Student Managed Investment Fund

Bucknell University College of Management

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Dow Jones above 13,000

[wikichart align=”right” ticker=”INDEX:DJI” showannotations=”false” livequote=”true” rollingdate=”6 months” width=”300″ height=”245″]

For the first time in nearly three years, the Dow Jones has closed above 13,000 points.  SMIF has positions in several of the equities on the Dow, including American Express, Chevron, GE, Intel, IBM, Coca-Cola, and Verizon.

To date, the SMIF portfolio stands at $936,339.63, aided in part over the last week by Las Vegas Sands, Apple, and Intel.

 

[WSJ]

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October 4, 2011

Today in Class:

The layout of the Fall 2011 Newsletter was discussed and the publish date was set for November 1, 2011.

Sector Reports

  • Healthcare (Holdings: CELG, TEVA, BMY) – BMY and CELG are both out-performing the S&P 500, yet TEVA is struggling.  Healthcare consumption has been rising every quarter in the past few years, however we see possible political risk present in several lawsuits that are challenging President Obama’s Healthcare bill.  Overall, we judge this sector to be risk averse, not volatile, and presents opportunities for high dividend yields.  The class has decided to overweight this sector.  See full sector report here.
  • Industrial (Holdings: GE, FSTR, UPS) – Industrials has been under-performing the S&P 500 but due to a 1.4% increase in construction spending in August and a full point increase in the PMI, we feel that it is best to stay neutral with the S&P 500 sector weighting.  See full sector report here.
  • Information Technology (Holdings: EBAY, IBM) – IT is a sector SMIF is very interested in, but we are wary of negative returns in the short run.  As spending is tied to global demand, we feel increasing our weighting and holdings would be ill-advised.  As such, we feel it is best to stay neutral.  See full sector report here.
  • Telecoms (Holdings: VZ) – Telecoms have high dividend yields and we will investigate diversifying our holdings, but will remain neutral with S&P sector weighting.  See full sector report here.
  • Utilities (Holdings: ED) – While the sector’s performance has been exemplary, we feel that prices are inflated and increasing in our position in utilities would result in future losses.  We will remain neutral with the S&P 500 sector weighting.  See full sector report here.

 

Read the entire class minutes: 10-04-11 Minutes

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Fall Telecoms Sector Update

Holdings: VZ

The major news in this sector is the possible AT&T merger with T-Mobile.  We do not feel that it will occur because the created company would possibly violate antitrust laws and reduce competition in the marketplace.

Other research on this sector shows that pre-paid plans are rising in popularity as many Americans become unable to pay for pricey contracts, especially now that both AT&T and Verizon Wireless have gotten rid of their intermediary one year-long contract options.  Verizon Wireless has also followed AT&T in discontinuing their unlimited data plan, a move that might indicate that customers of both companies are not subscribing to the more costly, higher minutes per month plans.  The introduction of tiered data pricing also demonstrates the growing wireless data usage of smartphones in the U.S.

This industry is generally defensive but has on the whole been slightly out-performing the S&P 500. With consistently high dividends in this sector, we feel it is best to keep our neutral weighting, but look to diversify our portfolio with foreign providers, internet operators, and infrastructure owners.  Potential holdings include Dish Network (DISH), DirectTV (DTV), TimeWarner (TWX), and China Telecom (CHA).

 

Acess the full report here: Fall 2011 Telecoms Sector Report

 

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September 20, 2011

Today in Class:

Students were assigned to sector committees based on the S&P 500 to present within the next two weeks on the outlook for that sector and determine an appropriate sector allocation in the portfolio.  Further changes were proposed to enhance the detail taken in minutes.  The professors announced that Frank Schreiner would visit the class on October 6th.  The accounting committee presented their weekly report, drawing attention to the fact that the fund was still overweight financials and consumer staples.

Buy/Hold/Sell:

  • Monica Wu – TEVA: More issues centered on uncertainty of TEVA’s generic drug pipeline have forced one more look at this company, scheduled for next class.
  • Henry Huang – PG: Proposed to buy 350 shares at $62, but the motion failed.  The class considered whether KO was a better buy in the consumer staples sector before ultimately deciding to buy 100 more shares of PG at a $61.16 limit order.
  • Thomas Brown – EMB:  A proposal to sell due to credit and interest rate risks failed, as did one to buy due to preferable yield.  Class settled on holding due to the diversity of holdings and exposure to emerging markets.
  • Brendan Smith – TIP: hold.
  • Alec Jacobs – VTR: hold.  There was some concern over the REIT’s low return but no alternative investment was proposed at the time.
  • Jason Katz – VZ: hold, Verizon is one of the best performing telecoms on the market.
  • Erin Reddy – KO: recommended a hold but further discussion revealed a desire to accumulate because of Coke’s excellent exposure to emerging markets, which the portfolio currently lacks.  Similarly to VZ, it is a better performer than its competitor, PepsiCo.  The ultimate decision was to place a limit order for 100 more shares at $69.51

Access full meeting minutes: 09-20am and 09-20pm