Bill Vogel joined the Student Managed Investment Fund (SMIF) on April 6, 2016. During his visit, Mr. Vogel discussed valuation strategies and shared lessons from his experience as President and CEO of Montag & Caldwell– a diversified financial advisory firm based in Atlanta. In addition, he is the Chairman of the Investment Committee of the North Georgia United Methodist Foundation and Chairman of the Onnie Mae Spruill Foundation; he also serves as a board member of Global Health Action, Inc. and the Grant Park Health Clinic. Not only that, but he heads the Endowment Committee of the Dunwoody United Methodist Church and is a member of the Board of Visitors of the Fuqua School of Business at Duke University and the Rotary Club of Atlanta. The SMIF class took advantage of the opportunity by raising questions of their own regarding valuation strategy and asset allocation. We had a wonderful time learning from Mr. Vogel and hope that future classes have the chance to learn from him as we did.
Dick Koch visited the Student Managed Investment Fund on March 30, 2016 to discuss his career, experience and advice for students in the job market. Mr Koch is a graduate of Bucknell University with a B.S. in Civil Engineering and the University of Chicago with an MBA. Prior to forming Koch Communications in 2014, Mr. Koch was Director of Investor Relations and Corporate Communications for Crane Co., a $3 billion diversified manufacturer of highly engineered products. Since joining the company in 2005, Crane’s stock price increased over 50%, surpassing its previous high stock price by over $12 per share. Prior to that Mr. Koch worked at Olin Corporation, a $2 billion diversified manufacturing company for 27 years in various positions including Vice President of Investor Relations and Public Affairs. He was in charge of investor relations when the company achieved the highest stock price in its history, and was involved in setting up two spin-off companies, three stock offerings and two major debt offerings. Mr. Koch shared invaluable advice with students still engaged in the job market and expressed confidence in the funds direction. We thank Mr. Koch and hope classes in the future have the opportunity to share in his knowledge and expertise.
SMIF member Grant Nissly ’16 pitched Kroger (KR) to the Student Managed Investment Fund (SMIF) on March 30, 2016. Kroger is the second largest U.S. food supermarket retailer and generates $110 billion in annual sales. Kroger operates primarily in the United States with stores in 34 states, primarily in the Midwest, West Coast, and South. KR current operates 3,923 stores. 2,778 of these stores are supermarkets in which 1,387 of the stores include fuel centers. Kroger also operates 781 convenience stores and 327 jewelry stores. Grant viewed Kroger’s current performance as an opportunity to purchase a large consumer staple. With large investments in new store technology and an aggressive acquisition strategy, Kroger appears poised to justify their high leverage structure with substantial future growth. The class cited concerns regarding the shifting competition in the market place and whether or not Kroger can execute their 2016 guidance. In the end, the class recognized Kroger as an opportunity to diversify our consumer staples sector and voted to pass Grant’s motion.
Joe Bridy, a Bucknell University ’98 graduate, visited the Student Managed Investment Fund on March 24 to discuss his career, time at Bucknell and outlook of fixed income markets. Mr. Bridy graduated cum laude from Bucknell with a degree in Economics and Finance. In addition, he attended Cornell University’s Johnson Graduate School of Management, earning his MBA in finance with high distinction. Currently, Joe is a partner and fixed income portfolio manager for Hamlin Capital Management. He has been with Hamlin since 2004 and oversees all fixed income commitments in addition to overseeing the sourcing and structuring of new fixed income investment opportunities. Prior to Hamlin Mr. Bridy was an analyst in the Fixed Income Division at Goldman Sachs. He then worked as an equity trader and junior portfolio manager at Oscar Capital LLC, a long-short equity hedge fund, founded by former Goldman Sachs executives. Mr. Bridy shared his tremendous experience in fixed income markets with the class as we have recently endeavored to learn more about the asset class and how it helps to mitigate the risk of an equity portfolio. We genuinely hope that future SMIF classes have the opportunity to benefit from his wisdom in the future.
SMIF member Wilson Powell ’16 pitched NextEra Energy (NEE) to the Student Managed Investment Fund on March 9, 2016. NextEra Energy is an integrated utility focused on building long-term value for its shareholders by investing in energy technologies that are designed to provide affordable, clean and reliable power for its customers. It is one of the largest electrical power companies in North America with 46,400 MW of generating capacity serving more than 5.3 million customers across 27 states and 4 Canadian provinces . Wilson focused on the company’s commitment to reinvesting in organic growth and its aggressive short term dividend growth. In addition, he cited research indicating a positive forecast for housing, which would boost demand for electricity. Students raised concerns regarding the 2016 election and the hypothetical implications of particular candidates. However, in the end, the SMIF saw reason to believe in NextEra and passed Wilson’s motion to purchase shares.
Yvonne Jeng ’16 pitched the iShares Nasdaq Biotechnology ETF (IBB) to the Student Managed Investment Fund (SMIF) on March 8, 2016. IBB offers an extremely large and liquid coverage of the biotechnology space, and will reduce exposure to firm-specific risk. With 190 total holdings, IBB has the broadest number of holdings of any biotechnology ETF available. Yvonne cited room for increased diversification within the healthcare sector as well as room for improved returns relative to the portfolio’s positions in Celgene, Gilead, and the Health Care Sector ETF (XLV). IBB has a comparatively low P/E ratio and tracking error when compared to peer ETFs. In addition, IBB yielded outstanding five-year returns relative to competitors and represents our desired blend of large-cap positions within the S&P 500. The SMIF recognized the potential to be overexposed to Celgene and Gilead due to the fact that IBB holds large positions in both of those equities. As a result, the SMIF decided to sell the corresponding weighted shares of Celgene and Gilead in order to execute the position in IBB. This strategy maintained the desired level of exposure to the individual equities in the sector and allowed the portfolio to benefit from the diversification that IBB offers within biotechnology.
Max McKelvy ’16 pitches Microsoft Corporation to the Student Managed Investment Fund (SMIF) on March 2, 2016. Max carefully outlined his top-down strategy and discussed why Microsoft would help the SMIF capture some of the larger returns in the S&P 500. Microsoft has been a company in transition for close to the last decade. Effectively shifting the focus of their business model away from hardware and decidedly in the direction of software and cloud computing. Margin growth is especially promising in the realm of cloud computing. Max was confident that Microsoft’s management team, lead by Satya Nadella (CEO) and Amy Hood (CFO), to cut wasteful costs and deliver on their modified business strategy. In the end, the SMIF decided to pass the motion and purchase MSFT
Nick Geissler ’16 pitched Chipotle Mexican Grill to the the Student Managed Investment Fund (SMIF) on February 24, 2106. Chipotle is a fast-casual Mexican food chain that serves a focused menu of burritos, tacos, burrito bowls, and salads using fresh and locally sourced ingredients. Chipotle optimizes transparency and customization by employing traditional cooking methods and utilizing an assembly line mode of production. Chipotle was a pioneer of fast-casual dining and has been one of the most successful restaurant brands in the S&P 500 for the last ten years. Nick leveraged the company’s recent price drop, from their food-borne illness scare, as a catalyst for investing in a historically successful company. Citing competent management and the company’s history of responding to customer concerns, Nick advocated that Chipotle would likely return to their former success, given time. In addition, the class enjoyed a catered Chipotle lunch in order to better experience and understand the product being presented. In the end, the SMIF decided to wait temporarily to reevaluate Chipotle’s price closer to their 1Q16 earnings report. The SMIF expressed confidence but decided to postpone a vote on the position until a later time.