Day Hagan Smart Core Equity Strategy Update March 2026
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Day Hagan Smart Core Equity Strategy Update March 2026 (pdf)
Summary
The Day Hagan Smart Core Equity Portfolio is designed to invest in companies that we believe have the potential to deliver excess returns through positive economic profitability, solid balance sheets (quality), meaningful cash generation (profitability), and trading at considerable margins of safety (valuation). We believe these factors will continue to provide rational opportunities for the foreseeable future.
Strategy Update
U.S. equity markets delivered mixed performance in February as investors balanced positive economic data with geopolitical uncertainty and shifting expectations for monetary policy. The S&P 500 finished the month modestly lower, while the Nasdaq declined more noticeably as volatility in mega-cap technology and AI-related companies weighed on sentiment.
Economic releases during the month painted a generally constructive picture of the U.S. economy. Retail spending and corporate earnings reports remained relatively firm, with roughly three-quarters of S&P 500 companies exceeding earnings expectations during the reporting season. At the same time, investors monitored inflation indicators and interest-rate expectations as Treasury yields trended modestly lower in response to shifting views on the Federal Reserve’s policy path.
Geopolitical developments also influenced markets late in the month. Rising tensions in the Middle East and concerns about potential disruptions to global energy supply pushed oil prices higher and contributed to bouts of volatility.
Within equities, sector rotation became more apparent. Technology and AI-exposed companies faced periodic selling pressure, while more cyclical and value-oriented areas such as financials and smaller-capitalization stocks attracted investor interest, reflecting a gradual broadening of market leadership.
The current portfolio is broadly diversified across sectors with a balance between structural growth businesses and companies tied to essential economic activity. Meaningful exposure to communication services and information technology provides participation in long-term digital trends such as artificial intelligence, cloud adoption, digital advertising, and data infrastructure. Positions in financials and payments add sensitivity to economic activity and global transaction volumes, while consumer and leisure holdings offer participation in evolving spending patterns.
The portfolio also includes companies tied to food production, pharmaceuticals, and energy supply, providing exposure to durable sources of demand. Real estate and infrastructure holdings contribute contractual cash flow characteristics.
Overall, sector exposures are balanced across growth, quality, and income factors, with businesses that generally maintain relatively sound balance sheets and recurring revenue models. This mix may help moderate sensitivity to economic cycles while preserving participation in innovation and long-term global growth opportunities.
Nearly all of our holdings have now reported calendar Q4 earnings, and overall results were positive. Below are summaries of key insights from management discussions released alongside the earnings updates.
Coterra Energy (CTRA)
Management at Coterra Energy highlighted operational execution and capital efficiency in its latest press release, noting that full-year production exceeded the high end of previously issued guidance and that cash generation increased year over year. The company generated $4.0B in operating cash flow and $2.0B in free cash flow in 2025, representing increases of 44% and 67% from the prior year, primarily due to higher production volumes and controlled capital spending. Management also discussed progress in integrating recently acquired Delaware Basin assets, citing improved well performance and lower operating costs. Capital allocation included approximately $820M returned to shareholders through dividends and share repurchases while maintaining relatively low leverage. For 2026, the company guided production to 750–810 MBoepd and approximately $2.2B of capital expenditures, with an estimated $2.35B of free cash flow based on current commodity price assumptions. Management reiterated its focus on balance sheet strength and disciplined reinvestment.
The Trade Desk (TTD)
Management discussed continued adoption of connected TV advertising and the company’s AI-driven Kokai platform, which is intended to improve campaign optimization and advertiser return on investment. The company reported revenue growth and increased adjusted EBITDA compared with the prior year, reflecting demand for programmatic advertising across multiple channels. CEO Jeff Green noted that many global advertisers remain engaged with the open internet ecosystem despite macroeconomic uncertainty affecting certain large advertisers. The company maintained a balance sheet with substantial cash and continued to generate free cash flow. Management indicated that connected TV remains a key growth area. Forward guidance calls for continued revenue growth, though management acknowledged potential near-term variability in spending from consumer packaged goods and automotive advertisers.
