Day Hagan Smart Value Strategy

The Day Hagan Smart Value Strategy is focused on achieving the following:

  • Capital Appreciation

  • Risk Management

  • Cash Flow from Dividends

An All-Cap Tactical Strategy Utilizing Yield
as an Objective Valuation Measure

Earnings and valuation metrics, in general, can be subjective and difficult to forecast. Using the Day Hagan Smart Value process, dividend yield becomes an objective, controlled means of valuation. The goal of the strategy is to begin by identifying attractive U.S. industries and then identifying the attractive companies within them.

The Process

Identify Attractive Industries

  • The proprietary process begins by screening all listed U.S. equities for companies with a 10-year history of uncut dividends, balance sheet sustainability, cash flow generation, and fundamental soundness.

  • Typically, approximately 400 names emerge for the next stage of analysis.

  • The screened buy candidates are then re-classified into proprietary industry groups based on business lines and revenue sources.

  • Once the industry groups are defined, there must be a minimum of four candidates within an industry for that industry (and the underlying names) to be included in the next analysis stage.

  • Further, the newly formed industry’s composite dividend yield must be near the high yield buy threshold we calculated for each industry.

  • Industries passing the evaluation are defined as potentially being at or near the lows of their current price cycles — and the companies within these industries are considered buy-candidate finalists.

We believe it is vitally important to only invest in those industries with a broad-based, large number of attractively rated constituents. Our view is that historically, this has proven to reveal industries benefiting from a broader-based positive fundamental change in that industry’s operating environment. The portfolio allocates assets and position sizes based on a weight-of-the-evidence approach. In contrast, tactical changes in the portfolio are made to reflect prevailing financial conditions within industries and sectors. Cash is utilized as a defensive measure when suitable buy candidates are unavailable.

The portfolio is constructed upon a foundation of time-tested factors which have historically pinpointed industries and companies that are attractively priced, shareholder-friendly, fundamentally sound, and exhibiting balance sheet strength. Cash is utilized as a defensive measure when suitable buy candidates are unavailable based on the strategy’s criteria.

Furthermore, the strategy employs a multi-faceted sell discipline, including the ongoing evaluation of fundamental and technical measures.

The Day Hagan Smart Value Strategy doesn’t try to replicate a fixed benchmark. Instead, as a function of the rigorous analysis of industries and the companies within them, the portfolio continually moves towards areas evidencing attractive prices and fundamental soundness – whether those areas are large-cap, small-cap, value, or growth. We focus only on the highest probability of success.

Executive Team

Disclosure

All investment strategies have the potential for profit or loss. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment or strategy will be suitable or profitable for a client’s portfolio. There is no assurance that the strategy will achieve its investment objectives. Increased portfolio turnover may result in higher brokerage commissions, dealer mark-ups, and other transaction costs and may result in taxable capital gains. Past performance is no guarantee of future results.