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Four money managers examine portfolio management strategies in the latest issue of The Wall Street Transcript, available at (212/952-7433) or http://www.twst.com/info/info567.htm

TWST: Tell us about the Small Cap Value Equity Fund.

Mr. Green: Our small cap style consists of 40-60 of our favorite names, with the maximum weighting of about 5% in any one name, and a very diversified portfolio. The way we pick stocks is through an enterprise value to EBITDA (or cash flow) analysis. That’s the most important part of the quantitative analysis. This helps us determine a company’s private market value and our price target. We speak with the management of every company that we follow. We won’t buy a stock unless we’ve spoken to management, and generally don’t own any stocks where we haven’t met with the senior executives or visited the facilities of those companies.

TWST: Do you monitor management closely because of the questions and concerns of your investors, particularly since Enron, or has it always been your style?

Mr. Green: The style has not changed since Enron; it has never really changed. Speaking with a company’s management has been the philosophy of the firm since day one. We believe that even with Reg FD and Enron issues, we can get valuable information about the viability of companies in the future, their strategic direction and how competitive their products are by speaking with management. We also speak to the company’s competitors, their suppliers, their customers and other industry experts, including the sell side. The small cap companies that we own, especially the ones that have high yield debt outstanding, are less likely to have Enron-type problems, because they’ve already been reviewed by the high yield market, and credit analysts tend to be a lot more risk-averse than equity analysts. To get a high yield deal done, these companies have had to pass the test of high yield investors. Their balance sheets, cash flow statements, and liquidity requirements have all been thoroughly reviewed by the high yield market, and have been given the stamp of approval. Therefore, we think the financial statements of some of these companies are in better condition than those of a lot of companies that don’t issue debt at all.

TWST: Can you give us examples of companies that have received a specific catalyst that has turned them around?

Mr. Green: Argosy Gaming (NYSE:AGY) is a good example. We recently sold it, but we were buying the stock when it was about 5 a share a couple of years ago. Caremark (NYSE:CMX) was also a good turnaround story for us. They brought in a new management team over there. Mac Crawford did a phenomenal job in turning that company around. We were buying the stock when there was a liquidity issue. The stock was trading at around 3.5-4 a share. The new management came in, sold off unprofitable businesses, fixed the balance sheet, and focused on their core business, which was a prescription benefit management business. That stock is trading at around 19 a share right now.

TWST: How do you measure your performance as a small cap manager?

Mr. Green: The goal of our style is to outperform the Russell 2000 in both a growth-driven market and a value-driven market. We benchmark against the Russell 2000 because we have the strongest correlation to the Russell 2000. As I said, our performance for the four-month period ended April 30 is 9.8% versus the Russell 2000 at 4.93%. Our one-year numbers through April 30 are 11.6% versus the Russell 2000 at 6.6%. Our five-year number through April 30 is 25.61% annualized versus the Russell 2000 at 9.66%. Penn’s small cap style ranked in the top 7% of all small cap managers in Nelson’s Money Manager universe for the last three- and five-year period.

This special Investing Strategies Report includes:

1) Investing in Biomedical Technology Stocks - Michael P. Walsh, Founder and Managing Partner of Kilkenny Capital Management, LLC, examines portfolio management strategies in this timely and deeply informative 5,000-word interview from The Wall Street Transcript.

2) Investing in International Small Cap Stocks - Thomas Hancock, Partner with Grantham, Mayo, Van Otterloo & Co., LLC, examines portfolio management strategies in this timely and deeply informative 4,500-word interview from The Wall Street Transcript.

3)James P. O'Mealia, Managing Director and Senior Portfolio Manager at Fox Asset Management, examines portfolio management strategies in this timely and deeply informative 4,500-word interview from The Wall Street Transcript.

4) Eric J. Green, Senior Portfolio Manager, Director of Research and Principal at Penn Capital Management, examines portfolio management strategies in this timely and deeply informative 6,100-word interview from The Wall Street Transcript.