construction. Holding 37,000 owned or controlled lots, Green Brick boasts anindustryleading gross margin of over 32%. Management’s prudent balance-sheet management and well-timed expansion of the Trophy Signature brand underpin the Company’s ongoing success. As Dallas-Fort WorthandAtlantaremain amongthetopmetro areas for job growth and building permits, Green Brick is well positioned to capitalize on resilienthousingdemand.
Performance Drivers: In the near term, favorable macro conditionssupportnewhome demand, benefiting builders with strong local footprintsand operationalefficiencylike Green Brick. Over the longer horizon, continued expansionintohigh-demandsubmarkets,deep backlog, and disciplined cost management should sustain the Company’s above-average marginsandearningsgrowth
Dorman Products(DORM)
Company Description: Dorman is a leading aftermarket automotive parts supplier with a broad catalog of over 133,000 SKUs, ranging from basic replacement parts to more specialized components for niche vehicles. By consistently adding new SKUs and working closelywithmajorretailerslikeO’Reilly,Dorman secures prime shelf space and broadens its distribution reach in the competitive auto aftermarket.
Investment Thesis: Dorman benefits from industry tailwinds driven by aging vehicles, as morecarsontheroadexceedsixyearsofservice and require frequent repairs. Its extensive product portfolio and established retailer relationshipsenablepricingpower,allowingthe companytopassoncostincreasesandmaintain or grow margins. A reverse DCF analysis suggests that the market may still underestimate Dorman’s margin expansion potential even after asignificantrun-upinthe stock price indicating room for additional upside.
Performance Drivers: Margin improvements stem from lower freight and material costs, combined with Dorman’s ability to price productsfavorably. AsU.S.vehicles continueto age,thedemandforreplacementpartsremains robust, bolsteringsales volume. Management’s focus on cost-saving initiatives and strategic productlaunchesfurthersupportsprofitability, positioningthe companyfor continuedgrowth inaresilientaftermarketsector.
Inter Parfums (IPAR)
Company Description: InterParfumsisaglobal fragrance house specializing in the licensing, design, and distribution of perfumes and cosmetics.Its asset-lightmodelhingesonlongtermlicensingpartnerships with iconicfashion brands (e.g., Coach, Montblanc, Jimmy Choo), which allows Inter Parfums to leverage strong brand recognition and a diversified product portfolio. Operating in over 100 countries, the Company added Lacoste and Cavalli to its lineup, solidifyingits position in the fragrance market.
Investment Thesis: Despite sales growth fueled by successful product launches under new brands Inter Parfums faces questions about the durability of its momentum. The fragrance market has shown unexpected resilience in achallengingmacro environment, raising concerns about long-term consumer demand. While the Company’s strategy of focusingonpremiumofferings and directretail relationships supports margin expansion and solidifies its competitive edge, it remains unclear whether high-income consumer spending on discretionary goods can be sustainedindefinitely.
Performance Drivers: Inter Parfums enjoys tailwinds fromstrongglobaldemandforluxury fragrances, complemented by successfulbrand launches that have exceeded sales targets.
Continued geographical diversification mitigates regional volatility. Management’s commitment to expanding premium product lines and improving gross margins through owned and high-end licensed brands is a key earningslever.
NorthWestern Energy (NWE)
Company Description: NorthWesternEnergy is a century-old electric and natural gas utility serving approximately 764,200 customers across Montana, South Dakota, Nebraska, and partsofYellowstoneNationalPark.Leveraginga diverse energy mix ranging from hydro and windtosolarandcoal the Companymaintains astrong communitypresence andcontinuesto modernizeits infrastructure through initiatives liketheWesternEnergyImbalanceMarket.
Investment Thesis: NWE’s strategy centers on proactive rate reviews and sizeable capital investments to bolster gridreliability and meet growing energy demands. Recent filings in Montana, South Dakota, and Nebraska aim to align rates more closely with real-time costs, potentially enhancing returns if successful. A declining interest rate environment further strengthens NWE’s position by widening the spread between authorizedreturns and capital costs, especially given its robust expansion plans.Overall,NWE’s regulatedmodel,focuson reliability, and upcoming generation assets provide a stable foundation, but final rate
outcomes will be critical to long-termearnings growth.
Performance Drivers: NorthWestern Energy’s future performance hinges on its proactive regulatory strategy, substantial capital expenditures, and an evolving interest rate environment.TheCompany’srecentratereview filings across Montana, South Dakota, and Nebraska are critical to ensuring timely cost recovery Meanwhile,theplanned$2.5billionin infrastructure spendingover the nextfive years targets reliability improvements, grid modernization, and better capacity management goals that, if realized, could translateinto4–6%annualratebasegrowth.
