SOUTHSTATE PRIVATE CAPITAL MANAGEMENT LLC

Private Capital Management LLC is a SEC-registered investment advisory firm headquartered in Naples, Florida, filing with the SEC under CIK #0001778185. The firm operates from one of Southwest Florida's most affluent communities — a region that has emerged as a significant concentration point for wealth management, family office, and private investment operations, drawing high-net-worth families, retired corporate executives, and entrepreneurial wealth from across the nation. Private Capital Management's name itself signals its foundational orientation: managing capital with the discretion, alignment, and long-term perspective characteristic of private, principal-driven investment operations rather than institutional, benchmark-constrained mandates. The firm traces its intellectual and organizational lineage to a distinguished tradition of small-cap and mid-cap value investing that has been practiced in the Naples, Florida financial community for decades. Bruce S. Sherman serves as Founder and Chairman, bringing a deeply experienced investment perspective that has been shaped by decades of navigating small-cap equity markets through multiple complete market cycles. Sherman is widely recognized within the institutional investment community as a practitioner of concentrated, research-intensive value investing focused on the less-efficient segments of the equity market where informational advantages can be cultivated through deep fundamental analysis. Gregg Powers serves as President and Chief Executive Officer, leading the firm's day-to-day operations, client relationships, and strategic direction. This dual-leadership structure combines Sherman's founding investment vision and analytical framework with Powers' operational and organizational leadership, creating a governance architecture that balances investment continuity with firm-building capability. The firm commenced 13F filings under the current CIK in approximately 2020, though the principals' investment track record extends substantially further. The available filing history captures the COVID-19 pandemic recovery, the speculative rally of 2021, the 2022 bear market, and the subsequent recovery — an analytically rich sequence of market environments that is particularly consequential for small-cap and mid-cap value strategies, which tend to exhibit distinctive behavioral patterns during market regime transitions. Researchers and allocators can examine the firm's complete 13F filing history through advanced portfolio analytics and backtesting platforms to reconstruct how Private Capital Management's concentrated, value-oriented approach has navigated these diverse market conditions.

Private Capital Management employs a deep value investment strategy with a distinctive focus on small-cap and mid-cap equities — the segments of the public equity market where informational inefficiency is greatest, analyst coverage is thinnest, and the potential for mispricing is most pronounced. The firm's investment philosophy is grounded in a fundamental conviction that the most compelling risk-reward opportunities in equity markets exist in companies that are too small, too complex, or too out-of-favor to attract the attention of large institutional investors and Wall Street research departments. By operating in these less-scrutinized market segments, Private Capital Management seeks to develop proprietary analytical insights that constitute a genuine informational and analytical edge — the foundation of sustainable alpha generation in a competitive investment landscape. The firm's 13F Portfolio Composition reflects a concentrated, high-conviction portfolio that is fundamentally different from the diversified, large-cap-oriented portfolios maintained by most advisory firms of comparable scale. Rather than holding dozens of positions across major market sectors in benchmark-like proportions, Private Capital Management typically maintains a select number of deeply researched positions in companies where the investment team's fundamental analysis identifies a significant gap between current market price and estimated intrinsic value. Each position represents a thesis-driven investment built on granular understanding of the company's business model, competitive dynamics, balance sheet quality, management capability, and catalyst pathway toward value realization. The Top 10 Holdings Concentration is characteristically high, with the majority of portfolio capital concentrated in the firm's highest-conviction ideas. This extreme concentration is a deliberate and philosophically consistent portfolio construction choice: the firm's investment edge derives from deep, company-specific research, and diluting that edge across a large number of positions would undermine the very information advantage that the strategy seeks to exploit. The sector distribution across the portfolio tends to be a byproduct of bottom-up security selection rather than top-down sector allocation — the firm invests in the most compelling individual opportunities regardless of sector, resulting in sector exposures that may shift meaningfully over time as the opportunity set evolves. The deep value discipline requires a willingness to own companies during periods of maximum pessimism — when valuations are most attractive precisely because the consensus outlook is most negative. This contrarian dimension demands patience, conviction, and a long-term holding horizon that allows fundamental value to be recognized by the broader market. Turnover is low to moderate, reflecting holding periods that may extend across multiple years as the firm waits for its value recognition thesis to play out. This patience is both a strategic choice and a practical necessity in smaller-capitalization stocks, where position building and liquidation must be managed carefully to avoid adverse market impact. Portfolio simulation and backtesting tools can reconstruct the historical compounding behavior of Private Capital Management's disclosed positions, providing a reconstructed view of how this concentrated, small-cap value approach has generated capital trajectory outcomes across its filing history.

