4th QUARTER 2016
SMALL CAP GROWTH STRATEGY
COMMENTARY
MARKET OVERVIEW
“Small cap stocks exploded during the fourth quarter and delivered an amazing return.” This statement is true…if one
is talking about small cap value stocks. Without a doubt, the entire domestic equity complex was given a nice postelection boost (reasons to be discussed later), but when looking at the quarter in its entirety, stock returns were good, but
not great depending on sector positioning. We consider the absolute return of the Russell 2000 Growth Index of +3.6%
to be quite acceptable. And the +6.6% performance from the Cortina Small Cap Growth Strategy is competitive relative
performance, but the +14.0% return delivered by the Russell 2000 Value Index was simply remarkable! In fact, when
looking at the year as a whole, small cap value enjoyed its greatest triumph over small cap growth since 2001. Sector
exposure is the principal explanation for this performance disparity and the extreme one-way performance of just a single
sector or two, exacerbated by short-term traders’ appetite for tactical allocation using traditional as well as synthetic
ETFs, which has helped make consistent outperformance over a number of consecutive periods such a challenge for
active managers. A few seasons ago it was the market’s insatiable demand for biotech stocks which helped growth
outshine value, but in 2016, it was the strong performance rebound in community bank shares which defined much of
the market’s performance. Indices with high exposure to this sector, such as the Russell 2000 Small Cap Value,
appreciated greatly while those with low exposures (eg. Russell 2000 Growth Index) were far behind.
PERFORMANCE
Cortina Small Cap Growth (Gross)
Cortina Small Cap Growth (Net) Russell 2000 Growth Index
4Q16
6.56%
6.33%
3.57%
YTD
23.90%
22.86%
11.32%
3 Year
2.70%
1.87%
5.05%
5 Year
11.93%
11.08%
13.74%
10 Year
8.95%
8.11%
7.76%
Inception*
9.56%
8.70%
8.25%
*Annualized return since June 30, 2004
In their post-mortem analysis of 2016, most pundits will call it a year featured by uncertainty, namely by the underpredicted outcomes of the Brexit and U.S. Presidential elections. While the actual outcomes of both were less than oddson favorites, we are hesitant to wave the flag of uncertainty because we think each and every single calendar year
becomes uncertain in its own right. It’s the reason why the most common prediction for stock returns entering any single
year seems to be the +5-10% return forecast, and an analysis of our primary benchmark reveals that this mark has been
met in just three years out of 37. Uncertainty is one of the main ground rules of equity investing and for those unwilling
to accept uncertainty, equity investing, particularly using small caps, is probably not for them. It is because the market
is uncertain and unpredictable that tactical asset allocation has proven to be a fool’s errand. Rather it is steadfast
commitment to a specific investment philosophy which tends to be tenets of those investment managers who achieve
longevity. Uncertainty creates volatility and much of the investment community has developed an extreme dislike for
volatility, but it is often volatility which creates tremendous opportunity. And when it is treated in an opportunistic yet
disciplined fashion, it can really be a tool which greatly enhances investment performance.
We have implemented a consistent philosophy and process throughout our history at Cortina. We have learned along
the way and continuously strive to enhance our execution, but the core tenets and positioning biases have remained
constant:

We believe small companies are in an advantageous position to be leading innovators and disruptors of industries
as they tend not to be faced with the conflicting tasks of progressing with the new while protecting the
established.
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
We believe the farther down the market cap spectrum one is willing to invest, the more value there is to be added
through fundamental research. Declining commission rates and management fees lead more and more brokerage
firms and investment managers to ignore small and micro caps leaving the asset class increasingly less efficient.

We believe to be considered a quality business a company should have a fully-funded business plan, competitive
products and management teams who are aligned with shareholders. These traits occur irrespective of market
cap or stock price.

We believe that in order to reduce risk, a company should be generating revenue from its primary value driver
before being considered for investment. As a result, the strategy has consistently avoided clinical stage
biotechnology and pharma stocks.

We believe a portfolio should be built from the bottom up, one stock at a time, with sector and industry weights
being a function of individual opportunities subject to risk management parameters.
