The Small-and-Mid (SMID) Cap portfolio is a concentrated U.S. equity portfolio that generally invests in companies with market capitalizations between $1 billion and $20 billion. The strategy is diversified primarily by end market exposure and business model. This diversification can be approximated by sector and industry, although the portfolio may be absent entire sectors and industries that do not conform to our investment process and quality standards. The strategy seeks to invest in high-quality, competitively advantaged businesses with good long-term prospects that are trading at a discount to intrinsic value. It is our belief that such businesses are best equipped to outperform their peers over full market cycles. The repeatable, process-oriented nature of our portfolio management employs substantial margin of safety, strict hurdle rates and the ability to organically compound capital. Strong balance sheets, management/shareholder alignment and revenue resiliency reduce the risk of permanent impairment of capital.