Ativo Capital Management: Quantitative Investing Excellence
Ativo Capital Management: A Deep Dive into Quantitative Investing Excellence
Ativo Capital Management, a Chicago-based firm with a rich history spanning over five decades, is one such beacon of stability and quantitative rigor. This in-depth exploration will illuminate the core tenets of Ativo Capital Management, from its storied history and deeply ingrained investment philosophy to its sophisticated processes, diverse product offerings, and impressive track record. For institutional investors, financial advisors, and high-net-worth individuals seeking a partner with a proven ability to navigate the complexities of global markets, this comprehensive overview will provide invaluable insights into what makes Ativo a distinguished name in the world of quantitative investing.
A Legacy of Quantitative Innovation: The Ativo Capital Management Story
To truly understand Ativo Capital Management, one must look back to its origins, which are deeply intertwined with the pioneering spirit of quantitative analysis. The firm’s story begins not in 2001, the year of its official inception, but three decades earlier, in 1971, with the formation of Callard, Madden & Associates (CMA). CMA was a trailblazer, one of the first to integrate the academic research of the “Chicago-school” of economics with systematic, empirical securities analysis. This forward-thinking approach laid the groundwork for what would become Ativo’s signature investment style.
A pivotal figure in this narrative is Ricardo Bekin, the founder, CEO, and Chief Investment Officer of Ativo. With a background in finance and an MBA from the prestigious University of Chicago, Bekin joined CMA and quickly became a senior member of the team. His expertise was instrumental in co-designing a PC-based system to replace the cumbersome mainframe computers of the time, a move that revolutionized the firm’s research capabilities and laid the foundation for the sophisticated analytical tools Ativo employs today.
In 2001, Callard Asset Management was established as a division of CMA, with Bekin at the helm. With his own capital and the support of family and friends, Bekin began offering advisory services, initially focusing on a Small Cap portfolio that had its roots in a model portfolio created by CMA back in 1986. This early venture proved successful, and in 2002, Callard Asset Management LLC became a separate entity, owned and managed by Bekin. This independence allowed the firm to cultivate its own identity and establish a track record for its investment products.
The final evolution of the firm’s identity came in 2004 when Callard Asset Management was renamed Ativo Capital Management. This change was a deliberate and meaningful one, reflecting Bekin’s Hispanic (Brazilian) heritage. “Ativo” is a Portuguese word that cleverly encapsulates the firm’s dual focus: “active” management and the prudent stewardship of “assets.” This new name was more than just a branding decision; it was a declaration of the firm’s core philosophy and its commitment to a dynamic and engaged approach to investing.
Since then, Ativo has achieved significant milestones, including surpassing the $1 billion mark in Assets Under Management (AUM) in 2015, a testament to the trust and confidence it has earned from its clients. This was followed by another impressive achievement in 2022, when the firm exceeded $150 million in Assets Under Advisement (AUA), further cementing its position as a leading provider of both portfolio management and model portfolios. With a 50-year legacy of quantitative expertise, Ativo Capital Management stands as a testament to the enduring power of a disciplined, research-driven approach to investing.
The Ativo Philosophy: Beyond the Hype, A Commitment to Rational Investing
In a world often swayed by market sentiment and short-term noise, Ativo Capital Management’s investment philosophy is a refreshing anchor of rationality and discipline. The firm’s approach is not based on gut feelings or speculative bets, but on a set of deeply held principles that have been tested and refined over decades. This philosophy, which the firm encapsulates in its motto, “Choose Wisely®,” is built on the following pillars:
Markets are Rational Over Time: Ativo acknowledges that in the short term, the behavioral biases of investors can lead to stock mispricings. However, the firm firmly believes that over the long run, markets are rational and that a company’s true value will ultimately be reflected in its stock price. This belief underpins their commitment to active management, which they use to identify and exploit these temporary pricing inefficiencies for the benefit of their clients.
Grounded in Sound Financial Theory: The academic work that forms the basis of Ativo’s approach is not some fleeting trend; it is sound financial theory. The firm rigorously applies Discounted Cash Flow Return on Investment (DCFROI) methodologies, a sophisticated valuation method that goes beyond simple earnings multiples to assess a company’s true economic performance.
