Invest boldly Manage risk wisely

Competitive Advantages:

To be enduring, a competitive advantage is rarely comprised of a single element. Rather, it comes from combining multiple company characteristics and practices in a way that few, if any, other firms can match. At Millrace, five elements combine to provide our competitive advantage:


Perspective supported by experience: We have met with thousands of companies over multiple market cycles and a broad range of market/economic environments. This experience provides the perspective to recognize opportunities as well as potential pitfalls. Empowering our team members to act on their research convictions reduces slippage in the investment process, reduces institutionalized thinking, and enhances accountability.


The firm’s culture reinforces the values of independent thinking, accountability, and intellectual honesty. We have a great deal of respect for what is not known, and this helps us move on from holdings that are not working as expected rather than waste time and capital trying to prove that we are correct. Doing so keeps the portfolio focused on what is working, controls risk, and allows us the mental freedom to move on to more productive endeavors.

Risk Management

Risk management is about minimizing the loss of capital—whether it is an actual loss from cost or giving back gains not yet realized. While the front end of our investment process is deliberately creative, the application of exacting risk management practices in managing the portfolio reduces the downside and allows for capital to compound more productively.


The willingness to limit capacity allows us to have trading access to smaller, less understood and more inefficiently valued companies while preserving the productive culture of our firm. In contrast, many/most firms seek open-ended growth in AUM. Further, we focus all of our resources on the evaluation of smaller companies and continually grow our proprietary knowledge of these businesses.


The Millrace heritage is growing capital while minimizing drawdowns, and we have a high degree of conviction in our research, investment process, and risk management skills. This gives us the confidence to focus on high reward, low risk opportunities while keeping the portfolio fresh and productive.