Student Managed Investment Fund

Kayla Scoli ’19 pitched Welltower Inc. (WELL) to the Student Managed Investment Fund (SMIF) on February 18, 2019. Founded in 1970, Welltower is a real estate investment trust that invests in senior housing, assisted living and memory care communities, post-acute care facilities, and medical office buildings. They were the first and are the largest Healthcare-focused REIT. Welltower aims to deliver the health care infrastructure necessary to facilitate better treatment at lower costs and keep patients out of the hospital. They target their investments in affluent, high barrier markets given the trend that urban seniors are hoping to age in place. A major driver for Welltower’s future growth is the aging of the baby boomer generation and synergies between Welltower and major health systems. Over the last 6 months they have invested $2.25B in acquisitions. Additionally, the firm recently reported an increase of 40 bps in senior housing occupancy and expect this to continue trending upward. Management also predicts FFO/share to increase 4% in 2019 over 2018 results. The class voted to buy 130 shares of Welltower.

Fran Kinniry ’19 pitched Southwest Airlines Co. (LUV) to the Student Managed Investment Fund (SMIF) on February 11, 2019. Founded in 1967, the mission of Southwest Airlines is dedication to the highest quality of customer service delivered with a sense of warmth, friendliness, individual pride and company spirit. Southwest Airlines is the fourth biggest U.S. airline. The company fits a niche market among the big three airlines (Delta, United and American) and ultra low cost carriers (Jet Blue and Spirit). Southwest attempts to offer all the amenities of major airlines at a fraction of the cost. They are famous for having the best customer service for 23 out of the past 27 years and treating their employees extremely well. Southwest has a market capitalization of 32.21 billion. SMIF voted to buy 300 shares of Southwest Airlines and selling 3 calls for April 18, 2019.

Eric Wallerstein ’19 pitched Lazard (LAZ) to the Student Managed Investment Fund (SMIF) on February 4, 2019. Founded in 1848, Lazard is a top global financial advisory firm. Lazard advises corporations and institutions on a variety of transactions, including mergers and acquisitions, restructuring, and shareholder advisory. Additionally, Lazard Asset Management currently manages over $240 billion in assets. Lazard Asset Management focuses on actively managed value-style equity strategies, and has doubled their AUM in just the past decade. Lazard’s financial advisory business has consistently finished in the top tier of both mergers and acquisitions and restructuring league tables, both in the U.S., and internationally. Recently, Lazard has advised on several major transactions, including Aetna’s $77 billion sale to CVS Health, and Express Scripts’ $67 billion sale to Cigna. Major recent restructuring clients include Pacific Gas & Electric, Toys “R” Us, and Sears Holdings. The class voted to purchase 400 shares of LAZ.

Chadd Cummings ’19 pitched The Home Depot, Inc. (HD) to the Student Managed Investment Fund (SMIF) on February 5, 2019. Home Depot was founded in 1979 with the dream of a home retail superstore capable of providing the most inventory, lowest prices, and best trained staff. From there, the store has grown to become the largest home retailer at 2,284 stores and over 400,000 employees. Home Depot is pursuing many strategic initiatives, however the most notable is their interconnecting retail efforts. Through continuing to intertwine aspects of their business, Home Depot has been able to optimize the customer experience and maximize their growth. Additionally, Home Depot has made extensive investments into its supply chain. Their supply chain currently has delivery capabilities of reaching 95% of the geographic US within two days, and they have set a goal to be able to reach 90% within one day. Home Depot has cemented itself as a strong company and reiterated this through continually beating earnings. The class voted to buy 55 shares of Home Depot.

As of December 3^rdand 4^th, each respective classes asset allocation has been in line with the benchmark set earlier in the semester (90% Equity and 10% Fixed Income). The Monday SMIF Portfolio is holding an asset allocation of 89.79% Equity and 10.21% Fixed Income. Since taking over the SMIF Portfolio on April 30, 2018, the Monday portfolio has achieved a total return of 5.04%, which trails their benchmark by 186 basis points.

The Tuesday SMIF Portfolio is holding an asset allocation of 89.57% Equity, 10.16% Fixed Income, and 0.27% Cash. Since taking over the SMIF Portfolio on April 30, 2018, the portfolio has achieved a total return of 5.67%, which trails our benchmark by 42 basis parts. Our benchmark is a blended benchmark consisting of 90% S&P 500 Index and 10% Barclay’s US Aggregate Bond Index. The majority of our achieved return can be attributed to the Information Technology and Health Care sectors of the total SMIF Portfolio.

In the early part of the semester, SMIF also selected target sector weightings for the equity position of the portfolios. The current weightings can be seen in the tables below for each respective class. Depending on our future outlooks, we will look into adjusting our target weights next semester.

Figure 1: Monday SMIF Equity Sector Weightings 12/3 Compared to SMIF Sector Targets

Figure 2: Tuesday SMIF Equity Sector Weightings 12/4 Compared to SMIF Sector Targets