Welcome to Morgan Dempsey

Morgan Dempsey Capital Management, LLC is the Advisor to the Morgan Dempsey Small/Micro Cap Value Fund - MITYX. Brian G. Rafn serves as the Fund's Portfolio Manager. Click here to download the Statutory Prospectus or obtain a hard copy by calling 1-877-642-7227.

The goal of the fund is to invest in only the strongest small companies. The strategic approach applies a Graham/Dodd valuation methodology focusing on inefficiently priced small/micro-cap companies with robust "fortress balance sheets" and ample free cash flow. Companies that make it in the portfolio tend to grow organically and many are run by founder/owner/operators where management's long-term interests are aligned with shareholders.

Morgan Dempsey does not rely on outside research preferring instead to do our own forensic accounting and analysis. We believe that disciplined, fundamental, bottom-up research is the key to gaining an information advantage. We consult company 10-Ks/10Qs/8Ks and conduct frequent and in-depth conversations with management, competitors, employees, regulators and suppliers. It is desirable to find companies selling at a 30%-70% discount to our computed valuations. Additionally emphasis is placed on looking for an emerging catalyst in order to avoid the inertia exhibited by many small company value stocks.

Employing a contrarian bias affords us the freedom to be agnostic to benchmark weightings and to instead focus on what we believe are the best companies in the most promising areas of the market.

Our ability to pursue inefficiently priced micro-cap companies, in addition to small-caps, provides us with opportunities that are off limits to larger, asset burdened, strategies.

One major fundamental tenant that runs through our trading strategy is that we do not equate risk with price volatility. Worrying about short-term price movements, which are unrelated to business fundamentals, tends to produce poor long-term results. We invite volatility as it may allow us to add to attractive investments we understand at reasonable prices.

We are buy-and-hold investors and tend to be concentrated in our highest conviction ideas. We believe in having conviction in our analysis and patience in our convictions. The process targets companies with increasing intrinsic values which we believe should allow our holdings to grow and build shareholder value over extended periods of time. As managers, we want to be long-term partners with the great companies and exceptional management teams we have invested the time to understand.

Our Strategy

We believe the Small Cap/Micro strategy offers the opportunity to pursue excess returns based on a variety of factors.

Fortress Balance Sheets

  • We're looking for companies with ample free cash flow, little leverage and minimal goodwill who adhere to conservative Generally Accepted Accounting Principles (GAAP) accounting
  • The vast majority of companies in the Small and Micro Cap space do not meet our strict criteria
  • We believe a strong balance sheet allows company to thrive in good times, survive in bad times

Founder/Owner Operators

  • The majority of the companies the portfolio seeks to invest in are Founder/Owner/Operator run.
  • We believe to be treated like an owner, we have to invest with owners
  • Long term operating histories provide a historical frame of reference

Avoiding Trouble - Strong Risk Controls

  • We utilize conservative GAAP accounting because we believe great companies aren’t built with creative accounting
  • We invest in easy to understand companies - We avoid turnarounds, serial roll-ups, litigation, debt and other problems

Information Advantage - Intense Forensic Accounting & Long Term Familiarity

  • We utilize an intense, fundamental, bottom-up research process.
  • We have followed many of the companies we seek to invest in for years.
  • We believe globalized markets have created a vacuum of coverage in the small/micro-cap space

Concentrated in Highest Conviction Ideas

  • Top 10 holdings will typically average ~ 40% of portfolio weight
  • Our best researched ideas aren’t diluted; over diversification leads to less knowledge of individual holdings may potentially increase investment risk

Benchmark Agnostic

  • We pursue our best ideas in the most promising areas of the market
  • We are active managers, not benchmark huggers

We Buy Micro-Caps in Addition to Small-Caps

  • We believe we are able to gain a significant information advantage due to the lack of any other analyst coverage in much of our portfolio as well as the depth and detail of our analysis we place into our proprietary research process.
  • Smaller opportunities are technically off-limits to larger investment firms burdened by assets

Mutual fund investing involves risk. Principal loss is possible. The Fund invests in small- and micro-capitalization companies, which involve additional risks such as limited liquidity and greater volatility than larger capitalization companies. Unlikemutual funds, ETFs do not necessarily trade at the net asset values of their underlying securities, which means an ETF could potentially trade above or below the value of its underlying portfolio. The Fund’s use of derivatives could cause losses due to the unexpected effect of market movements on a derivative’s price, or because the derivatives do not perform as anticipated.

Before you invest in the Morgan Dempsey Small/MicroCap Value Fund, please refer to the prospectus for important information about the investment company, including investment objectives, risks, charges and expenses. You may also obtain a hardcopy of the statutory prospectus by calling 1-877-642-7227. The prospectus should be read carefully before you invest or send money.

The Fund is offered only to United States residents, and information on this site is intended only for such persons. Nothing on this web site should be considered a solicitation to buy or an offer to sell shares of the Fund in any jurisdiction where the offer or solicitation would be unlawful under the securities laws of such jurisdiction.

Free cash flow measures the cash generating capability of a company by adding non-cash charges (e.g. depreciation) and interest expense to pretax income.

Morgan Dempsey Capital Management, LLC is the advisor to the Morgan Dempsey Small/Micro Cap Value Fund, which is distributed by Quasar Distributors, LLC.

Fund Facts

Morgan Dempsey Small/Micro Cap Value Fund
Portfolio Manager: Brian G. Rafn
Ticker: MITYX
Min. Initial Investment: $2,500
Subsequent Min. Investment: $50

Investment Objective

The investment objective of the Morgan Dempsey Small/Micro Cap Value Fund is long-term capital appreciation.

Portfolio Construction

80-120 potential portfolio candidates

Mix of small and micro-cap names
2/3 short term ideas (awaiting an emerging catalyst)
1/3 longer term ideas (catalyst >2 years)

Concentrated in best ideas
Top 10 holdings ~ 40%
Top 20 holdings ~ 60%

Sector limits of 35%
Industry limits of 20%

Agnostic to benchmark weightings
New position size = 1% - 2% of portfolio
Seeks low turnover
45-75 positions in final portfolio

Quick Links

Fact Sheet
Statutory Prospectus
Summary Prospectus
Statement of Additional Information
Annual Report
Semi-Annual Report
IRA Application
IRA Transfer Form
IRA Disclosure
Privacy Policy

Contact Us

For Regular Mail:
Morgan Dempsey Small/Micro Cap Value Fund
c/o U.S. Bancorp Fund Services, LLC
P.O. Box 701
Milwaukee, WI 53202

For Overnight or Express Mail:
Morgan Dempsey Small/Micro Cap Value Fund
c/o U.S. Bancorp Fund Services, LLC
615 East Michigan St.
3rd Floor
Milwaukee, WI 53202-0701

Phone: 1-877-642-7227

The Advisor

Morgan Dempsey
Capital Management, LLC.
111 Heritage Reserve
Suite 200
Menomonee Falls, WI 53051

Phone: 414-319-1080
Fax: 414-319-1087
Toll Free: 1-800-969-6326