On Monday, February 26th, 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 26thto 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.
On Monday, February 19th, Michael McHale pitched Booking Holdings (at the time of the pitch known as The Priceline Group) to be added to the Consumer Discretionary sector holdings. Booking Holdings (NASDAQ: BKNG) is the world’s leading provider of online travel and related accommodation services. The company is made up primarily of six independently operated brands: booking.com, KAYAK, priceline.com, agoda.com, rentalcars.com, and OpenTable. Michael predicts strong growth in the company’s agency and advertising sectors, along with stable growth in their merchant sector. The travel industry has been growing globally at consistently high rates for the past two decades, and experts believe that this growth will continue into the future. Michael believes that Booking Holdings is the best-positioned company to capitalize on this growth. He also cites that a growing consumer trend of spending more on experiences such as travel and less on material goods would be a positive driver for Booking’s growth. Michael proposed to buy 6 shares of BKNG, financed by selling 108 shares of XLY, the Consumer Discretionary sector ETF. The motion passed unanimously.
Guest Speaker Richard Koch joined SMIF for lunch on February 22, 2018. Mr. Koch graduated from Bucknell with a B.S. in Civil Engineering and the University of Chicago with a M.B.A. in Finance. He is the founder of Koch Communications, a small business that assists companies with financial, corporate communication, and training activities. Prior to this venture, Mr. Koch worked as the Investor Relations Director for various manufacturing companies. Mr. Koch began his career as an officer and instructor for the United States Navy.
Mr. Koch shared career advice, presentation tips, and meaningful anecdotes with SMIF. Mr. Koch also provided unique insights on his area of expertise: company external communications. The SMIF students in attendance enjoyed their time with Mr. Koch and took away valuable lessons they could apply to their pitches.
Guest Speaker David Dunn joined SMIF on February 20th, 2018. Mr. Dunn graduated from Bucknell in 1991. He is currently a Managing Partner at Shot Tower Capital, an investment banking firm that provides strategic and financial advisory services to media, entertainment, and consumer companies. Prior to founding Shot Tower Capital, Mr. Dunn held senior positions at Signal Capital Group and Deutsche Bank. Prior to that, Mr. Dunn was an attorney at Hogan Lovells and an economist for the U.S. Department of Labor.
Mr. Dunn shared his sentiments on the music industry and threats from streaming websites such as Spotify. Overall, he is optimistic about the growth of music publishing and new distribution channels. Mr. Dunn went on to explain the complicated process behind projecting cash flows and creating valuations. Mr. Dunn ended the talk by sharing examples of client work, such as debt restructuring. The SMIF class enjoyed hearing about Mr. Dunn’s career, and we thank him for taking the time to speak with us.