Student Managed Investment Fund

On Monday, April 2nd, Emily Gagis pitched The 3M Company (NYSE:MMM) to add to the Industrials Sector holdings.  3M is a Global Science company that manufactures over 55,000 products across five business segments. 3M has experienced immense growth in the past years through three key growth levers: Portfolio Management, Investing in Innovation, and Business Transformation, which continue to grow.  Emily outlined that 3M’s diversified public offering will benefit immensely from an expanding manufacturing economy. In addition, the company has strategically repositioned itself for growth through acquisitions, divestitures, and restructuring. Emily concluded her investment thesis by detailing the company’s potential for success in growing industries such as autonomous vehicle technology, which 3M is a first mover in due to its development of Smart Signs and LiDAR Sensors.  Emily proposed to buy 30 shares of MMM and sell 40 shares of XLI and 100 shares of ALSN to fund the transaction. The motion passed unanimously.

On Tuesday, February 27^th, Charlie Duryee pitched Callaway Golf as an addition to SMIF portfolio. Callaway is a producer of all types of golf accessories ranging from clubs to clothing. Given the success of the company’s most recent line of clubs, EPIC, and its strategic acquisitions of TravisMatthew and OGIO, Callaway saw a significant revenue increase in 2017. This is expected to continue into 2018 with the companies’ new golf club line, ROGUE and increased investment into TopGolf. Unlike any of its competitors, Callaway currently holds nearly a 20% stake in TopGolf, a privately held golf entertainment company with 41 locations, three of which are in the U.K. TopGolf has brought a social aspect to the game by simplifying it and inviting guests to both eat and drink while they play with their friends and family. Analysts estimate Callaway’s initial 54-million-dollar investment to be worth up to 400 million dollars today. In addition, an investment in Callaway further diversifies the consumer discretionary sector of the SMIF portfolio through an investment in a golf specific, Russell 2000 company. The motion to purchase 400 shares of ELY and sell 60 shares of XLY was ultimately approved by the class. Now, Callaway makes up about 75 basis points of the equity fund and is the smallest company held in the portfolio with a market cap of roughly 1.5 billion.

On Tuesday, February 27th, 2018, James Boothe pitched Lowe’s Companies, Inc. (LOW) to be added into the SMIF portfolio.  Lowe’s is the world’s second largest home improvement warehouse retailer that provides a full-line of products and services to their retail and professional customers.  In his investment thesis, James highlighted Lowe’s recent large expansion into the Canadian market and improvements to their distribution centers, on top of positive changes in relevant economic indicators.  James demonstrated how Lowe’s would be a great long-term investment for the portfolio as increases in the economy and real disposable personal income would result in greater amounts of spending on home improvements.  James proposed to purchase 100 shares of LOW through the sale of 95 shares of XLY, the consumer discretionary ETF. The motion passed unanimously.

On Tuesday, March 6, one of our Consumer Staples analysts, Jack Horan, pitched Costco as an addition to the SMIF portfolio. Costco (COST) is a membership warehouse club that is uniquely positioned in the retail industry to capitalize on current consumer trends. With the looming concern of a potential market downturn, Costco’s low cost, low margin business structure gives the company a unique advantage over its competitors in the retail space, as was evident in 2007/2008. Costco is determined to grow its store count year over year, with an emphasis on the upcoming years in particular. Costco is a growth company and thus behaves as a growth stock. Jack based his thesis on the idea of investing in Costco’s future growth prospects, which will help provide substantial return for the portfolio in future years. An investment in Costco further diversifies the retail consumer staples industry through an investment in the world’s largest membership warehouse club. The motion to buy 30 shares of COST at market price and sell 105 shares of XLP was approved by the class.

