fall 2013 report -...
TRANSCRIPT
Goizueta Investment Management Group Fall 2013 Report
Fall 2013: Taking GIMG to the Next Level A successful recruiting season, independent charter from BBA Council, continued portfolio strength and commitment to the Atlanta community
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GIMG’s most successful recruiting season yet
We received over 40 applications, ultimately bringing on 13 new analysts, each bringing a unique perspective to the group. (See p.2)
New Chief Investment Officer and revitalized organizational structure
Senior Micah Sims was promoted to CIO. New Associates successfully led our five sector coverage teams. (See p.2)
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Continued portfolio strength amidst broad market rally
44% cumulative portfolio return, 8.89% return for the Fall semester. Successfully drew down cash balance by close to 50%. (See p.3)
Targeted, new investments in compelling small-cap equities
New portfolio positions in Take Two Interactive (TTWO), and Novavax (NVAX) – two of our strongest performers in December. (See p.4)
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Continued commitment to bringing financial literacy to Atlanta’s youth
We continued our partnership with Maynard Jackson H.S. and forged new relationships with SEED and APEC. (See p.5)
Exciting new initiatives planned for the Spring semester
We are currently developing an independent GIMG website and plan to host a Student-Managed Fund Conference in April. (See p.6)
The Goizueta Investment Management Group (GIMG) is a student-managed investment fund at Emory University’s Goizueta Business School. We are a group of undergraduates that manage a portion of Emory’s endowment in a long-only, U.S. equity portfolio. In addition to our investment activities, we are extremely passionate about teaching financial literacy to underserved youth in the Atlanta area. The group was founded in the Fall of 2011.
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GIMG’s Most Successful Recruiting Season Yet
At the beginning of the semester, we solicited new analyst applications and received over 40 qualified submissions. We ran a competitive interview process and ultimately brought on 13 new analysts. Each has brought his or her own unique perspective to the group this semester.
Two of our top new analysts this semester were Kevin Lee and Kyle Jorgensen. Kevin is a Sophomore from Chula Vista, California who is studying Finance at Goizueta. He has previous experience as a member of AMIG, another investment club at Emory. Kyle is a Junior at Goizueta from San Carlos, California. He is pursuing a concentration in Finance and interned last summer with Lam Research, a designer and manufacturer of semiconductor processing equipment. Both Kevin and Kyle have played an
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active role in their respective sector coverage teams this semester. They each delivered strong new investment proposals to the group, which have performed exceptionally well since being added to the portfolio. To read more about their stocks, see page 4.
New Chief Investment Officer and Revitalized Organizational Structure
At the beginning of the semester, the group selected Senior Micah Sims to serve as CIO. Micah joined the Investment Committee as a top student in her class at Goizueta and having previously interned with UBS Wealth Management. She is in charge of all GIMG investment activities and oversees the group’s five sector coverage teams. Micah will be joining Bain Consulting after graduating in May.
This semester we also strengthened GIMG’s
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organizational structure by empowering independence among the sector coverage teams. Our Associates stepped up this semester and ran each of their teams more effectively. Our Top Associate this Fall was Mike Filer, who has done an incredible job running the Tech & Telecom group. Mike and his team delivered consistent portfolio coverage, as well as compelling new investment proposals and an insightful industry update report. Mike is a Junior majoring in Economics.
2013 – 2014 Investment Committee
Aaron Weiner President Junior, Finance & Accounting Micah Sims Chief Investment Officer Senior, Finance & Consulting Ethan Anderson Chief Operating Officer Sophomore, Consulting
Mike Filer Associate, Tech & Telecom
Fall 2013
Top Associate
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Continued Portfolio Strength Amidst Broad Market Rally 44% cumulative portfolio return, 8.89% return for the Fall semester. See p.8 for our latest portfolio performance report
Micah Sims Chief Investment Officer
Senior
Joining Bain Consulting after graduation
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Cumulative Return Leaders: Signet Jewlers Limited +100.1%, Apple +87.82%, SanDisk +66.83%, Michael Kors +51.69%, General Electric Co. +43.49%
2013 has undoubtedly been an interesting year for investors, GIMG included. We began the first semester of the 2013-2014 academic year by transferring coverage responsibilities to new analysts and reviewing our positions to ensure that our original theses remained intact. This resulted in the unwinding of several positions – T, SYY, PAA, and ADT – where we found that the company had reached our estimated fair value, or we believed the underlying thesis for holding the company no longer held true.
