PORTFOLIO SPOTLIGHT
Morningstar’ s mid-blend category during the one-, three- and five-year periods, and ranked as high as either the top 3 % or top 1 % for the category during those designated time frames.
FullerThaler’ s roots go back to 1993 when Russell Fuller, a financial analyst and academic considered to be a pioneer in the field of behavioral finance, decided to put his ideas to work in the real world by launching the behavioral small-cap growth strategy.
In 1998, he joined forces with Richard Thaler, who received the 2017 Nobel Memorial Prize in Economic Sciences for his contributions to behavioral economics and is currently a professor at the University of Chicago Booth School of Business. Thaler offers strategic direction for the firm’ s research and investment processes.
In a short video on the company’ s website, Thaler explains that the firm’ s investment strategy is based on a simple premise:“ That investors make mistakes. And they make mistakes because they’ re human.”
But then again, so are the investment managers at FullerThaler. So it’ s fair to ask what makes them think they possess the secret weapon enabling them to slay the markets.
Overreaction
FullerThaler identifies three reasons an investment strategy can outperform a market benchmark and achieve alpha. One is that it has an informational edge. Another is that it has an analytical edge.
Portfolio Statistics
Number Of Stocks 23 Average Mkt. Cap
$ 40.39 billion P / E Ratio 19.16x Std. Dev Fund / Benchmark 16.35 / 14.74 Turnover Ratio 20 % Net Expense Ratio 0.99 %
Performance and asset numbers as of 8 / 7 / 26. Holdings and portfolio stats as of 6 / 30 / 26.( Note: Applied Materials was sold from the portfolio after Q2.) Standard deviation( threeyear period) versus the Morningstar US Mid Cap Mkt TR USD Index. Turnover as of 9 / 30 / 25. Performance and expense ratio figures are for the institutional share class. Sources: Fuller & Thaler Asset Management, Inc. and Morningstar.
Manager: Raymond Lin Age: 60
And the third is its behavioral edge. The last is the gist of FullerThaler’ s strategy— it’ s about finding the mistakes investors make when they analyze information.
In that regard the firm identifies two types of investor mistakes: overreaction( when investors panic after a company reports negative news) and underreaction( when they fail to capitalize on good news because they’ re anchored to their existing analysis and opinions about a company’ s prospects).
Such mistakes mean stocks can be mispriced.“ And at FullerThaler we exploit those situations,” says Raymond Lin, lead portfolio manager on the Behavioral Unconstrained Equity Fund.
The firm says investors overreact to vivid, emotional feelings tied to bad news and losing money. Part of that ties in with the concept of“ loss aversion”— when they feel the emotional impact of a loss to be twice as heavy as the emotional equivalent of a gain.
Lin says that investor overreaction to bad news is often accompanied by an extended period when the stock remains in the dumps. Investors get worn down and conditioned for bad news about a stock when it loses money.
And in a situation of extreme pessimism,“ they overlook positive signals that a company’ s management might be giving out about its prospects,” Lin says.
Such overlooked signals could include large stock purchases by top executives. Another is when a company repurchases its shares and shrinks its share count.
“ Both of these events are a sign that the people running these companies— who
Professional Background: He is responsible for managing FullerThaler’ s domestic equity strategies. He has been with the firm since 2006 and has been in the industry since 1988. Before joining the firm, he was a portfolio manager for a long-short equity fund at Tricera Capital. He previously was a currency options trader at J. P. Morgan.
Outside Interests: Running and playing piano.
know more about the fair value of these companies than any outside investor— believe the shares are undervalued,” Lin says.
Timely Purchase
Lin points to Applied Materials, a semiconductor equipment and materials company, as a recent example that fits the bill. He said his fund bought shares in the company shortly after its CEO, Gary Dickerson, bought more than $ 6 million in Applied Materials stock. His purchase, in April 2025, happened when the stock was down roughly 45 % from its 52-week high.
“ This was during a time when people feared there would be export controls regarding China and were concerned about slower semiconductor sales,” Lin says.
He notes that when FullerThaler analysts look at insider buying they gauge whether the person doing it has a good track record of previously timing the purchases. This was Dickerson’ s first stock purchase since 2016.
“ His prior purchase was very optimistic, buying when Applied Material’ s stock was down about 40 % from its peak,” Lin explains. The company’ s stock price subsequently rose in the period after Dickerson’ s purchase.
Lin bought Applied Materials’ stock last year at about $ 144 a share. It peaked at about $ 670 a share this past June. Lin sold the company’ s shares at the end of the second quarter after Dickerson sold more than $ 100 million in stock in June.
“ In our view that was a sign that he was no longer as bullish on the stock as he was in 2025,” Lin says.
46 | FINANCIAL ADVISOR MAGAZINE | SEPTEMBER / OCTOBER 2026 WWW. FA-MAG. COM