LoWho's Buyinying Verizon and JPMorgan -- Barrons.com
DOW JONES & COMPANY, INC. 7:29 AM ET 7/13/2018
Symbol Last Price Change
VZ 51.2down -0.04 (-0.08%)
ABT 62.95down +0.21 (+0.33%)
ADI 97.96down -0.44 (-0.45%)
NOV 44.2down -0.04 (-0.09%)
JPM 105.47down -1.38 (-1.29%)
QUOTES AS OF 09:59:25 AM ET 07/13/2018
Astute readers of Barron's are familiar with investment firm Dalton Greiner Hartman Maher, which we've profiled a number of times, most recently about two years ago.
DGHM, which has investments across all market capitalizations, has a reputation for expertise in finding value in smaller, lesser-known names. In fact, $1.2 billion of the total assets of $1.9 billion that the firm manages is invested in its DGHM V2000 SmallCap Value strategy, which launched in 1994.
That strategy has annualized return of 12.2% for the 15 years ended May 31, compared with 10.9% for the Russell 2000 Value index. Its performance also tops the S&P 500's annualized 15-year total return of 9.4% for the period ended July 10, according to Morningstar.
Recent years haven't been as kind to the small-cap strategy, however; It has lagged the Russell 2000 Value for the past three years and in shorter periods.
Interestingly, DGHM's most notable second-quarter investment trades were in larger-cap stocks. It initiated a position in Verizon Communications(VZ) , tripled holdings in Abbott Laboratories(ABT) , Analog Devices(ADI) , and National Oilwell Varco(NOV) , and quadrupled its investment in JPMorgan Chase(JPM) .
The firm didn't respond to a request for comment.
DGHM bought 415,200 Verizon(VZ) shares in the quarter. We noted in a cover story last month that Goldman Sachs sees the telecom giant as having a strong balance sheet, which could bolster the stock when the bull market ends. Nonetheless, this is a time for a measure of uncertainty for Verizon(VZ), as a new chief executive takes the helm at the start of next month.
We suggested last month that Abbott, among others, could have replaced General Electric (GE) in the Dow Jones Industrial Average instead of Walgreens Boots Alliance (WBA). DGHM likes the health-care firm and bought 160,300 additional Abbott shares to end June with 247,700 shares.
DGHM bought 101,200 more shares of chip maker Analog Devices(ADI) in the second quarter and ended the period with 148,700 shares. We noted last month that Raymond James was bullish on the company, writing that it "continue[s] to see catalysts that can move the stock higher."
Oil and gas drilling firm National Oilwell is recovering along with the price of oil. Shares are up 23% so far in 2018 through Thursday, excluding dividend payments, but are still a third lower than where they were at the end of 2013. DGHM was bullish on the name, and bought another 219,400 National Oilwell shares to end June with 312,200 shares.
DGHM invests 13.1% of its assets in regional banks, its most heavily weighted industry, but JPMorgan(JPM) -- the largest U.S. bank by assets -- isn't anyone's regional bank, unless they live in a townhouse on Manhattan's Upper East Side. In fact, JPMorgan(JPM) represents DGHM's sole investment in the diversified-banks sector and the largest holding in its AllCap Value strategy. Now its holding is much more hefty; DGHM bought 123,400 more shares to end the second quarter with 163,525 shares.
The larger position could be a play for steady income. Earlier this month we were upbeat on JPMorgan's(JPM) 2% dividend yield, which has been praised as sustainable.
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Write to Ed Lin at edward.lin@barrons.com
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