Our constant adherence to philosophy and process has led to consistent aggregate portfolio construction over time.

We have consistently had a weighted average market cap meaningfully below that of the Russell 2000 Growth
Index (our benchmark) as well as the vast majority of our peers.

Our portfolio has consistently had a higher projected Long Term EPS Growth Rate than that of the benchmark.

Our focus on fully-funded businesses and strong balance sheets has led to a lower weighted average Debt /
Equity than that of the benchmark.

We have been consistently willing to pay a modest premium on near-term sales and earnings multiples to invest
in the businesses which we believe to have the brightest intermediate to long-term prospects.
A consistent philosophy and process does not necessarily lead to consistent relative performance, as in the short run,
styles come in and out of favor. From March 31, 2014 to March 31, 2015, each of the core tenets of our strategy were
severely out of favor. Over that period of time, the slowest growth quintile of the Russell 2000 Growth Index returned
21.9% while the fastest growth quintile was up a mere 4.2%. The largest market cap quintile within the benchmark was
up 17.7% while the smallest quintile was down 2.7%. Higher valued stocks, those in the lowest free cash flow yield
quintile, returned 8.8% while those in the highest free cash flow yield quintile were up 18.3%. To top it off,
biotechnology and pharmaceutical stocks returned 39% and 39.7% respectively. Combined, the two industries made up
12.7% of the benchmark weight yet accounted for 39.6% of benchmark returns. This was a “perfect storm” environment
in which our strategy suffered mightily.
While learning from this period and making enhancements to the execution of our research process, the core tenets
remain the same. Since March 31, 2015, the “perfect (negative) storm” environment has abated, and our strategy has
outperformed in six out of seven quarters. This is not to say that stylistically everything has become a tailwind, but it is
much improved. Focusing just on calendar 2016 returns, the story remained the same. The highest growth companies
remained out of favor as did the lowest market cap companies. High cash flow yield and low P/E ratios remained
desirable factors. So while these all remained stylistic headwinds for Cortina Small Cap Growth, they were not to the
extreme degree of the period detailed above. Also aiding performance was lousy performance from biotechnology and
pharmaceutical stocks.
Analyzing 2016 performance from a sector standpoint, positioning in a few sectors contributed to our successful return.
While it is nearly (we believe completely) impossible to isolate individual factors, the following helps frame the year.

Our strategy returned 23.9% before fees, compared to 11.3% for the Russell 2000 Growth Index, a difference of
12.6%.

Based on attribution analysis, 10.4% of the 12.6% delta came from the Health Care sector.
o Overall our Health Care stocks returned 28% on average, an indication that we did more than just avoid poor
performing biotechs. In fact, seven of the portfolio’s top 15 contributors for the year were from the sector.
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
The Technology and Telecommunications Services sectors combined accounted for 441 basis points of positive
relative performance.

The Energy sector accounted for 159 basis points of positive attribution effect, almost equally split between
allocation and security selection.

Over the course of the year, eight portfolio holdings were acquired, accounting for 442 basis points of absolute
performance – inclusive of gains both before and after the announced take outs.

Partially offsetting these positives, the Consumer Discretionary, Consumer Staples and Materials sectors had
negative attribution effects of 1.3%, 0.4% and 1.8% respectively.
OUTLOOK & POSITIONING
As we look to 2017, we remind our readers that we face the same uncertainty that we face in any given year. We will
continue to execute our strategy in accordance with our stated philosophy, and our stylistic attributes are likely to remain
very similar – i.e. we will not attempt to skew our portfolio to match a macro view that may or may not ultimately occur.
That being said, we can envision an improved economic backdrop which could prove constructive for our style of
investing over the course of the year. Given the historic nature of the November election, most discussions on the year
ahead begin and end with President Trump and what he may or may not do. When it comes to specific policies and
topics, his Presidency is no doubt a wildcard, but at present the market appears comfortable with where we are likely
heading. The following figure is reprinted from a Strategas Research Partners report published before the election
regarding directional policy prescriptions and what they might mean for the economy.
