Investment Fund Students Pitch Strategies to Distinguished Judges

By William Rindfuss, executive director of strategic programs, Haas Finance Group

It was a format familiar to many, but without any singing or dancing. And with much nicer judges.

On May 9, students in the Haas Investment Fund course — an experiential learning course in our Innovative Leader curriculum, competed against each other in pitching to judges the investment strategies they’d been developing over the past semester. The purpose was for the teams to benefit from feedback and advice from this panel of high-level investment professionals (who have a Berkeley MBA and two Haas PhD degrees among them), and for the judges to recommend allocation of the fund itself between the two competing teams, based on the market-beating promise of their innovative strategies — taken together with the degree of perceived risk.

Investment executive and Haas alum Minder Cheng (l.) with Haas Investment Fund students.

Judges included Minder Cheng, MBA 89, PhD 94, independent director with Investment Technology Group, Inc. Previously, Cheng served as chief investment officer for index equity and capital markets globally at BlackRock and as chief investment officer for the Equity and Capital Markets division of Barclay’s Global Investors worldwide.

Students in the course are encouraged to consider their own backgrounds and areas of expertise that would provide their teams with unique insights into the fundamental dynamics of particular industries or macro trends. They use skills learned in the Problem Finding Problem Solving course in “divergent thinking” to brainstorm multiple possible theses, and in “convergent thinking” to narrow and refine the list for further research and analysis. They are introduced to the particular financial instruments that might be used to implement a strategy (most students benefit from concurrently taking the Investments course), and they may then analyze their strategies with factor models and backtest them with historical data. Students received training on financial tools such as Bloomberg, FactSet, and BarraOne — as well as research tools and databases available from the Haas Library.

Team 1 had developed a “matched pair” strategy of long/short positions within multiple segments of the automotive components industry, with positions selected based on varying degrees of commitment to green technology. Team 2 had developed a screen for promising performance in the apparel retail space based in part on real-time trends in “Likes” of particular brands on Facebook.

Guidance was constructively delivered by the judges and was eye-opening to the students. A member of Team 1 felt the judges “provided extremely insightful feedback regarding our proposed investment strategy, including their suggestion to look more closely at current valuations and their recommendation to reconfigure our portfolio to a long-only one with risk analyzed through a factor model.”

A member of Team 2 added “The panelists’ questions were candid and thought-provoking.  It was reassuring to find that we had already discussed some of them in our team meetings — while there were others we hadn’t considered at all. To be able to present in front of such a distinguished panel was truly a phenomenal experience.  The panelists were respectful, kind, and generous with their compliments.”

In the end, the judges allocated the fund 60/40 between the two teams. After some adjustments based on the insights and suggestions of the judges, the teams will implement their strategies starting this June and will continue to implement, monitor, and manage their positions until December.

This one-year, three-unit course is cross-listed between the Full-time and Evening & Weekend MBA Programs and was led this year by Finance faculty members Christine Parlour and Bill Rindfuss.

With the pressure of pitching over…

…these investment fund teams will spend the next six months implementing their strategies.

Winning Approaches: University of Michigan Renewable Energy

The Winning Team: Dave Hirsch, Rohan Ma, Dan Stotts, Josh Lich, all MBA 13

The Competition: Renewable Energy Case Competition, University of Michigan, Feb. 2nd.

The Team: Dave Hirsch, Josh Lich, Rohan Ma, and Dan Stotts, all MBA 13.

The Outcome: First place.

The Field: Fifteen other teams, including those from Columbia, Tuck, Fuqua, and Kellogg.

The Challenge: To move a Michigan utility closer to achieving 20% of electricity generation from renewable energy technology. The team analyzed the cost-effectiveness of both renewable  and conventional energy generation; conducted risk and extraneous cost assements, and developed a risk-minimizing strategy that included analysis of tax implications.

The Winning Approach: Diversification. “We suggested a solution similar to diversifying a stock portfolio that would minimize the risks associated with renewable energy,” says Stotts. Also, a dose of reality.” We emphasized that there is no ‘magic bullet,’ but rather a combination of best-practices to employ around locational diversification, smart grid, energy storage, and market integration. Behind these recommendations, we provided robust financial modeling the corroborated our story.”

Won Because: Judges praised the team’s thorough and consistent approach. Stotts says the team’s two “quants,” Ma and Hirsch, exhaustively researched the inputs to the financial models that eventually led to the final costs presented. “The judges, industry experts, could see our costs were logical and realistic,” Stotts says” Additionally, the team’s strategy was specific to the market in which it operated and highly applicable.

The H Factor: “There’s no question that Berkeley-Haas has a vibrant energy community,” says Stotts. “The access that we, as first-years, have received through BERC, the Energy Institute, and experiential learning really provided an intuition from which we could think through the problems.” The team also credits the Leadership Communications course with helping deliver a confident presentation.

