For our second pitch on Wednesday, March 8, the class heard from DJ Magee, who proposed adding Exxon Mobil to the portfolio. DJ believes Exxon Mobil to be a strong addition to the energy sector due to its industry leading cost management. The company is diversified and highly stable. DJ cited a recent selloff in July of 2016 as a strategic justification for buying. He believes the fundamentals of the company are still strong, and that the selloff was not justified. DJ also noted that SMIF has active risk in the portfolio by not holding Exxon Mobil. He motioned to purchase 300 shares of XOM; unfortunately the motion did not pass.
On Wednesday, March 8, Reagan Cerney discussed adding FedEx to the Industrial Sector of the SMIF Portfolio. Reagan believes that SMIF currently lacks diversification within Industrials – adding a logistics company such as FedEx or UPS would help round out our holdings. When comparing FedEx Vs. UPS, Reagan cited that FedEx has faster shipping times, and more European exposure through the acquisition of TNT. Furthermore, much of UPS’ revenue comes from Amazon; FedEx has no such dependence on a single customer. Reagan also believes that FedEx is currently undervalued – their efforts to improve margins should drive heightened profits in the future. She motioned to purchase FedEx; the motion passed unanimously.
On Tuesday, March 7, the SMIF class heard from Rory Bonner, who pitched Eagle Materials (EXP). Eagle Materials is a diversified manufacturing company specializing in the production of slag, concrete, aggregate, gypsum wallboard, and recycled paperboard. With over 50% of Eagle’s revenue coming from government, Rory believes they will benefit from the Trump Administrations increased spending in infrastructure. Rory also cited that currently SMIFs materials exposure is very limited, with only 1 or 2 holdings. Eagle Materials faces competition from companies such as USG, Martin Marietta, and Vulcan, however Eagle’s superior margins are estimated to deliver better long term profits. Rory motioned to purchase 70 shares of EXP; the motion passed 29:1.
Today, SMIF heard from Haley Calkins, who proposed to add Disney to the Consumer Discretionary sector. Founded in 1923, Disney has grown into a multimedia giant, with revenues deriving from media networks, studio entertainment, and theme parks and resorts. Haley noted that SMIF currently has active risk by not holding Disney; the company currently makes up .80% of the S&P 500 index. Haley made a point to note that Disney is far more diversified than its competitors; though Disney competes with companies such as Comcast, Fox, and Time Warner, none of these companies operate in as many industries as Disney. Haley believes this is the real benefit of the Disney brand – the company is able to generate intellectual property through the creation of movies and media, and then further generate profits from these creations in their theme parks, merchandise, and licensing. She motioned to purchase 230 shares of Disney, funded by the sale of XLY Consumer Discretionary ETF. The motion passed unanimously.
Yesterday in class, Jake Levine proposed to add Visa to the Information Technology sector. Visa is the largest payment transaction company in North America. The company offers their transaction services to Financial Institutions. Jake went to great lengths to explain Visa’s business structure, noting how it is fundamentally different from competitors such as Discover and American Express. These firms, unlike Visa, offer credit. Visa is strictly a transaction technology.
Jake believes Visa is positioned strategically for the future, as he expects gains from Mobile Payment to drive domestic revenue. Currently mobile payment only accounts for 5% of US spending; however this figure is expected to grow to $3 Trillion by the year 2021. Furthermore, Jake believes that with millennial gaining purchasing power, the use of cash payments will fall relative to card payments, in which Visa takes a cut. Jake ultimately motioned to purchase 250 shares of Visa by through a mix of cash and shares of XLP Consumer Staples ETF. The motion passed unanimously.
On February 15th, Zach Matarazzo discussed the addition of Salesforce (CRM) to the SMIF Portfolio. Salesforce began as a Cloud-Based CRM Software Company in 1999, but has since expanded its product offering to a comprehensive list of enterprise software solutions. The company competes in the SaaS (Software as a Service) subsection of the Cloud Computing Industry. Salesforce has seen 25-30% YoY revenue growth in the past 3-4 years, and it expects to hit a $20B revenue mark by the year 2022. Though Salesforce currently does not generate net income, the firm has positive cash flows, and has been investing heavily in R&D and Marketing in the past 1-2 years. Zach is confident that this investments will begin to payoff, resulting in positive net income from 2017 forward. He motioned to purchase 180 shares of CRM; the motion passed unanimously.
On February 9, Jack pitched Abbott Labs to be added to the SMIF Portfolio. Abbott is a diversified healthcare company, founded in 1888. Jack believed our current Healthcare holdings were too concentrated in biomed/pharma, and he hoped that Abbott would help to diversify this. Abbott currently has 4 main business segments – nutritionals, medical devices, diagnostics, and branded generics. Currently Abbott is in a restructuring phase, where the company is attempting to only operate in markets in which they are #1 or #2. Jack believes that this play will prove profitable in the long run. Jack also cited rising GDP and rising median age as reasons why he believes this company is positioned to succeed. Jack motioned to purchase 300 shares of Abbott laboratories; the motion passed unanimously.
Yesterday in class we had the pleasure of hearing Christian Cavaretta pitch
Activision for the SMIF portfolio. Activision is the largest interactive gaming company (Video games), with three main components – Activision (Console games), Blizzard (Subscription based computer games), and King (Mobile games). Some of Activision’s most famous titles include Call of Duty, Candy Crush, and Overwatch. Christian believed now is the time to buy in this industry, as the switch from disc based games to downloadable content will significantly improve margins; with downloadable content, Activision does not have to produce/package games, and is also able to push downloadable expansions (IE Map Packs).
Even with the most conservative of estimates, Christian is confident that Activision is currently undervalued in the market. He motioned to purchase 450 shares of ATVI; the motion passed unanimously.