Seth Cogswell

Seth Cogswell's investment career started before he was born. His father created Running Oak's core strategy in the 1970s, and Seth grew up surrounded by investment management. Before the internet, his dad had blue and orange stock chart books for the NYSE and NASDAQ, and Seth would steal them, comb through the pages, and imagine how easy it would have been to buy low and sell high. He set up a brokerage account in college with a few hundred dollars, made a lot of dumb mistakes cheaply enough to learn from them, and eventually became a trader in New York where his firm built a small hedge fund around what he was doing. But he had a realization: "At the best of times, I almost felt like I was stealing money from a grandmother." He left, put his father's strategy through the ringer at business school with an investment management professor, concluded it was far better than even his dad realized, and launched Running Oak with $800,000 under management. Some of his professors were his first clients.

On this episode of Behind the Ticker, Seth walks Brad through RUNN, the Running Oak Efficient Growth ETF, a 50-to-75 name portfolio spanning large and mid cap that's been run as an SMA strategy for four decades and recently moved into the ETF wrapper.

The Strategy: Growth With Guardrails

Running Oak's approach is built on three pillars: higher earnings growth, attractive valuations, and lower downside risk. The strategy scores companies on these characteristics using a quantitative process. The goal isn't to find the next Nvidia or Palantir; it's to consistently maintain a portfolio with those qualities that, over the long run, provide higher returns with less risk.

Seth is philosophical about individual stock conviction in a way that separates him from most active managers. "We have absolute conviction that if we maintain a portfolio with higher earnings growth, attractive valuations, lower downside risk, that we will, over the long run, provide higher return, lower risk. Nobody will ever be able to convince me otherwise." But for individual companies? "We look at each company, as long as it meets our criteria, as a coin flip." They're not talking to management. They don't feel that's where their edge lies. The edge is in the portfolio characteristics, not in any single holding.

Why Equal Weight Over Four Decades

Equal weighting, Seth explained, outperformed cap weighting over every single rolling decade in history up until the most recent stretch. The reason: equal weighting takes advantage of mean reversion, while cap weighting is essentially a momentum play. With momentum dominating for the past decade-plus as people pile into the same names driving those weights larger and larger, cap weighting has looked great. But over full market cycles, the reversion advantage of equal weight reasserts itself. Brad admitted he's been waiting for the equal-weight factor to come back for years. The data supports patience.

When Brad asked why he doesn't score-weight the portfolio instead, putting more money into the highest-scoring names, Seth pointed to his philosophical framework. Many managers take concentrated, high-conviction approaches with deep fundamental dives on a handful of names. Running Oak takes the opposite approach. Each company that meets the criteria gets equal weight. The portfolio of 50 to 75 names is designed to reduce idiosyncratic risk so no single company matters too much. You can think of it like flipping a coin: each individual flip might go either way, but the aggregate outcome is highly predictable.

Where It Fits in a Portfolio

The portfolio historically runs about 50% mid cap, 50% large cap, though Seth notes that the line between mid and large is "made up" and multiple firms can't even agree where it falls. He positions RUNN as a true core holding that walks the line between mid and large cap. It's growthy because they maximize for earnings growth, but the valuation discipline and focus on lower debt pull it back into core territory.

Seth suggested complementing RUNN with more innovative growth names on one side (companies that don't yet pass his valuation screens or weren't profitable when their valuations got ahead of themselves) and value on the other. The rules-based nature means advisors know exactly what the fund is doing at all times. "We've been doing it for four decades," he said. "It's meant to be that very dependable core holding in the middle of your portfolio."

The Mid-Cap Case

Seth made a broader case for mid-cap exposure that goes beyond his own fund. In an uncertain world, it's a good time to be hedging your bets and making sure you're not setting yourself up for a reversal. He believes the conversation around mid-caps is really about rethinking how people invest, not just adding a sleeve. RUNN offers that mid-cap tilt naturally through its screening process rather than forcing a market-cap mandate. Seth also spends 30 to 40 minutes every day meditating, trying to stay present. "It's easy to get lost in the moment when you're chasing kids and running a business." He was quite the musician in school too, playing trumpet and tuba.

Key Takeaways

• RUNN holds 50-75 equally weighted positions across large and mid cap, selected using quantitative screens for earnings growth, attractive valuations, and lower downside risk.
• The strategy has been running as SMAs and UMAs for four decades, originating with Seth's father in the 1970s.
• Equal weighting is chosen over score-weighting because the edge is in the portfolio characteristics, not individual stock conviction. Each holding is treated like a coin flip.
• Historical split is roughly 50% mid cap, 50% large cap, positioned as a core equity holding that walks the line between growth and core.
• Seth launched Running Oak with $800,000 under management against the advice of nearly everyone he knew. His business school professors were among his first clients.

Listen to the full conversation on Spotify, Apple Podcasts, or YouTube.