There are four policy levers that the government can
pull to impact the economy – Monetary, Fiscal,
Regulatory and Trade. Based on what we know so
far, President Trump can be viewed as overall
bullish for equities and bearish for bonds.
Monetary
Candidate Trump pulled no punches during the
campaign in deriding the FOMC and its near zero
interest rate policy. Just how much influence a
president has over monetary policy is debatable, but
it is likely that the next appointee to head the FOMC
will be more hawkish than Chairperson Yellen. A
more pro-growth fiscal and regulatory environment
Source: Strategas Research Partners
could also help take the responsibility of economic recovery off the back of the FOMC
allowing for a more normalized rate environment. Rising rates would not be good for every stock, but historically rising
rates coincident with a growing economy is constructive for equities. Furthermore, empirically small cap equities
perform especially well in a rising rate environment, particularly one with a steepening yield curve. In a January 3rd
piece, Strategas Research Partners examined the last five periods when the spread between 2 and 10 year notes was on
a sustained rise. Over those five instances which date back to 1990, the Russell 2000 Index averaged a 330 basis point
annualized performance advantage over the S&P 500 Index. And the performance differential was particularly
rewarding during the last two such steepening instances: +800 bps during 2013’s taper tantrum and +1,010 bps during
the brief steepening in 1H 2015.
Fiscal
For years we have been hearing politicians on both sides of the aisle calling for increased spending on infrastructure, yet
little has actually been done. Candidate Trump was no different, referring to our airports as “Third World” and vowing
to make infrastructure spending a priority. With the passage of the landmark highway bill (the FAST Act) signed by
President Obama in December of 2015, the wheels are already in motion so to speak. With a single party controlling
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the House, Senate and Oval Office the pathway to further fiscal policy initiatives is smoother than it has been in years.
In addition, the defense industry also stands alongside infrastructure to benefit from increased fiscal involvement.
Regulatory
A major part of President-Elect Trump’s candidacy was rolling back regulation that in his words “costs our economy $2
trillion dollars a year and reduces household wealth by almost $15,000.” The early days of his Presidency are likely to
include cancellation of existing executive orders that he views as overreaching and issuing new executive orders that
reduce the regulatory burden on businesses. He has already named investor Carl Icahn as a special advisor on regulatory
reform. Major regulatory achievements of the Obama Administration including Dodd Frank and the ACA are likely to
be rolled back and/or repealed. We are not of the belief that all regulation is bad regulation and rolling back regulation
and an overly lax regulatory environment can certainly lead to bigger problems down the road. In the near to intermediate
term, however, a lighter regulatory hand would be viewed favorably by businesses and investors alike. Most importantly,
business optimism, confidence and enthusiasm could unleash an investment cycle held at bay since the recession.
Trade
Trade is a definite wildcard, and the prospects of trade wars and tariffs has retailers, auto makers and plenty of other
businesses concerned. The uncertainty created here is definitely bearish for sentiment, and the imposition of tariffs
would be bearish for profitability at many companies. Overall this is bad for equities. Tariffs are also inflationary in
nature and equities typically like inflation, provided it’s not too high.
While the likely direction of policy is on the whole bullish for equities and bearish for bonds, the uncertainty created by
the changing administration cannot be ignored. In the very near term, we will hear companies report fourth quarter
results and provide guidance for 2017. Uncertainty in the market place may have created a pause in purchasing during
the fourth quarter and it may lead management teams to anticipate further disruptions when setting guidance. This
uncertainty demands that we remain vigilant on valuations and maintain our wish lists of companies to invest in should
the right price present itself. After all, as mentioned at the start of this piece, volatility can be used as an effective tool
in portfolio construction. The volatility in stocks in the first two months of 2016 proved to be very lucrative for the
strategy, given our preparedness to buy.
Appreciating that the economy could quite possibly be in an elevated state of repair and ripe for a return to “animal
spirits,” just what does it mean for the market? Understanding this question requires one to look at the signs of whether
there will be a propensity for dollars to come into the market, or exit the market. We attempt to forecast this based on
the primary clues we have: valuation and sentiment. On the valuation front, small cap stocks are not particularly cheap,
especially following fifteen consecutive up sessions for the Russell 2000 in and around the election. According to
Barclays, the strong performance in 2016 left small caps sitting at 13.0x EV/EBITDA, their highest level since 2004.
