2018-19 Holdings Updates
Founded in Chicago in 1979, Addus Homecare (ADUS) has become one of the nation’s largest providers of personal home care and support
services through acquisitions, diversification, and opening new office locations.
Since SIF’s purchase, the stock has already risen 16.84% from $64.22 to $78.70, and
investors sentiment remains positive, with a consensus outperform rating and a $91
target price. Addus recently announced it will acquire Hospice Partners of America,
continuing its practice of growth through acquisition and gaining entry to the Texas
In spring 2019, the SIF class chose to add Canopy Growth Corporation (CGC) to its portfolio. This organization is an international marijuana producer and distributor
based out of Smith Falls, Canada. CGC was deemed a good purchase because of its healthy
balance sheet, a 5 billion dollar investment from Constellation brands, and the legalization
of marijuana in Canada. As of September 17, 2019, CGC is valued at $28.40 price per
share with a market cap of $9.88B.
Discover Financial Services (DFS) is a bank and payments services company and it is a great financial investment for
a variety of reasons. DFS has a diversified product mix consisting of banking, loans,
and payments services. Having a wide variety of cross-marketed products reduces the
risk across the business segments. Additionally, Discover has increased its acceptance
rate worldwide, which creates an opening for expansion. At the time the stock was
purchased, a partnership between Discover and Zest Automated Machine Learning was
taking effect. The collaboration will allow Discover to improve its credit underwriting
process and make better lending decisions to give it a competitive advantage in the
Ellomay Capital LTD (ELLO) is a developer of renewable energy and power generation projects in Europe and Israel.
Through its subsidiaries, Ellomay owns and operates 18 PV (photovoltaic, or solar)
panel farms in Italy (12), Spain (5), and Israel (1), as well as having a small interest
in a natural gas power plant in Israel. ELLO owes its competitive advantage to strategically
operating in regions that are rapidly shifting to the use of renewable energy, and
by tailoring its investments in solar and biowaste to the most suitable environment.
Ellomay decreases the overall portfolio risk by providing exposure to multiple foreign
markets while hedging against the U.S. downturn and providing foreign upside.
Fluor Corporation (FLR) is one of the largest global engineering and construction companies. Operating for
well over 100 years, Fluor provides integrated design and construction solutions for
a diverse clientele, including oil and gas, chemicals and petrochemicals, mining and
metals, transportation and advanced manufacturing sectors. Touting their ability to
profitably take on some of the toughest challenges in the industry, Fluor has positioned
itself to capitalize on a unique industry niche.
LeMaitre Vascular, Inc. (LMAT) is a global provider of medical devices and innovative practices focusing their efforts
on the treatment of peripheral vascular disease. In 2018 ,revenue jumped 5% to $105.6
million, with net income also showing major growth of 34% to 22.9 million. In their
current quarter, they have reported sales of $29.5 million, up 9%. LMAT’s 2018 acquisitions
of Syntel and Cardial are running at $8 million in annual sales, significantly ahead
of initial projections. In addition, they have considerably expanded by opening offices
in Singapore and Arizona with plans to expand into England in the near future.
Microsoft Corp (MSFT): Microsoft is company that has demonstrated stable growth in the past and is projected
to continue that growth into the future. As of June 2019, Microsoft’s operating margin
is 36.79%. This is up nearly 4% since 2018, meaning that Microsoft’s profitability
and cost management are only getting better. Microsoft is continuing to diversify
with its stable business model in AI, VR, and IOT. Over the past 10 years, the average
dividends per share growth rate was 15.50% and as of 2018 the dividends accounted
for only 40% of its free cash flows, leaving plenty of room for growth in 2019.
Nike (NKE) is the world’s largest athletic footwear, apparel, and equipment company. The SIF
class chose to invest in Nike because of its strong strategic advantages such as economies
of scale, global business with geographic areas for growth, and the financial stability
and soundness. Their revenue has grown in the past three years and their operating
profit has seen modest growth on a year-over-year basis. P/E ratio, inventory turnover,
ROA, and D/E are all areas where Nike has outperformed competitors like rival Adidas.
