Finance and Securities Analysis

University of Oregon CCFSA Profile – Nishan Senthirajah

Originally from Tualatin, Oregon, Nishan Senthirajah is a junior majoring in finance with a minor in economics at the University of Oregon. He is in the Honors Business program and is also the consumer goods sector leader analyst for the University of Oregon’s Investment Group (UOIG). He was the president of the Financial Management Association (FMA) this past year and will be interning as an investment KeyBanc Capital Market analyst this summer. Here is what he has to say about his experiences in the Lundquist College of Business thus far:

Can you tell me a little bit more about UO’s Investment Group? (UOIG)
NS: I’m a senior analyst within the University of Oregon’s Investment Group, which is a student-led organization within the Lundquist College of Business that actively manages more than one million dollars in endowment funds. It’s comprised of student analysts as well as six students on the management team. Essentially, our job is to put together an equity research report every term on a stock that we believe would be a good investment. So, we generate investment models and do a lot of research to determine how the stock is valued. After the report, you do a presentation to the entire group with about a 45-minute Q&A session. It’s an intense atmosphere. This is my second year in the group so I have one more year after this. It’s been an excellent experience for me thus far. It gives students an opportunity to expand their learning in an environment that they wouldn’t find in the classroom, which is why it’s such a reputable group within the Lundquist College. We try to keep our strong name as we continue in our operations. You also meet a lot of people and a lot of great friends that are invested in the same things and have the same interests as you. People who actually care about the things you’re working on as much as you do. That’s been one of the best parts.

What was your role within the Financial Management Association (FMA) and how is it different than UOIG?
NS: I was the past president at the FMA, which was started two years ago. We’re a chapter of a larger national organization, similar to a lot of other clubs you find in the business school. It’s designed for the broader range of students. The FMA is a much broader-based finance group that covers topics ranging from corporate to investment banking to private equity. The goal for FMA is to provide students with a learning environment to get exposed to different areas of finance in order to determine if it’s something they’re interested in, and if so, what area and how can we help students get there. We do this by going on site visits locally and within the Pacific Northwest. We bring in different speakers from all different backgrounds to come and share their career paths, what they do with their job, skill sets in their current positions, and ways to navigate yourself into that position. It’s been a pretty decent success; it grows every year. Unlike UOIG, the application process isn’t as intense and selective.

What does the future hold in store for you?
NS: This coming summer I’ll be working as an investment KeyBanc Capital Market analyst. My goal is to work there for a couple years because it will provide excellent exposure as far as potential career opportunities going forward. Whether I want to move into private equity or take the industry route, I’m hoping to gain the necessary skill sets and experience while working with investment banking. It’s a work-hard atmosphere, so when you make a lot of great connections you gain extremely valuable experience. I haven’t decided exactly what I want to do – whether I want to stay in investment banking or private equity, or maybe a corporate finance field, but that’s what I’m looking at right now. Ideally, I would like to find myself working on the financial managerial division of a professional sports team or basketball team. After getting my experience in the financial executive department, the decisions I make post-grad will be either going back and getting my MBA or continuing within the field. Within UOIG you see a lot of people doing a couple years of investment banking but then they usually take a lot of different paths.

How do you like to spend your free time?
NS: I’m a basketball fanatic. I’m super into analyzing and catching as many games as I can, especially right now with all the games that are going on. I also play basketball and soccer. I love to travel when I get the chance to. I was able to do a lot of traveling growing up while visiting my parents’ family, so seeing as many places as possible has always been a huge interest of mine. I love Indian cuisine and I like playing blackjack too.

What are some tips you have for other finance students?
NS: Don’t use the mouse when you’re using Microsoft Office; always use the keyboard. I would also say networking is critical within the industry because it’s so concentrated. Because we’re from the west coast, making relationships and being able to network is critical for landing the ideal internship or post-grad job. I would say take advantage of the opportunities that are offered at UO outside of the classroom because not many other schools have them, and that’s what’s going to separate you when you’re going up against your peers or students from other schools. It’s a lot of work but it’s worth it when it’s all said and done.

Written by UO Business

The UO Lundquist College of Business empowers an engaged community of students, faculty, staff, and stakeholders who create, apply, and disseminate knowledge that contributes significantly to their professions, communities, and society. The college delivers a dynamic learning environment where world-class professors engage and get to know students, where students work on real projects for real companies, and where alumni go on to high-powered jobs worldwide.

University of Oregon CCFSA Profile – Dougal Williams

Dougal Williams is the chief investment officer at Vista Capital Partners in Portland. He is a University of Oregon alumnus who will be returning to campus on May 11 to share his experience in the financial planning industry. Students will have the opportunity to gain insight into Williams’ responsibilities as well as learn more about how financial markets function. We had the opportunity to ask Williams a few questions in preparation for his upcoming visit:

Can you give me a brief introduction into the roles and responsibilities of the chief investment officer at Vista Capital Partners?

