2019 - 2021 FMA Magazine

2020 PERFORMANCE SUMMARY
2020 Investment Rationale
While COVID-19 eliminated a good portion
of market value early in the year, we took that
opportunity to deploy capital in select single equities
that we thought were competitively entrenched and
set to take advantage of key trends accelerated by the
pandemic. As the market began to rebound and set
all-time highs, our portfolio reached a peak value of
$415,012 as of December 31, 2020.
Extreme market volatility in the first quarter
presented us with the opportunity to buy four high
quality businesses at discounted valuations. KKR
proved to be a compelling investment with stable
cash flows and growing base fees. The company’s
high equity duration, balance sheet strength, and dry
powder proved to be a great addition to the fund and
has been one our best performers since we entered
the position last spring. We decided to up our
position in the stock, as performance fees for their
infrastructure, real estate, and growth funds still
have about five more years before they are realized.
In addition, COVID has brought along several
opportunities for them to deploy their dry powder at
depressed valuations.
2020 INVESTMENT DECISIONS
February:
• Sold JB Hunt
• Sold Oracle
April:
• Purchased Lockheed Martin
• Purchased Microsoft
• Purchased KKR
• Purchased Johnson & Johnson
December:
• Purchased NVIDIA
• Purchased Alexandria Real Estate
• Purchased Waste Management
• Purchased Mastercard
• Sold Constellation
• Sold AT&T
• Sold Supernus
• Increased position in KKR
Microsoft is another company that was positioned to
benefit from the pandemic due to accelerated trends
in cloud computing and internet infrastructure.
Microsoft is well diversified and is competitively
entrenched in all of its segments.
Lockheed Martin provides great diversification for
the industrials sector. The defense contractor’s longterm
F-35 contracts provides recurring revenue and
the company is poised to take advantage of increased
spending from the Department of Defense.
Johnson & Johnson’s adaptive business model gives
it a plethora of products to rely upon in addition to
being a free cash flow powerhouse.
70 FMA 2019-2021 MAGAZINE