Idea Brunch with Andrew Summers of Summers Value Partners

Andrew Summers is the Founder and CIO of Summers Value Partners, a Denver-based investment manager focused on small-cap healthcare companies. Prior to founding the firm in 2018, Andrew was a portfolio manager and equity analyst at INVESCO Funds Group and Janus Henderson, where he managed large institutional portfolios.

Since inception, Summers Value Fund has generated a total return of 136% net (12.0% annualized net) with an uncorrelated profile relative to its small-cap benchmark. The firm uses a fundamental research process to identify special situations within the healthcare sector to build a concentrated portfolio of stocks with the potential to outperform the market over a three-to-five-year period. Andrew serves on the boards of both public and private companies and has led multiple activist campaigns over his career.

Can you tell readers a little more about your background and why you decided to launch Summers Value Fund?

I grew up in a small town in Wisconsin in a traditional middle-class family, where sports played a central role in my life. I was the quarterback on my high school football team and captain of the basketball team, experiences that instilled the importance of preparation, effort, communication, and teamwork—principles that continue to play a role in my approach to investing.

My interest in investing began early. In sixth grade, my grandfather purchased my siblings and me our first stock—a regional utility company that was unglamorous but paid a reliable dividend. That simple investment sparked a lasting fascination with how businesses operate and how their fundamentals translate into stock prices. I opened my first brokerage account in college using savings from part-time work, sourcing stock quotes from the Wall Street Journal and Value Line in the school library.

While in college, I served as president of the Finance Association, the largest student-run organization on campus. I was responsible for recruiting guest speakers from across the finance industry, which gave me valuable exposure to a wide range of career paths. Through these conversations, it became clear which roles were not a good fit for me. One speaker, however—an equity analyst at Strong Funds (now Wells Fargo Asset Management) in Milwaukee—made a lasting impression. After dinner with him, I knew equity research was the right path, and I began immersing myself in the discipline.

That decision led me to business school at the University of Wisconsin–Madison, where I participated in the Applied Security Analysis Program, a rigorous, fundamentals-driven investment curriculum. I began my professional career in 1998 as an equity analyst on the healthcare team at INVESCO Funds Group in Denver. Over the years, including time at large asset managers such as Janus Henderson, investing has remained both my profession and my passion.

I founded Summers Value Fund to capitalize on persistent mispricings in small-cap healthcare stocks. Having worked at large institutions, I saw firsthand that companies with market capitalizations below $2 billion were often overlooked—not due to lack of opportunity, but because they were too small to meaningfully impact large pools of capital. My thesis was straightforward: a disciplined, institutional-quality research process could generate attractive long-term returns in this underfollowed segment of the market.

At the same time, I observed increasing short-termism across the investment industry, where investment horizons were compressed, leading to poor outcomes. To counteract this, we structured Summers Value Fund with three- and five-year capital commitments to better align incentives and encourage patient, thoughtful decision-making. Today, nearly 90% of our capital is committed for five years.

Our investor base consists primarily of high-net-worth individuals, followed by family offices and registered investment advisors. We have seen growing interest from RIAs seeking differentiated strategies for client portfolios, particularly as a complement to allocations heavily concentrated in large-cap technology.

Alignment is a central tenet of our philosophy. My family is the largest investor in the partnership, and that alignment has been a meaningful driver of our success.

Outside of investing, I enjoy exercising, fly fishing, and collecting vintage basketball cards. I live in Colorado with my wife and three sons, where we embrace an active, outdoor lifestyle.

Can you tell us more about your investment process? Does the lack of Wall Street coverage make sourcing ideas more difficult?

We are fundamental, long-term investors with a value mindset. We look for companies undergoing positive change that is not yet reflected in the stock price. We favor businesses with a history of free cash flow generation, strong balance sheets, and management teams whose incentives are aligned with shareholders. What we are really looking for are companies with underappreciated or mis-understood earnings potential. In the long run, stock prices follow earnings. As investor perception towards a company oscillates from negative to positive, we expect to benefit from a multiple re-rating that can amplify a stock’s return potential.

