The first quarter of 2016 presented several trading opportunities as we reevaluated our companies’ strategies and valuations. We sold United Parcel Service (tkr: UPS) after Amazon.com’s (tkr: AMZN) entry into the logistics business. Amazon clearly intends to bring more of its shipping in house, with reports that it will lease freighter jets and add thousands of trucks to its fleet. As a rule, Amazon entering a business portends poorly for competitors.

To replace UPS, we added to Masco (tkr: MAS), which continues to benefit from the recovery in the housing market, and bought Roper Technologies (tkr: ROP). Roper is a diversified industrial conglomerate, manufacturing equipment including pumps and water meters, highway tolling systems, and digital imaging software. Roper’s strategy is to acquire small, niche industrial companies in technology and health care, pivoting away from heavy industry. Its software as a service (SaaS) solutions now contribute nearly a third of the firm’s revenue. We think Roper’s diversification will help it weather the rocky climate for industrial companies, and its focus on high-margin, quickly growing businesses should add value in the long run.

Recent negative performance in the international markets presented an opportunity to reposition our holdings in international exchange-traded funds (ETFs). We swapped the Vanguard FTSE All-World ex-US ETF (tkr: VEU) for the Vanguard FTSE Developed Markets ETF (tkr: VEA). We also swapped the iShares Core MSCI Emerging Markets ETF (tkr: IEMG) for the Vanguard FTSE Emerging Markets ETF (tkr: VWO). Our international exposure stayed constant, continuing to provide diversified exposure to the developed and emerging markets. The differences in the underlying indices are minor, but we expect the trades will minimize ongoing fund expenses and let taxable accounts realize a tax-loss benefit.

In our health care holdings, we trimmed our position in Celgene (tkr: CELG) and added to Gilead Sciences (tkr: GILD). Seventy percent of Celgene’s revenue comes from one drug, Revlimid, which is used to treat multiple myeloma. The company is expensive at a price-to earnings ratio of 57, lacks a dividend, and addresses a smaller potential market. Conversely, Gilead trades at seven times earnings despite its significant growth potential and addressable market. We added to our Illumina (tkr: ILMN) position, selling part of our position in the Health Care Select Sector SPDR ETF (tkr: XLV) to raise cash for the trade while keeping our healthcare exposure constant. We think the stock’s recent downturn is unwarranted given the success of its sales model and its diversification into non-invasive prenatal testing.

We also doubled our position in SVB Financial Group (tkr: SIVB) after the stock declined due to an overreaction by the market relative to the bank’s actual exposure to deflating startup valuations. Lending is SVB’s core business, and its exposure to individual companies is fractured. Furthermore, a plurality of its lending is to venture capital and private equity firms, not the startups in the headlines, and lending is not exclusive to the technology industry.

We trimmed Disney (tkr: DIS) due to our rising concern that cable “cord-cutting” would cause near-term volatility in its Media Networks segment, which includes ESPN (please see our Q2 2015 Commentary). However, we think that competitors would struggle to replicate Disney’s success at monetizing content, and our position is still overweight relative to the market.

Individual investment positions detailed in this post should not be construed as a recommendation to purchase or sell the security. Past performance is not necessarily a guide to future performance. There are risks involved in investing, including possible loss of principal. This information is provided for informational purposes only and does not constitute a recommendation for any investment strategy, security or product described herein. Employees and/or owners of Nelson Roberts Investment Advisors, LLC may have a position securities mentioned in this post. Please contact us for a complete list of portfolio holdings. For additional information please contact us at 650-322-4000.