Preferred Bank(PFBC)
Company Description: Preferred Bank is aLos Angeles–based commercial bank founded in 1991 with deep roots in the Chinese American community.Whileithasdiversifieditscustomer base over time, this cultural niche remains a core strength, enabling robust referral-driven depositgrowth. TheBank’sloanportfoliospans real estate mortgage loans (primarily miniperm), commercial lending, construction financing,and residentialmortgages,reflecting abalancedexposuretobusinessandindividual borrowers.
Investment Thesis: IMA continues to hold Preferred Bank, viewing its operational
efficiency and superior credit management as primary competitive advantages. By pairing underwriting standards with a risk-based pricing model, the Bank has maintained nearzero net charge-offs. Its well-structured loan mix featuring 74% floating-rate loans often protected by interest rate floors supportsnet interest margin stability in changing rate environments. As the Fed’s recent rate cuts stimulate loandemand,PreferredBank'sstrong capital base and high net interest margins positionittobenefitfromincreasingvolumes.
Performance Drivers: Preferred Bank’s ability to keep costs low by avoiding major acquisitions, focusing on core business lines, and leveraging word-of-mouth referrals results in a best-in-class efficiency ratio. Loan portfolio quality remains robust, sustained by disciplinedunderwritingandconservativeloanto-value ratios, even in riskier mini-perm segments. Additionally, geographic and demographic diversification gradually reduce concentrationrisk.
Payoneer GlobalInc.(PAYO)
Company Description: Payoneer is a global fintech specializing in cross-border payment infrastructure andservingover190 countriesin 150 currencies. Focused on small-to-mediumsized businesses (SMBs) and online marketplaces, the Companygenerates revenue through transaction fees, foreign exchange
services, and float income on customer deposits. By forging direct relationships with banks and offering a multi-currency account platform, Payoneer’s solutions simplify internationaltransactions.
Investment Thesis: Payoneer is a compelling growth story as it is in the underpenetrated $800B B2B payments market, supported by secular trends such as global e-commerce expansion and the inefficiency of legacy payment rails. The Company’s strategy centers on attracting high-value “ideal customer profiles,” which consumemultiple services and process significant monthly volumes. Ongoing product expansion exemplified by the Skuad acquisition for payroll and workforce management fosters cross-selling and enhancesPayoneer’svalueproposition.
Performance Drivers: Payoneer’s continued success lies in its strategic focuson high-value B2B payments, cross-sellingopportunities,and globalexpansioninhigher-take-ratemarkets.By targeting “ideal customer profiles” (ICPs) that transact over $10K in monthly volume, the Company secures a predictable, recurring revenuestream thatleveragesmultiple product offerings.This approach is further bolstered by acquisitions like Skuad, which adds global payroll capabilities to Payoneer’s suite of services, driving deepercustomer engagement and improving average revenue per user. Geographically, Payoneer gains traction in emergingwhere itcommands highertakerates and faces less direct competition than in more establishedregions.
Innovative Industrial Properties (IIPR)
Company Description: Innovative Industrial Properties is a real estate investment trust (REIT) specializing in cannabis-related industrial facilities. Operating across 19 states with 108 properties, IIPR’s portfolio caters to licensed growers, processors, and distributors in the regulated cannabisindustry. By focusing on specialized assets and leveraging long-term triple-net leases, the Company has positioned itselfasaprimaryrealestate capitalproviderin anichemarketpoisedforongoinggrowth.
Investment Thesis: IIPR remains a premier cannabis-focused REIT, benefiting from both stable rent collections and expanding opportunities as more states legalize medical and recreational cannabis. Its specialized assets, conservative debt levels (around 11% debt-to-total gross assets), and diverse tenant base nosingle tenant accountsfor more than 18%ofannualizedbaserent helpmitigate risk in a still-evolving regulatory landscape. Continued growth in legalization efforts, including potential federal rescheduling of cannabis, offers meaningfulupside to property demand.
Performance Drivers: IIPR’sgrowth stemsfrom disciplined capital deployment largely via sale-leaseback deals and steady acquisitions, with over $65 million in new investments this year alone. Its tenant diversification and
specialized property design align well with operators’ needs, creating a resilient business model despite cannabis sector headwinds. Recent re-leasing successes and ongoing expansionintonewstates reinforce its capacity to capture future industry growth. The Company’s potentialtocapitalize onregulatory shifts(e.g.,cannabisrescheduling)andbroaden access to conventionalfinancing could further enhancetenantstability, supportingIIPR’slongtermoutlook.