Owens Corning (OC)
Management reported demand across insulation, roofing, and composites businesses, supported by repair and remodeling activity and infrastructure investment. Revenue and earnings exceeded prior expectations, reflecting pricing actions and productivity initiatives. The company generated operating cash flow and maintained a moderate-leverage balance sheet. Leadership also discussed operational improvements and portfolio simplification following recent strategic divestitures. Management reiterated its focus on improving margins through manufacturing efficiency and capital allocation initiatives, including dividends and share repurchases. Guidance for the coming year assumes relatively stable demand in roofing and insulation markets and potential growth in composites linked to industrial activity.
Salesforce (CRM)
Management reported growth across its cloud platform, including Data Cloud and AI-enabled capabilities integrated into its applications. Revenue and earnings exceeded prior guidance, reflecting enterprise demand for customer relationship management and data analytics solutions. The company reported operating margin expansion and continued free cash flow generation, which supported share repurchases. CEO Marc Benioff highlighted the increasing role of generative AI features integrated throughout Salesforce’s platform. Management also reiterated its commitment to cost discipline following restructuring actions implemented in prior periods. Guidance calls for continued revenue growth and potential margin expansion as AI products gain adoption and cross-selling opportunities develop.
Zoom Video Communications (ZM)
Management reported revenue growth driven by enterprise adoption of Zoom’s collaboration platform, including products beyond video meetings, such as contact center and telephony offerings. The company generated free cash flow and maintained a balance sheet without long-term debt. Leadership discussed the rollout of Zoom AI Companion and related productivity features designed to integrate meetings, messaging, and workflow tools. While growth in the core meetings business has moderated following pandemic-driven demand, management noted increased enterprise adoption of multiple Zoom products. Guidance calls for moderate revenue growth and relatively stable margins as the company continues transitioning toward a broader collaboration platform.
VICI Properties (VICI)
Management highlighted the performance of its triple-net lease portfolio, which continues to generate contractual rental income and high occupancy levels. The company reported revenue and AFFO growth supported by rent escalators and recent acquisitions. Leadership discussed the characteristics of its gaming and experiential real estate portfolio, including long-term leases with major operators. VICI maintained investment-grade credit metrics and liquidity for potential acquisitions. Management reiterated its strategy of selectively expanding into experiential assets beyond gaming, including hospitality and entertainment properties. Guidance calls for continued AFFO growth supported by contractual rent increases and selective portfolio expansion.
American Tower (AMT)
Management reported growth in global tower leasing activity as mobile data demand continues to increase and wireless carriers invest in network upgrades. Revenue and adjusted EBITDA increased year over year, with international operations and data center investments contributing alongside the U.S. tower business. The company generated recurring cash flows and maintained an investment-grade balance sheet. Leadership discussed long-term demand drivers related to 5G deployment and global data consumption. American Tower continues adjusting its portfolio following recent asset transactions while maintaining a disciplined capital allocation framework. Guidance suggests moderate growth in tower leasing revenues and continued AFFO generation.
Realty Income (O)
Management reported continued performance of its diversified triple-net lease portfolio, with occupancy near historical levels and rent collection rates remaining high. The company generated AFFO growth supported by acquisitions and contractual rent escalations. Leadership discussed the characteristics of its tenant base, which includes service-oriented and non-discretionary retail businesses. Realty Income maintained investment-grade credit metrics and access to capital markets. Management reiterated its acquisition strategy focused on long-duration leases and creditworthy tenants. Guidance calls for continued AFFO growth supported by acquisitions and rent escalators.
NRG Energy (NRG)
Management reported improved earnings driven by retail energy margins and cost management initiatives. The company generated free cash flow and continued to reduce leverage. Leadership discussed the integration of the recently acquired residential energy portfolio, which expanded the customer base and operating scale. Capital allocation priorities include debt reduction, share repurchases, and reinvestment in energy assets. Guidance assumes relatively stable earnings supported by hedged energy positions and operational initiatives, though results may be affected by commodity price volatility and changes in electricity demand.
Deere & Company (DE)
Management reported continued adoption of precision agriculture technologies while noting that equipment demand has moderated following several years of elevated sales. Revenue remained stable, and margins benefited from pricing actions and manufacturing efficiencies. The company generated operating cash flow and maintained a well-capitalized balance sheet. Leadership discussed long-term opportunities related to automation, data-driven farming, and sustainable agriculture. Guidance reflects a more normalized demand environment, with management expecting profitability to remain solid despite lower equipment volumes than during the prior peak.