Does that mean that stocks are sure to fall? Of course not. For most of 2016, earnings were down and this helped
contribute to the rise in arithmetic valuation figures. But given the commentary above, it is highly probable that earnings
will be on the rise, something worth paying up for in our opinion.
In addition, much like the commentary made one year ago, small caps remain at a discount compared to the large caps.
It is widely anticipated that the cards to be dealt to smaller, domestic companies (regulation, stimulus, protectionism,
taxes) will be more beneficial relative to large corporations than at any time since the recession. And this should
engender business confidence which should/could unleash those animal spirits mentioned above. The latest results
(December) from the National Federation of Independent Business (NFIB) survey jumped for the seventh consecutive
month to 105.8, placing the survey at its highest level in twelve years. Interestingly, the survey asks what is “the single
most important problem” that the participants are facing, and the two leading responses were taxes and government
requirements both of which we discussed above as most likely easing.
Surprisingly, if fund flows are a good gauge of sentiment, bonds remained en vogue throughout 2016, in spite of the
tremendous returns from equities. According to data provided by Credit Suisse (through year end), U.S. equity funds
experienced a second consecutive year of outflows in excess of $150 bil. This compares with a $141 bil inflow in U.S.
Taxable and Muni bonds (although this followed an outflow in 2015). Now recall much of the year witnessed interest
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rates which continued to fall, helping bond prices. But since summer, rates are up and this could start to cause some
shock to investors as they compare performance of their bonds relative to equities over the course of the year. Back to
the Credit Suisse fund flow data, the recent results of small cap equities in particular is alarming. This asset class has
not experienced a cumulative inflow since 2013!
If money is not flowing into the market through funds, how is the market performing so well these past few years? Talk
to any investment manager, and you’ll probably get the same answer. While the above data on flows does capture
passive flows, it excludes ETFs which are consuming a bigger portion of investable assets each year. Credit Suisse’s
chart below really illustrates the pain in the side of active managers as it’s easy to see who’s been the source of funds.
Source: Credit Suisse
The key question for the investment community revolves around the permanency of this trend. Is passive investing,
which features low costs and minimal risk (if “risk” is defined as the standard deviation from an index benchmark) a
multi-year trend the likes of which have been seen come and go through the stock market’s history? Or is classic active
management the buggy whip of investment management? We do not have the answer (although we certainly have a
rooting interest), but we do know what the solution for a recovery in active management popularity is. That, of course,
is sustained outperformance versus the index, in excess of fees.
We believe that one cannot beat the benchmark if it tries to be the benchmark. The Credit Suisse report goes on to
discuss active share which generally describes how a fund differs from its benchmark. The Cortina Small Cap Growth
Strategy is and always has built portfolios with high active share. Credit Suisse concludes that “an active share of 90
percent or more indicates a manager who is truly picking stocks.” For better or worse, Cortina has consistently operated
with a high active share, averaging 92 over the last five years (data available upon request). Now it’s a bit challenging
to proudly carry the flag for active management when our strategy had the poor performance it did in parts of 2014 and
2015, but we feel the severity of the underperformance was highly related to a temporary market anomaly which exposed
and exploited our high active share. This relative performance bruise was concentrated in the four quarters between
Q2’14 and Q1’15. Outside of those four quarters, the strategy has outperformed in 15 of the past 20 quarters. We cannot
eliminate those tough quarters from our record, but we should try to make sense of them to determine if there is something
in our process that needs to change.
Analysis of the changing trends in asset flows and corresponding market returns line up coincidentally well with the
availability of “free money” courtesy of coordinated central bank easing. Widely available capital encouraged
companies to recapitalize their financial structures by taking down debt and using the proceeds to repurchase shares
and/or pay dividends. This is fair and legal play, and if we were CFOs, we would strongly consider the same action.
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But activities such as these do not do much for the operating
competitiveness of these companies and operating competitiveness
is precisely what our research activity targets. Our companies
typically do not engage in buybacks because they are using their
capital to improve their business fortunes. This chart to the right
also from Credit Suisse reveals the strong correlation between share
repurchases and stock index performance since the Federal Reserve
easing cycle commenced after the recession.
