The Delafield Fund Inc., New York, will celebrate this month the birthday its managers and parent company, Reich & Tang LP, New York, have been anxiously awaiting: number five.
Nvest LP, Boston, parent company of Reich & Tang, waited to introduce the Delafield Fund to the 401(k) plan marketplace until the fund had a five-year track record, the minimum required by most plan sponsors before they will consider including a fund in their 401(k) plan lineup.
With a new institutional share class, the $100 million, small-cap to midcap value Delafield Fund will become one of the core options Nvest marketers promote heavily to defined contribution plans. Nvest markets the mutual funds and investment products of its subsidiaries to 401(k) plans on an investment-only basis.
The fund's manager, Dennis Delafield, said he uses a contrarian value style that allows him to move into cash when "the market is ebullient" so he can take advantage of buying opportunities later in slower markets. He looks for companies selling at prices that carry with them little market or intrinsic risk. Mr. Delafield is looking for special situation companies where something positive is happening to the company that will make a difference to its share price. He said he "hits more singles and doubles than homers" using an old-fashioned multiple of between 12 and 15 times earnings as a criteria to identify possible stocks.
The fund had a terrible third quarter, said Mr. Delafield, because of a couple of stock picks, PennCorp Financial Group in particular, that were disappointing; also a problem were the effects of the Asian contagion that has knocked down the pricing power of U.S. companies.
For the 12 months ended Aug. 31, the Delafield Fund had a category rank for small-cap value funds from Morningstar Inc., Chicago, of 77% for its -21.58% return and 60% for the three years with a 7.38% return.