On Tuesday, December 5th, Jeff Hagen, one of our Consumer Discretionary analysts, pitched McDonald’s Corporation. Jeff pointed to McDonald’s three recent growth initiatives as catalysts for future growth, including improvements in technology, a new delivery platform and menu expansions. He believes that McDonald’s is a valuable addition to the SMIF portfolio due to its commitment to provide shareholder value. McDonald’s has outperformed our benchmark during economic downturns while having a lower beta. Jeff proposed buying 75 shares of McDonald’s by selling 100 shares of Starbucks, 35 shares of Nike, 5 shares of the SPY and funded the rest with cash. The proposal passed unanimously.
On Tuesday, November 28th, Kortney Klingert pitched CarMax to the Student Managed Investment Fund. Kortney is confident that CarMax is well positioned to deliver long-term growth. CarMax is the largest retailer of used cars in the United States, selling more used cars each year than their three closest competitors combined. They revolutionized the auto industry by simplifying the process of selling, purchasing and financing used cars with no-haggle, honest pricing. The used car market is highly fragmented, consisting of over 18,000 franchised dealers, 120,000+ local used car lots and individual sellers. CarMax’s national footprint, sizable data advantage, great associates and proprietary systems uniquely position them to service customers and navigate between an ever important digital and store experience. CarMax has the established footprint to scale up and expand its market share and to best service changing consumer demands. Their innovative and digitally focused business model will continue to benefit them in the future. This investment diversifies our portfolio and gives SMIF exposure to a company that is strongly positioned for growth and success. The class approved the motion 17:18 to purchase 100 shares of CarMax and fund this purchase through the sale of the consumer discretionary ETF, XLY.
On Tuesday, November 28th, one of the SMIF Technology sector analysts, Charlie Niehaus, pitched Square Inc., a payment processing solutions business. Charlie highlighted Square’s recent diversification of revenue sources with the addition of their Square Capital and Square Cash business segments in his stock pitch. He believes Square is a beneficial addition to the SMIF portfolio as a Fintech growth stock. From the time Charlie started covering Square to when he pitched it, the stock price had nearly doubled. Taking this possible over valuation into account and the recent volatility in the stock price due to earnings and cryptocurrency news, Charlie proposed to utilize a put onboarding strategy. He believed this was the best option in anticipation that in the short term, the price could slide even more. The motion passed 17:18.
On Tuesday, November 14, Jackie Ham pitched Waste Management to be added to the SMIF portfolio for our first stock pitch of the academic year. She is confident the company will be an excellent long-term position. Waste Management is the largest provider of waste management services in North America, partnering with residential, commercial, industrial and municipal customers to manage and reduce waste around the country. Waste Management will continue to grow with an expanding economy and increasing population, both of which will drive industry growth in the coming years. She emphasized decreasing costs and improving margins as a catalyst for earnings growth and stock appreciation. Jackie believes that Waste Management is best positioned in the industry to capitalize on the shifting trends towards environmentally sustainable waste disposal, such as recycling. Finally, she cited that the addition of WM will diversify the Industrials sector of the portfolio, as we currently only have exposure to two subsectors: aerospace and defense and transportation and logistics. Jackie motioned to purchase 75 shares of WM, funded by the sale of 75 shares of XLI and cash. The motion passed unanimously.