Added to Customers Bancorp (CUBI):

• Commercial bank primarily serving the Washington DC to Boston corridor
• Early this year took advantage of the post-election price jump to reduce weighting
• In spite of continuing to grow earnings, share price down approximately 20% this year
• Management team has remarkable track record
• Trading at less than 10x trailing earnings
• Customers Bancorp hasn’t traded this inexpensively during its history
• Therefore, purchased additional shares to increase weighting in the portfolio

Added to TESSCO Technologies (TESS):

• Distributor of products to wireless carriers and retail stores
• New CEO enhanced leadership team
• Early stages of revenue rebound now apparent
• Forecast margin expansion with increased efficiencies as revenues grow
• Leading to earnings growing faster than revenues
• Expanding into new markets
• Adding significant new customers
• Rebound in wireless carrier spending would be meaningful enhancement to business
• Nearly 6% dividend yield
• Trading at roughly book value

Sold Omega Protein (OME):

• Food ingredients company
• Increased Peruvian quotas for fish catch impacting supply-demand balance and global pricing
• Increased competition in human nutrition segment pressuring profitability
• Sold shares while management navigates these challenging industry factors

Purchased Atlas Financial Holdings (AFH):

• Specialty insurer of commercial vehicles
• Forecast increased market share in non-taxi transportation segment
• Growth of aging population may be tailwind to paratransit premium growth
• Investors panicked over unexpected reserve increase for bigger losses in Michigan (small portion of revenue)
• Concluded Michigan issues are isolated
• Therefore, used stock price decline associated with investor concerns to purchase company
• Trading at approximately 8x this year’s earnings estimates and slightly above book value at time of purchase

Added to Enova International (ENVA):

• Profitable online, small loan lender with operations in the United States, United Kingdom and Brazil
• Three new business lines: Near prime, small business and Brazilian consumer
• CEO of four years completed strategic realignment last year
• Company positioned for meaningful growth with new and existing business lines
• Added to company after reported strong first quarter earnings
• Trading at approximately 10x this year’s earnings estimates at time of purchase

Added to VAALCO Energy (EGY):

• Produce oil offshore Gabon
• Reduced operating costs considerably
• Therefore, breakeven oil price also reduced
• Higher oil prices directly benefit the company’s earnings
• Believe investors underestimating this positive influence

Trimmed Lattice Semiconductor (LSCC):

• Design and develop high performance, low cost, programmable semiconductors
• Company being acquired by a Chinese backed buyout fund
• Share price rose on acquisition announcement
• Trimmed position again to further reduce risk if purchase is rejected by U.S. Government

Purchased CARBO Ceramics (CRR): 

• Manufacture proppants and chemicals for oil & gas well completions
• Expect oil and natural gas activity and completions to increase
• Look for excess inventory to decrease with industry rebound
• Believe increasing proportion of proppants per well could be trend for several years
• New technologies may improve well production and gain meaningful adoption
• Share price dropped from nearly $150 to around $10 because of industry downturn

Purchased ChromaDex Corporation (CDXC): 

• Dietary supplement and ingredient company
• Acquired and developed NIAGEN
• NIAGEN may combat multiple age related ailments
• Early science promising in several areas
• NIAGEN being evaluated at pharmaceutical level down to global food companies
• Purchased small position in advance of additional science
• Increased conviction in the future could lead to raising weighting

Purchased Enova International (ENVA): 

• Profitable online lender
• Three new business lines: Near prime, small business and Brazilian consumer
• CEO of four years completed strategic realignment last year
• Company positioned for meaningful growth with new and existing business lines
• Trading near 11x this year’s consensus earnings

Added to Helix Energy Solutions (HLX): 

• Operate specialized well intervention vessels for offshore energy industry
• Forecasting rebound in offshore oil & gas well maintenance work
• New vessels add to capabilities and opportunity for incremental revenue
• Relationship with Schlumberger could be more impactful in 2017 & 2018
• Long-term demand growth due to increased number of subsea tree installations

Sold Arctic Cat (ACAT): 

• Design and manufacture snowmobiles, ATVs and side-by-sides
• Company announced they were being acquired by Textron for $18.50 cash
• Share price traded above the acquisition price
• Used that opportunity to sell shares above $18.50 takeover price

Sold Gulfmark Offshore (GLFM): 

• Operate offshore supply vessels globally for oil and gas industry
• Incorrectly predicted rebound in price as investors anticipated Gulf of Mexico activity recovery
• Sold shares due to lengthened expectations for vessel supply/demand balancing

Sold Investment Technology Group (ITG): 

• Electronic institutional brokerage
• New CEO is refocusing business
• Share price reflecting future potential, leading to sale
• Interested in owning company again if circumstances present themselves

Sold Nautilus, Inc. (NLS): 

• Design personal and commercial exercise equipment
• Purchased company for organic growth potential, driven in part by new products
• Head of innovation left company this month
• Sold shares due to future new product pipeline concerns with turnover 

Sold Vera Bradley (VRA): 

• Specialty designer moderately priced women’s handbags & accessories
• Management taking steps to broaden product appeal while creating freshness for existing customers
• Efforts not sufficient in current environment to create business momentum
• Therefore, position sold

Trimmed Barrett Business Services (BBSI): 

• Outsourced human resources company
• Share price up significantly from early 2016
• High confidence in management team and conviction in long-term growth
• Weighting was approaching our maximum 10% threshold
• Trimmed to better balance weighting with projected near-term upside 

Trimmed Customers Bancorp (CUBI): 

• Commercial bank spanning Philadelphia to Boston
• Stock price rallied post-election
• Took advantage of price jump to trim shares and redeploy proceeds to companies with greater upside

Trimmed Lattice Semiconductor (LSCC): 

• Designs and develops high performance, low cost, programmable semiconductors
• Company being acquired by a Chinese backed buyout fund
• Share price rose on acquisition announcement
• Trimmed position to hedge against risk purchase is rejected by U.S. Government

Trimmed Marlin Business Services (MRLN): 

• Finance equipment leasing
• Management executing as anticipated
• Investors recognizing management implementation of plan and implications for future
• Led to stock price rise from initial purchase
• Shares trimmed to balance weighting with expected upside

Trimmed Navigant Consulting (NCI): 

• Consulting firm with focus on Healthcare, Finance and Energy industries
• Share price up in response to favorable catalyst development
• Trimmed to generate proceeds for companies with more projected upside

Trimmed Vonage Holdings (VG): 

• Provider of voice over internet services, also known as VOIP
• Management executing business plan to improve business mix and growth rate
• Stock price rallied following strategically revolutionary acquisition last summer
• Portfolio weighting grew and projected upside came down with higher stock price
• Position was trimmed to better align upside with weighting and raise cash for purchases above