Dropbox (DBX)
Management reported revenue growth supported by the expansion of higher-value subscription tiers and the introduction of AI-enabled productivity tools. The company continues to broaden its product offering beyond file storage toward a collaboration platform that includes products such as Dash and integrated workflow tools. Dropbox generated free cash flow and maintained a balance sheet with relatively low leverage, which management indicated supports share repurchases and strategic investments. Leadership discussed ongoing expense management initiatives and margin improvement efforts. Management indicated that AI-enabled search and productivity features may increase user engagement and monetization over time. Guidance reflects expectations for modest revenue growth and potential margin improvement as the company focuses on operating efficiency and expanding its subscription offerings.
Omnicom Group (OMC)
Management reported organic growth supported by demand for digital marketing, data analytics, and precision advertising services. Revenue and margins increased over the prior period as clients increased spending on performance-based marketing and digital campaigns. The company generated free cash flow and maintained a moderate-leverage balance sheet. Leadership discussed continued investment in AI-enabled marketing tools and data platforms intended to improve campaign targeting and measurement. Management indicated that demand across major sectors remained generally stable, though some industries continue to exercise caution due to macroeconomic uncertainty. Guidance calls for moderate organic growth and continued focus on margin discipline as Omnicom integrates technology into its marketing services platform.
CF Industries (CF)
Management reported demand for nitrogen fertilizer supported by global crop production and agricultural market conditions. Revenue and earnings remained elevated despite commodity price volatility, with operating margins reflecting the company’s natural gas cost position in North America. CF generated free cash flow and maintained a balance sheet with moderate leverage. Leadership discussed investments in clean ammonia and lower-carbon fertilizer initiatives as part of the company’s long-term strategy. Capital allocation includes both shareholder returns and strategic investment initiatives. Management indicated that fertilizer demand may remain stable in the coming year, supported by global agricultural demand and industry supply dynamics.
Cisco Systems (CSCO)
Management reported increased demand for enterprise networking and increased adoption of products in security, observability, and AI-related infrastructure. Revenue growth was supported in part by recurring software subscriptions and service offerings. The company generated operating cash flow and maintained a balance sheet with substantial liquidity. Leadership discussed the role of networking infrastructure as enterprises upgrade data centers and cloud connectivity to support artificial intelligence workloads. Cisco continues shifting toward software and recurring revenue streams while maintaining its networking hardware business. Guidance calls for modest revenue growth and relatively stable margins.
National Retail Properties (NNN)
Management reported continued performance from its triple-net lease portfolio, which generates contractual rental income and maintains high occupancy levels. Revenue and AFFO increased modestly, supported by rent escalations and acquisitions. The company maintained investment-grade credit metrics and access to capital markets. Leadership noted that the tenant base is primarily composed of service-oriented retail businesses that may be less affected by e-commerce competition. Guidance reflects expectations for continued AFFO growth supported by acquisitions and contractual rent increases. Management reiterated its strategy of maintaining conservative leverage while supporting dividend growth over time.
Amazon (AMZN)
Management reported fourth-quarter results, including a 14% year-over-year increase in revenue to $213.4B and higher operating income than in the prior year. Performance reflected growth in cloud computing, advertising, and operational improvements in logistics. Amazon Web Services remained a major contributor to operating income, with demand for cloud services and AI-related infrastructure. CEO Andy Jassy discussed ongoing investment in artificial intelligence, robotics, and logistics capabilities. Management indicated that elevated capital expenditures may affect near-term margins but are intended to support long-term growth initiatives. Guidance for the upcoming quarter assumes continued revenue growth as the company focuses on improving delivery speed, cloud services, and customer experience.
Hershey (HSY)
Management reported stable demand for core confectionery products despite cost pressures related to cocoa and sugar. Revenue growth reflected pricing actions and seasonal demand patterns. The company maintained margins through cost management and supply chain initiatives. Hershey generated cash flow and continued returning capital to shareholders through dividends and share repurchases. Leadership discussed product innovation and expansion into broader snacking categories. Guidance reflects ongoing inflation in input costs alongside relatively stable consumer demand. Management expects modest revenue growth while continuing pricing and efficiency initiatives.
