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Quarter	Letter Date	Fund Name	QTD	YTD	Tickers	Themes	Quick Take

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TimesSquare Capital Management U.S. Mid Cap Growth Strategy 2023 Q4 Investor Letter | Buyside Digest

Back to Fund Profile (TimesSquare Capital Management U.S. Mid Cap Growth Strategy)

Primary Source Intelligence • Q4 2023 Letter Analysis

TimesSquare Capital Management U.S. Mid Cap Growth Strategy Quarterly Analysis

Buyside Digest is not affiliated with, and does not endorse, TimesSquare Capital Management U.S. Mid Cap Growth Strategy. This analysis is provided for institutional research purposes only and is not investment advice.

Fund Returns

QTD+13.44%

Annualized+9.14%

Positioning StanceConstructive

Market CapMid Cap

GeographyUS

Digest Analysis

Quick Take

"Driven by cybersecurity, infrastructure spending, and supply chain onshoring themes. Strong performance from technology and consumer holdings offset some healthcare weakness."

Executive Summary

TimesSquare's U.S. Mid Cap Growth strategy delivered strong performance in Q4 2023, with the portfolio gaining 13.44% net as global equity markets rebounded on speculation of central bank policy pivots. The manager maintains a bottom-up investment approach focused on companies with quality management, competitive advantages, and sustainable growth drivers. Key themes driving positioning include cybersecurity demand following high-profile breaches and new SEC disclosure requirements, infrastructure spending supported by government programs, and supply chain onshoring away from China. The portfolio benefited from strong performance in technology names like CrowdStrike and CyberArk, consumer discretionary holdings including Five Below and Ross Stores, and healthcare positions such as DexCom. The manager actively managed positions during the quarter, trimming winners like Palo Alto Networks and adding to weakness in names like Legend Biotech and argenx. Looking ahead to 2024, the team expects continued fundamental improvement across portfolio companies while monitoring central bank policies and a busy global election calendar that could drive fiscal policy shifts.

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Institutional Meta Strategy

Meta Strategy Gauges

Algorithmic conviction, macroeconomic posture, and risk appetite signals extracted from this quarterly letter with qualitative explanations.

Signal Matrix

Market Conviction

72%

CautiousHigh

High Conviction (72%)

High conviction evidenced by concentrated portfolio of approximately 75 stocks with detailed individual position commentary, specific sizing decisions (trimming, adding), and clear thesis articulation for each holding. Manager demonstrates strong conviction through active position management and willingness to add to positions on temporary weakness.

Growth Outlook

25%

BearishBullish

Bearish (25%)

The manager expresses cautious optimism about 2024, noting improving fundamentals in portfolio companies and early signs of monetary easing. However, they acknowledge uncertainty around central bank timing and highlight the potential for policy shifts from global elections. The tone is constructive but measured.

Risk Appetite

15%

DefensiveAggressive

Defensive (15%)

The portfolio shows selective risk-taking with active position management - trimming winners and adding to quality names on weakness. The manager maintains full investment but demonstrates disciplined approach to position sizing based on fundamentals rather than aggressive deployment.

Capital Deployment

5%

De-riskingDeploying

De-risking (5%)

Net neutral deployment with active rotation - trimming some winners like Palo Alto Networks and Gartner while adding to positions like Ross Stores, BJ's Wholesale Club, Legend Biotech, and argenx on weakness. No indication of significant cash level changes, representing portfolio rebalancing rather than net deployment.

Forward Guidance

20%

CautiousExpansionary

Cautious (20%)

The manager indicates continued selective deployment based on fundamental improvement expectations in portfolio companies. They express willingness to add to positions on weakness but maintain a measured approach given macro uncertainties around central bank policy and election outcomes.

Language Signal

30%

BearishBullish

Bearish (30%)

Language is balanced with more opportunity-focused terms around cybersecurity growth, infrastructure spending, and fundamental improvements, but tempered by risk acknowledgments around inflation, housing market pressure, and policy uncertainty. Net positive but not overwhelmingly bullish.

Perceived Risk

45%

Low RiskElevated

Moderate Risk (45%)

Moderate risk acknowledgment with specific concerns about inflation victory being premature, housing market pressure, and telecommunications sector challenges. Manager identifies sector-specific headwinds but doesn't express systemic alarm, maintaining standard risk awareness for a growth-focused strategy.

Opportunity Density

65%

ScarceAbundant

Abundant (65%)

Manager sees selective opportunities across multiple sectors with specific themes like cybersecurity, infrastructure spending, and onshoring providing investment rationale. Active position management and new additions suggest reasonable opportunity set, though selectivity is emphasized given market conditions.

Time Horizon

70%

Short-TermLong-Term

Decade+ (70%)

Multi-year investment horizon evidenced by focus on structural themes like infrastructure spending continuing 'for several years' and supply chain onshoring. Manager emphasizes fundamental business improvements expected to continue 'into 2024 and beyond' rather than near-term catalyst dependency.