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Investment Objective
Nicholas II, Inc. strives to increase the value of your investment over the long-term (“long-term growth”) by investing in a diversified portfolio of small- and mid-sized companies. The Fund looks for established companies with the potential for superior sales and earnings growth that are positioned to benefit from emerging, long-term social and economic trends. Our goal is to find what we believe are great companies and hold them for the long-term.

Investment Policies & Considerations
Nicholas II's management team believes that company selection is a key to providing superior returns over time. Our goal is to find companies that have the potential for outstanding earnings and sales growth, and are positioned to benefit from long-term economic and social trends. Some of the factors we consider in assessing companies include:

  • Growth rate of 12% or better
  • High return on capital
  • Strong cash flow
  • Consistent earnings
  • Return on equity (ROE) of 15%, or an improving ROE
  • Debt to total capitalization of less than 50%
  • A price-to-earnings ratio lower than two times the growth rate
  • An enduring franchise or brand
  • Honest, capable management
  • Significant management ownership of stock
  • Long-term and short-term business momentum

It is our strong conviction that superior long-term results are achieved by minimizing capital losses in adverse markets. We do not attempt to forecast short-term market swings, but work to preserve gains and minimize losses using long-term, fundamental valuation techniques. Our portfolio turnover is moderate as our goal is to find, and hold, stock in great companies. However, if a stock is not meeting our expectations, or has become over-valued, we will sell it.

At Nicholas, our watchword is patience. We believe it is a key to superior long-term results.

Mutual fund investing involves risk; loss of principal is possible. The Fund invests in smaller companies, which involve additional risks such as limited liquidity and greater volatility.

Diversification does not assure a profit nor protect against loss in a declining market.

Glossary of terms

Nicholas Funds are distributed by Quasar Distributors, LLC


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