A) Description of Firm; Firm Inception; Principal Owners
Donald Smith & Co., Inc. was formed in 1975 as Home Portfolio Advisors, Inc. The name
and ownership of Home Portfolio Advisors, Inc. was changed to its present form in 1983,
when it was purchased by our late founder, Donald G. Smith. We are a registered
independent investment advisor since 1975, specializing in managing value equity accounts
for large institutions.
We have practiced our investment philosophy since our inception with great success, and
have never deviated from our style. We have only one line of business and thus are able
to devote all of our time to managing client assets. Our business is simple – we only
manage low price/book equities – and this allows us to conduct focused, detailed
fundamental analyses of companies we invest in.
We are an independent entity and have no parent organization. Currently, seven employees
and Donald G. Smith’s two daughters have ownership stakes in the company. The total
ownership of current employees is now 51.49%. The voting stock and management of the
company is controlled by employees – Richard L. Greenberg and Jonathan E. Hartsel. Of
these 9 owners, none own more than 25%.
Donald G. Smith passed away in October 2019. He and Richard Greenberg worked
together for over 38 years. Our new Co-CIOs, Richard L. Greenberg and Jonathan E.
Hartsel, have worked together for over 20 years.
B) Types of Services Offered
As stated above, we have only one line of business – managing value equity accounts for
large institutions. We specialize in value investing and our investment advice is limited
to this area. We offer six products:
All Cap Value Equity,
Large Cap Concentrated Value Equity,
Midcap Value Equity,
Small Cap Value Equity,
Micro Cap Value Equity, and
Global Value Equity.
In our All Cap Value Equity, Large Cap Concentrated Value Equity, Midcap Value
Equity, Small Cap Value Equity and Micro Cap Value Equity products, we invest in
securities listed on national exchanges, including domestic equities, ADRs of foreign
companies and dually-listed companies. We may also receive ordinary shares of foreign
companies, rights, warrants, etc. via
corporate actions affecting our existing holdings. In
these instances, we will elect to participate on a case-by-case basis and will only
participate on behalf of clients that have approved these types of holdings for their
portfolio(s).
In our Global Value Equity product we invest in ordinaries of foreign companies priced
in local currencies in addition to all of the above listed security types.
We do not utilize any derivatives or any fixed income securities for any of our products.
C) Tailoring Services to Clients; Client Restrictions
Our clients are able to place guidelines and restrictions on their accounts if they choose.
Examples of areas that can be restricted upon clients’ requests include, but are not limited
to:
Cash maximum,
Individual security weight maximum (at cost or at market),
Sector and/or Industry weight maximum,
Foreign Investment / ADR maximum,
Soft-dollar usage,
Proxy voting authority,
Client-directed trade programs,
Restricted securities, and
Types of securities *
* Again, we invest in securities listed on national exchanges, including domestic equities,
ADRs of foreign companies, dually-listed companies and, for the Global Value Equity
product, ordinaries of foreign companies. We do not utilize any derivatives or any fixed
income securities.
In addition we allow our clients to select performance-based fees.
D) Wrap Fee Programs
We provide investment advisory services for a wrap fee program in our Large Cap
Concentrated Value Equity product. The only difference between the wrap accounts and
the other client accounts is that all trades executed on behalf of the wrap accounts have to
be traded through the broker managing the wrap program at $0 commission. In all other
ways we manage the wrap accounts in the same way we manage all other client accounts.
Our investment advisory fees are included in the total wrap fees charged to these
accounts.
E) AUM – Discretionary vs. Non-Discretionary
As of December 31, 2023, our total firm assets under management was $4,034M. The
breakdown between discretionary and non-discretionary assets was:
Discretionary: $4,034M *(100% discretionary)
Non-Discretionary $0