On the second day of SMIF’s travels to New York, the group woke early to meet with Ron Baron at Baron Capital. Ron graduated from Bucknell in 1965 with a degree in chemistry. He later attended Georgetown Law School in the evenings while working as an examiner at the U.S. Patent Office. Ron got his start in the investment world in 1970, when he began conducting his own stock research and selling this research to large investment houses. From there he began Baron Capital in 1982. Baron Capital is a long term investment company, often holding securities for more than 10 years. As was reiterated time and time again to the SMIF class, Baron “Invests in People.” The company has seen many successes – they now manage over $28 billion. We thank Ron and his company for taking the time to host us that morning.

From Baron Capital, SMIF traveled to Blackrock, where we had lunch with several employees, many of which were Bucknell alums. We first heard from Maria Heyeca, who discussed a broad market outlook with SMIF, particularly discussing the turbulence regarding the upcoming French election. Next we heard from Dan Greenberg, a former SMIF student in charge of Blackrock’s high net worth Separately Managed Accounts business. Dan touched on the soft skills required in the Private Wealth industry, particularly when discussing personal finances with those who are less literate in investments. Later we heard from Morgan Beeson, who works with Blackrock’s Aladdin computer program. Aladdin is Blackrock’s proprietary research, trading, and investment optimization platform. It was fascinating to hear how Blackrock has both harnessed Aladdin for its own use, as well as monetized it through sales to other firms. Lastly we heard from Katrina Schmaltz, a former SMIF student, who worked with Blackrock’s Portfolio Consulting Group. Katrina discussed her role in optimizing many financial planners’ portfolios.

After visiting Blackrock, SMIF ended our lengthy day by visiting SMIF Advisory Board Member Joe Quintilian at the New York Stock Exchange. SMIF members were fascinated to see how the stock exchanged has changed in the past two decades; now very few people are on the once-crowded floor. SMIF students were able to have private meetings with market makers from Global Trading Systems (GTS) and Citadel; they were also able to witness the ringing of the bell to close the trading day.

All in all, though it was a busy day, these hands-on experiences in New York proved to ones that could only be provided through a program like SMIF. It was an incredible way to end the year.

On Wednesday April 19th, SMIF presented to Bucknell Alumni at the Harvard Club in NYC. The presentation started with a history and overview of SMIF and then we proceeded to share some memorable learning experiences throughout the year. In addition, SMIF explained its investment process which consists of a top down approach, first determining an asset allocation, next sector weighting and last but not least, equity selection. SMIF then proudly announced our total portfolio performance, which was a HUGE two basis point above our benchmark. Therefore, we outperformed our benchmark while taking on less risk. Our class also informed alumni of two exciting developments this year. First, the SMIF class increased the use of derivatives, focusing on reducing active risk, income generation and put on boarding strategies. Secondly, this was the first year that juniors were added to SMIF, allowing for a smoother transition between classes.

Overall, we really enjoyed speaking with alumni before and after the presentation and want to thank so many alumni for their attendance and support.

After many months, today SMIF heard its last pitch of the year! Zach Alerhand ended on a strong note, pitching Iron Mountain to the class. Iron Mountain is a global business dedicated to storing, protecting, and managing information and assets. The company, although not a traditional Real Estate company, is in the REIT sector. Being a REIT, Iron Mountain is required to pay 90% of its taxable income annually in the form of shareholder dividends. Zach made a point to note that the company is remarkably stable. He believes that though there may be little price appreciation when holding Iron Mountain, there will be a stable and ever-increasing dividend. He believes the company will find growth opportunities in the coming years as it expands its operations overseas, namely in Europe and Australia. All in all, Iron Mountain is a stable company with trusted clients that will provide dividend income for years to come. Zach proposed to purchase 400 shares of Iron Mountain – the motion passed 28:2.

On Tuesday, SMIF heard from Gleb about adding low-cost brokerage firm Charles Schwab to the financial sector holdings. Gleb believes that in a world of ever-compressed fees, Charles Schwab is best posed to succeed. Unlike competitors Ameritrade and E-Trade, Schwab is diversified away from pure trading. In fact, trading commission only accounts for 11% of Schwab’s revenue. The bulk of the firm’s revenue is derived from Asset Management fees and Net Interest. The firm has fared remarkably well, with a Net Income CAGR of 20.8%. This is in stark contrast to the stagnant growth of its competitors. Gleb proposed to buy 500 shares of Charles Schwab. The motion passed unanimously.