Our focus in the second half of the semester centered around putting our large cash position to work. We began the semester with a cash position of over 17%,
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reflecting our hesitation in making new investments over the past year. Given the uncertainty about the Federal Reserve Bank’s continued role in supporting asset prices, we had acted very conservatively. However, with the S&P 500 breaking all-time highs and rising over 29% in the past year, a 17% cash position has certainly made it difficult for our portfolio to compete with the benchmark. Despite the environment that Bernanke has coined as “unusually uncertain,” we believe opportunities remain to be exploited. Over the past semester we initiated positions in five new companies – TTWO, NVAX, HD, WAG, and PTEK, and increased our positions in QCOM, CHK, GOOG, and AAPL. As a result, we have reduced our cash position to slightly over 10%.
While delivering returns is naturally amongst our highest priorities, we strive to make our fund as educational of an
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experience as possible. Many of the positions we have initiated reflect this goal, as we seek opportunities beyond traditional Fortune 500 companies. Through pitches and now monthly coverage, our analysts are exposed to new industries and sub industries, such as gaming and immunization R&D, and their respective business models and value drivers. We are very excited about the new additions to our portfolio and look forward to what 2014 will bring.
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Novavax: A Compelling Investment in the Niche Biopharma Sector a potential multi-billion dollar opportunity for Novavax, and the US government has already begun funding the company’s research. The company is also well positioned to leverage their lower capital requirements to expand manufacturing capabilities globally. This should help the company capitalize on the growing global focus on counter-terrorism and pandemic disease prevention.
We view Novavax as an extremely compelling small-cap vaccine play within the biopharma sector. We recently initiated a position at $4.21 and have seen our investment appreciate more than 20% already this month. We believe there is significant upside from here as the company continues to leverage a commanding position in the niche vaccine market.
“Our investment in NVAX has appreciated more than 20% already…We believe there is significant upside from here.”
- Kevin Lee Analyst, Consumer Staples
Take Two Interactive: A Well-Positioned Company in the Trending Video Game Industry
Novavax, Inc. (Nasdaq: NVAX) is a clinical stage biopharmaceutical company creating novel vaccines and vaccine adjuvants to address a broad range of infectious diseases worldwide. Using innovative proprietary recombinant protein nanoparticle vaccine technology, the company produces vaccine candidates to efficiently and effectively respond to both known and newly emergent diseases.
Novavax’s platform technology enables the rapid manufacture of highly potent vaccines with little infrastructure investment. The company’s main programs are in seasonal and pandemic flu, and respiratory syncytial virus (RSV) vaccines. RSV is one of the last common and potentially serious infectious diseases for which there isn’t yet a vaccine. This represents
“We look forward to TTWO’s continued success, driving strong portfolio returns over the coming year and beyond.”
- Kyle Jorgensen Analyst, Tech & Telecom
4 – presents a unique investment opportunity for GIMG. Take-Two is well positioned to continue to succeed in this cycle due to its various growing franchises and quality-focused and innovation-centric management team. Additionally, the company has continued to grow their digital distribution systems with an 85% growth rate in digitally delivered content since last year. This will give the company greater flexibility when expanding their game offerings through both downloadable content and microtransactions.
We have accumulated a ~3% portfolio position in TTWO at an average price of $16.57. We look forward to Take-Two Interactive’s continued success, driving strong portfolio returns over the coming year and beyond.
This past Fall semester, GIMG made its first ever investment in the video game industry by initiating a position in Take-Two Interactive (TTWO). Take-Two develops, publishes and distributes interactive entertainment software through its two subsidiaries; Rockstar Games and 2K Games. It is one of three publically traded game publishers in the US, competing against Electronic Arts (EA) and Activision-Blizzard (ATVI). Take Two Interactive is best known for its Grand Theft Auto, Bioshock, Borderlands, and Civilization franchises. This past quarter, Take-Two’s Grand Theft Auto V became the fastest selling entertainment product in history, grossing $1 billion in sales over its first three days.
The beginning of the 8th console cycle – initiated by the release of both the Xbox One and PlayStation
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Since the group’s founding, GIMG has taken an active role in helping to teach financial literacy to underserved youth in Atlanta.
This semester the group orchestrated several financial literacy sessions at Maynard Jackson High School, a local high school in Atlanta that we have worked with for the past two semesters. In October, we worked with Ms. Sumra’s Economics classes, providing extra-curricular material on the banking and budgeting topics that they were covering in their personal finance unit. We were extremely excited to have this opportunity to work with the students during their normal class time, and this was the first semester that we were able to develop and deliver our own curriculum. In our banking unit, we gave an overview of the industry and then narrowed in on personal banking topics such as saving, borrowing, and credit. We delivered our budgeting unit
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through an interactive simulation, where the students worked on their own real-life monthly budgets. The interactive nature of our sessions at Maynard Jackson made for an extremely rewarding experience for our analysts. We also received lots of positive feedback from Ms. Sumra and the students, and we look forward to continuing this relationship in the future.