Dougal Williams:  My primary responsibility is to orchestrate and implement Vista’s investment and wealth management research. These decisions are made at the investment committee level, so a big part of my job is to effectively lead this investment team. I also try to be a resource for our firm’s lead advisors and portfolio managers, so they can better serve our clients. We have been fortunate to add a number of great, young people to our staff in recent years, so helping mentor them and positively impacting their professional development is important.  Finally, the passion we exude for our anti-Wall Street, evidence-based investment philosophy has caused a few of our industry peers to label us as “zealots.” If that’s true, then I consider myself Vista’s Chief Investment Zealot.

What would you say is your guiding principle in terms of making financial decisions?

DW:  My dad was a craftsman and he told me to always “measure twice, cut once.” To me, that’s a great basic reminder to always check or test my understanding before undertaking an action. When you’re in charge of someone’s life savings, you can’t be sloppy and make mistakes.

What advice would you give students planning to go into a career in wealth management?

DW: Go for it! Being an investment advisor is rewarding on many levels. First, there is the intellectual stimulation that comes from working in a profession where the playing field changes every day. We get to read, learn, and teach every day. We are also well compensated for the work we do, so it can be a great career that provides financial security and opportunity for a family. Most gratifying, however, are the intimate relationships we build with clients. Seeing our advice help clients through major events in their lives is incredibly rewarding.

What resources did you utilize at the University of Oregon that you would recommend students take advantage of?

DW: Honestly, I probably wasn’t as mature or career-focused as many of the students I’ll be talking to later this week. I was double majoring in economics and Spanish with a minor in sports marketing, and captaining the men’s varsity tennis team. I didn’t have a lot of time to explore many of the resources available to students then or today. My focus was on excelling in the classroom and improving on the tennis court, as I wanted to play professionally for a few years after graduation. My advice would be to find something you’re genuinely interested in and to dive in as deep as possible. You’ll learn a lot and meet interesting people in the process.

Can you give me a brief description of what students can expect to hear from you at Vista Capital Partners’ upcoming visit to campus?

DW:  I hope to share my journey from U of O to where I am today, and what I’ve learned that might be helpful to others. I’m also going to run a little real-time experiment, the results of which should help students better understand how financial markets work and how that underpins Vista’s investment philosophy.

Dougal Williams and Vista Capital Partners will be visiting the UO Financial Management Association on Wednesday May 11 at 6:00 p.m. in Lillis 232. Don’t miss this opportunity to gain insight into the financial planning industry!

Written by UO Business

The UO Lundquist College of Business empowers an engaged community of students, faculty, staff, and stakeholders who create, apply, and disseminate knowledge that contributes significantly to their professions, communities, and society. The college delivers a dynamic learning environment where world-class professors engage and get to know students, where students work on real projects for real companies, and where alumni go on to high-powered jobs worldwide.

From Cal Bear to Oregon Duck: Highlights from San Francisco

Earlier this month, the entire first-year MBA cohort had the opportunity to spend the first week of April in the San Francisco Bay Area visiting with top executives in a wide variety of companies.

In just four days, we met with Levi Strauss, Blackrock, Strava, Wells Fargo, the Federal Reserve, Farmland LP, Capital One, LinkedIn, Google, Women’s Startup Lab, Interwest Partners, Bay Area Impact Investing Initiative, RSF Social Finance, Clif Bar and Sierra Nevada Brewery! We also had a little time to explore downtown San Francisco, take pictures under the Golden Gate Bridge, and spend the evening playing in the Exploratorium.

Showing our Oregon pride under the Golden Gate Bridge

Showing our Oregon pride under the Golden Gate Bridge

While I was excited to get insight into the inner workings of some incredibly successful companies, I was also thrilled to be returning to the Bay Area for the first time in a few years. I did my undergrad at the University of California, Berkeley, and I was eager to show my new friends around all of my old favorite spots in the city.

Oregon Ducks take over the UC-Berkeley Campus (My alma mater)

Oregon Ducks take over the UC-Berkeley Campus (My alma mater)

 

It would be hard to pick my favorite experience from our week in the Bay, but I was able to narrow it down to a list of my top three:

  1. Clif Bar

Going in to the trip, Clif Bar was the company that I was most excited to visit, and the office tour did not disappoint. Between the rock-climbing wall in the employee gym, bike parts repurposed as door handles, an endless supply of snack bars, and a program that allows employees to volunteer for an unlimited number of paid hours, it would be hard not to want a job at Clif. Our group was lucky enough to meet with the CFO, who shared stories about what it was like to work for the company 15 years ago when the CEO turned down a $120 million offer and decided to keep Clif Bar private. As far as authentic companies go, Clif Bar is the real deal.

