U.S. Equity Strategies
The United States is home to the world’s deepest and most innovative equity market, offering investors access to a broad universe of growth companies across many industries. For investors seeking long-term growth, this provides exposure to businesses at the forefront of innovation and value creation.
These strategies provide targeted exposure to U.S. companies and are often used to complement Canadian holdings, expanding the opportunity set and enhancing long-term growth potential within a diversified portfolio.
Within our U.S. equity approach, you can choose from two strategies that vary by concentration and expected volatility.
Strategies
The Pembroke U.S. Growth Strategy is a high-conviction, benchmark-agnostic equity strategy designed to deliver long-term capital appreciation through investment in high-quality U.S. small- and mid-cap growth companies.
Strategy Overview
The Pembroke U.S. Growth Strategy applies Pembroke’s long-standing, bottom-up investment philosophy to the depth and breadth of the U.S. equity market, with a disciplined focus on per-share value creation, durable competitive advantages, and alignment between company management and shareholders.
Security selection and portfolio construction are intentionally not constrained by index definitions. While small-cap U.S. equity indices provide a useful reference for the opportunity set, they do not constrain investment decisions.
The strategy invests across U.S. small- and mid-cap companies, including businesses that may fall outside traditional index definitions but continue to exhibit attractive long-term growth characteristics. This flexibility allows Pembroke to pursue opportunities based on company fundamentals rather than index membership.
The U.S. market offers a uniquely rich environment for growth investing. It is home to a large number of innovative companies operating in specialized niches across technology, healthcare, industrials, consumer, and business services. Many of these businesses are earlier in their growth lifecycle, have long reinvestment runways, and operate in markets that may be less efficiently priced than large-cap segments. The Pembroke U.S. Growth Strategy seeks to identify these companies through rigorous fundamental research and to build a relatively focused portfolio of its highest-conviction ideas.
Pembroke favors companies with strong balance sheets, recurring or visible revenue streams, high returns on invested capital, and management teams that demonstrate prudent capital allocation and long-term stewardship. The strategy seeks to partner with management teams whose interests are aligned with shareholders through meaningful ownership, long-term incentive structures, and a demonstrated commitment to building enduring businesses.
Growth that is supported by internal cash generation and competitive strength, rather than financial leverage or external capital dependence, is central to the strategy’s design.
As a result of its bottom-up approach, the portfolio will often look meaningfully different from broad U.S. equity indices, with portfolio characteristics emerging from bottom-up stock selection rather than from predefined sector, style, or market-capitalization targets. This differentiation is intentional and reflects Pembroke’s conviction that disciplined stock selection, rather than index alignment, is a key driver of long-term returns in U.S. small- and mid-cap equities. Over time, the strategy seeks to benefit from the compounding effects of disciplined growth investing across market cycles.
Who Should Invest?
The Pembroke U.S. Growth Strategy is suited to investors seeking long-term capital appreciation who are comfortable with equity market volatility and periods of benchmark-relative performance variation. Pembroke classifies the strategy as medium-to-high risk. It is intended for investors with a long-term investment horizon, typically five years or longer, who can remain committed through market cycles and short-term fluctuations.
The strategy may be appropriate for investors who:
- Seek exposure to U.S. small- and mid-cap growth companies
- Have a medium-to-high risk tolerance
- Are focused on capital appreciation rather than current income
- Are comfortable with active management, and benchmark-relative variability
Role within a portfolio
Within a diversified portfolio, the Pembroke U.S. Growth Strategy may serve as:
- A dedicated allocation to U.S. small- and mid-cap growth equities
- A satellite holding complementing U.S. large-cap or more broadly diversified equity exposure
- A source of differentiated growth exposure alongside more broadly diversified equity allocations
For Canadian investors in particular, the strategy provides access to a significantly broader growth opportunity set than is available domestically. Canada represents a small portion of global equity markets and is heavily focused in financials, energy, and materials. By contrast, the U.S. market offers greater exposure to technology, healthcare, industrial innovation, and consumer-oriented growth companies. Allocating to U.S. growth equities can therefore improve portfolio diversification and long-term growth potential.
Who Should Not Invest?
This strategy is not suitable for investors with short-term liquidity needs, those seeking stable income or capital preservation, or those unwilling to tolerate equity market volatility and periods of relative underperformance versus broad U.S. indices. Investors who prefer index-tracking strategies or who are uncomfortable with relatively focused portfolios may find the strategy misaligned with their objectives. Returns may vary meaningfully from year to year, and investors should be prepared for short-term fluctuations in pursuit of long-term capital growth.
Investment Strategy
The strategy is managed using a disciplined, bottom-up, research-intensive investment process, with security selection, long-term ownership, and valuation discipline driving portfolio construction.
