Delta Capital Management

Products

Investment Products

Large Cap Equity

Our process begins by screening our database for the companies with market capitalizations above $1 Billion. We eliminate all stocks that have price-to-earnings ratios (on a normalized basis) above that of the median. This results in a list of approximately 800 companies. The next step is a rigorous analysis of these companies on such factors as financial strength, price-to-book ratio, price-to-cash flow and revenue, earnings and dividend growth. This multi-factor screening derives a list of 100-125 companies, which we research continually. It allows us to find financially strong companies while avoiding problematic, low P/E stocks. Experience has taught investors that the most successful investments have been in owning profitable companies rather than trying to discover turnaround situations. Ideally our client portfolios will be invested in 35-45 stocks, diversified across 16-20 industries. This is very important, as good diversification is essential to properly exploit the low P/E effect. When a decision to buy or sell a stock is made, it is implemented uniformly for all portfolios, unless a specific constraint exists.

Sector Diversification

Portfolio Characteristics

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Sample Holdings

Abbott | Fedex | Pepsico | Johnson & Johnson | JP Morgan Chase


Small Cap Equity

Our process begins by screening our database for the companies with market capitalizations between $200 Million to $4.0 Billion. We then eliminate all stocks that have price-to-earnings ratios (on a normalized basis) above that of the Russell 2000. This results in a list of approximately 950 companies in today’s market. The next step is a rigorous analysis of these companies on such factors as financial strength, price-to-book ratio, price-to-cash flow and revenue, earnings and dividend growth. This multi-factor screening derives a list of 100-125 companies, which we research on an ongoing basis. It allows us to find financially strong companies while assisting in avoiding problematic, low P/E stocks. Experience has taught investors that the most successful investments have been in owning profitable companies rather than trying to discover turnarounds.

Ideally our client portfolios will be invested in 35-45 stocks, diversified across 16-20 industries. This is very important, as good diversification is essential to properly exploit the low P/E effect. When a decision to buy or sell a stock is made, it is implemented uniformly for all portfolios, unless a specific constraint exists.

Sector Diversification

Portfolio Characteristics

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Sample Holdings

Old Dominion Freight | Life Storage | Chemed | Digital Realty Trust | Mednax


Diversified Income

The objective of the diversified income strategy is to provide conservative investors with a reasonably predictable income stream while at the same time providing solid opportunity for capital preservation and appreciation. Current economic and interest rate conditions will determine the sectors that the strategy invests in and therefore the dividend and income yield of the portfolio. Changes in these conditions may lead to adjustments in the strategy’s holdings. These changes may produce an adjustment to the overall yield of the portfolio and the income received.  DCM is very tax conscience for clients that have taxable accounts.

DCM uses fundamental Graham and Dodd investment analysis in the selection of a portfolio of high dividend paying securities. On a fundamental basis, we examine the ability of the security to generate sustainable cash flow and dividends on an ongoing basis. Specifically, we analyze an entity’s net free cash flow, payout ratio and demonstrated history of stable or increasing dividends. In addition, we examine the company's ability to generate increases in earnings and cash flow which may translate into higher dividend payouts and capital appreciation.  The fundamental premise of the strategy is to generate a tax efficient dividend and income return with low volatility.

Portfolios are comprised of common stocks (both domestic and international), bonds, preferred stocks, master limited partnerships, limited partnerships, royalty trusts, ETF’s, REIT’s and closed-end funds.  DCM will manage client accounts using the some or all of theses vehicles, and on occasion other liquid, publicly traded securities.  Overall the combination of the components in the strategy provides a portfolio that generates a high-yield while providing capital protection. Our risk overlay is used in order to: (1) reduce volatility, (2) control interest rate risk and (3) temper sector exposure (especially in commodity specific holdings). The current target portfolio yield is approximately 4.9%.