Recent Transactions

Bloomberg-Terminal

 

2017 was a busy year for the SIF Portfolio. SIF made 8 new investments:

 

CVS Healthcorp (CVS): CVS owns more than 9,700 retail pharmacy stores throughout the U.S., CVS also operates the nation’s largest chain of in-store clinics. These MinuteClinics have proven to be a big hit with consumers, keeping CVS top of mind for consumer healthcare needs. CVS also runs one of the largest pharmacy benefit management (PBM) businesses in the country. CVS uses its immense buying power to negotiate hefty discounts on drugs and then passes along the savings to customers, taking a small fee for its service. By 2050, the population over age 65 in the US is expected to double. CVS is likely to benefit from this demographics shift. Moreover, CVS is poised to do well, as its main competitor, Walgreens, failed to consummate an acquisition of Rite-Aid, and CVS continues to expand its pricing power in its PBM business through a proposed acquisition of Aetna.

Cullen/Frost Bankers (CFR): CFR is a regional commercial bank headquartered in Texas that offers customers commercial and consumer banking services, trust and investment management, insurance, brokerage, mutual funds, leasing, treasury management, capital markets advisory and item processing services. CFR is very well run and offers more room for growth than the bulge bracket banks. CFR is strongly linked to its oil sector customers, so the bank is poised to do well as the price of oil slowly appreciates.

Crown Castle International (CCI): Crown Castle International Corporation (CCI) operates as a real estate investment trust.  The Company owns, operates, and leases approximately 400,000 towers and other infrastructure for wireless communication.  Crown Castle manages and offers wireless communication coverage and infrastructure sites across the United States. Rising network density is driving demand for towers and fiber. Wireless data traffic is expected to increase 53% in 2017-2020, according to Cisco. As the second largest tower operator (in revenue and market share) in the U.S., Crown Castle International Corporation is well-positioned to capitalize on this growth.

Avalon Bay Communities (AVB): AvalonBay Communities has a long-term track record of developing, redeveloping, acquiring and managing apartment homes. With an emphasis on luxury apartments in high-growth urban markets across the Northeast, Mid-Atlantic, Pacific Northwest, and California, AVB has benefited from demographic and housing trends in these areas, as young professionals flock to these cities, but housing stock has not kept up. Structured as a Real Estate Investment Trust (REIT), AVB is tax-advantaged, and this is passed on to investors in the form of high regular dividends. SIF will watch this stock closely, however, as rising interest rates may dampen AVB’s growth prospects.

Cognizant Tech (CTSH): Cognizant Technology Solutions is a professional services company that offers world-class business strategies, operating models, and technology implementation for other IT companies. The growth in fields such as data analytics and R&D indicate a greater need for Cognizant’s products and business offerings. As we continue the trend towards digitization, Cognizant is well positioned to be a leader in shifting businesses from traditional operations towards more tech-inclusive operations.

Eli Lily (LLY): After divesting from an insurer (ANTM) and a biotech company (GILD) deemed too risky, the SIF decided to maintain market weight in the healthcare sector but purchasing Eli Lily, a diverse maker of pharmaceuticals. With plans to divest from their lower-performing veterinary care line, Lily looked poised for attractive returns in 2018 and beyond.

Paylocity (PCTY): Paylocity is a cloud-based provider of payroll and human capital management (HCM) software solutions for medium-sized organizations.  Paylocity is growing rapidly, averaging 40% top-line growth over the last three years, prompted by increased adoption of cloud-based human resource applications. The company generates 94% of revenue from subscriptions, and has an attractive customer retention rate.

SunTrust International (STI): A regional bank concentrated in the U.S. Southeast, SunTrust was hard-hit during the 2008 Financial Crisis. Yet, the banks has improved its core operations, reduced risk in its portfolio, and stands to benefit from tailwinds in the form of regulatory and tax relief and an attractive southeastern economy.

 

During 2017, students also voted to divest from nine companies:

 

– Church & Dwight (CHD)

– Marathon Oil (MRO)

– Gilead Science (GILD)

– Anthem Inc (ANTM)

– Duke Energy (DUK)

– Xerox (XRX)

– Brighthouse Financial (BHF)

– ConocoPhillips (COP)

– Metlife (MET)

 

Finally, SIF trimmed its holdings in Wynn Casinos (WYNN). Wynn had grown to the largest single holding in the portfolio; while the SIF still believes Wynn has some attractive potential, the company’s reliance on the Macau market prompted us to reduce exposure to the company by approximately $20,000.