INSTITUTIONAL INVESTING

Our experienced ESG asset management team based in Milwaukee, WI actively manages two ESG Small Cap separate account strategies.  We apply a value-oriented approach to ESG investing using our disciplined research process, the Three Pillar Approach.®

LONG-TERM INVESTING

We are business owners not stock traders. We strive to hold our investments for the long term. By limiting turnover, we can minimize execution costs, tax inefficiencies and compound after-tax returns.

FOCUSED PORTFOLIOS

We manage focused portfolios that invest between 20-35 names. Studies have shown that focused portfolios generate superior risk-adjusted returns.

RESPONSIBLE INVESTMENT

It is our goal to ensure your assets are invested for the long-term and given the opportunity to align with businesses that enhance our world for the next generation. We are proud to be members of the USSIF and signatories to the PRI Association and CDP Worldwide.

INVESTING BESIDE YOU

The partners at Riverwater believe in eating our own cooking and proudly invest our personal assets beside yours in Riverwater strategies.

We create a watchlist of companies that we believe have enduring franchises. The list is created through management meetings, intensive reading of company filings, media sources and screening. Our screens focus on companies that earn their cost of capital and have grown sales over the last 10 years. Companies that are attractively valued are further vetted using the Riverwater Three Pillar Approach®.

PILLAR

ONE

EXCEPTIONAL MANAGEMENT TEAMS

We focus on teams that exhibit a history of making wise capital allocation decisions and are aligned with shareholders.

PILLAR

TWO

SUPERIOR BUSINESS

We look for unique and sustainable businesses with defensible moats allowing them to consistently earn and exceed their cost of capital.

PILLAR

THREE

ATTRACTIVE VALUATION

Companies should be able to consistently generate or grow free cash flow throughout an economic cycle with flexible balance sheets. We prefer to pay either at or below market multiples on earnings.

ESG SMALL & MID CAP (SMID) VALUE STRATEGY

The Riverwater ESG SMID Value Strategy seeks to provide attractive risk-adjusted returns versus its benchmark, the Russell 2500 Value Index. The Riverwater ESG SMID Value Strategy holds 20-35 small and mid-sized companies generally between a range of $250mm and $20B in market capitalization.  SMID FACTSHEET

 

ESG MICRO CAP OPPORTUNITIES (MICRO) STRATEGY

The Riverwater ESG Micro Cap Opportunities Strategy seeks to provide attractive risk-adjusted returns versus its benchmark, the Russell 2000 Index. The ESG Micro Cap Opportunities Strategy holds 20-40 micro cap companies generally between a range of $50mm and $2B in market capitalization.  MICRO FACTSHEET

We believe responsible investment or ESG investing is in the best interest of our clients, our firm, our communities and our society.  Therefore, we consider environmental, social and governance (ESG) policies, practices, and outcomes, alongside traditional investment criteria, when evaluating potential investment candidates.

We employ a Three Pillar Approach to evaluate ESG efforts of companies being considered for inclusion in client portfolios: Due Diligence, Engagement and Collaboration.

Due Diligence

Our due diligence process seeks to understand a company’s attention to environmental, social and governance (ESG) factors. We believing that a focus on ESG factors can shed light on potential risks and/or opportunities for a company, which may impact people, planet and profit. We focus on those factors that are most salient to a company based on its industry. While we seek best-in-class efforts, we also invest in companies willing to engage regarding improvement.

We maintain a proprietary database of the ESG efforts of the companies in which we hold positions, those under consideration, and peer companies. Companies receive points for having a sustainability report, for inclusion in ESG Indices, and for the nature of their business being socially responsible.

Engagement

Riverwater engages with companies executives and boards to gain an understanding of their current attention to ESG factors and to encourage greater efforts. The overall goal of engagement, as with our other ESG efforts, is to generate positive impact to the environment and society, as well as superior financial outcomes. We are guided by our Engagement Policy to increase impact with laggards and to raise the bar with leaders.

Riverwater Partners documents and follows up on our engagement efforts. If a company is unresponsive or unwilling to improve its ESG efforts, we will consider selling our position.

Riverwater Partners votes proxies for portfolio companies according to our Proxy Voting Policy, which favors management and shareholder resolutions that align with our ESG views.

Collaboration

Collaboration with local, national and international responsible investment thought leaders informs our practice and strengthens our engagement.

MEDIA MENTIONS

Making Sense of ESG Investing

BizTimes Milwaukee (click here for a no login link) When Quinn Schwellinger, 31, and his wife decided to start building an extra retirement fund to supplement their 401(k)s, they knew they wanted to invest in companies that supported their concern for the environment. “My wife and I believe climate change is real, fundamentally,” said Schwellinger,…

Read more

Adam Peck mentioned in Barron’s

Riverwater’s CIO Adam Peck was quoted in Barron’s this month. Adam chatted with Barron’s reporter Daren Fonda about Gentherm, a holding in our SMID strategy. To Daren’s great introduction we’d add that Gentherm–a Michigan company that’s reinvented itself for the EV age–is a solid performer in our ESG evaluations. It’s always good to see sustainability reports coming from small caps–not to…

Read more

Riverwater ESG SMID Value Strategy Celebrates 5 Year Milestone

Research team looks ahead as Riverwater Partners’ SMID Value Strategy reaches five-year milestone Chief Investment Officer Adam Peck says industry’s lack of ESG focus in small-cap value is inconsistent with value-investing mindset  Milwaukee, October 13, 2021 – Riverwater Partners’ flagship ESG Small & Mid Cap (SMID) Value Strategy marked its five-year anniversary at the end…

Read more

ESG investors struggle to find the right balance in doing good – and solar panels show why

Marketwatch. August 24, 2021 The Intergovernmental Panel on Climate Change issued a stark warning this month that human-led warming from burning of fossil fuels is causing climate change and removing carbon emissions will cause warming to cease. That makes transitioning to renewable energy like solar power even more urgent. However, reports that China forced Uyghurs to work…

Read more

Sustainable agriculture is the next way ESG investors can fight climate change

Marketwatch. March 24, 2021. By Debbie Carlson 7 ways for ESG investors to profit from sustainable agriculture The original green sector — agriculture — hasn’t been on the radar for environmental, social and governance investors, given industrial agriculture’s heavy dependence on pesticides, fertilizers and genetically modified seeds. But ESG investors are turning their interest to…

Read more

ESG: Growth Is Welcome, But What Drives Actual Change?

WealthManagement.com, March 11, 2021 By Cindy Bohlen Encouraging news arrived late last year about the fast growth of investments managed with attention to environmental, social and governance (ESG) factors. Seventeen trillion was the headline dollar figure in the latest biannual report from trade association US SIF, which tracks the responsible investing industry. Seventeen trillion represents…

Read more

Malkiel’s Misguided View of ESG Investing

Advisor Perspectives, February 1, 2021 Burton Malkiel, esteemed author of the classic investing book A Random Walk Down Wall Street is one of the more prominent critics of environmental-, sustainable- and governance-based (ESG) investing. He called ESG investing a “self-defeating” strategy in a recent Wall Street Journal column. But Malkiel and other detractors who claim ESG is a fad…

Read more