Defining Principles at Work: “Everyone left their egos at the door in order to facilitate collaboration,” says Stotts. The team took a Students Always approach by believing they could learn from each other and incorporating peer feedback to arrive at a more refined message. “Our maturity and authority on the subject matter also showed the Confidence without Attitude” that was behind our teamwork.”

Why it Mattered: “These are important problems and this is the preeminent energy case competition in the U.S. We wanted to represent Haas and leverage our respective backgrounds to develop solutions.”

ZZZ Factor: Every spare moment from receiving the case on Jan. 27 to presenting solutions on Feb. 2. was spent on the case. The night before departure, the team worked until 2 a.m., then left to pack for 6 a.m. flights. Copious amounts of caffeine and 80′s pop via Spotify kept them going in those final hours.

MBA 11s at Work: Dodge & Cox

Welcome to MBA 11s at Work, a periodic series on the career launches—in consulting, finance, tech, entrepreneurship, and more—of the Berkeley MBA class of 2011. First up: Hallie Marshall of Dodge & Cox.

Grad: Hallie Marshall, MBA 11

Working as: Portfolio Manager with Dodge & Cox, where she researches and analyzes large public companies looking for new investment ideas for the firm’s mutual funds and separately-managed accounts.

Thrilled to be with Dodge & Cox because: “The foundation of our investment approach has always been deep, fundamental analysis on companies and securities, combined with a strict valuation discipline,” says Marshall. “In the current climate of market uncertainty, I am proud to be part of an investment team that remains committed to its original values of integrity, client focus, continuous learning, persistence, accountability and independence.”

Most excited to be working on: Analyzing  international companies means Marshall gets to study the political economy of countries worldwide. “I’ve always been interested in the intersection of politics and economics, particularly in the developing world, and my work allows me to study these topics on a daily basis.”

Inside Dodge & Cox: The firm brings professors in to instruct equity analysts on topics from accounting to technology strategy analysis. “Haas professors and instructors will be teaching a series at Dodge & Cox in 2012!”

Networked: “There is a healthy Cal vs. Stanford rivalry at my office as there are many alumni from both schools here,” says Marshall (who does admit that this past football season was a tough one.)

Best career search strategies: “Working as an equity research analyst intern was the single most important factor that allowed me to confirm my career choice,” says Marshall. She also met with the Career Management Group to hone her resume and interview strategy. “My adviser went the extra mile to make sure I was prepared.”

From the classroom to reality: “The analyses I learned from Professor Richard Sloan in his “Financial Information Analysis” class are techniques I use regularly to assess earnings quality of the companies I study.”

Living the Bay Area life: “In my free time, I hike on Mt. Tamalpais with my 2 year old son in a backpack.  (My son is known by classmates as ‘Baby Oski’ because he was born during our first year at Haas.) I’m expecting another baby in May, so it’s getting harder to make it up the mountain!”

MBA Internships: Visa

Student: Amy Josephson, MBA 12

Interning with: Visa Inc, Foster City, CA

Thrilled to be with Visa because: It’s “a major global brand with tons of interesting areas to focus on as a marketer– from global brand strategy to Olympics sponsorship to innovative new payment solutions in the mobile and eCommerce space. “

Can’t believe she’s getting the chance to: Get exposure to the CMO (Chief Marketing Officer) through intern executive breakfasts and project presentations with her team.

Already she’s learned: “How to prep a building for painting!” (through a Visa Volunteers day at a local elementary school.) She’s also gained good strategic frameworks for product marketing.

Advancing career goals by: “Applying strategic thinking to marketing in a way I haven’t done before.”

Who makes you proud to be Berkeley-Haas? Tell us in the comments below or share your stories with vgilbert@haas.berkeley.edu.

Award-Winning Instruction

Students Honor Faculty, GSIs with Cheit Teaching Awards

Poised on the brink of summer, with its new career opportunities, internships, or continuing coursework, Berkeley-Haas students took time to pay tribute to faculty members and graduate student instructors (GSIs) by bestowing Earl F. Cheit Awards for excellence in teaching.

Asst. Finance Prof. Walden

Finance faculty were honored with four of the awards, with Peter Goodson winning for his teaching in the Berkeley-Columbia Executive MBA Program, Mark Rubinstein for the Master’s in Financial Engineering Program, Alexei Tchistyi for work in the PhD Program, and Johan Walden for his teaching in the Evening MBA Program.

The Full-time MBA program honored Richard Sloan of the Haas Accounting Group, while the Weekend MBA Program, recognized Terry Taylor of the Operations and Information Technology Management Group. The Undergraduate Program gave the award to Jennifer Walske of the Lester Center for Entrepreneurship and Innovation.

