Student Managed Investment Fund

Eric Wallerstein ’19 pitched Lazard (LAZ) to the Student Managed Investment Fund (SMIF) on February 4, 2019. Founded in 1848, Lazard is a top global financial advisory firm. Lazard advises corporations and institutions on a variety of transactions, including mergers and acquisitions, restructuring, and shareholder advisory. Additionally, Lazard Asset Management currently manages over $240 billion in assets. Lazard Asset Management focuses on actively managed value-style equity strategies, and has doubled their AUM in just the past decade. Lazard’s financial advisory business has consistently finished in the top tier of both mergers and acquisitions and restructuring league tables, both in the U.S., and internationally. Recently, Lazard has advised on several major transactions, including Aetna’s $77 billion sale to CVS Health, and Express Scripts’ $67 billion sale to Cigna. Major recent restructuring clients include Pacific Gas & Electric, Toys “R” Us, and Sears Holdings. The class voted to purchase 400 shares of LAZ.

Chadd Cummings ’19 pitched The Home Depot, Inc. (HD) to the Student Managed Investment Fund (SMIF) on February 5, 2019. Home Depot was founded in 1979 with the dream of a home retail superstore capable of providing the most inventory, lowest prices, and best trained staff. From there, the store has grown to become the largest home retailer at 2,284 stores and over 400,000 employees. Home Depot is pursuing many strategic initiatives, however the most notable is their interconnecting retail efforts. Through continuing to intertwine aspects of their business, Home Depot has been able to optimize the customer experience and maximize their growth. Additionally, Home Depot has made extensive investments into its supply chain. Their supply chain currently has delivery capabilities of reaching 95% of the geographic US within two days, and they have set a goal to be able to reach 90% within one day. Home Depot has cemented itself as a strong company and reiterated this through continually beating earnings. The class voted to buy 55 shares of Home Depot.

As of December 3^rdand 4^th, each respective classes asset allocation has been in line with the benchmark set earlier in the semester (90% Equity and 10% Fixed Income). The Monday SMIF Portfolio is holding an asset allocation of 89.79% Equity and 10.21% Fixed Income. Since taking over the SMIF Portfolio on April 30, 2018, the Monday portfolio has achieved a total return of 5.04%, which trails their benchmark by 186 basis points.

The Tuesday SMIF Portfolio is holding an asset allocation of 89.57% Equity, 10.16% Fixed Income, and 0.27% Cash. Since taking over the SMIF Portfolio on April 30, 2018, the portfolio has achieved a total return of 5.67%, which trails our benchmark by 42 basis parts. Our benchmark is a blended benchmark consisting of 90% S&P 500 Index and 10% Barclay’s US Aggregate Bond Index. The majority of our achieved return can be attributed to the Information Technology and Health Care sectors of the total SMIF Portfolio.

In the early part of the semester, SMIF also selected target sector weightings for the equity position of the portfolios. The current weightings can be seen in the tables below for each respective class. Depending on our future outlooks, we will look into adjusting our target weights next semester.

Figure 1: Monday SMIF Equity Sector Weightings 12/3 Compared to SMIF Sector Targets

Figure 2: Tuesday SMIF Equity Sector Weightings 12/4 Compared to SMIF Sector Targets

Chris Esernio ’19 pitched McDonald’s (MCD) to the Student Management Investment Fund (SMIF) on November 12, 2018. Founded in 1948, McDonald’s brand mission is to be their customers’ favorite place and way to eat and drink. With over 37,000 locations in over 100 countries and a market cap of $140 billion, McDonald’s has an enormous global influence. Forbes recently ranked the company as the 11th most valuable brand in the world and the most valuable brand in the restaurant industry. The new CEO Steve Easterbrook has led a complete transformation of the company with a franchising initiative after taking over in 2015. This strategy strives for the company to be 95% franchised in the long-term and has thus far vastly improved margins. Currently, MCD is 91% franchised and had revenues of $22.3 billion in 2017. MCD looks to continue to expand in the coffee, breakfast, and delivery segments in order to drive future growth. MCD released exceptional financial results for the third quarter of 2018, highlighted by significant same store sales growth domestically and abroad. The class voted to buy 55 shares of MCD at $184.24.

Mary Anne Click ’19 pitched Lululemon Athletics to the Student Management Investment Fund (SMIF) on November 12, 2018.  Founded in 1998, Lululemon’s mission is to provide individuals with the best athletic clothes possible to help them achieve their goals.  Lululemon is much more than just a retail brand; they strive to create a community among their consumers by promoting healthy lifestyles and actively engaging in the fitness community across the globe.  Starting from just producing yoga clothes, Lululemon has expanded their product offerings to include lines for almost any athletic endeavor, ranging from surfing to CrossFit to dance.  Additionally, the organization prides themselves on marketing through authentic individuals leading healthy lifestyles who are visible in their own communities versus an emphasis on expensive celebrity athlete campaigns.  Over the course of this calendar year, Lululemon has continued to grow at an astonishing rate through their physical footprint and their digital one, which has doubled their market capital. The class voted to buy 70 shares of LULU at $139.67.