As interest rates rise, this window appears to be closing as can be
Source: Credit Suisse
seen by the below chart provided by Strategas Research Partners.
Source: Credit Suisse
When it does, we believe good corporate fundamentals should
differentiate the winners and the losers in the stock market because in the long run it always has. And that is why we
are not shedding too heavy of a tear as interest rates rise. We think this extended quote from Jason Trennert at Strategas
Research best sums up what the market may be on the precipice of.
“There is little value in stock picking when nearly every company can use financial engineering, rather than long‐term investments in their own businesses, to drive EPS growth. Why take a risk on a big capital spending project when investors are rewarding companies who issue debt to buy back stock more handsomely?... Inflationary expectations are rising as investors discount the prospects for easier regulation on financials with vast reservoirs of excess reserves. This should benefit the active manager willing to take risk rather than clip coupons.” Jason Trennert, Strategas Research Partners
Source: Strategas Research Partners
If there is a television in your institutional manager’s office or trading room, there is a sky high probability it is tuned to
CNBC every day (or every day that the NCAA Tournament is not ongoing). Cortina is no different, we have televisions
and while they spend more time off or on mute than on, two observations are worth mentioning.
The first observation is the tremendous level of attention CNBC is paying to achieving the milestone of the Dow Jones
Industrial Average reaching $20,000. It seems like this milestone has been discussed for three weeks, complete with a
constant “metric” visual. Our opinion is summed up as SO WHAT? Nothing will change once it is achieved.
The other observation, is that while this commentary is being authored, the post-market program titled Fast Money is
celebrating its 10yr anniversary. The program fancies itself as “Faster than a New York minute” and the highlight of
the program is its daily trade…which is the one trade each host recommends viewers put on the following morning given
the options activity which occurred the previous day and reflecting what is “implied” by that trading behavior. Here at
Cortina, this approach does not really compute. Maybe it reflects an old-fashioned investment process, but we don’t
understand basing investment decisions on the activity made by just a handful of other large investors because what does
it really tell you about where a company is heading?
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Is it a coincidence that in the ten years this program has been aired the attitude between active and passive management
has changed? The Credit Suisse picture displays that the relative flows toward passive management shares a birthday
with the Fast Money program reflecting the public’s appetite for short-term trading relative to long-term investing. In
its comprehensive report on Passive and Active Investing authored by Credit Suisse, they help bridge this relationship.
“Institutions that use ETFs to speculate, hedge, and arbitrage are the most active traders of ETFs. Individuals who trade
frequently are the next largest segment.”
Additionally, an analysis of the Fast Money staff and panelists is entertaining because most participants have inherited
a moniker which is a reflection of their investment style. Examples include the following:
“The Negotiator”
“The Pit Boss”
“The Liquidator”
”The Ambassador”
“The Strategist”
“Dr. Evil”
The following names are not currently present among the on-air personality:
“The Investor”
“The Value Creator”
“Mr. Long Term”
“Dr. Discipline”
Maybe when these characters appear, we will start to turn up the volume. But for now, CNBC program Mad Money
where fundamentals are discussed, managers are interviewed and valuations receive attention is starting…time to turn
up the volume.
TAKE AWAYS
 Following the election, equity market performance was strong. Small caps did very well, but it was the value-tilted
indices which had the strongest performance, driven by community banks. The Cortina Small Cap Growth Strategy
outperformed its benchmark by 299 basis points with a return of +6.56%.
 Looking ahead to 2017 and beyond, the incoming administration brings rhetoric of relaxing the constraints on the
private sector. Regulation, tax policy and protectionism are thematic backdrops which should assist American
business and is especially conducive for small, domestically-focused companies.
 In addition to fiscal policy actions expected out of Washington, rhetoric suggests that the days of an accommodative
monetary policy are numbered. Anticipation of this has caused interest rates to rise. For several years, easy money
has caused many companies to financially engineer earnings rather than make strategic investments in their
businesses. As rates rise, these decisions may have to be re-evaluated.