In addition to our work with Maynard Jackson, we also partnered with SEED (Student Educational Experience Development), a new organization at Emory that focuses on motivating underprivileged high school students through experiential learning. As part of this program, SEED brought a group of these students to Emory for them to explore different academic and career paths, as well as college-life more broadly. We had the opportunity to host the students at our weekly meeting, where we
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talked about business and finance as an academic and career path, while also covering personal finance topics related to going to college.
Next semester we are excited to welcome back our Vice President of Financial Literacy, Chris Rolling, who spent this semester studying abroad in Finland. Chris is very passionate about the financial literacy work that we do, and we are looking forward to next semester’s programming under his leadership.
Continued Commitment to Atlanta’s Youth
“Helping these kids become financially literate has been an
extremely gratifying experience…No market rally is
more rewarding than that.”
-Sidd Pasari Analyst, Energy & Utilities
Ethan Anderson Chief Operating Officer
Sophomore
Member of the ROTC program at Georgia Tech
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Members, Stakeholders, and the Greater Goizueta Community,
GIMG has made incredible strides this semester and is quickly becoming a premier extra-curricular experience here at Goizueta. We were able to accomplish several key initiatives this Fall and have already begun working on some exciting developments for the Spring.
At the beginning of the semester we met with BBA Council and secured independent, permanent club charter for our organization. With this distinction, we will be able to continue our efforts to grow and integrate with the BBA program, and we will now receive the funding necessary to develop and execute even more robust financial literacy programming for Atlanta-area youth. We look forward to working with BBA Council and the BBA Program to continue building GIMG as a top extracurricular experience for Goizueta undergrads.
This semester also marked our most successful recruiting season yet. We received over 40 applications for our open Analyst positions, ultimately bringing on 13 new members to the group. Our group continues to attract high-achieving students, and we are pleased by the results of our efforts to increase our visibility at Goizueta. This has included broadcasting our weekly performance reports on BBA TV, as well as maintaining an active social media presence. We are also currently developing an independent website, where we will be able to publish our investment research, post our portfolio performance, and share about our experiences in the Atlanta community. We hope to launch the website at the beginning of the Spring Semester.
Additionally, we are currently working on plans to host the first-ever Student-Managed Fund Conference here at Goizueta in April. The event will bring together organizations like GIMG from schools across the country to mix and share experiences over the three days. The conference will also include a case competition, speaker series, and networking event. This event will be a great way to extend our group’s impact beyond our normal operations, and we look forward to showcasing Goizueta to some of the top undergraduate business students from across the country.
As a group, we are proud of what we have accomplished this semester and we are excited for the future of GIMG. The Investment Committee and I remain committed toward making GIMG the best possible extra-curricular experience for our members. It is has been a privilege serving the organization, and I look forward to an amazing Spring semester.
On behalf of the GIMG Team, thank you for your support and Happy New Year!
Some key initiatives we accomplished this Fall:
þ Securing permanent club charter from BBA Council
þ Increasing GIMG’s PR presence within Goizueta
þ Developing an independent GIMG website
Some key initiatives we look to pursue this Spring:
