This article was originally published on Citywire by Olivia Bybel on June 23, 2025.
The MSCI World Small Cap Index contains more than 4,100 companies across 23 developed markets, nearly three times as many constituents as the MSCI World Index.
How can any investor make sense of such a sprawling, heterogeneous universe? For Greg Dean, managing partner at Langdon Equity Partners, the answer is simple: focus on the people, not the numbers.
‘We don’t start with the business - we start with the team.What we think makes a great small-cap investment is a proven and stable management team, in a business that ideally generates 10-15% cash flow per share growth, is not too cyclical, and is fundamentally undervalued,’ he said.
That approach is at the core of the Langdon Global Smaller Companies fund, which launched a Ucits version earlier this year.
Dean founded Langdon, along with the strategy, after departing his previous firm, Cambridge Global Asset Management, to escape the bureaucracy of a larger structure.
He ran a similar global small cap strategy at his previous firm before starting Langdon.
‘We wanted to build a forever home,’ he said of the boutique, which was launched in partnership with Pinnacle Investment Management.
Global approach to small caps
While many small-cap strategies are regional, Dean and his team are resolutely global, investing only in developed markets but without any regional or benchmark constraints.
‘We’ve always wanted to have the broadest array of homogeneous opportunities. If the ninth best idea in France isn’t as good as the best idea in Sweden, we want the flexibility to go with the better one.’
This global mindset comes with logistical costs.
Langdon’s team of five covers 23 developed countries, with each member responsible for a region (US, UK, Europe, Canada and Asia Pacific) and a sector (consumer, industrials, financials or software).
Dean himself spent 140 days outside the country last year, including a two-month stint in France and seven weeks visiting seven different countries.
‘We want to be a global investor that’s actually global. A lot of portfolios are labelled “global” but end up being 84% US. That’s not what we do.’
The team met 300 to 400 companies last year, roughly equivalent to meeting every S&P 500 constituent, but made just seven investments.
‘You could call it nuts, but we’re building a long term knowledge base. Sometimes you meet with a company just to validate what the competition is saying.
‘You’re looking for consistency, and you’re also trying to eliminate variables, even things like bad translation. In Japan, for example, we use our own translator to standardise meetings.’
The result is a concentrated portfolio, currently between 25and 40 holdings, reflecting Langdon’s decision to increase its minimum position size from 1-2% following insights from behavioural analytics software.
‘The 1% positions just weren’t contributing much to long term returns,’ Dean said.
The goal now is one or two new ideas per analyst per year.
Management over metrics
Langdon’s team is indifferent to the traditional small-cap investor playbook of screening for value or momentum signals.
‘We don’t screen on outputs like interest growth or valuation returns. That stuff is easy. It doesn’t tell you anything about who runs the business.’
Instead, management quality drives every aspect of the investment process, from initial contact to due diligence, and from thesis building to eventual investment. ‘If the team passes the test, we’ll spend a lot of time on the business. But if it doesn’t, we’re done. Opportunity cost is too high.’
Before allocating time to a new investment, team members must convince a colleague it’s worth pursuing. ‘Usually, if you can’t convince your colleague, you shouldn’t be able to convince yourself.’
Langdon’s bar for investing is a 15% net hurdle rate, roughly doubling capital every five years, and they do not underwrite any multiple expansion. That keeps the emphasis on underlying business performance. Hold periods range from one year to as long as 15, with exits driven by fundamentals.
‘We’re not in the prediction business. We’re in the observation business. That means figuring out what management believes is true, and then validating it independently through customers, competitors, even employee reviews.’
The emphasis on people also supports resilience. During last year’s volatility, when the market was down around 10%, Langdon’s portfolio was down just 1-2%.
‘We avoid leverage. We stress test every holding before we invest. We try to kill the company in our analysis. If it’s easy to kill, it doesn’t get through.’
This bottom up, people first focus has generated what Dean calls ‘idiosyncratic alpha’, returns that don’t depend on geography, sector or style factors.
While many global portfolios are tilted toward large cap US tech, Langdon has outperformed despite being underweight both.
Its best performing position last year was Japanese IT consultancy called Bay Current, which he said is well positioned to support the country’s lagging digital transformation.
‘When markets get more challenging, not all companies will prosper. That’s when the quality of the team really shows,’ Dean said.