Focus on Real Shareholder Value: For Ativo, the true measure of a company’s worth is its ability to create real shareholder value. This is defined as generating real earnings in excess of the real cost of capital. By focusing on a company’s cash flows and its cost of capital, Ativo’s team can establish their own estimates of intrinsic value, rather than relying on the often-inflated valuations of the market.
A Broad Opportunity Set: Ativo believes that a broad opportunity set increases the likelihood of adding alpha, or returns above the benchmark. Their portfolios are not constrained by rigid style boxes; they include both growth and value stocks, as well as benchmark and non-benchmark holdings. The portfolios are tilted based on where the most attractive opportunities lie at any given point in time, allowing for a flexible and adaptive approach.
Systematic Risk Control: Controlling risk is not an afterthought for Ativo; it is a vital component of generating consistent, long-term returns. The firm follows a systematic, model-based process designed to minimize unintended exposures and, crucially, to eliminate the human emotions of fear and greed that can so often derail even the most well-thought-out investment strategies.
This philosophy is more than just a set of guiding principles; it is the very DNA of Ativo Capital Management. It informs every decision the firm makes, from its macro-level assessments to its individual stock selections. It is a commitment to a way of investing that is both intelligent and prudent, a philosophy that has served the firm and its clients well for over half a century.
The Investment Process: A Disciplined and Repeatable Framework for Success
Ativo’s investment philosophy is brought to life through a meticulous and highly disciplined four-step investment process. This process, driven by the firm’s proprietary model and focused on bottom-up stock selection, is designed to be both repeatable and transparent. It is a process that avoids the behavioral biases inherent in traditional, fundamental approaches, allowing for a level of objectivity that is rare in the investment world.
Step 1: Macro Assessment
The process begins with a comprehensive evaluation of the global economy and the stock market. The goal of this macro assessment is to understand the current environment and how it might influence the results of their model. This top-down perspective provides a crucial context for the bottom-up stock selection that follows.
Step 2: Accounting Adjustments
Ativo’s investment universe is vast, encompassing more than 30,000 companies worldwide. This broad universe gives the firm the flexibility to invest in a wide range of markets and sectors, expanding their ability to generate alpha. However, the firm recognizes that standard accounting regulations can often distort a company’s true economic performance. To counter this, they make a series of adjustments to the accounting data, a critical step in their quest to uncover a company’s real intrinsic value.
Step 3: Rules-Based Analysis
This is where Ativo’s proprietary model takes center stage. This sophisticated model scores each of the 30,000+ stocks in their universe on a scale of 1 to 100 across various component factors, with 100 being the best possible score. The model then weights and combines these scores to arrive at an overall rating for every stock—a rating known as the “Ativo Attractiveness Score™.”
It is important to note that not only is the model itself proprietary, but its component factors are also unique to Ativo. This gives the firm a significant competitive advantage, as they are able to analyze companies through a lens that is entirely their own.
Step 4: Portfolio Construction
Once the Ativo Attractiveness Score™ has been calculated for every stock in their universe, the team is ready to build the portfolio. This is a multi-stage process:
Ranking the Universe: The stocks are first ranked based on their Ativo Attractiveness Score™. Those that do not meet the firm’s stringent thresholds for liquidity and market capitalization are eliminated, as are any stocks that are prohibited by a client’s specific investment policy statement.
Scaling and Re-Ranking: The remaining stocks are then subjected to a scaling process. Their Ativo Attractiveness Scores™ are adjusted up or down based on their size, style, “risky-defensive” characteristics, and country. For example, in a risk-averse market environment, the scores of high-quality stocks with strong financial structures would be modestly increased.
This is also where the “Ativo Country Ranking Model™” comes into play. This proprietary model uses 19 macroeconomic and top-down aggregate factors to rank over 30 countries in both developed and emerging markets. The scores of stocks domiciled in countries deemed unattractive by this model would be modestly lowered.
Finally, the scores are also scaled based on how a stock would impact the existing country, sector, and industry exposures of the portfolio relative to the benchmark. Once this comprehensive scaling process is complete, all of the stocks are re-ranked.
