|By PR Newswire||
|April 8, 2014 12:50 PM EDT||
CHICAGO, April 8, 2014 /PRNewswire/ -- Oberweis Asset Management, Inc. announced today that The Oberweis International Opportunities Fund (OBIOX) received two 2014 Lipper Fund Awards in the International Small/Mid-Cap Growth Funds classification, one Award as the "Best Fund" over the three-year period ending December 31, 2013, and one Award as the "Best Fund" over the five-year period ending December 31, 2013. Lipper reported that the Oberweis International Opportunities Fund won "Best Fund" out of 130 funds in that classification for the three-year period and 101 funds for the five-year period*. The Lipper Awards recognize funds that have demonstrated consistent and strong risk-adjusted returns relative to their peers. The Oberweis International Opportunities Fund has been managed since its inception in 2007 by portfolio manager Ralf Scherschmidt.
The Oberweis International Opportunities Fund seeks to identify and capitalize on the long-term investment opportunities offered by smaller-cap companies in Europe, the United Kingdom, Canada, Asia, Japan, and Latin America. The Oberweis investment team uses a disciplined and structured approach to identify under-followed companies undergoing positive changes in business fundamentals that drive strong earnings growth and positive earnings estimate revisions. The Fund is supported by an experienced and dedicated team of analysts and traders with international experience and an extensive network of global contacts.
"I am very excited for Ralf and his team," said Jim Oberweis, President of Oberweis Asset Management. "Their strong performance record is the result of years of dedication and hard work, and we have seen tremendous interest in the Oberweis International Opportunities Fund from investors seeking exposure to international small-cap stocks."
We asked Ralf Scherschmidt, Portfolio Manager of The Oberweis International Opportunities Fund, some questions about his investment philosophy and what makes it unique.
Q: What is your fund's investment philosophy?
We believe that while markets are generally efficient at pricing securities, there are specific situations when it takes the market time to correctly price companies undergoing meaningful changes in business fundamentals. Specifically, we take advantage of a well-documented stock market anomaly termed the Post-Earnings-Announcement Drift (PEAD). When a firm posts actual earnings which are meaningfully higher than what the market had expected, if this is based on fundamental changes at the firm that can sustainably drive higher future earnings, the market should theoretically digest this news quickly and price the stock accordingly. However, this does not always happen, and instead it often takes many months or even years for the market to digest the new situation and price the stock correctly. As a result, the stock price tends to drift higher after the earnings announcement; hence the name of the effect. Academic research supports this finding and PEAD is considered one of the most statistically significant and robust stock market anomalies.
Q: This seems counter to the widely-held belief in the Efficient Market Hypothesis (EMH). How is this PEAD effect explained?
It is correct that the traditional theory of EMH would preclude these research findings. Behavioral economists, on the other hand, believe that the PEAD effect is well explained by the decisional biases exhibited by humans in the real world. These biases have been widely written about in financial literature and include concepts such as anchoring, commitment bias, confirmation bias, and herding. Basically, people tend to anchor beliefs to old data, people do not like to change their minds, people do not process new data objectively (instead evaluating it through the lens of ingrained, prior beliefs and pre-conceived notions), and people feel safer agreeing with the general consensus (safety in the herd) rather than having controversial, non-consensus opinions. All of these factors contribute to the delayed or 'sticky' way in which the market reacts to new information that is at odds with investors' prior beliefs and pre-conceived notions. Over time, the market will eventually overcome its biases and adjust its beliefs to reflect the changed situation. We find that if an investor is nimble enough the PEAD effect can provide an opportunity to generate returns in excess of the market.
Q: How do you take advantage of the PEAD effect in your investment process?
We have created a rigorous, systematic process that identifies companies experiencing positive fundamental changes which can lead to sustainably higher future earnings than currently expected by the market. This efficient, check-listed, bottom-up fundamental analysis process helps us determine if the market has not yet fully appreciated the improved earnings potential of the business. If that is the case, we will buy the stock. We continue to monitor the situation, and when we believe the market has digested the new information and priced the stock correctly, we will sell it in favor of another company which is not yet fully understood.
Q: In summary, your buy and sell decisions are not based solely on your beliefs about a company's earnings potential in isolation, but also on the difference between your and the market's belief about the company's earnings potential?
Exactly. There are many great companies with steadily growing earnings. But our process focuses specifically on a subset of these companies – those companies which are misunderstood by the market, and therefore mispriced.
About Oberweis Asset Management, Inc.
Oberweis Asset Management, Inc. is based in Lisle, Illinois and specializes in smaller capitalization growth equity management globally. The firm has over $1.5 billion in assets under management and manages assets for its own seven-fund mutual fund family, The Oberweis Funds, institutions, and high-net-worth individuals.
Past performance is no guarantee of future results. Investment return and principle value will fluctuate; investors may experience gains or losses when shares are sold. You can obtain performance data current to the most recent month by visiting oberweisfunds.com.
The Oberweis Funds invest in rapidly growing smaller and medium sized companies which may offer greater return potential. However, these investments often involve greater risks and volatility. Foreign investments involve greater risks than U.S investments, including political and economic risks and the risk of currency fluctuations. There is no guarantee that the funds can achieve their objectives. Holdings in the Funds are subject to change. Before investing, consider the fund's investment objectives, risks, charges, and expenses. To obtain a copy of the prospectus or summary prospectus containing this and other information please visit our website at oberweisfunds.com or call 800-323-6166. Read it carefully before investing.
The Oberweis Funds are distributed by Oberweis Securities, Inc. Member: FINRA & SIPC
*The Lipper Fund Awards program honors funds that have excelled in delivering consistently strong risk-adjusted performance, relative to peers. In addition, the Lipper Fund Awards program recognizes fund families with high average scores for all funds within a particular asset class or overall. The Lipper Fund Awards take place in 23 countries in Asia, Europe, MENA, and the Americas. The awards winners are formally announced between January and April.
Lipper designates award-winning funds in most individual classifications for the three-, five-, and ten-year periods and fund families with high average scores for the three-year time period. Please review the Lipper Fund Awards methodology document to learn more about how the awards are calculated. Lipper Award designations are not intended to constitute investment advice or predict future results and Lipper does not guarantee the accuracy of this information.
Lipper Fund Awards are part of the broader Thomson Reuters Awards for Excellence program. Please visit the Awards for Excellence website for more details about the Lipper Fund Awards. If you have specific questions about please send an email to [email protected].
SOURCE Oberweis Asset Management, Inc.