On April 5th, Adam Mszanski pitched Lockheed Martin, the number one defense contractor in the U.S, to the SMIF Class. The company has four main segments: Aeronautics, Missles and Fire Control, Rotary & Missile Systems, and Space Systems. Adam believed that Lockheed has room for much growth in the future due to many political catalysts during the Trump Presidency. For example, Adam foresees tax reductions, increases in defense spending, deregulation and increased global conflicts in the future. Therefore, Adam explained that when other countries increase their spending, Trump will react by further increasing defense spending. Moreover, Lockheed Martin has taken on more debt at lower rates than their competitors, has lower operational costs, strong revenue streams and increasing dividends. 

Therefore, Adam recommended buying 75 shares of LMT at market price. This motion was denied as the class felt that they needed to see more information and competitor comps before coming to a final decision.

On Tuesday, April 4th, Ryan Cutler discussed adding T-Mobile to the telecom sector of the portfolio. Ryan described T-Mobile as a disruptor to the current Mobile space. The company brands themselves as the “un-carrier,” offering many benefits to the consumer over traditional competitors such as Verizon and AT&T. For instance, T-Mobile has no 2 year contracts, unlimited streaming video, and simple “no-hidden fee” billing. The company has seen marked success since it went public in 2013; both revenue and subscribers have seen a CAGR of over 11%. Furthermore, Ryan believes T-Mobile is better positioned in the mobile market due to their recent acquisition of both high frequency and low frequency ends of the wireless spectrum. This has allowed T-Mobile to rapidly shape its coverage network, making it equally as competitive as the other major carriers. All in all, Ryan believes T-Mobiles entry into the mobile space as a new, energetic, and refreshing alternative to cellphone carriers will prove successful. He motioned to buy 100 shares of T-Mobile. The motion passed 29:1.

The SMIF Class had the pleasure of hearing from alumni David Granson on March 29th. David is managing director in the Investment Management Division (IMD) at Goldman Sachs. He joined Goldman Sachs in 1997 as a summer associate in the Equities Division and became a vice president in IMD in 2001 and then was named managing director in 2012. Prior to joining the firm, David was a senior investment analyst at SEI Investments.

David provided the class a great deal of guidance on how to succeed in finance. For example, he emphasized the importance of asking questions because it helps improve your understanding of the industry. In addition, he explained that it is also important to read outside of your industry to gain a broader understanding and connect with clients. Also, he expressed that timing is everything and one cannot predict what will happen in the future, they can only react. Therefore, there is no right or wrong, but you do need a philosophy to act appropriately in situations.

We thank David for sharing his knowledge with the class, we learned a great deal during his interactive talk!

 

On March 30th, Charlotte Clegg pitched Panera Bread to the SMIF class. She believed that the job of a portfolio manager is to outperform the market and sectors, not to be satisfied with indexing or achieving average returns. Therefore, even though Panera Bread is not in the S&P500, she explained that it is not only the best restaurant stock to own, but also has outstanding long term growth potential. Panera’s performance (now and in the future) is the best in the fast casual industry and NPD group estimates that fast casual will grow in the double digits through 2022, while the rest of the restaurant industry will seek out growth rates around half a percentage point. Additionally, Panera has just started to take advantage of new market opportunities in the fast growing delivery and catering sectors, which will provide a significant boost to both future revenues and profitability. Therefore, Charlotte emphasized that three key catalysts for Panera in the future: growth in new sales channels, Panera 2.0 (their technological initiative) and the increased trend in healthy eating.

Accordingly, Charlotte recommended to sell 310 shares of XLY (the consumer discretionary ETF) and buy 100 shares of Panera. However, after discussion, the class decided that buying 50 shares of Panera would be best, so we would not be taking on too much active risk. Thus, Charlotte motioned to buy 50 shares of Panera and sell 155 shares of XLY. The motion passed 22 to 5.