  1. RSF Social Finance

One of the primary benefits of the experiential learning trips is the opportunity to be exposed to an array of companies in many different industries. While I am not personally interested in a career in impact investing, I really enjoyed learning about RSF Social Finance. RSF is a nonprofit financial services organization dedicated to transforming the way the world works with money. The visit with RSF drew together the interests of all three centers (finance, entrepreneurship, and sustainability) in attendance, as we had the chance to talk about social responsibility, financial analysis, and innovation and entrepreneurship within the company.

  1. Net Impact Meet Up

My third and final highlight of the trip was our meet up at UC-Berkeley’s graduate chapter of Net Impact, a nonprofit organization of students and professionals dedicated to using business skills for social and environmental causes. On Tuesday night, students from our chapter at UO met with students from the chapter at UC-Berkeley. We compared professional interests, internship prospects, and our plans for the Net Impact conference in Seattle, Washington in November. Of course, we also told stories about our experiences in grad school and laughed over local brews. This highlight might be biased, but it was eye-opening to see my college campus through the eyes of my new friends.

Despite feeling slightly nostalgic for my college days in Berkeley (who isn’t nostalgic for their alma mater), my biggest takeaway from San Francisco was a renewed appreciation for the MBA program at the University of Oregon. The experiential learning trips are just one of the many benefits of the Oregon MBA, and I feel really lucky to have a cohort full of intelligent, passionate, collaborative and enthusiastic students with which I can share these trips. Until next time, San Francisco!

Written by Katie Clark

Katie is a second year MBA student in the Center for Sustainable Business Practices. Over the summer, Katie worked for Happy Family Brands as the Corporate Social Responsibility Intern, where she managed multiple supply chain projects and provided employee education on topics in sustainability. She hopes to bring this experience and her MBA coursework to a strategic sustainability position in a mission-driven company in the outdoor product or natural foods industry.

Valentine’s Day in Thailand with Cricket Flours

It felt as busy as our Engaging Asia trip this past September, but this whirlwind of a journey was completed in only five days. The opportunity to participate in a business plan competition was something I had never experienced before — let alone an international competition. The talent of both the student groups and the judges were top-notch. This included some of the top-ranked schools in both the United States and Asia, as well as some of the most respected companies in Thailand. Being able to compare MBA experiences with people from around the world made for great conversation.

cricket flours team

The Cricket Flours team at our booth

We spent the first three days of the trip entirely focused on the competition. Every free moment was spent refining our presentation and incorporating the judge’s feedback. The months of hard work by the Cricket Flours team was rewarded when we were named our division’s top team. With this designation we earned an automatic berth into the competition’s final round. The finals were broadcasted live on Thai television and had $12,000 on the line. Cricket Flours was selected to present first in the finals round. This was both a blessing and curse because the team would be able to make the first impression on the judges but also meant we would face a panel eager to poke holes in our business plan. Ultimately, Cricket Flours was left out of the top two spots on the podium but the competition provided the team with great feedback concerning our marketing strategy and the cricket flour industry.

Thailand competition

The main stage and the 3 trophies that managed to elude us

After the competition our hosts, the Sasin Graduate School, arranged for us to spend an evening on the river in Bangkok followed by an entire day seeing the main cultural spots in the city. Our night on the river was capped off with a fireworks show in honor of Valentine’s Day. We visited the Temple of the Emerald Buddha and the Vimanmek Mansion. Being able to relax and hang out with our new international friends without the pressure of the competition was much needed.

However, as quickly as it had begun, I found myself back in Eugene learning Constitutional Law reminiscing about another incredible international experience provided by the Oregon MBA program.

Written by pmb@uoregon.edu

Paul Butler is a concurrent JD/MBA student at the University of Oregon currently in the Finance and Securities Analysis Center. His goal after he graduates in 2016 is to apply his education within a corporate finance department.

Embracing Change

Change. It can be exhilarating but painful. All too frequently if you want to achieve anything worthwhile you have to make the change yourself. For some, this means taking stock of where you are, where you want to go and determining what actions you must take to get there. It’s daunting. It’s new. It’s exactly what happens when considering changing something in your personal or professional life, and it might lead you to consider earning your MBA.

All of the current MBA candidates at Oregon decided to make a change, and it led us here. Our program is known for its intimate, small cohort with a unique approach to preparing us for our futures. Everyone made a personal decision by coming here, but we had a lot of information to help us make that choice.

