Ragen Stienke, founder of Ballast Asset Management, joined the Behind the Ticker podcast to discuss his 30+ years of experience in small and mid-cap investing. Ragen got his start in the 1990s at Arthur Anderson's business valuation group before working at UBS and later founding a SMID strategy at Westwood. In 2015, he started Ballast focused on small and mid-caps, offering both SMAs and their Small/Mid Cap ETF called MGMT. Ragen aims to turn alpha generation into a process focused on quantifying downside risk rather than relying on conviction. He sees opportunity in the small and mid-cap space as coverage by analysts has declined, believing this segment will outperform large caps in the coming years. Ragen evaluates management teams for alignment, capital deployment history, and strategic fit. Ragen positions MGMT as a replacement for passive ETFs or to balance large cap growth tilts in models, focusing distribution on RIAs and advisors rather than consultants. He summarizes Ballast's approach as “looking both ways when crossing a one-way street.”To learn more about Ballast and Ragen please visit ballastam.com
Deeper Dive: Insights from the Full Conversation
Beyond the headline strategy, the full conversation between Brad and Ragen Stienke covered several additional themes worth highlighting for advisors and investors.
On Process and Philosophy
So it's really two things. Either A is a replacement to Pantos ETFs and a lot of many of the ETFs out there within that our competitors trust or either something or quantitative or just peer-prepared. And we are part of the fundamental one. And I think it's something like this where there's a lot of uncertainty that that's where real value comes in play. And the other is just purely in allocations. We've seen over the last 10 years the large cap growth is basically dramatically performed a small cap to you.
We have a proprietary risk management model that that we employ to help help them understand and putting those different positions together. And we say an analyst job is paint perfect stroke on a piece of canvas. It's our job to make sure that we have a picture that makes sense. So part of this model is fundamentally driven. We look at all the revenue and earnings associated with all of our businesses and break those down based on one of those things like cyclicality and markets, etc.
Market Context and Positioning
Today we have Reagan Steinke. He is the founder of Ballast asset management. They have a long history in the space, specifically small and midcap SMA products, and have jumped into the ETF world a few years back with their small midcap active ETF, MGMT. I think you are going to find this conversation extremely interesting, specifically around their fundamental process, as well as how they view and evaluate management and how they view and evaluate risk.
I'm Brad Roth, Chief Investment Officer of Thor Financial Technologies, and portfolio manager of THLV, the Thor Low Volatility ETF. Behind the Ticker, uncovers the inner workings of the ETF industry. We will interview portfolio managers and ETF service providers to dive deep into their work lives and their businesses. We will learn the inner workings of their strategies and what drives them as they continue to grow their company. Many of these individuals are entrepreneurs, and will have unique and compelling insights to share as much goes on behind the Ticker.
Historically, we have a managed primarily institutional capital. I've got a point in the beginning. Probably 85% percent was institutional. And then three years ago, through a, or I should say, as a result of an SEC opinion letter. I've got a lot of different interests such as ourselves. They have the same efficiency and an ETS strategy. It's the, we launched the first my knowledge.
I hope running SMAs and continue to run SMAs to the head. The way I think about the ETF is the same strategy. It's just a different vehicle or act to think of the same strategy. We have a single strategy.
Notable Insights
"It's an evaluation group that I'd like to say that's where to gotten things in the real world, as opposed to an academic perspective."
"The commissions are the up any or half a penny of share and a lot of these days and the reality is that many of the large brokerage firms."
Key Takeaways
- Ragen aims to turn alpha generation into a process focused on quantifying downside risk rather than relying on conviction.
- The conversation explores important themes in quantitative investing relevant to today's advisor landscape.
- The conversation explores important themes in quantitative investing relevant to today's advisor landscape.
What This Means for Advisors
For financial advisors evaluating options for client portfolios, this conversation with Ragen Stienke highlights important considerations around quantitative investing. Understanding the strategy behind each fund—not just the ticker—helps advisors make more informed allocation decisions and better communicate the rationale to clients.
Listen to the Full Episode
This article is based on an episode of Behind the Ticker, hosted by Brad Roth, Founder and CIO of THOR Financial Technologies. For the full conversation with Ragen Stienke, including additional nuances and details, listen on Spotify, Apple Podcasts, or watch on YouTube.