The types of change we focus on include new management teams, spin-offs, carve-outs, operational turnarounds, and business model pivots. Market structure has changed meaningfully over the course of my career becoming more quantitative and algorithmic. We study qualitative factors to anticipate a company’s future earnings and cash flow generation capabilities before it shows up in a company’s reported results. We hold a portfolio of eight to twelve special situations within the healthcare sector at any given time.

The lack of Wall Street coverage does not make sourcing ideas more difficult—in fact, it often creates the opportunity for a mispricing. I have been investing in this sector for almost thirty years, and we are very comfortable doing our own work rather than relying on sell-side analysts to tell us what a business is worth. As asset managers continue to consolidate and grow larger, fewer investors are willing or able to spend time on sub-$2 billion market cap companies. That structural void is exactly where we operate.

Can you tell us about your experience with activist investing and serving on company boards? Has it changed your approach?

We have run two activist campaigns since inception. The first was unsuccessful, and we took a loss, but the learnings were invaluable. The second campaign has been extremely successful. There is a lot more we could do on this front, but the gating item has been attracting the capital required to run a successful campaign and drive positive change at a larger company. In the past, private equity investments traded at a discount to public company valuations, but today that situation is reversed. We see high quality public companies trading at a discount to private market valuations – in some cases, a significant discount. Using activism to drive change can unlock shareholder value.

I currently serve on two corporate boards: one public and one private. Being in the boardroom provides a very different perspective on how decisions are made behind closed doors—how trade-offs are evaluated, how messaging is shaped, and how incentives truly work. That insider’s perspective has materially improved my ability to interpret press releases, strategic announcements, and governance dynamics as an investor.

You mentioned attending the HIMSS conference and doing field work. How important is that to your diligence process?

It is extremely important. Healthcare businesses are complex, and financial statements rarely tell the full story. Getting out into the field—attending trade shows, speaking with customers, sales reps, competitors, and former employees—gives us a real-world view of what is happening on the ground. We also interview doctors and other medical professionals to understand the market potential of drugs and medical devices.

At HIMSS, for example, conversations with hospital IT buyers and salespeople helped us understand which vendors were gaining traction and which were losing relevance. In other cases, customer conversations have helped us gain conviction during periods of short-term volatility—or avoid investments entirely when reality did not match management’s narrative. Field work is often the difference between surface-level understanding and true insight.

You’ve had three consecutive profitable years shorting healthcare companies. What’s been the key to success?

Selectivity. Our short book is smaller, and more catalyst-driven than our long book. I have been shorting stocks for over a decade, and I have a healthy respect for how difficult it is to do well consistently.

We have found success shorting pharmaceutical and biotech companies with new product launches where sales expectations are unrealistic. We have also done well shorting companies with weak balance sheets and deteriorating business fundamentals. We have learned that valuation is rarely a sufficient reason to be short. We look for an event that can serve as a catalyst to draw the market’s attention to a company’s shortcomings.

Why did you choose a 1% management fee and 20% incentive fee after a 6% hurdle? How do you differ from traditional funds?

We endeavor to treat our investors fairly in every aspect of our business. I have been on the other side of the table where fees were excessive and communication was poor, and that does not build trust.

Our fee structure encourages a performance-based culture while allowing us to run a high-quality operation. Importantly, we pay all operating expenses—including fund administration, audit, tax, and legal—out of the management fee. We have never charged our investors anything beyond the stated fees. We communicate openly and transparently, and we take client service very seriously.

Our portfolio—long and short—looks nothing like an index or an actively managed mutual fund. Being different is necessary, but this is not sufficient in isolation. We also need to be better. Since inception, our net performance has materially exceeded small-cap benchmarks.

What are some interesting ideas on your radar now?

Several years of small-cap underperformance, combined with the recent sell-off in the healthcare sector have created an especially attractive opportunity set. We are currently generating more compelling ideas than we have capital to deploy. Given our concentrated approach, maintaining discipline is critical, particularly when opportunity is abundant.