2019 - 2021 FMA Magazine

2019 Investment Reasoning
2019-2020
PERFORMANCE SUMMARY
We entered FY 2019 with a portfolio value of $275,997
and a total return of -1.1% following the market
downturn in December 2018. This correction eliminated
all of the capital appreciation generated since our
inception in October 2017 and a minor portion of
our initial capital. The Fund viewed this as a result
of the bond market signaling down, inversion of the
yield curve, and trade war tensions, but we felt these
effects could be short-term and elected to maintain our
holdings. As the market rebounded in the beginning
of 2019, our portfolio reached a new peak in value of
$320,489 as of April 30, 2019, concluding the academic
year with strong growth (+14%).
In June 2019, our Exec elected to form a position in
intermediate-term bonds and maintain larger cash
and short-term bond positions. We sought stability
in the summer months as the fund recessed but
also anticipated the nearing end of the market cycle
and desired a more conservative positioning. This
lessened our risk and volatility in comparison to the
S&P (see bottom graph on page 8). We maintained
this investment philosophy through FY 2019 and the
beginning of 2020 and, as a result, were well positioned
for March 2020’s market crash and to execute our main
objective: capital preservation.
In the fall of 2019, the Fund’s leadership made the
decision to spend the majority of the year revaluing our
current portfolio to a standardized template, making
BUY, SELL, and HOLD decisions accordingly, and
establishing better methods of portfolio management
and monitoring. When we began the process of
revaluing, the Fund intended to establish a solid thesis
on each of our holdings and to use the cash generated
from sell-offs to purchase new equities that better
fit our investment principles. With this in mind, we
will spend the spring of 2020 completing this process
and seek to purchase 3 - 5 new stocks, establishing a
strong portfolio of 20 - 25 single equities as the Fund
transitions into the new academic year. We concluded
FY 2019 with a total return of 27.9%, portfolio value of
$343,303, overall beta of .73, and total alpha of 1.9%.
2019 INVESTMENT DECISIONS
February:
March:
June:
• Purchased Tyson Foods
• Trimmed Position in Tall Grass Energy
• Purchased Supernus Pharmaceuticals
• Increased Position in PayPal
• Increased Position in Short-Term Bonds
• Purchased AT&T Inc.
• Sold Financial Sector ETF
• Purchased Bank of America
• Sold Emerging Markets ETF
• Purchased Intermediate-Term Bonds
• Trimmed Position in Gilead
December:
• Sold Schlumberger
• Sold Cerner
• Sold Tall Grass Energy
STRONG IN TECH & CONSUMER,
WEAK IN HEALTHCARE & ENERGY
Top Performers:
1. Amazon +86.9%
2. Tyson Foods +47.8%
3. Estee Lauder +45.5%
4. Alphabet +33.4%
5. Medical Properties Trust +28.6%
Bottom Performers:
1. Schlumberger -43.6% (Realized Loss)
2. Supernus Pharmaceuticals -42.5%
3. Constellation Brands -13.0%
4. Gilead -12.8%
5. Tall Grass Energy -1.09% (Realized Loss)
FMA 2019-2021 MAGAZINE 65