Oregon MBA

Oregon’s MBA program is divided into four Centers of Excellence:

This division allows candidates to gain crucial business acumen while building a specialized skillset in small sub-cohorts. “We know our students more personally than we would be able to if we were a 100 student program,” said Michele Henney, Program Manager, Finance and Securities Analysis Center, Senior Instructor of Accounting. “In that situation (100+ students), there is no way we could provide the same services.” Each Center’s students are a part of the Oregon MBA program, meaning you know and collaborate with individuals working towards specialized skill sets unlike your own. Although different, each center provides valuable opportunities to its own sub-cohort and is continually looking to improve.

“Our green MBA is really strong. We’re in a region where sustainability and our connection to businesses is very strong. Not every region can say that,” said Dr. Laura Strohm, Program Manager, Center for Sustainable Business Practices. Industry expertise differs from center to center, but each emphasizes the need to prepare candidates to be leaders.

“I think the best thing we can do is prepare students to be comfortable taking leadership positions, analyzing the situations that they find themselves in, because usually MBAs will end up in places where someone looks to them for expertise even though they might not have it,” said Nathan Lillegard, Program Manager, Lundquist Center for Entrepreneurship, Instructor of Business.

One of the most compelling reasons to select an MBA program is the culture established by current students, faculty and staff. At Oregon, candidates are motivated by factors like entering a new industry, learning skills to use in a different job function and work locations. “A lot of times the people drawn to the University of Oregon are people who want to stay and work in the Pacific Northwest,” Henney said. These motivations, though not always focused on the highest possible salary, are used by faculty and staff to inspire candidates to think about their careers early, and often.

“You really spend your two years here either landing internships or landing jobs,” said John Hull, Executive Director, Business Innovation Institute, Assistant Dean for Centers of Excellence. Hull stresses the importance of hitting the ground running in that pursuit of change, something candidates might be apprehensive about. “’Wait a minute, I thought I was stepping away from my career for 2 years for education?…Well no, I’m actually supposed to be working on my career stuff from day 1.’”

With strong alumni connections and a growing office of individuals devoted to the career paths of OMBA candidates, Oregon is empowering graduates to aim not for jobs, but careers.

“What makes us different is that you can have a meaningful connection within the industry week in and week out if you want it,” said Paul Swangard, Managing Director, Warsaw Sports Marketing Center, Woodard Family Foundation Fellow. “I think we are the only ones who have a standing international travel experience that is imbedded into the framework of the program, and we are trying to differentiate ourselves geographically.”

Swangard’s reference of the yearly Engaging Asia trip taken by second-year MBA candidates is just one of multiple experiential learning trips taken by the Oregon MBA. (Read about the Engaging Asia trip here) Centers travel as far away as Mumbai, India to gain a global perspective. Other domestic trips take MBA candidates to NYC, San Francisco, Seattle and, of course, Portland. These trips bridge the gap between where candidates once were to where they want to be, allowing them to see, taste, and smell what a particular industry is like.

Change can be challenging but also exhilarating, fulfilling and rewarding. If you’re thinking about making a change, consider how you’ll make it happen. The destination is the goal but the journey there can be equally important.

Written by kkostal@uoregon.edu

After a college experience filled with opportunities in journalism, creative advertising and guerrilla marketing Kostal began her career with a cross-country move from the University of Illinois to Las Vegas. There she worked as a producer in an event and media production company. She crafted sizable proposals to secure client projects worth over $100,000 in the pressure-cooker environment of live events. She spent the last five years at a Chicago medical liability insurance company in the risk management division. While there Kate utilized her event planning and marketing skills to promote, plan and execute multiple live events for over 10,000 policyholders and their staff throughout Illinois. During that time she also acted as the Sponsorship Chair for the Chicago Triathlon Club on a volunteer basis and earned her RRCA coaching certification for endurance runners. Another cross-country move followed when she decided to pursue her passion for sports as a career. Kate’s marketing experience, communication skills and drive to succeed will be an asset in any organization. Her passion for sports will lead her to pursue opportunities more closely tied to sports business after graduation, focusing on sponsorship and marketing.

Typhoons and Travel: Hong Kong Edition

Geographically, it quickly became apparent why the British had colonized Hong Kong. The land was full of deep natural ports surrounded by large mountains, offering ships protection from typhoons or whatever else Mother Nature might offer-up.

I guess we should have taken a ship.

In the days leading up to our travel from Beijing to Hong Kong there was a lot of talk about a typhoon that was hitting HK precisely when we where scheduled to arrive. Sure enough, it did. Flights were delayed and we spent a few extra hours in the airport but the storm cleared out just as fast as it came in and the rest of our trip was typhoon free.

