Using a fundamental, bottom-up approach, Alpha Omega’s All Cap Dividend Value portfolio seeks to outperform its benchmark over a full market cycle by focusing on investment performance in down markets as well as up markets.
- Alpha Omega begins with a universe of all U.S.-listed, dividend-paying equities with market caps over $400 million for liquidity. We do not seek a dividend to target or maximize income. Rather, we desire the protection of some income in a market downturn, and we believe that paying a dividend demands discipline from corporate management and signals an investor-friendly attitude.
- We screen first for low-valuation and balance sheet strength. Extensive reading may generate additional investment possibilities where earnings power or balance sheet strength are not evident in a statistical screen. The team refines the list generated from screening and other ideas through in depth fundamental research and analysis.
- In addition to a strong balance sheet, we look for companies with improving business outlooks, defensible market positions, excellent management teams and strong and diverse Boards of Directors, and potential/likelihood of a growing dividend. We consider valuation relative to assets, earnings and cash flow against a company’s historical averages, peers and overall market.
- We must identify catalyst(s) to unlock value and we examine closely potential downside risks.
Alpha Omega selects positions using a team approach. Investment committee members average almost 20 years of experience with different areas of expertise and experience. In order to add a position to the portfolio, all four members of the investment committee must agree. Alpha Omega adds portfolio positions anticipating a long-term hold; as a result, it buys and sells after substantial deliberation.
Alpha Omega targets 30-40 positions mostly of approximately equal-weighting. Individual company fundamentals drive buy/sell decisions rather than sector or industry weightings. We neither make sector/industry bets nor seek to mirror an index. However, consideration is given to correlation of stock price drivers among portfolio holdings, again with an eye toward downside protection.