 The market trend toward passive investing continued through 2016 and may persist until active managers as a group
display a capability for sustained outperformance.
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4th Quarter 2016 Commentary
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│ SMALL CAP GROWTH STRATEGY
TOP 5 CONTRIBUTING STOCKS1,2
Security
Spirit Airlines Inc
BofI Holding Inc
Saia Inc
Heska Corp
AtriCure Inc
TOP 5 DETRACTING STOCKS1,2
Weight Contribution
1.43%
0.46%
0.42%
1.36%
0.41%
0.92%
0.39%
1.31%
0.35%
1.58%
Security
Brightcove
Amplify Snack Brands Inc
Novadaq Technologies Inc
HMS Holdings Corp
Entellus Medical Inc
Weight Contribution
1.12%
-0.58%
0.52%
-0.41%
0.57%
-0.32%
1.11%
-0.24%
1.03%
-0.20%
CONTRIBUTING
Spirit Airlines Inc
Industrials
Contrary to what many might expect, the airline stocks are positively responding to the rise in interest. While fuel is a
significant expense for the airlines, when oil prices are higher, the operations for the industry tend to improve. This is because
when the cost of fuel is low, airlines tend to convince themselves that they can aggressively grow capacity and/or reduce fare
prices. This backdrop caused bad behavior and stock prices in 2015 and part of 2016. As oil prices have risen, airlines are
starting to resurrect capacity discipline and as a result, fares are starting to climb. Spirit Airlines is a low cost carrier and its
aggressive capacity expansion plans have not really changed along the way.
BofI Holding Inc
Financials
Assisted by the constructive move in interest rates, it appears as though the multi-year bearish story on BofI, regarding its
internal controls and compliance systems, is fading to black. The stock is recovering much of its lost earnings multiple and
has more than doubled off its lows seen in February. Like other banks, the financial model at BofI enjoys a steeper yield curve.
Saia Inc
Industrials
Saia is a less-than-truckload company which is benefitting from a number of catalysts. First of all, with thoughts of an
improved domestic economy, trucking stocks across the board have been appreciating in anticipation of stronger earnings. In
addition, LTL companies such as Saia face some of the highest corporate tax rates in the country so any relief in corporate
rates have a meaningful impact on these companies. Finally, Saia recently revealed a corporate initiative to expand its
operations into the Northeastern states, expanding the market it addresses by an additional $7B.
DETRACTING
Brightcove
Technology
A slightly more conservative commentary from management led to underperformance for this video software marketing
company during the quarter. While Brightcove continued its pattern of beating guidance and raising forward expectations,
management also reminded the market that as it heads into its biggest bookings period of the year, it is not a lay-up to meet its
growth targets. We still believe the company is well positioned for solid growth in 2017, as its salesforce has been successfully
retooled and its product set has been expanded to target not only media companies, but also enterprises who want to add video
to their digital marketing strategy. In addition, at present, we find the shares to be priced extremely inexpensively.
Amplify Snack Brands Inc
Consumer Staples
Amplify is a “Better-For-You” snack food company that owns several brands including Skinny Pop, Paqui tortilla chips and
Oatmega. Third quarter results were mixed, and fourth quarter guidance was negatively impacted by several factors including
higher promotional spending in a competitive market. Although we continue to believe the company has a solid portfolio of
brands, several moving parts including a recent debt-laden acquisition caused increased consternation in the name, and we
sold our position.
Novadaq Technologies Inc
Health Care
Novadaq develops and sells imaging solutions and tissue product for use in surgical and wound care applications. The
company reported inline results for the third quarter, but on the earnings call management discussed a change in sales approach
and urged investors to focus on their recurring revenue growth and not their overall revenue growth. This discussion raised
two concerns in our minds. First, 2017 revenue estimates were likely too high and management was already laying the
groundwork for that. Second, customers weren’t seeing the value in their products that we expected, thus necessitating the
new selling model. Accordingly we exited our position in November. Our concerns were confirmed in early January when
the company released disappointing preliminary results for the fourth quarter and provided 2017 guidance that was well below
expectations.
