Founded in 1995, Daruma Capital Management invests in high-conviction small- and smid-cap portfolios of no more than 35 stocks. Our firm is 100% employee-owned and manages $2.3 billion for public and corporate pension plans, endowments, foundations and individuals.
We practice true active management by owning only our most compelling ideas. We buy stocks with the potential to go up 50% or more over the next two years, with a reward-to-risk ratio of three to one.
This strategy has resulted in outstanding small-cap long-term performance with average annual portfolio turnover of under 50%.
TRUE ACTIVE MANAGEMENTWe run concentrated portfolios because, in our experience, concentration works. A concentrated portfolio means that every stock has to earn its keep.
A WILL TO WINAs a 100% employee-owned company, our destiny hinges on long-term investment results. We prefer to measure success by our investment track record rather than the amount of assets under management.
OPEN DOOR POLICYOur clients tell us we are refreshingly honest in our updates. We believe that you have a right to speak to the investment team whenever you want, and we will always tell it to you straight.
Small-Cap AnnualizedReturns (Net of Fees) Since Inception (07/28/95 to 09/30/15)
SMid-Cap AnnualizedReturns (Net of Fees) Since Inception (04/30/10 to 09/30/15)
ON DARUMA'S WATCH
Daruma (dah-ROO-mah) was a fifth-century Indian monk who reached China after a perilous three-year sea voyage and became the founder of Ch’an (Zen) Buddhism. He is said to have trained the warrior monks of the Shaolin temple in Kung Fu, crossed the Yangtze River on a reed and meditated continuously for nine years (losing his arms and legs in the process). You can see why Daruma embodies resoluteness, perseverance and resilience.
Many of the tenets of Zen Buddhism (separating illusion from reality, nonattachment to emotions and ideas, self-discipline and embracing impermanence) are also key to successful investing, and many of the qualities Daruma is best known for are those we seek to emulate every day.
A popular form of Daruma in Japan is the papier-m’âché doll, pictured here, traditionally purchased at New Year’s. The owner commits to fulfilling a goal through hard work and discipline and paints a pupil in the left eye. Once the goal is achieved, the right eye can be filled in, making the doll complete.
Our firm greets each New Year with this ritual to reaffirm our goals for our clients: the relentless pursuit of superior investment performance through focus, discipline, and the separation of illusion (misperceptions) from reality (fundamentals).