The Baltimore-based firm, founded in 1983 by T. Rowe Price alum Eddie Brown, made its name with an unusual approach. Its four equity strategies define companies by operating revenue rather than market capitalization. The Small Company team, under CEO and CIO Keith Lee, perfected this technique. Lee has also groomed rising leaders, such as new president Robert Young III, and worked to broaden engagement with the 2016 launch of an employee stock ownership plan. Lee and Brown (who remains executive chairman and a portfolio manager) have deepened the firm’s three investment teams with a mix of senior and junior professionals who invest in their strategies and rarely leave.
The vitality of Brown Capital’s culture has helped it address a few challenges. Lee has doubled down on rigorous research and the favored revenue-based approach in the Mid Company and International All Company offerings, which haven’t done as well as its small-company ones. And while the firm could modernize its bonus structure by looking beyond fixed, three-year performance periods, its managers haven’t taken outsized, shorter-term risks to catch up. More serious tests loom—such as the reduced involvement of Brown and Lee in coming years—but Brown Capital’s strong, shared convictions should see it through.