1 Positions identified do not represent all the securities held, purchased or sold. Calculation methodology and a complete list of 2
positions and contributions for the quarter are available upon request. Past performance does not guarantee future results. Page 8 of 10
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PERFORMANCE DISCLOSURES
│ SMALL CAP GROWTH STRATEGY
1. Cortina Asset Management, LLC (“Cortina”) is an independent investment management firm established in 2004.
Cortina manages small cap equity assets in the U.S. The firm has no subsidiaries or related asset management firms.
2. The Cortina Small Cap Growth composite numbers consist of all fully discretionary, fee-paying accounts greater
than $1 million invested in our Small Cap Growth Strategy. This composite was created in June of 2004. Prior to
October 1, 2009 the minimum threshold for composite inclusion was $5 million. The decrease in account minimum
explains the significant increase in the number of accounts in the Small Cap Growth composite for 2009.
3. Returns are calculated on a total return basis, including all dividends and interest, realized and unrealized gains or
losses, and are net of all brokerage commissions, execution costs and without provision for federal and state income
taxes. Securities transactions are accounted for on trade date. Cash and equivalents are included in performance
returns. Composite returns are calculated daily. Quarterly returns are calculated by geometrically linking the daily
returns for each day in the quarter and annual returns are calculated by geometrically linking the daily returns for
each day in the year. All returns presented are calculated using U.S. Dollars.
4. Effective October 1, 2005, we remove portfolios from composites when significant cash flows occur. Significant
cash flows are defined as a flow greater than 5% of the portfolio’s beginning market value. The portfolios are subject
to inclusion back into the composite at the beginning of the next full quarter the portfolio meets the composite
definition. Additional information regarding the treatment of significant cash flows is available upon request.
5. Returns are presented before management and custodial fees and include dividends and interest, realized and
unrealized gains or losses, and transaction costs. A client’s returns will be reduced by the management fees and other
expenses it may incur in the management of the account. For example, an actively managed account of $20 million
with an annual rate of return of 10% compounded over a 10-year period that was charged a management fee of 1%,
would achieve a net-of-fee return of 136.7%; compared to a gross-of-fee return of 159.4% based on the same
assumptions.
6. The benchmark for the Cortina Small Cap Growth Composite is the Russell 2000 Growth Index. The Russell 2000
Growth Index measures the performance of the small-cap growth segment of the U.S. equity universe. It includes
those Russell 2000 companies with higher price-to-value ratios and higher forecasted growth values. The Russell
2000 Growth Index is constructed to provide a comprehensive and unbiased barometer for the small-cap growth
segment. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance and
characteristics of the true small-cap opportunity set and that the represented companies continue to reflect growth
characteristics. Benchmark returns are not covered by the report of independent verifiers.
7. The Russell 2000 Value Index measures the performance of small cap value segment of the U.S. equity universe. It
includes those Russell 2000 Index companies with lower price-to-book ratios and lower forecasted growth values.
The Russell 2000 Value Index is constructed to provide a comprehensive and unbiased barometer for the small-cap
value segment. The Index is completely reconstituted annually to ensure larger stocks do not distort the performance
and characteristics of the true small-cap opportunity set and that the represented companies continue to reflect value
characteristics. The Russell 2000 Index measures the performance of the small-cap segment of the U.S. equity
®
universe. The Russell 2000 Index is a subset of the Russell 3000 Index representing approximately 10% of the total
market capitalization of that index. It includes approximately 2000 of the smallest securities based on a combination
of their market cap and current index membership. The Russell 2000 Index is constructed to provide a comprehensive
and unbiased small-cap barometer and is completely reconstituted annually to ensure larger stocks do not distort the
performance and characteristics of the true small-cap opportunity set. The S&P 500 Index is an index of 500 U.S.
stocks chosen for market size, liquidity, and industry group representation and is a widely used U.S. equity
benchmark. Benchmark returns are not covered by the report of independent verifiers.
8. The Cortina Small Cap Growth strategy typically owns between 90-120 stocks. The Cortina Small Cap growth
strategy may or may not invest in industries and sectors in the same weightings as the Russell 2000 Growth Index.