Our first meeting was at a business complex called Cyberport. Cyberport was located on the west side of HK Island, so when taking the bus to Cyberport we got to see the layout of most of the city. For those of us who are Oregon natives it was very refreshing to see many parks scattered throughout the city and mountains in the distance. (We later found out that 60% of the land in HK was set aside for public parks and nature reserves, making only 40% of an already small landmass buildable.) Cyberport was a massive complex geared to spur the start-up environment, as well as cater to small businesses. Business located within the Cyberport complex had access to amazing resources. There were 3-D animation rooms, recording studios, prototype building facilities, unlimited office space, and grant funding that Cyberport offered to businesses deemed as having ‘great potential’. While talking with some of the entrepreneurs, it was not unusual for them to share that starting a business in HK only took “6 hours, and that you could conduct business the same day”, supporting the notion that HK was a business friendly environment.

We had a fantastic lunch meeting with Mr. Edwin Keh, the former SVP COO of Global Procurement at Walmart and currently the CEO of Hong Kong Research Institute of Textiles and Apparel. The location, The China Club, could not have been more fitting when talking to a man as acclaimed as Edwin. The China Club is a restaurant/private club in the old Bank of China building, which is now dwarfed by the new Bank of China building and other large skyscrapers. Keh discussed the business environment of China in depth, talking about the mass migration of people from the country side to urban areas, the role of the Chinese government in its immense growth and how business in Hong Kong is different than that conducted in mainland China. Many of us did not want to conclude the meeting due to the wonderful food and the fantastic stories that Keh was sharing.

In the final days of our trip we met with Lizette Smook, the founder of InnovAsians, a sustainability driven lifestyle brand building the “bridge to biodiversity”. Lizette was full of new and exciting projects underway at InnovAsians using a variety of eco-friendly fibers to create anything from clothes to towels at hotels to the plates and bowls restaurants serve food on.

After two weeks of traveling through Asia, dozens of business meetings, long days and short nights most of us were more excited to see the suits we had tailored the day earlier than meeting with the founding members of the investment bank REORIENT. Little did we know we were about to sit-in on what some may describe as the highlight meeting of the trip. The founding team consisted of highly educated young men who dressed like they had their own personal tailors, (a little better quality than we had got from our street tailors) and were paving the way for investment banks in Hong Kong. The banks’ senior management included Mr. Uwe Parpart, who took a few economics classes from Mr. John Nash himself (who Russell Crowe depicts in the movie ‘ A Beautiful Mind’) and has experience conducting business in China that dates back to the 1980’s. REORIENT’s strategy is to conduct business on a personal level, fully understanding the power of Guanxi (relationships) when doing business in China. The meeting was full of innovative ideas by the founders and compelling stories of start-ups that had crazy potential, much like REORIENT themselves.

Not only was business in Hong Kong exciting but the city as a whole was equally thrilling. The endless restaurants, amazing views atop skyscrapers or mountains, and the variety of people located in HK made this a great way to end a fantastic whirlwind trip to Asia.

-Blake Thompson (Class of 2015)

Blake is a second year MBA student focusing on Sustainable Business Practices. The experience of growing up involved in his family’s business, has led Blake to realize the importance of a holistic approach to business. He hopes to bring this approach to the organization he works for after completing his MBA. Blake received an undergraduate degree from the University of Oregon where he was also a student athlete. 

Written by UO Business

The UO Lundquist College of Business empowers an engaged community of students, faculty, staff, and stakeholders who create, apply, and disseminate knowledge that contributes significantly to their professions, communities, and society. The college delivers a dynamic learning environment where world-class professors engage and get to know students, where students work on real projects for real companies, and where alumni go on to high-powered jobs worldwide.

EMF Review: October 30th, 2013

The UO EMF fund was affected by the overall poor performance of the global economy losing 1.01% on the week. This was 0.75% worse than the MSCI EM fund (our benchmark), which lost 0.26% for the week. Overall, the fund has an annualized return of 10.24% (20.15% for the holding period), well above the MSCI EM fund’s annualized performance of 3.80% (7.27% for the holding period).

The individual stocks within the fund performed relatively consistently (albeit negative) over the past week with the vast majority gaining or losing less than 1%. The few outliers included Mercadolibre Inc., SK Telecom, and Anglogold Ashanti LTD, which lost 4.92%, 2.87% and 2.56% respectively.

