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.
John Campbell, a Bucknell University ’85 graduate, visited the SMIF class on February 24 to discuss financial management and planning. Mr. Campbell is the Area Business Manager for the Central, Western and Northern Pennsylvania regions for Wilmington Trust. He actively participates in the leadership and administration of the Market Area including contributing to the development of strategic plans, taking a leadership role in managing the execution of those plans, and resolving business administration issues within the regions. He actively participates in the leadership and administration of the Market Area including contributing to the development of strategic plans, taking a leadership role in managing the execution of those plans, and resolving business administration issues within the regions. John joined M&T Bank in 1986, which acquired Wilmington Trust in 2011. He has nearly three decades of experience in the financial services industry. John shared with the class his experience in financial services and provided invaluable advice for the portion of the class looking to enter the industry.
Eric Hubey ’16 pitched Nike Inc. to the Student Managed Investment Fund (SMIF) on February 17, 2016. Nike, a globally recognized brand, engages in the design, development, marketing and sale of footwear, apparel, and equipment, accessories and services. It focuses on NIKE Brand and Brand Jordan product offerings in seven key categories: running, basketball, football, men’s and women’s training, NIKE sportswear, and action sports. The company’s wholly-owned subsidiaries include Converse Inc. and Hurley International LLC. Nike has a significant global presence, with their largest two markets coming in the United States and China respectively. Nike has a robust growth strategy and excellent margins, to date. Eric touted the company’s strong fundamentals and their large position and steady performance in the S&P 500. The SMIF agreed and saw Nike as an excellent opportunity to diversify and grow our Consumer Discretionary sector. In the end, the SMIF voted to enter into Mr. Hubey’s recommended position.
Joe Cullina ’16 pitched CVS Health Corporation to the Student Managed Investment Fund (SMIF) on February 10, 2016. CVS is an integrated pharmacy health care company with three reportable business segments: Pharmacy Services, Retail Pharmacy and Corporate. The pharmacy services arm of the business provides pharmacy benefits management (PBM) to employers, insurance companies, and government entities. This segment works with health providers to secure cheaper pharmaceutical solutions while improving clinical outcomes for plan members– a large potential source of growth for the company. Joe expressed confidence in the future guidance of the company, citing a trustworthy management team. Additionally, given a volatile start to 2016, Joe expressed pessimism towards consumer discretionary spending and stressed the limited risk associated with consumer staples and potential growth derived from their role in health care. The class agreed and voted unanimously to purchase CVS.
Yang Gao ’16 pitched Expedia Inc. (EXPE) to the Student Managed Investment Fund (SMIF) on February 3, 2016. Expedia is the second largest online travel service provider in the world, in terms of booking volumes. It operates a variety of online travel portals which offer its customers diversified services depending on market demand. Expedia drives its business by either acting as a travel agent and charging a commission for every transaction or by acting as a merchant and purchasing the travel inventory (plane tickets and hotel rooms) from travel providers in bulk at discounted prices and selling back to customers at a premium. Yang expressed optimism in consumer discretionary spending and stressed the company’s diversified business model as a catalyst for driving growth. The class responded cautiously and were weary of entering a new consumer discretionary sub-sector in the midst of high market volatility and the emergence of the Zika virus. In the end, the pitch missed passing by a single vote and we will look to evaluate new positions moving forward.