Bristol-Myers Squibb (BMY)
Management reported growth in certain oncology and immunology therapies, partially offset by declining revenue from products approaching or already expired patents. The company generated operating cash flow and maintained a balance sheet that supports continued investment in research and development. Leadership discussed pipeline programs in oncology and immunology, including several late-stage clinical candidates. Bristol-Myers continues to pursue acquisitions and partnerships to expand its portfolio. Guidance reflects expectations for moderate revenue growth driven by newer therapies while managing patent-related headwinds.
Alphabet (GOOGL)
Management reported revenue growth supported by expansion in search advertising, YouTube, and Google Cloud. Cloud revenue increased as enterprise customers expanded spending on data analytics and AI infrastructure. The company generated free cash flow and maintained substantial cash reserves. Leadership discussed ongoing investments in artificial intelligence, including Gemini models and AI-enabled search capabilities. Management indicated that integrating AI across products may increase user engagement and create additional monetization opportunities. Guidance reflects continued investment in data centers and AI infrastructure while maintaining operating margins across core business segments.
Cognizant (CTSH)
Management reported demand for digital transformation services, including cloud migration, artificial intelligence, and data analytics projects. Revenue growth remained modest as enterprise technology spending stabilized. The company generated free cash flow and maintained a moderate-leverage balance sheet. Leadership discussed restructuring initiatives aimed at improving operating efficiency and delivery capabilities. Cognizant continues expanding partnerships with major cloud providers to support client modernization initiatives. Guidance calls for gradual revenue growth and potential margin improvement as operational initiatives progress.
Qualcomm (QCOM)
Management reported demand for semiconductor solutions used in smartphones, automotive platforms, and connected devices. Revenue growth reflected continued adoption of Snapdragon platforms and expansion into markets beyond mobile handsets. The company generated cash flow and maintained a moderate-leverage balance sheet. Leadership discussed opportunities in automotive connectivity, edge artificial intelligence, and the Internet of Things. Qualcomm continues investing in wireless technology and AI-related capabilities. Guidance assumes relatively stable smartphone demand and continued expansion in automotive and industrial markets.
Mid-America Apartment Communities (MAA)
Management reported rental income growth supported by occupancy levels across its Sun Belt apartment portfolio. The company generated operating cash flow and maintained a conservative balance sheet. Leadership discussed population migration and employment trends in Sun Belt markets as factors influencing long-term housing demand. While new apartment supply has increased in certain markets, management indicated that demand growth may absorb additional units over time. Guidance calls for moderate same-store revenue growth and relatively stable operating margins.
Merck (MRK)
Management reported revenue growth supported by oncology and vaccine products. Demand for certain newer medicines offset revenue declines from products approaching patent expiration. The company generated operating cash flow and maintained a balance sheet that supports continued investment in research and development. Leadership discussed pipeline programs across oncology, immunology, and vaccines, as well as acquisitions intended to expand the company’s portfolio. Guidance reflects expectations for revenue growth driven by new therapies and expanded indications for existing products.
Amdocs (DOX)
Management reported revenue growth supported by telecommunications providers investing in digital platforms and network management solutions. The company generated free cash flow and maintained a relatively low-leverage balance sheet. Leadership discussed demand for cloud-based software, 5G monetization tools, and AI-enabled customer experience platforms. Amdocs continues expanding partnerships with telecommunications operators globally. Guidance calls for moderate revenue growth and relatively stable margins supported by recurring software and service contracts.
Gartner (IT)
Management reported demand for research, advisory, and consulting services as enterprises evaluate technology spending and digital transformation initiatives. Revenue growth occurred across subscription research and consulting segments. The company generated operating cash flow and maintained a moderate-leverage balance sheet. Leadership discussed Gartner’s role advising corporate executives on technology strategy, including artificial intelligence adoption. Guidance reflects expectations for continued revenue growth supported by client retention and expansion of research subscriptions.
Several factors could support the portfolio over 2026. Many holdings operate in industries benefiting from durable structural trends, including digital advertising, cloud computing, artificial intelligence, and data infrastructure. Continued investment in enterprise technology and ongoing adoption of AI-enabled tools may support revenue growth across several information technology and communications services companies in the portfolio.
The portfolio also includes businesses tied to essential economic activity, such as payments, energy infrastructure, agriculture, and pharmaceuticals. These industries tend to experience relatively steady demand across different economic environments, which may help provide stability if economic growth moderates. Financial holdings could benefit from stable credit conditions and continued transaction growth, while real estate investments may contribute consistent income through contractual lease structures.