Qualitative Review: The highest-ranked stocks are now considered candidates for the portfolio. However, before any final selections are made, each one undergoes a qualitative assessment. The goal of this review is to identify any disqualifying information that may have recently become available, such as M&A activity, legal or regulatory developments, or significant geopolitical events. The team also looks for any non-recurring items in a company’s income statement that may be temporarily inflating its earnings.
Stock Selection and Portfolio Optimization: The final step is to create a diversified portfolio of the highly ranked stocks that have passed the qualitative review. To do this, Ativo uses a proprietary optimizer that helps them maximize the adjusted Ativo Attractiveness Scores™ of the stocks in the portfolio while simultaneously reducing tracking error. Position sizes are typically close to equal weights, ensuring that the portfolio is not overly reliant on any single holding.
This four-step process is a testament to Ativo’s commitment to a disciplined, rules-based approach. By following this process, the firm is able to invest with objectivity, avoiding the emotional pitfalls that so often lead to poor investment decisions.
A World of Opportunity: Ativo's Diverse Investment Strategies
Ativo Capital Management offers a wide array of investment strategies, each designed to meet the specific needs and objectives of their diverse clientele. These strategies span the globe, from the developed markets of North America and Europe to the dynamic and rapidly growing economies of the emerging world. A common thread runs through all of them: a focus on undervalued companies that display above-average growth characteristics.
International Strategies:
Ativo International ADR / Ativo International ADR Concentrated: This all-cap portfolio invests primarily in undervalued American Depositary Receipts (ADRs) and other foreign companies traded on American exchanges.
Ativo International AC ex US: This all-cap strategy invests in undervalued companies domiciled in developed (non-US) and emerging countries. The portfolio has a minimum of 100 holdings.
Ativo International Developed: This all-cap portfolio focuses on undervalued companies in non-US developed countries.
Ativo International Emerging: This strategy invests in undervalued companies domiciled in emerging market countries. The portfolio has a minimum of 100 holdings.
Ativo International Small Cap: This strategy focuses on small, undervalued companies in non-US markets that display above-average growth characteristics. It also has a minimum of 100 holdings.
Ativo Global: This all-cap, all-country portfolio invests in undervalued companies from around the world. It has a minimum of 100 holdings.
Domestic Strategies:
Ativo Small Cap / Ativo Small Cap Concentrated: This strategy invests in undervalued, US-domiciled small companies. The diversified version has a minimum of 45 holdings, while the concentrated version has approximately 20.
Ativo Mid Cap / Ativo Mid Cap Concentrated: This portfolio focuses on undervalued, US-domiciled mid-sized companies. The diversified version has a minimum of 45 holdings, and the concentrated version has approximately 20.
Ativo Large Cap / Ativo Large Cap Concentrated: This strategy invests in undervalued, US-domiciled large companies, with a minimum of 30 holdings.
This comprehensive suite of strategies allows Ativo to offer its clients a wide range of investment solutions, from broad-based global exposure to more targeted investments in specific market segments.
Tailored Solutions for Discerning Investors: Products and Services
Ativo Capital Management provides its investment expertise through a variety of products and services, each tailored to the needs of its institutional and high-net-worth clients.
Separately Managed Accounts (SMAs): For clients who prefer a more personalized approach, Ativo offers SMAs. These accounts are managed according to one of the firm’s specific investment strategies, but they can also be customized to meet a client’s unique needs and constraints.
Model Portfolio Management for Unified Managed Accounts (UMAs): Ativo also provides model portfolios for UMA platforms. This allows financial advisors to offer their clients access to Ativo’s sophisticated investment strategies within a diversified and professionally managed UMA structure.
Private Funds: For qualified investors, Ativo manages two private funds: the Ativo International Equity Fund, LP and the Ativo International Small Cap Equity Fund, LP. These funds provide exclusive access to Ativo’s expertise in international and small-cap investing.
Strategic Alliances: The Power of Partnership
In today’s interconnected financial world, strategic partnerships are more important than ever. Ativo Capital Management has recognized this by forging a key alliance with SMArtX Advisory Solutions, a leading innovator in unified managed accounts (UMA) technology and the architect of the SMArtX turnkey asset management platform (TAMP).
