W ith complementary backgrounds in investment banking, capital markets and private equity, strategy founders Jack Bryant and Kenan Lucas were attracted to HMC as much by the resources as by the opportunity. “HMC’s expansive network of talented executives, industry leaders and strategic partners offers us a significant advantage in performing due diligence with every prospective investment,” notes Bryant. Lucas cites HMC’s reputation as a key factor in the consistently positive reception they have received from corporate boards. “We often take concentrated positions with our investments, and we maintain a tightly-focused portfolio, which enables us to work closely with each company. Our contributions range from offering input on strategy, capital allocation and growth opportunities, to recommending board members from our collective network of connections.” The Discovery strategy launched in 2014, with $20 million in the fund. In less than four years, the strategy has nearly tripled to $56 million — a growth rate both partners ultimately attribute to the HMC culture. “The administrative support we’re afforded every day allows us to focus single-mindedly on delivering exceptional risk-adjusted returns for our clients,” says Lucas. Bryant agrees, “Few managers in our part of the market have access to such a broad bench of resources for driving operational improvement and creating value. It’s a competitive advantage that can’t be overstated.” HMC’s Discovery strategy evolved from the recognition, shared by its co-founders and our Senior Management, of a significant market opportunity: The exceptional investment potential in small and microcap stocks in the U.S. and Canada. Toward that end, our focus is centered on identifying deeply undervalued companies and assets — then generating long-term capital appreciation, primarily, through direct engagement with our companies as highly involved owners and advisors. The Discovery strategy returns already indicate the attractiveness of this approach, and we believe the fund is just beginning to see the benefits of the strategy managers’ intensive, hands-on process. ABSOLUTE RETURN Discovery Strategy 3.3% Annualized Alpha (vs. Russell Microcap Index) 56.3% Average IRR on Exited Positions 25