In addition, many portfolio companies maintain strong balance sheets, recurring revenue models, and disciplined capital allocation policies. Over time, these characteristics may support earnings growth and cash flow generation, positioning the portfolio favorably if market leadership continues to broaden beyond a narrow group of companies.
The portfolio’s most significant sector allocations are to Financials, Information Technology, Communication Services, Real Estate, and Consumer Discretionary. Our target weightings versus the Russell 1000 Value Index are as follows: Information Technology 22.6% vs. 11.5% benchmark, Healthcare 8.02% vs. 11.8%, Financials 10.7% vs. 19.9%, Consumer Discretionary 7.2% vs. 7.0%, Communication Services 9.1% vs. 8.0%, Industrials 4.5% vs. 14.0%, Consumer Staples 6.0% vs. 7.7%, Energy 6.5% vs. 6.8%, Utilities 4.8% vs. 4.5%, Materials 3.0% vs. 4.4%, and Real Estate 9.3% vs. 4.1%.
Overall, this portfolio aims to strike a balance between growth and stability by combining innovative growth companies with established blue-chip stocks and defensive sectors, making it suitable for investors seeking long-term capital appreciation through prudent diversification across the U.S. economy.
The Smart Core Equity portfolio strategy uses measures of economic profitability, balance sheet sustainability, cash flow generation, valuation, economic trends, liquidity, and market sentiment to make objective, rational decisions about how much capital to allocate and where to invest it.
Please let us know if you want to discuss the portfolio in more detail or learn more about our approach.
Sincerely,
Donald L. Hagan, CFA®
Regan Teague, CFA®, CFP®
Disclosure: The aforementioned positions may change at any time.
Disclosure: *Note that individuals’ percentage gains relative to those mentioned in this report may differ slightly due to portfolio size and other factors. Returns are based on a representative account. The information contained herein is provided for informational purposes only and should not be construed as investment advice or a recommendation to buy or sell any security. The securities, instruments, or strategies described may not be suitable for all investors, and their value and income may fluctuate. Past performance is not indicative of future results, and there is no guarantee that any investment strategy will achieve its objectives, generate profits, or avoid losses.
This material is intended to provide general market commentary and should not be relied upon as individualized investment advice. Investors should consult with their financial professional before making any investment decisions based on this information.
Data and analysis are provided “as is” without warranty of any kind, either express or implied. Day Hagan Asset Management, its affiliates, employees, or third-party data providers shall not be liable for any loss sustained by any person relying on this information. All opinions and views expressed are subject to change without notice and may differ from those of other investment professionals within Day Hagan Asset Management or Ashton Thomas Private Wealth, LLC.
Accounts managed by Day Hagan Asset Management or its affiliates may hold positions in the securities discussed and may trade such securities without notice.
Day Hagan Asset Management is a division of and doing business as (DBA) Ashton Thomas Private Wealth, LLC, an SEC-registered investment adviser. Registration with the SEC does not imply a certain level of skill or training.
There is no guarantee that any investment strategy will achieve its objectives, generate dividends, or avoid losses.
This material is for educational purposes only. Further distribution is prohibited without prior permission. There is no guarantee that any investment strategy will achieve its objectives, generate dividends, or avoid losses.
Further distribution is prohibited without prior permission.
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Definitions:
*“Magnificent Seven”: Apple, Microsoft, Alphabet (Google), Amazon, Meta Platforms, Nvidia, Tesla
Russell 1000 Value Index: Russell 1000 Value Index measures the performance of large U.S. companies from the Russell 1000 universe with lower price-to-book ratios and lower forecasted growth values, serving as a benchmark for large-cap value stocks with traditional sectors like Financials and Health Care. It's a market-cap-weighted index, annually reconstituted, that provides an objective measure of the U.S. large-cap value segment.
Russell 1000 Growth Index: Russell 1000 Growth Index tracks the performance of large-capitalization U.S. stocks exhibiting strong growth characteristics defined by higher price-to-book (P/B) and price-to-earnings (P/E) ratios, and higher forecasted growth, separating them from value stocks within the top 1,000 U.S. companies (the Russell 1000). It serves as a benchmark for the large-cap growth segment, capturing companies expected to grow faster, often reinvesting earnings, and is reconstituted annually.