 

GOOD AS GOLD

Our recent purchases of gold mining firms Gold Fields LTD, and Anglogold Ashanti LTD have struggled since acquisition. Both stocks were updated this term, Gold Fields by Ryan Strub, and Anglogold by Kyle Spradling. The updated DCF for both stocks were not as strong as the original analysis, primarily due to the decrease in gold prices since their acquisition last spring. Gold prices have recovered over the past several months and we have seen the price of these stocks slowly increase as the price of gold has started to recover. In both cases, our group decided to maintain these stocks in our portfolio, citing various reasons (described below in the Anglogold update).

NEW PITCH: Dr. Reddy’s Laboratories Limited (RDY) – Haruka Abe

Dr. Reddy’s Laboratories is India’s second-largest pharmaceutical company next to Ranbaxy. It was established by Dr. K. Anji Reddy as a private company in 1984, going public the following year.  RDY has a strong presence in highly regulated markets such as the United States, the United Kingdom, and Germany, as well as other key markets such as India, Russia, Venezuela, Romania, and South Africa. The firm derives its revenue from the sale of finished dosage forms, active pharmaceutical ingredients and intermediates, development and manufacturing services provided to innovative pharmaceutical and biotechnology companies, and licensing fees from marketing authorizations for its products.

ANALYST DECISION: BUY

Pros

The class saw a lot of advantages in purchasing a firm like RDY. Kyle Spradling noted that Haruka’s DCF was very conservative in her assumptions and the stock still appeared to be undervalued based on the analysis. Shu Zhu thought that a pharmaceutical firm would bode well for diversification as we currently lack the presence of one in our portfolio. Analyst Matt Justice liked the high profit margins of the firm and was impressed that the margins stayed consistently high even as revenue grew substantially over the past few years. Ryan Strub liked the idea of having a lower beta stock in the portfolio and commented that even in down economies there would still be a strong demand for RDY’s products. Finally, Kyle Worley saw an advantage in investing in the brand of RDY as it is highly recognized in the emerging markets it serves.

Cons

As with any stock, RDY poses many risks that need to be considered when we contemplate adding it to the portfolio. Kyle Spradling was quick to point out that the firm grew quickly in recent years but it did not have a long history of growth, which may not be sustained in future years. Shu Zhu piggybacked on Kyle’s comment and noted that it was difficult to pinpoint where the drastic spike in revenue was derived from. Matt Justice was also concerned that the products that RDY specializes in are generic drugs that were easy to duplicate and thus the firm could be at risk of being undercut.

UPDATE: Anglo Gold Ashanti – Kyle Spradling

Anglo gold was purchased last spring along with our other gold mining firm, Gold Fields LTD. Immediately after the acquisition the stock price fell but since has been recovering, which started around that the time of the Q2 report. Additionally, gold prices continued to fall after the acquisition, dragging the stock price down with them. As gold began to recover, Anglo Gold also saw an increase but at a much slower rate than the commodity.

Some good notes from the Q2 report brought a sense of confidence in the stock as the new CEO’s strategic plans are beginning to pay off. These changes were geared toward shareholder satisfaction and included a massive debt restructuring that would increase annual payments but do so in a less volatile manner.

ANALYST DECISION: HOLD

Pros

Analysts in the fund were still optimistic about the stock and thought that the decrease in gold prices as of late was in part due to the dumping of gold as a safe investment tool during the recession. This practice has been reduced by 50%, dropping the demand for gold and ultimately lowering the price. Additionally, the forecast for gold demand looks promising as it is being used in more high technology products as of late, something that hasn’t been done in the past. Finally, Anglo gold is opening new gold mines that will reduce the cost of gold down to $630/oz. Compare this to their current cost of $898/oz.

Cons

As a firm that is highly dependent on the price of a commodity, Anglo Gold does pose many risks for investors. First, it is hard to determine what the firm is doing to hedge their risk against the price of gold declining. Additionally, the forecasts that are in our DCF assume that gold is undervalued at this time. If this is incorrect and gold prices have yet to bottom out, our analysis could suffer. Even if gold prices do recover, but not up to the levels of our expectations, the stock could still be overvalued.

CONCLUSION

Our fund had one of its first unanimous decisions in the two-year holding period, electing to buy RDY and hold Anglo Gold. Both presented an upside that was hard to ignore. The conservative assumptions in RDY left a lot of room for error before the stock would have been overvalued, and the funds bullish stance on gold prices made it easy to select a hold for Anglo Gold.

Do you agree or disagree with our analysis? Keep checking back for updates on these stocks and more, and feel free to reach out for more detailed analysis including our DCFs, and portfolio reports.

Written by strub@uoregon.edu

Ryan Strub is a second year MBA student in the Finance and Securities Analysis Center. He currently works as an Acquisitions Analyst for ScanlanKemperBard Companies, a Portland based real estate merchant banker. Ryan plans on developing socially responsible communities upon graduation.