Bottom-up fundamental research
Pembroke’s investment team conducts deep fundamental research across the U.S. small- and mid-cap universe. The research process combines quantitative screening with qualitative judgment developed through decades of growth investing experience. Analysts and portfolio managers evaluate business models, industry structure, competitive positioning, financial strength, and management quality through detailed financial analysis and ongoing engagement with company leadership.
Key characteristics sought in portfolio companies include:
- Sustainable revenue and earnings growth supported by large or expanding addressable markets
- High and improving returns on invested capital
- Strong balance sheets that enable growth without reliance on external financing
- Durable competitive advantages such as proprietary technology, switching costs, or scale benefits
- Management teams with demonstrated execution capability and meaningful ownership alignment
Valuation discipline
While the strategy is growth-oriented, valuation remains a critical component of the investment decision. Pembroke focuses on a company’s long-term intrinsic value, emphasizing normalized earnings and cash flow potential rather than short-term market sentiment. Investments are made when the team believes a company’s long-term growth prospects are not fully reflected in its current valuation, providing an attractive risk-reward profile.
Role of macroeconomic considerations
Pembroke is a bottom-up investor. Macroeconomic factors such as interest rates, inflation, or economic cycles do not drive security selection or portfolio positioning. These factors are monitored as part of overall risk awareness, particularly where they may influence business fundamentals or valuation assumptions, but they do not dictate investment decisions.
Portfolio construction and risk management
The portfolio is constructed on a relatively focused basis, with position sizes reflecting conviction, liquidity considerations, and company-specific risk. Diversification across industries and business models is used to manage portfolio risk while preserving the impact of individual investment decisions.
Risk is managed through disciplined position sizing and sector diversification, designed to avoid excessive exposure to any single company or industry. Beyond these considerations, portfolio composition is driven entirely by bottom-up opportunity.
Risk management is embedded throughout the investment process:
- Extensive due diligence seeks to mitigate company-specific risks
- Portfolio construction limits exposure to any single economic driver
- Continuous monitoring ensures timely reassessment of fundamentals and valuation
Given its focus on small- and mid-cap growth companies and its benchmark-agnostic approach, the strategy is expected to experience periods of volatility and performance dispersion relative to broad U.S. equity indices.
Accessing the Strategy
Investors may access this strategy through the Pembroke American Growth Fund Inc. or the Pembroke U.S. Growth Pooled Fund. The strategy is available in both Canadian dollar and U.S. dollar denominations, depending on investor preference. The strategy may also be implemented through a separately managed account for clients with a discretionary management agreement. Additional information about the Pembroke American Growth Fund, including investment objectives, risks, fees, and expenses, is available in the fund’s prospectus. The pooled fund is offered to accredited investors.
The Pembroke Concentrated Strategy (also referred to as the Pembroke Select Strategy in certain consultant and institutional databases) is a high-conviction, benchmark-agnostic equity strategy designed to deliver long-term capital appreciation.
Strategy Overview
The Pembroke Concentrated Strategy is a focused portfolio of Pembroke’s highest-conviction growth companies. The strategy is currently invested in U.S. equities, reflecting where the investment team sees the most compelling growth opportunities.
The strategy represents the most concentrated expression of Pembroke’s bottom-up investment philosophy. It is intentionally constructed with a limited number of holdings, allowing capital to be allocated decisively to those businesses where conviction in long-term outcomes is highest. This level of concentration reflects Pembroke’s willingness to focus on its strongest ideas rather than diversifying exposure for its own sake.
The investment universe consists primarily of U.S. growth companies across a wide range of market capitalizations, with the flexibility to include Canadian companies when long-term fundamentals and valuation warrant. While the strategy often emphasizes small- and mid-cap companies, where growth potential and market inefficiencies tend to be greatest, it retains the flexibility to invest in larger companies when investment opportunities and valuation remain compelling. There are no predefined allocations by country, sector, or capitalization; portfolio composition is driven entirely by bottom-up opportunity.
The U.S. equity market currently provides a particularly attractive backdrop for this approach. It offers a deep and diverse universe of innovative businesses across technology, healthcare, industrials, consumer, and business services. Many of these companies benefit from long reinvestment runways, strong industry positions, and the ability to compound value over extended periods. The Concentrated Strategy seeks to identify a small number of such businesses where Pembroke’s conviction in the durability of growth and competitive advantage is highest.
The strategy emphasizes quality, growth, and alignment. Pembroke favors companies with strong balance sheets, visible or recurring revenue streams, high and improving returns on invested capital, and management teams that demonstrate disciplined capital allocation and long-term stewardship. The strategy seeks to partner with management teams whose interests are aligned with shareholders through meaningful ownership, long-term incentive structures, and a demonstrated commitment to building enduring businesses.
Growth supported by internal cash generation and competitive strength, rather than financial leverage or external capital dependence, is central to the strategy’s design. By concentrating capital in companies that meet these criteria, the strategy seeks to maximize the impact of successful stock selection over the long term.