Renewable Energy Group (REGI) is North America’s largest producer of biodiesel fuel. REGI expanded their production
facilities in 2018 and is likely to see increased sales as a result. REGI has also
increased its presence into the European market, which is a keen play given the increasing
European focus on clean energy.
Broadcom Inc. (AVGO): In order to reduce exposure to the technology sector and realize some of the return
AVGO had generated over its holding period, the SIF decided to trim Broadcom by 42
shares [24.6%] in April 2019. Since SIF had a large holding in Broadcom that was generating
a 19.3% return, the option to sell was not based on poor performance but instead in
order to provide liquidity for SIF scholarships, and recognizing AVGO’s growth opportunities
in the future may not be as attractive as specialized chip producers such as Nvidia
gain market share.
Celgene (CELG): Celgene Corporation is a global biopharmaceutical company that focuses on discovery,
development, and commercialization for treatments of conditions such as cancer and
inflammatory diseases. During a review of the stock in 2017, it was thought CELG would
rise, but it was noted that they had quite a bit of bad news hit them all at once:
losing a prospective drug, lowered earnings, and that they were likely trading at
a discount. SIF originally bought Celgene in 2013 at $82.39 per share. Celgene stayed
in the portfolio because it continued to rise steadily over the years, until late
2017 when the stock fell 47.65% in one month and continued its downward trend until
December of 2018, reaching the lowest it had been in five years, at $60.92 per share.
SIF sold the stock for $85.10 per share in January 2019 after CELG rallied based on
an announced acquisition by Bristol Meyers Squibb.
Chevron (CVX) is the second largest oil company in the United States. It is an integrated energy
company with exploration, production, and refining operations worldwide. The SIF voted
to trim this position to lessen our exposure to conventional oil and gas, which has
suffered from extended depressed pricing thanks to fracking-related supply increases,
and create room for renewable energy services in our portfolio.
Goodyear Tire (GT)
has been on the downward trend for over two years and is currently sitting at $13.53
price per share as of September 17, 2019. Since being acquired in 2015 by the SIF
class, we’ve decided to sell our shares because of GT’s continued underwhelming performance
and slowing automotive sales in the U.S. dampening future prospects. GT was sold for
$21.08 in January 2019. Most recently, their stock dropped 16.5% in August due to
the slowing U.S. economy and the ongoing trade war with China.
Kroger (KR) is one of the largest retailing companies in the United States and was bought by
the SIF class in 2013. However, since then the class has decided to sell the stock
due to the low performance in the last five years. It was sold in January 2019 for
$28.13; since then, the price per share has dropped to $25.64 as of September 17,
2019. Kroger’s performance has weakened because of the intensely competitive market.
Synopsys Inc. (SNPS): The SIF decided to trim its Synopsys holding by 109 shares [20.5%] in April 2019.
The company - which develops electronic products and software applications - has recently
decided to venture into the app security market, as well as automotive chips and software
that should prove to be profitable. The SIF remains bullish on SNPS, which had generated
a 22.2% annual return, to provide liquidity for scholarships.
Valero Energy (VLO), one of the largest independent refiners in the United States, is focused on mid-and-downstream
production. VLO refines 3.1 million barrels of fuel daily, as well as a yearly production
of 1.7 billion gallons of ethanol. The SIF decided to trim part of the holding in
VLO in order to gain exposure to higher growth renewable opportunties in the sector.
VISA INC (V): Visa is a global payments technology company. It was the heaviest weight in the SIF
at 6.5%. In March 2019, the SIF sold 20% of its holdings in Visa, to realize some
of the return over the life of the holding and allow the fund to diversify away from
financial technology holdings. Diversity in investing is vital to preventing another
financial crash and recession, which occurred when individuals invested in relatively
solid investments that failed.