Through this partnership, Ativo’s International ADR Select strategy is now available on the SMArtX UMA platform. This is a significant development, as it greatly expands the reach of Ativo’s investment expertise, making it accessible to a wider audience of financial advisors and their clients. For Ativo, this partnership is a powerful way to leverage the technology and distribution network of a leading TAMP provider. For SMArtX, the addition of Ativo’s highly regarded international strategy enhances the value and appeal of their platform. It is a classic win-win situation, and a testament to Ativo’s forward-thinking approach to business development.
A Commitment to Excellence: Awards and Recognition
While Ativo Capital Management may not be a firm that actively seeks the spotlight, its commitment to excellence has not gone unnoticed. In the first quarter of 2025, the firm received a significant accolade: both the Ativo Small Cap Core and Ativo Mid Cap Core portfolios earned a prestigious six-star rating from Zephyr PSN Top Guns.
Zephyr PSN is a highly respected investment manager database and a leading provider of investment analysis software. Its “Top Guns” ratings are awarded to the best-performing strategies in their respective categories. A six-star rating is the highest possible honor, reserved for those strategies that have demonstrated exceptional performance and risk-adjusted returns. This recognition is a powerful external validation of the quality and effectiveness of Ativo’s investment process and a testament to the skill and dedication of its team.
The People Behind the Process: A Team of Experts
For all its sophisticated models and quantitative tools, Ativo Capital Management has never lost sight of the fact that its greatest asset is its people. The firm’s leadership team is comprised of seasoned professionals with a deep understanding of the financial markets and an unwavering commitment to serving their clients with integrity.
At the heart of the team is Ricardo Bekin, the firm’s founder, CEO, and CIO. With over 25 years of experience in financial and investment management, Bekin is the driving force behind Ativo’s success. His vision and leadership have shaped the firm’s culture and its investment philosophy, and he continues to oversee all of the firm’s investment management activities.
But the strength of the Ativo team goes beyond its founder. The firm is proud of its remarkably low turnover rates, a rare feat in an industry known for its high-pressure environment and frequent personnel changes. This stability has allowed the firm to cultivate a strong and cohesive culture, one that is focused on collaboration, intellectual curiosity, and a single-minded dedication to achieving the best possible results for its clients.
The team is small, with approximately nine employees, but what it may lack in size, it more than makes up for in expertise. The professionals at Ativo are highly educated, with many holding advanced degrees and prestigious industry certifications. They are leaders in their respective fields, and they all share an unwavering commitment to excellence.
The Enduring Value of a Disciplined Approach
In a world that is often captivated by the latest investment fads and the promise of quick riches, Ativo Capital Management stands as a powerful reminder of the enduring value of a disciplined, rational, and long-term approach to investing. With a legacy of quantitative innovation that spans more than half a century, a deeply ingrained investment philosophy grounded in sound financial theory, and a meticulous and repeatable investment process, Ativo has proven its ability to navigate the complexities of the global markets and to deliver consistent, risk-adjusted returns for its clients.
For institutional investors, financial advisors, and high-net-worth individuals seeking a partner that they can trust, a partner that prioritizes their interests above all else, and a partner that has the expertise and the discipline to help them achieve their long-term financial goals, Ativo Capital Management is a compelling choice. In the ever-changing world of investment management, Ativo is a beacon of stability, a testament to the power of quantitative rigor, and a firm that truly knows how to “Choose Wisely®.”
Ativo Capital Management Leadership & Teams
Ricardo Bekin – Founder, Chief Executive Officer & Chief Investment Officer
Ram G. Gandikota – Deputy Chief Investment Officer & Director of Research
Adan Galvan – Chief Operating Officer
Kiat Tang – Director of Information Technology
Shirley Huang – Chief Compliance Officer / Director of Finance
Michael S. Brooks – Director of Marketing & Investor Relations
Headquarters: 120 N. LaSalle Street, Suite 1160, Chicago, IL, 60602 USA
Phone: 312-263-7600
Number of employees: 2-10
Website: www.ativocapital.com