v Utilize website to post investment research and portfolio performance
v Host Goizueta’s first-ever Student Managed Fund conference
v Forge new community partnerships for GIMG’s financial literacy programming
Aaron Weiner President
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Our Team Fall 2013
Aaron Weiner Micah Sims Ethan Anderson President Chief Investment Officer Chief Operating Officer [email protected] [email protected] [email protected]
Alex Fields Chris Rolling VP of Information VP of Financial Literacy [email protected] [email protected]
Mike Filer Mike Ordway Aakash Parlecha Evan Rhea Associate Associate Associate Associate Tech & Telecom Financials Energy & Utilities Consumer Discretionary Connor Stark Associate Consumer Staples
DJ Bagrodia Ben Cheriyan Daryl Chua Andrew Dillinger Analyst Analyst Analyst Analyst Consumer Discretionary Tech & Telecom Financials Consumer Discretionary Robert Finger Jun Huo Kyle Jorgensen Kevin Lee Analyst Analyst Analyst Analyst Consumer Staples Financials Tech & Telecom Consumer Staples Mark Leone Sidd Pasari Denver Rayburn Eileen Roteta Analyst Analyst Analyst Analyst Financials Energy & Utilities Tech & Telecom Energy & Utilities Brandon Walker Analyst Consumer Discretionary
Vishwas Chandra Charlie Donahue Ryan Gaines Corey Moore Associate Analyst Analyst Analyst Focus Investment Banking Sagent Advisors Trian Partners J.P. Morgan
Alex Rodin Shawn Shivalkar Analyst Analyst Spot Trading LLC Spectrum Group
Investment Committee
Vice Presidents
Associates
Analysts
Alumni Advisory Board
Company Ticker Weight Purchase Market Weekly Total Months Sector
Apple Inc. AAPL 6.04% $298.21 $560.09 2.02% 87.82% 46 Consumer Goods
American Express Company AXP 3.64% $66.16 $89.19 1.85% 34.81% 9 Financial
B&G Foods Inc. BGS 2.17% $31.18 $33.93 (1.39%) 8.81% 11 Consumer Goods
Chesapeake Energy Corporation CHK 4.76% $25.00 $27.49 1.40% 9.95% 4 Basic Materials
Energy XXI (Bermuda) Limited EXXI 4.24% $27.21 $27.57 2.22% 1.34% 4 Basic Materials
General Electric Company GE 4.43% $19.40 $27.83 1.72% 43.49% 18 Industrial Goods
SPDR Gold Shares GLD 3.43% $158.95 $117.12 1.02% (26.32%) 21 Commodities
Google Inc. GOOG 4.30% $829.15 $1,118.40 1.62% 34.88% 47 Technology
GlaxoSmithKline plc GSK 2.82% $43.29 $53.00 3.15% 22.42% 13 Healthcare
The Home Depot, Inc. HD 2.77% $79.58 $81.64 2.00% 2.59% 0 Services
iShares Russell Midcap Index IWR 5.74% $100.29 $149.14 0.67% 48.71% 13 Index
Joe's Jeans, Inc. JOEZ 2.06% $1.24 $1.07 0.94% (13.36%) 4 Consumer Goods
Michael Kors Holdings Limited KORS 2.98% $53.12 $80.58 (3.93%) 51.69% 11 Services
Novavax, Inc. NVAX 2.17% $4.21 $5.13 4.06% 22.00% 0 Healthcare
PokerTek, Inc. PTEK 1.55% $1.16 $1.01 0.88% (12.66%) 0 Services
QUALCOMM Incorporated QCOM 4.55% $64.70 $73.80 1.22% 14.06% 20 Technology
Signet Jewelers Limited SIG 3.30% $38.96 $77.93 0.63% 100.05% 26 Services
SanDisk Corp. SNDK 2.49% $42.10 $70.24 1.05% 66.83% 13 Technology
SPDR S&P 500 SPY 15.85% $138.32 $183.85 1.26% 32.91% 26 Index
Take-Two Interactive Software Inc. TTWO 3.27% $16.57 $17.68 0.57% 6.71% 0 Technology
Walgreen Co. WAG 2.87% $59.08 $57.43 (2.73%) (2.79%) 0 Services
Wells Fargo & Company WFC 3.85% $33.61 $45.50 1.20% 35.38% 20 Financial
S&P 500
Weekly Return 1.26%
Fiscal Year* Return 12.75%
1-Year Return 31.29%
Cumulative Return 56.84%
Annualized Sharpe 0.19
Aaron Weiner - President
Micah Sims - CIO
Ethan Anderson - COO
Alex Fields - VP of Information
Goizueta
*GIMG fiscal year runs from September 1 to August 31
Goizueta Investment Management GroupFund performance for the week ending December 27, 2013
Contact Leadership
GIMG
1.53%
8.89%
24.30%
43.79%
0.15
Cash, 10.65%
AAPL, 6.04%
AXP, 3.64%
BGS, 2.17%
CHK, 4.76%
EXXI, 4.24%
GE, 4.43%
GLD, 3.43%
GOOG, 4.30%
GSK, 2.82%
HD, 2.77% IWR, 5.74%
JOEZ, 2.06%
KORS, 2.98%
NVAX, 2.17%
PTEK, 1.55%
QCOM, 4.55%
SIG, 3.30%
SNDK, 2.49%
SPY, 15.85%
TTWO, 3.27%
WAG, 2.87% WFC, 3.85%
Portfolio Holdings
56.8%
43.8%
-10%
0%
10%
20%
30%
40%
50%
60%
70%
9/2/11 3/2/12 9/2/12 3/2/13 9/2/13
S&P 500 GIMG
Cumulative Return
14.63%
10.95%
0%
2%
4%
6%
8%
10%
12%
14%
16%
6/28/13 7/28/13 8/28/13 9/28/13 10/28/13 11/28/13
S&P 500 GIMG
6 Month Return
$129,895.56 NAV Cash $13,829.46