Given its benchmark-agnostic and highly concentrated structure, the portfolio will often look materially different from broad equity indices.
Sector exposures, geographic mix, and individual holdings are outcomes of the investment process rather than predefined targets. This differentiation is intentional and reflects Pembroke’s conviction that long-term outperformance is driven by disciplined stock selection and patience.
Who Should Invest?
The Pembroke Concentrated Strategy is suited to investors seeking long-term capital growth who are comfortable with a higher degree of portfolio concentration and equity market volatility. Pembroke classifies the Concentrated Strategy as high risk. It is designed for investors with a long-term time horizon, ideally six years or longer, who can remain committed through market cycles and periods of meaningful performance dispersion.
The strategy may be appropriate for investors who:
- Seek exposure to Pembroke’s highest-conviction growth ideas
- Have a high tolerance for volatility and short-term performance fluctuations
- Are focused on long-term capital appreciation rather than income generation
- Are comfortable with highly concentrated portfolios and periods of benchmark-relative performance dispersion
Role within a portfolio
Within a diversified portfolio, the Pembroke Concentrated Strategy is best suited as a satellite allocation rather than a core holding. It may serve as:
- A high-conviction complement to more diversified equity strategies
- A vehicle for investors who wish to amplify exposure to Pembroke’s best ideas
- A differentiated growth allocation alongside passive or broadly diversified equity exposures
For investors already invested in Pembroke’s Canadian and U.S. Growth Strategies, the Concentrated Strategy can provide an additional layer of differentiation by allocating capital exclusively to the most compelling opportunities across markets.
Who Should Not Invest?
As with any concentrated equity strategy, the Pembroke Concentrated Strategy will not be appropriate for all investors. It is not suitable for investors with short-term liquidity needs, those seeking stable income or capital preservation, or those unwilling to tolerate elevated volatility and potentially extended periods of relative underperformance. Investors who prefer index-tracking approaches or who are uncomfortable with concentrated exposure may find the strategy misaligned with their objectives.
Investment Strategy
The Pembroke Concentrated Strategy is implemented through a disciplined, research-intensive investment process that represents a distilled version of Pembroke’s broader equity approach. Bottom-up security selection, long-term ownership, valuation discipline, and conviction-weighted position sizing are the primary drivers of portfolio construction.
Bottom-up fundamental research
The investment team draws on research conducted across all Pembroke equity strategies, selecting only those companies that meet the highest standards for quality, growth potential, and valuation. Each holding must clear a high internal bar for expected long-term return and confidence in the investment thesis.
Analysts and portfolio managers evaluate business models, industry structure, competitive positioning, financial strength, and management quality through detailed financial analysis and ongoing engagement with company leadership. With fewer holdings, each position is followed closely and reviewed continuously as new information emerges.
Key characteristics sought in portfolio companies include:
- Sustainable revenue and earnings growth supported by large or expanding addressable markets
- High and improving returns on invested capital
- Strong balance sheets that support growth without reliance on external financing
- Durable competitive advantages such as proprietary technology, switching costs, or scale benefits
- Management teams with demonstrated execution capability and meaningful ownership alignment
Valuation discipline
While the strategy is growth-oriented, valuation remains central to the investment decision. Pembroke focuses on a company’s long-term intrinsic value, emphasizing normalized earnings and cash flow potential rather than short-term market sentiment. Capital is allocated most aggressively where the gap between market price and long-term intrinsic value is greatest and where conviction in the underlying business is highest.
Role of macro considerations
Pembroke is a bottom-up investor. Macroeconomic factors such as interest rates, inflation, or economic cycles do not drive security selection or portfolio positioning. These factors are monitored as part of overall risk awareness, particularly where they may influence business fundamentals or valuation assumptions, but they do not dictate investment decisions.
Portfolio construction and risk management
The portfolio is constructed on a highly concentrated basis, with position sizes reflecting conviction, liquidity considerations, and company-specific risk. While some diversification across industries and end markets is considered, the strategy is intentionally focused, allowing individual holdings to contribute meaningfully to overall returns.
Risk management is embedded throughout the investment process:
- Extensive due diligence seeks to mitigate company-specific risks
- Position sizing reflects both upside potential and downside risk
- Continuous monitoring ensures timely reassessment of fundamentals and valuation
Given its highly concentrated structure and unconstrained mandate, the strategy is expected to exhibit higher volatility and greater performance dispersion than Pembroke’s more diversified equity strategies. The potential for higher long-term returns is accompanied by the likelihood of more pronounced short-term fluctuations.
Accessing the Strategy
Investors may access this strategy through the Pembroke Concentrated Fund. The strategy is available in both Canadian dollar and U.S. dollar denominations, depending on investor preference. The strategy may also be implemented through a separately managed account for clients with a discretionary management agreement. Additional information about the fund, including investment objectives, risks, fees, and expenses, is available in the fund’s prospectus.