VeecoInstruments (VECO)
Company Description: Veeco Instruments is a semiconductor process equipment manufacturer specializing in advanced, highprecision solutions for next-generation chip production.Foundedin1945,Veecohasevolved its focus toward high-value segments such as high-bandwidthmemory, DRAM,and advanced logic nodes. Its key product lines LaserSpike Anneal(LSA) and Ion Beam Deposition (IBD) enable critical steps in achieving smaller process nodes and reducing defects, thereby improving yields. Partnerships with leading chipmakers like Samsung and TSMC highlight Veeco’sstrongindustryrelationships
Investment Thesis: Veecowas attractive forits high-margin, differentiated product offerings and proven success in securing Tier-1 design wins. As artificialintelligence, electric vehicles, and emerging compute applications push the
limits of Moore’s Law, demand for specialized equipmentincreases,favoringVeeco’ssolutions for sub-5nm processes. With a near 100% conversionrate fromequipmentevaluationsto orders,Veeco’spipelinefuelssustainedrevenue growth. The Company’s diversified geographic exposure and flexible product portfolioreduce geopolitical and regulatory risks, ensuring resilience in a volatile global environment. Additionally, new technologies like its upcoming NSA system promise to expand its served market beyond $1 billion, positioning Veeco to capture a meaningful share of advanced memory and logic demand in the years ahead.
Performance Drivers: Veeco’s performance is driven by strong design-win momentum, particularly in the DRAM market, where the company secured a new Tier-1 customer expected to contribute approximately $50 million in additionalrevenue. Its technological leadership in semiconductor equipment manufacturing positions Veeco as a critical supplier for high-performance memory and logic chips. Additionally, the company benefits fromexpandingsemiconductordemand fueled by artificial intelligence, data centers, and automotive applications, all of which require increasingly advanced chip technology. Furthermore, Veeco’s planned introduction of NSA technology in 2025 is expected to expand its total addressable market beyond $1 billion, supportinglong-termgrowth.
DoubleVerify HoldingsInc. (DV)
Company Description: DoubleVerifyHoldings, Inc. is a leading digital advertising firm specializing in media measurement and analytics. Established in 2008 and headquartered in New York, the company provides ad verification,fraud detection,brand safety, and performance measurement solutions.DV partners with major socialmedia platforms, global brands, and ad agencies to ensure transparent and effective digital advertising.
Investment Thesis: Established as a market leader in ad verification, DoubleVerifybenefits fromastrongcompetitivemoat.Thecompany's platform processes over 7 trillion media transactions annually, more than any competitor,with a95%grossrevenue retention rate, demonstrating the stickiness of its solutions.DV’sdataaggregation creates alongterm network effect the more ads it verifies, the stronger its AI-driven verification models become.
Performance Drivers: TheCompany’sgrowthis driven by its market leadership in ad verification,the shutdownofOracle’s Moat,and expansionintohigh-growthdigitaladsegments. Its platform processes over 7 trillion media transactions annually, reinforcing its datadrivencompetitivemoat.TherecentexitofMoat from the industry presents an immediate
opportunity,with DVwell-positionedtocapture a significant portion of the $300 million in displacedrevenue. Additionally,the company’s expansion into Connected TV (CTV) and social mediaadvertising presents amajor runwayfor growth, as these channels remain undermeasured. The company’s 95% gross revenue retention rate underscores its strong customer relationships,while continuedinvestmentinAIdriven ad verificationtools furtherstrengthens itsmarketposition.
TegnaInc. (TGNA)
Company Description: Tegna is a leading broadcast television company that owns and operates 64 television stations across 51 U.S. markets. As one of the largest independent station groups, Tegna reaches over 39% of all television households.Thecompany generates revenue through advertising, retransmission fees, and its growing digital and over-the-top (OTT) platform, Premion, which serves local businesses with streaming TV advertising solutions.
Investment Thesis: Withtelevisionexpectedto capture most of the political ad spend, and Tegna’sstationslocated in keyswingstates like Arizona, Georgia, Ohio, and Pennsylvania, the Company is well-positioned to capture a large share of this ad revenue. Beyond the election year, Tegna’s growing focus on sports and entertainmentbroadcasting, includinga recent
partnership with the Dallas Mavericks, strengthens its recurring revenue from traditionalcableandOTTplatforms.
Performance Drivers: Tegna’srevenue growth is primarily driven by political ad spending, strategic sportsbroadcasting partnerships,and an expanding digital presence. The 2024 election cycle generated $15 9 billion in total spending, benefiting Tegna’s extensive station network across key swing states. Beyond election-driven revenue, the Company’s partnerships, such as its deal with the Dallas Mavericks, enhance its subscription revenue fromtraditionalcableandOTTplatforms.
Conclusion
The Investment Management Academy demonstrated resilience and adaptability in navigating a volatile yet opportunity-rich market environment during the Fall 2024 semester. The success of top-performing holdings, such as Axos Financial and Prestige BrandsHoldings,highlightsthestrength ofIMA’s fundamental research and disciplined stock selection. While underperformance in certain positions, such as Innovative Industrial Properties and Rapid7, underscores improvements that need to be made in the screening process, these experiences provide valuable lessons for refining the team’s investment approach. Looking ahead, IMA remains optimistic for its long-term performance, anticipating a favorable environmentforsmall-capequitiesaseconomic conditions stabilize and capital investments increase. By maintaining its commitment to thorough analysis, collaborative decisionmaking, and strategic sector alignment, the fund is well-positioned to capitalize on future opportunities and achieve its goal of outperformingtheS&P600.