Students recognized with GSI awards were: Edward Egan, a Business and Public Policy PhD student, who worked in the Full-Time MBA Program; James McLaughlin, a Finance PhD student, for his work in the Weekend MBA Program; and Sam Snyder, MBA 11, former president of the Haas Finance Club, for his work in the Undergraduate Program.

Recipients are selected by student panels from student nominations. Dean Emeritus Earl “Budd” Cheit established the awards in 1976 and made teaching excellence one of his top priorities.

Who makes you proud to be Berkeley-Haas? Tell us in the comments below or share your stories with vgilbert@haas.berkeley.edu.

The Oracle of Omaha

Berkeley MBA Students Visit Warren Buffett

Twenty Berkeley MBA students journeyed to Omaha to meet legendary investor Warren Buffett, on a March 11 trip organized by the Haas Investment Club. They toured Berkshire Hathaway portfolio companies and had a generous Q & A session and lunch with the Oracle of Omaha. Read all about it in a blog post by Investment Club Co-president Aaron Azelton, MBA 12. Azelton (in headlock below) hails Buffett as inspiring, insightful, and, well… humorous.

Who makes you proud to be Berkeley-Haas? Tell us in the comments below or share your stories with vgilbert@haas.berkeley.edu.

Buyout Bout

Berkeley-Haas Takes 3rd Place in Wharton Buyout Case Competition

Leveraging talent: MBA 12s Derek Simmons, Allan Riska, Jonathan Stull, and Serge Stanek (Not pictured: Zoe Zhu)

Pity the poor valentines of Team LTO Capital: This crew of dedicated Berkeley MBA students shunned the flowers-and-candy fest to spend February 14 developing a full LBO valuation model.

The choice paid off when Allan Riska, Derek Simmons, Serge Stanek, Jonathan Stull, and Zoe Zhu, took third in the Wharton Buyout Case Competition, placing ahead of such schools as Columbia, Wharton, Kellogg, LBS, and NYU in the Feb. 18 contest. Haas also placed third in 2010.

The competition simulates a real-life private equity buyout—the acquisition of a company using equity and significant amounts of debt. Asked to develop an investment thesis and Leveraged Buyout (LBO) valuation for video game retailer Gamestop, the Haas team said no-go. “From our research and discussion with gaming experts, we anticipate a shift to digital distribution (downloads) for videogames in the coming 3–5 years, which will make Gamestop’s retail business obsolete and a later exit through IPO or strategic sale impossible,” says Stanek.

The team impressed the judging panel of private equity pros with a strong and concise presentation and a thesis backed up by data and expert opinions, according to Simmons. “We definitely stood out for our industry knowledge, developed by talking to experts from companies like EA Games and Microsoft/X-Box—all contacts pulled from the Haas network within three days.”

And three days is just how long the students had to conduct research, develop the valuation model, and put together an investment committee presentation, “work normally done in 1–2 weeks by a private equity firm,” observes Stull. Team LTO Capital used the time to gather input from the Haas Investment Club, which had analyzed Gamestop’s stock, and from the Haas Technology Club, which provided gaming insights and alumni contacts in the industry.

Lecturer Peter Goodson and GSI Jonathan Groll coached the team members, who also credit a dry run competition held by the Haas School’s Private Equity Club. The new club, says Simmons, who serves as president, has offered practitioner chats with leading industry professionals and “generated an amazing amount of interest within the PE community.”

Sweet.

Who makes you proud to be Berkeley-Haas? Tell us in the comments below or share your stories with vgilbert@haas.berkeley.edu.

Giving Credit

Berkeley MBA Team Wins Wells Fargo Case Comp

Wells Fargo Case Comp Winners Claudia Diaz, Andrew Hamilton, Matt Acalin, and Mike Young, all MBA 12

Competing in—and winning—the 5^th annual Wells Fargo MBA Case competition garnered a $4,000 prize for a team of Berkeley MBA students, not to mention a crash course in oil and gas acquisitions, company growth strategies, and hedging.

The MBA 12 “Cash Flow Ridas” team of Matt Acalin, Claudia Dias, Andrew Hamilton, and Mike Young beat out seven other competing schools to win the SMU competition, held Feb. 9–10. This was the second consecutive win in the competition for Berkeley-Haas.

Students were given one week to formulate the optimal financing solution for an actual Wells Fargo credit request involving Laredo Petroleum. “We were concerned that our limited knowledge of the drilling business would put us at a disadvantage relative to schools located in states where this industry is a significant economic driver,” says Dias. “Fortunately, we got up to speed quickly and were able to think through many potential downside scenarios, which the judges seemed to appreciate.”

Who makes you proud to be Berkeley-Haas? Tell us in the comments below or share your stories with vgilbert@haas.berkeley.edu.