FSAC Emerging Market Fund: Oct. 23rd Review

OVERVIEW:

The FSAC Emerging Market Fund is an investment portfolio that is actively managed by MBA students through an experiential learning class. The fund began through a generous donation of $200,000 from alumni and board members who thought the practice of managing a portfolio would be a valuable learning experience for future professionals. Each week a recap of the fund’s performance is given by the portfolio manager, followed by an update of a stock currently in the portfolio, and a pitch for a stock to be added to the portfolio.

Students vote on each pitch, both updates and new pitches, to see if it will be in the portfolio the following week. Each semester weaknesses in the portfolio are identified and addressed so students know what firms to look at for future pitches. Weaknesses include a lack of certain industries, geographic locations, or riskiness.

The fund is benchmarked against the MSCI EM fund, a diverse fund containing assets from our targeted countries. The benchmark is also included in our portfolio and offers a good example for ways to diversify our portfolio.

October 23rd Recap:

The student-run EMF fund experienced another week of steady growth, posting a weekly gain of 2.32%. The return for the blend of stocks (the fund excluding cash and the MSCI EM Index) was even higher at 2.59%. This brings our total return for the holding period to 21.31%, or 10.92% annualized.

Tencent Holdings continues to be the star performer of the fund with a 113.88% return over the holding period. Anglogold Ashanti LTD posted the biggest gain of the week returning 16.87%. However, the stock has not performed well since it was acquired last spring, down 10.46% in the period. Sterlite Industries also saw substantial returns, ending the week up 7.32%.  China Nat. Offshore Oil Corp. and Taiwan Semiconductor took the biggest hit this week dropping 3.50% and 2.98% respectively.

Below is a detailed breakdown of the funds performance:

New Pitch: ICICI Bank Ltd

Analyst Matt Justice presented a new pitch for ICICI Bank Ltd. (ICICI), the largest private sector bank in India in terms of assets. The bank is headquartered in Mumai, Maharashtra and has over 62,000 employees. ICICI offers commercial banking for retail customers, insurance, treasury operations, and venture capital services and private equity fund management.

A debate ensued with analysts weighing the pros and cons of buying ICICI. James Ball noted that the DCF was thorough and provided sufficient details that instilled confidence in Matt’s forecasts. Kang Zhang noted that the potential acquisition would bode well for diversification, as it would be our only financial institution in the portfolio. (NOTE: currently our fund’s bylaws restrict us from purchasing financial institutions, a rule that is being sent to the board to change). Kyle Worley stated that the timing seemed right considering the growing middle class in India and the potential for large growth.

In contrast, Haruka Abe noted that the finance industry is volatile, India is volatile, and there is an unknown ownership team. These all pose substantial risks in investing in a business of this nature. Additionally, because the firm is tied to India’s currency, inflation in India will greatly affect the actual cash flows of the business. Ryan Strub also noted that the group is not familiar with investing in India’s economy, which could present difficult challenges in forecasting growth rates.

Our team decided that it was best to postpone a vote on ICICI until we go through the process of changing the bylaws to allow financial firms in our portfolio. Once this is done, an updated DCF will be required and a re-vote will take place.

Written by strub@uoregon.edu

Ryan Strub is a second year MBA student in the Finance and Securities Analysis Center. He currently works as an Acquisitions Analyst for ScanlanKemperBard Companies, a Portland based real estate merchant banker. Ryan plans on developing socially responsible communities upon graduation.

Alumni Host MBA’s at San Francisco’s Century Club

After a busy day of business meetings, we had the wonderful opportunity to spend the evening in great company with business leaders at the Century Club in San Francisco, hosted by Mark and Martha Greenough. The evening opened with drinks and appetizers providing ample opportunity to introduce ourselves to our hosts (and other guests) and begin learning more about their various business ventures. The variety of our guests gave us insight into small business management, financial advising, capital investment, entrepreneurial startups, and general business advice.

The evening continued to the dining room where our first course and main course were served over more intimate conversations between the students and our business guests. Topics of conversation ranged from football allegiances to work-life balance and entrepreneurial advice, to name a few. We students were then offered the opportunity to introduce the guests at the table to the entire group, giving everyone a chance to see the great talent, success, and achievements made by those in our company.

As we made our way upstairs for drinks and dessert, Mark Greenough prepared a networking activity to offer additional time for small groups to ask questions and glean as much as we could from our guests before the evening drew to a close. In small groups, we spoke with 2-3 guests about their great achievements, biggest challenges, and highest aspirations. The intimate setting provided for a honest discussion of the highs and lows of business, focusing on how the journey is the exciting part, not the destination.