Private Capital Management LLC represents a distinctive and increasingly rare investment model — a Naples, Florida-based boutique advisory firm practicing concentrated, research-intensive deep value investing in the small-cap and mid-cap equity segments where institutional competition is thinnest and mispricing potential is greatest. Under the leadership of Chairman Bruce S. Sherman and CEO Gregg Powers, the firm applies a philosophy that has been refined through decades of small-cap market navigation, constructing high-conviction portfolios that bear no resemblance to the diversified, benchmark-aware constructions typical of the advisory industry. Key analytical dimensions for deeper investigation include the Annualized Return (CAGR) reconstructed from the firm's disclosed positions across its filing history, which would illuminate whether the concentrated deep value approach has generated the outsized absolute returns that the strategy's elevated risk profile demands as compensation. The Sortino Ratio is particularly appropriate for evaluating Private Capital Management's risk-adjusted outcomes, as the strategy explicitly accepts elevated total volatility in pursuit of asymmetric return distributions where the magnitude of upside outcomes compensates for the frequency and depth of drawdowns. The Alpha Generation vs S&P 500 metric would further clarify whether the firm's deliberate small-cap, deep value positioning has delivered returns beyond what can be explained by market beta and standard factor exposures — the critical test of whether the concentrated research process generates genuine informational alpha. The firm's concentrated small-cap value approach represents a philosophically pure expression of active management — a strategy whose existence depends entirely on the proposition that deep, company-specific research can identify mispricings in less-efficient market segments. A pivotal forward-looking question for allocators: As the small-cap equity landscape undergoes structural transformation — with declining numbers of publicly listed small companies, increasing private equity competition for small-cap deal flow, and the growing dominance of passive ETF flows in setting small-cap prices — does Private Capital Management's research-intensive, concentrated approach face a secular challenge in the form of a shrinking and changing opportunity set, or do these same structural forces actually enhance the firm's competitive position by driving less-committed active managers from the small-cap space, reducing analytical competition and potentially widening the mispricings that the firm's patient, deep value discipline is designed to exploit?

The risk profile of Private Capital Management is defined by the intersection of three amplifying factors: concentration risk, small-cap illiquidity risk, and deep value timing risk. Each of these dimensions contributes a distinct source of portfolio volatility, and their interaction creates a risk architecture that is fundamentally different from — and substantially more complex than — the risk profiles of diversified, large-cap equity strategies. Concentration risk is the most immediately visible: with a significant share of portfolio capital deployed in a limited number of positions, individual stock outcomes have an outsized impact on portfolio-level returns. A single position experiencing an adverse fundamental development — an earnings disappointment, management change, competitive disruption, or balance sheet deterioration — can produce meaningful portfolio-level drawdowns that would be absorbed and diluted in a more diversified construction. This concentration is the deliberate cost of conviction-weighted, research-intensive investing, and the firm's alpha potential is inseparable from this risk. The Max Drawdown Depth observable through historical replication of the firm's filing record provides critical empirical evidence of how concentrated small-cap value performs during market stress. Small-cap stocks typically experience deeper drawdowns than large-cap counterparts during broad market declines, as institutional liquidation flows disproportionately impact less-liquid securities. The 2020 COVID crash and the 2022 bear market each represented distinct stress vectors for small-cap value — the former testing liquidity resilience during acute panic, the latter testing value discipline during sustained risk-off sentiment. The recovery trajectory following each drawdown is equally informative: small-cap value strategies that survive drawdowns intact often experience powerful recoveries as depressed valuations normalize, though the timing of these recoveries is inherently unpredictable. The Volatility Profile derived from the firm's filing history is expected to exhibit elevated characteristics relative to broad equity benchmarks and large-cap strategies, reflecting the combined effects of concentration, small-cap size premium volatility, and the behavioral dynamics of value investing in less-liquid market segments. This elevated volatility is not a deficiency but rather the inherent cost of accessing the return premium that has historically been associated with small-cap value exposure — a premium well-documented in academic finance but one that requires substantial investor patience and risk tolerance to capture. The illiquidity dimension adds a further layer of complexity: in stressed markets, the bid-ask spreads and market impact costs of small-cap positions can widen dramatically, potentially constraining the firm's ability to manage risk through position reduction precisely when such action is most desirable. Bruce Sherman's decades of experience navigating small-cap markets through multiple complete cycles provides an institutional memory and pattern recognition capability that serves as a qualitative risk management resource, complementing whatever quantitative risk frameworks the firm employs. However, allocators must acknowledge that concentrated small-cap value investing is inherently a high-volatility, high-conviction discipline where drawdowns are expected features rather than aberrations, and the strategy's risk-adjusted value can only be properly evaluated over complete market cycles.