The Cortina Small Cap Growth strategy includes stocks not included in the Russell 2000 Growth Index.
Page 9 of 10
4th Quarter 2016 Commentary
CORTINA
ASSET MANAGEMENT
│ SMALL CAP GROWTH STRATEGY
9. The dispersion of annual returns is measured by the standard deviation across asset-weighted portfolio returns
represented within the composite for the full year. The number of accounts in the composite are as of period end.
Dispersion is not shown for periods less than a year or when there are five or fewer accounts in the composite for
the entire year.
10. Cortina Asset Management claims compliance with the Global Investment Performance Standards (GIPS®) and has
prepared and presented this report in compliance with the GIPS standards. Cortina has been independently verified
for the periods 7/1/04-12/31/16. Verification assesses whether (1) the firm has complied with all the composite
construction requirements of the GIPS standards on a firm-wide basis and (2) the firm’s policies and procedures are
designed to calculate and present performance in compliance with the GIPS standards. The Cortina Small Cap
Growth composite has been examined for the periods 7/1/04-12/31/16. The verification and performance
examination reports are available upon request.
11. A complete list and description of composites and additional information regarding policies for valuing portfolios,
calculating performance, and preparing compliant presentations are available upon request
12. Past investment results are not necessarily indicative of future investment results.
CORTINA ASSET MANAGEMENT, LLC
Small Cap Growth Strategy as of 12/31/2016
13.
Total Return Benchmark Composite Accounts Composite
3-Year Annualized Standard Deviation Composite Assets at End Percentage of
at End of Period Dispersion (%)
Composite
Benchmark
of Period (millions)
Firm's Assets
Gross of Fees
Return
Year
2004*
11.41%
8.16%
2005
6.01%
4.15%
2006
12.47%
13.35%
2007
12.60%
7.05%
2008
-44.90%
-38.54%
2009
52.37%
34.47%
2010
37.43%
29.09%
2011
3.26%
-2.91%
2012
7.71%
14.59%
2013
50.58%
43.30%
2014
-7.64%
5.60%
2015
-5.34%
-1.38%
2016
23.90%
11.32%
*Last 6 months performance in 2004
6
12
32
8
5
10
9
9
13
20
28
24
12
n/a
0.23
0.44
0.49
n/a
0.11
0.14
0.01
0.01
n/a
0.04
0.05
0.05
n/a
n/a
n/a
n/a
n/a
n/a
n/a
25.30%
22.82%
18.69%
16.08%
14.43%
16.44%
n/a
n/a
n/a
n/a
n/a
n/a
n/a
24.31%
20.72%
17.27%
13.82%
14.95%
16.67%
66.6
246.0
845.9
399.7
198.5
333.3
247.9
236.5
428.9
748.2
876.5
613.1
478.3
28.7%
42.2%
50.5%
27.1%
19.6%
24.4%
13.1%
12.6%
19.9%
26.4%
37.3%
26.6%
19.3%
Total Firm Assets at End
of Period (USD millions)
232.1
583.1
1,676.4
1,473.5
1,013.3
1,368.9
1,890.1
1,871.7
2,157.8
2,830.3
2,349.5
2,308.5
2,481.5
Other Disclosures:
1. The data provided about the portfolio characteristics relate to a representative account’s portfolio holdings as of
12/31/16. While we believe the data accurately reflect the investment process, the holdings and portfolio
characteristics will change from time to time.
2. This presentation includes stock profiles and other information about portfolio holdings. Information about portfolio
holdings is as of 12/31/16 and will change without notice. It is not intended to represent or predict portfolio
investment performance or as a recommendation of any individual security. The specific securities identified do not
represent all the securities purchased for accounts and you should not assume these securities are or were profitable.
For a complete copy of all investment recommendations made by Cortina within the past year, please contact Lori
Hoch at 414-225-7365.
3. Additional information about Cortina is contained in the firm’s Form ADV. Cortina will supply a copy of its Form
ADV to any prospective client upon request.
4. Management fee schedule:
0-$25 million
100 bps
Next $25 million
90 bps
On balance
80 bps
Page 10 of 10
4th Quarter 2016 Commentary