To say the least, the evening was motivational as we had the honor to hear about real world business success from the mouths of those who achieved it. The variety of personalities and careers afforded us a myriad of examples of what success really looked like and how it could be achieved. As young men and women at the beginning of our career adventures, this dinner provided us a unique look at the paths taken of those who were once in our shoes. The Oregon MBA is grateful for the following guests, especially Mark and Martha for offering us their time, energy, and wisdom:

  • Mark Greenough (Greenough Consulting Group)
  • Martha Greenough (Independent Bookkeeper)
  • Joshua Greenough (Capital One Innovation Center)
  • Brian Connolly (Connolly Advisors)
  • Ben Keighran (Chomp)
  • Lauryn Agnew (Seal Cove Financial)
  • Geoff Dolan (Makani Power)
  • Claire Herminjard (Mindful Meats)
  • Robert Simon (IDC Ventures)
  • Ken Pearlman (Oceanshore Ventures)
  • Eli Janin (Capital One Innovation Center)
  • Bob Komin (TicketFly)

 

Written by Andrew White

Andrew is an MBA Candidate in the Center for Sustainable Business Practices. A native of Massachusetts, he came to UO to refine his business skills and build his expertise in the sustainability arena. His primary interest is in helping organizations implement environmentally and socially sustainable strategies for long-term success, and he is a regular participant on many of the MBA intramural sports teams.

MBA by the Bay: Day 2

The second day of the combined FSAC/LCE/CSBP trip to the Bay Area began with chocolate. A factory FULL of chocolate. We visited the Guittard Chocolate Company at their HQ and manufacturing facility in Burlingame. After a great discussion about quality control and the importance of sustainable agriculture to their supply chain, we were fortunate to be able to take a tour of the factory and see exactly how chocolate is made. The production floor was hot and it didn’t always smell like fresh chocolate, but our perseverance paid off in the end as we were all sent home with a massive box containing a variety of amazingly delicious treats!

Next, we were off to visit 500 Startups, which is a business incubator/accelerator (with heavy focus on mobile applications) located in Mountain View. The laid back environment was completely open, and focused totally on allowing new ideas to flourish and develop into potential businesses. Everything seemed acceptable here, as evidenced by the sign on the front door that read “Warning: Ninjas and Pirates and Lasers and S[tuff]”. Unfortunately our time here was a bit limited by our schedule, so we asked a lot about the current tenants and the funding structure (the incubator provides seed funding and guidance, and maintains relationships with larger organizations in the area) before heading to our much anticipated meeting with Facebook.

Looking at the campus from afar, you’d barely be able to distinguish Facebook from a series apartment buildings, until you spotted the gigantic “Like” button right outside the driveway entry. At Facebook we met with Lyrica McTiernan. Lyrica is a Sustainability Program Manager at Facebook, which means that a great deal of her time is spent analyzing the performance and developing programs for the company’s data centers. Because of their massive energy demand, data centers make up very large portion of Facebook’s environmental impact, and have dedicated team that works tirelessly to balance maximum reliability and minimal energy usage. While the discussion of energy efficiency and green building practices was interesting, I think it’s safe to say that most of us were a bit preoccupied trying to get our names on the signature wall (Shaq’s autograph is obviously at the very top) and take in the beauty and eccentricity of our surroundings (complete with a mural of Yoda!).

After “checking in” at the Facebook HQ, we moved north again on US101 to visit Pinnacle Engines. This was another short visit, but allowed us the opportunity to observe an engine durability test in progress, and learn about a potentially massive upgrade in fuel efficiency for internal combustion engines. Using Pinnacle’s patented and innovative engine design, small vehicles (mopeds, motorcycles, cars) can experience over 50% more efficient use of fuel. Pinnacle’s VP of Marketing and Special Projects, Tom Covington, explained the importance of selecting the right markets for initial adoption, and outlined the company’s plans to build a strong customer base in emerging markets such as India and China, where sensitivity to fuel prices and an abundance of smaller vehicles combine to create favorable market conditions.

The last visit of our trip was at Stanford Hospital with the Executive Director of Emergency and Medicine Services, Janet Rimicci, and a panel of Stanford Hospital executives. Our discussion here was centered on the important role that logistics can play in a hospital that continually needs to move patients in and out of various services, as well as sustainability at a facility that requires redundant systems and constant access to electricity to support its systems. Overall it was a great visit that provided a nice finale to our busy trip to the Bay Area!

 

Written by Andrew White

Andrew is an MBA Candidate in the Center for Sustainable Business Practices. A native of Massachusetts, he came to UO to refine his business skills and build his expertise in the sustainability arena. His primary interest is in helping organizations implement environmentally and socially sustainable strategies for long-term success, and he is a regular participant on many of the MBA intramural sports teams.