On Monday, March 5th, Jake Dunlop pitched Royal Dutch Shell (NYSE: RSDA) as an addition to the Energy sector holdings.  Shell is an integrated energy company with three main business segments: Downstream, Upstream, and Integrated Gas.  Jake expects modest revenue growth over the next few years due to population expansion, larger demand for electricity, a decrease in oil discoveries, and international supply cuts.  He also believes Shell is the most attractive energy investment due to its ability to maintain high operating margins regardless of macroeconomic factors, as well as its expansion into the liquefied gas segment (LNG) after its acquisition of the BG Group in 2016.  Jake believes Shell’s expansion into LNG will serve Shell strongly in future, especially with increasing demand for clean energy.  Jake also believes that Shell’s Strategy and Capital Allocation Framework provides an optimal return to the portfolio through a reduction of its gearing ratio to 20% by 2018, a continued strong dividend policy without the Scrip Dividend program, and an increase in shareholder value through an accelerated share buyback program.  Jake is confident that Shell will be an exceptional long-term position in the portfolio.  He motioned to purchase 50 shares of RSDA; the motion passed, with 17 in favor and 4 against.

On Monday, February 26^th, Amber Mironov pitched Constellation Brands, Inc. (NYSE: STZ) to add to the Consumer Staples Sector holdings.  Amber outlined Constellation Brands as a well-diversified, market leading alcoholic beverage company with promising growth prospects and shareholder returns driven by a strong leadership team.  Recent acquisitions of high growth companies have allowed Constellation to further diversify and profit from new trends in the industry.  Investments in the high-growth craft beer market have favorably positioned the company to grow rapidly in the coming years.  Future growth will be driven by Constellation’s focus on innovation with new products, new packaging, and line extensions along with its expansion of breweries.  Favorable demographics, powerful brand presence, distribution opportunities, and innovation are key drivers for Constellation’s future.  Given its first mover advantage with investment in the Canadian marijuana industry, Constellation Brands will reap the benefits that are expected with legalization of the drug in 2019.  Further, once the industry expands internationally, as many analysts and company executives predict, Constellation Brands will be well positioned to take advantage of industry growth.  Amber proposed to buy 35 shares of STZ and sell 40 shares of XLP and 20 shares of SPY to fund the transaction.  The motion passed unanimously.

On Monday, February 26th, Uttam Kumaran pitched Nvidia Corporation (NASDAQ: NVDA), an equity that would add to holdings in the Information Technology sector.  Uttam focused on the growth of NVIDIA into AR, cryptocurrencies, and PC gaming.  In the past 25 years, Nvidia has been the leading manufacturer of graphics processing units (GPUs).  Their products are used in a wide array of markets including gaming, datacenters, automotive, and professional visualization. Nvidia utilizes two business lines, GPU and the Tegra Processor, to target the aforementioned four markets. Today, Nvidia looks to emerge as the leading supplier of GPUs for state-of-the-art technologies in the fields of cryptocurrency, virtual reality, and artificial intelligence.  Uttam proposed to purchase 50 shares of NVIDIA at the market price on February 26^thto be financed through the sale of 180 shares of the Technology Sector SPDR Fund (XLK).  The proposal passed unanimously.

On Monday, February 19, Connor Zierden pitched Applied Materials Inc. (NASDAQ: AMAT) as an addition to the Information Technology sector holdings.  Applied is a semiconductor equipment manufacturing company with three main business segments: Semiconductor Systems, Applied Global Services, and Display.  Connor anticipates strong double-digit revenue growth in all three segments through the end of the decade, with the Display Segment experiencing the most drastic market expansion. The most explosive drivers over the next five years are expected to be Artificial Intelligence and hyperscale data centers. Applied saw record operating margins and quarterly revenues in the first quarter of 2018, with sales growing 28% year over year to $4.20 Billion.  Applied leads the industry in research, development, and engineering (RD&E) investment, enabling them to take the largest market share.  Alongside the commitment to RD&E, Applied has a venture arm that invests over $50 Million annually to extend its reach and supplement its businesses.  Connor believes that a revitalized capital allocation framework that includes doubling the quarterly dividend payment, increasing capital expenditures, and authorizing an additional $6 Billion in share buybacks confirms the bullish executive outlook and the company’s commitment to return value to its shareholders. He envisions the semiconductor industry to be prominent over the next decade, which demonstrates the long-term value Applied has to offer.  Connor motioned to purchase 160 shares of AMAT; the motion passed unanimously.