On Tuesday, April 10th, Peter Snow pitched Las Vegas Sands (NYSE: LVS) to add to the Consumer Discretionary Sector holdings. Las Vegas Sands Corp. is a global operator of integrated resorts that specializes in developing premium accommodations that feature gaming, high-end shopping, unique entertainment, fine dining and a variety of other amenities. The Company operates integrated resorts in both Asia and the United States. Peter believes Las Vegas Sands is well positioned to capitalize on the first period of strong synchronized global economic growth in a decade. In Macao, the company will benefit from increased visitation and spending from the premium mass segment, as well as new transportation options for visitors to the peninsula. In Singapore, higher VIP spending coupled with exceptional operating margins will lead to further increases in free cash flow; while in Las Vegas, a healthy U.S. consumer in tandem with growth in convention related bookings will increase revenues. The legalization of casino gaming in Japan will serve as an additional catalyst for LVS’ stock. Peter recommended purchasing 150 shares of LVS, while selling 160 shares of CMCSA, 50 shares of NKE, and 20 shares of XLY. The motion passed unanimously.
On February 27th, Alden Stone,pitched Constellation Brands, Inc. (NYSE:STZ). Constellation is the largest producer of wine in the world and has exclusive rights to sell Modelo’s Mexican beer portfolio in the U.S. Alden’s investment thesis was based on an industry leading premium product mix, increasing company margins, diversification within the alcohol beverage industry, the company’s first mover advantage, and the company’s history of returning value to shareholders. In the U.S. market, consumers are buying less volumes of alcohol, but spending more dollars, illustrating how consumer preferences are changing to higher-end wines, beers, and spirits. The company is able to capitalize on this trend as it focuses on producing and marketing premium wines, spirits, and high-end beers, with a majority of revenues coming from the U.S. Alden proposed a purchase of 45 shares of Constellation. This transaction was financed through the sale of 180 shares of the Consumer Staples Select Sector SPDR (XLP). The proposal passed unanimously.
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 February 20th, Jake Frankel, a materials sector analyst, pitched Southwest Airlines Co. (NYSE:LUV). As of September 30th, 2017, Southwest Airlines Co. (Southwest) is the largest domestic air carrier in the United States per the Department of Transportation. Jake’s investment thesis was predicated on a strong corporate strategy, competitive industry position, consistent operational excellence, a strong balance sheet, and a Company responsibility to return value to shareholders. Southwest has demonstrated a commitment to growth through robust capital expenditures. This investment will allow Southwest to add more aircraft to its fleet and maintain operational efficiency as it grows. A robust United States economy and changing consumer trends that favor experiential spending will further support Southwest. Southwest has a strong balance sheet and is well equipped to access the debt capital markets to finance future growth. Jake proposed a purchase of 100 shares of Southwest. This transaction was financed through the sale of 20 shares of Honeywell International Inc. (HON) and 50 shares of Delta Air Line, Inc. (DAL). The proposal passed unanimously.
On Tuesday, February 20, Aaron McIntyre pitched Simon Property Group (NYSE: SPG) to be added to the SMIF portfolio. Simon Property Group is a retail real estate investment trust (REIT) and the second largest publicly traded equity REIT. The company invests in large malls as well as premium outlets. Aaron emphasized continued growth in NOI, revenue, and same-store sales, which presents strong performance in SPG’s assets. The retail industry is in the middle of a large transformation with the emergence of e-commerce and the shift in consumer interest to more enjoyable shopping experiences. As the largest mall owner in America, Simon has the advantage over its competitors of being able to focus on evolving its current assets as opposed to seeking other investment opportunities. The addition of SPG supports the fund’s consensus that the U.S. economy will see great growth in the coming year and therefore, an increase in consumer spending. Aaron proposed to purchase 40 shares of SPG through the sale of 38 shares of the XLU, 11 shares of NextEra Energy (NEE), and 10 shares of SPY. The motion passed unanimously.
On January 30, 2018 Cole Davis pitched Devon Energy (NYSE: DVN) to be added to the SMIF Portfolio. Devon is an upstream oil and gas production company with operations in seven primary basins across North America including the Permian, STACK, Eagle Ford, Heavy Oil, and several Rocky Mountain basins. While Devon saw a steep decline in stock price and enterprise value as a result of the collapse of oil prices between 2014 and 2016, they are poised to make a strong recovery from these lows moving forward. Cole is confident that Devon’s management will be able to grow their current production through capital expenditures in the STACK play and Permian basin funded by free cash flow produced by the company’s Heavy Oil and Eagle Ford projects. Cole is confident that Devon’s management will be able to develop their premium positioning in prolific unconventional basins to further outperform their peers’ production. He is also confident in the company’s ability to reduce operating costs and provide economic production in low price environments. Finally, Cole believes that Devon’s developments in their STACK and Permian basin positions within their free cash flow will allow some level of protection from having to raise equity or debt to aggressively expand. This spending control will also provide a means for Devon to return cash to shareholders through dividends as well as fund the repayment on Devon’s current debt. Ultimately, Cole pitched the purchase of 325 shares of Devon through the sale of 175 shares of Anadarko Petroleum (NYSE: APC) and 12 shares of SPY, which passed unanimously.