spring 2013 newsletter message from the seo€¦ · page 4 sif spring 2013 newsletter current...

Gianna Esparza

Jane Ann Galiger

Elliot Gribaudo

Josh Hunt

Qiu Jin

Jie Ke

Matt Kocisak

Zongbei Lu

Kylan Martin

Douglas Meadours

Joey Moppert

Khoa Nguyen

Cynthia Onyechere

John Patterson

Peilin Shi

Shuang Song

Abram Stewart

Morgan Tipton

Bret Travis

Yang Wang

Natalie White

Christopher Worrell

S P R I N G 2 0 1 3 N E W S L E T T E R

F A C U L T Y

Message from the SEO

I would like to begin by ex-

pressing how great an honor it

has been to serve as Student

Executive Officer for the

Spring, 2013 SIF Class. I have

truly enjoyed my time working

with the 21 talented and very

hardworking members of SIF.

Elected as Student Executive

Officer for the spring semester

of 2013, I seek to continue the

outstanding performance of

the Student Investment Fund.

With input from the committee

chairs and all 22 members of

the Student Investment Fund,

we decided to more closely

track the S&P 500 in our sec-

tor weightings. Although our

investment policy allows a 50%

over or underweighting for

each sector from its bench-

mark we decided to immedi-

ately discuss and make appro-

priate changes within the Fund

whenever a sector was more

than 20% off from its bench-

mark sector weighting. This in-

class policy change had the

immediate effect of moving the

Student Investment Fund to

invest more in the under-

weighted financials sector.

Furthermore, we made an ac-

tive effort to target quality

higher beta stocks to more

fully reap the benefits of mar-

ket rallies.

Macroeconomic concerns

about the length of the reces-

sion and the continuing delete-

rious effects of high unemploy-

ment on the U.S. economy

challenged SIF members to

better understand the im-

portance of sector allocation

and its impact on the perfor-

mance of the Student Invest-

ment Fund. The Fed’s policy of

holding already historically low

interest rates constant provid-

ed SIF members the opportuni-

ty to examine more closely the

financial theory regarding equi-

ty valuation and to more criti-

cally apply the inputs into equi-

ty valuation models such as

CAPM. We further recognized

the cost of holding cash in a

low interest rate bull market.

Finally, SIF managed the chal-

lenge of firm-specific risk as

the poor performance of Apple

provided one opportunity to

diversify and reduce exposure

within the fund.

The performance of the fund

is ultimately the responsibility

of every SIF member fulfilling

his/her role within each SIF

committee. The Portfolio

Committee is the main driver

of performance as it makes

recommendations on specific

securities and optimization

within the fund. The Macroe-

conomic Committee examines

current macroeconomic condi-

tions and provides analysis

and recommendations on sec-

tor weightings to the Portfolio

Committee. The Operations/

MIS committee provides the

models that SIF members use

to judge fund and security per-

formance. Finally, the PR com-

mittee increases the visibility

of the Student Investment

Fund on campus and the Tulsa

community by arranging excel-

lent guest speakers from the

financial community and re-

cruiting new members for the

Student Investment Fund.

Participation in the University

of Tulsa’s Student Investment

Fund is a truly invaluable expe-

rience for its student members

and it has been a great honor

to serve as SEO. The course

has been the best learning

experience I have experienced

at TU and I know that the skills

that all SIF members have

learned during the course will

serve us all very well going

forward into our careers.

Regards,

Douglas Meadours

Student Executive Officer

Spring 2013

Message from SEO

PAR Committee Report

Current Holdings

Leaders & Laggards

New Securities

Macro Economic

Guest Speakers

Organizational Structure

C O N T E N T S

1

2

4

6

8

11

12

13

S P R I N G 2 0 1 3 C L A S S

Tally Ferguson

MESSAGE FROM THE SEO

PORTFOLIO, ACCOUNTING AND RISK COMMITTEE REPORT

S I F S P R I N G 2 0 1 3 N E W S L E T T E R

The main objective of the Student Investment Fund is to increase value of the portfolio, while outperforming the

S&P 500. This was achieved by not only utilizing the analysis done by the Macro-Economic committee over the

optimal portfolio weights, but by considering the valuation and recommendations of the stocks done by the class.

This allowed the Student Investment Fund to properly allocate the portfolio weight, while making sure we had the

best representation for the sector and their industry; this all lead to surpassing the market .

Performance Attribution:

As seen below, the SIF underperformed the S&P 500 for the 2012 year.

The Spring 2013 semester results are stated below:

SIF Portfolio Sector Weighting

The SIF follows the GICS structure, which consists of ten sectors. The following weightings include the indirect

sector weights of the S&P 500 ETF:

SIF S&P YTD Returns 10.44% 11.8%

YTD Difference Underperformed by .74% Jan-Apr Monthly Returns 2.514% 2.8%

Monthly Difference Underperformed by .22% per month

CONSUMER DISCRETIONARY

10%

CONSUMER STAPLES

13%

ENERGY11%

FINANCIALS14%

HEALTHCARE14%

INDUSTRIALS10%

IT18%

MATERIALS3%

TELECOM3%

UTILITIES4%

5/8/2013


GIS SECTOR as of May 8, 2013

GICS SECTOR DESIGNATIONS TOTALS

EQUITY VALUE

EQUITY %

S&P WEIGHTINGS

Consumer Discretionary $213,924 $334,834 10.48% 11.84%

Consumer Staples $314,044 $425,458 13.32% 10.91%

Energy $251,665 $360,729 11.29% 10.68%

Financials $283,363 $448,798 14.05% 16.20%

Healthcare $314,990 $443,253 13.88% 12.56%

Industrials $210,757 $312,673 9.79% 9.98%

IT $381,155 $564,460 17.67% 17.95%

Materials $65,563 $100,284 3.14% 3.40%

Telecom $54,505 $85,141 2.67% 3.00%

Utilities $82,873 $118,309 3.70% 3.47%

SPY $1,021,202

Cash $20,179

Total $3,214,220 $3,193,939 100% 100%

This semester 26 students applied for the Fall 2013 class, of which 20 out-standing students were selected.

“As members of the University of Tulsa’s Student Investment Fund, we will meet for the purpose of further-ing our knowledge of financial management, elevating our experi-ence in the investment arena, promulgating our objectives and pur-poses to the public, mastering the practic-es, habits, and ethics of finance profession-als, and for the promo-tion of social and pro-fessional relationships amongst our mem-bers. This background will provide us with su-perior knowledge and competitive ability in our professional field.

We will also, as benefi-ciaries, endeavor to provide superior re-turns to our sharehold-ers; those individuals who have enabled us to enjoy this experi-ence by donating to the Finance Excel-lence Fund.”

-Adopted January 23rd, 2001

S I F M I S S I O N

S T A T E M E N T

N E X T S E M E S T E R

Q1 Total Dividends received by SIF $13,839.38 Top 5 Dividend Paying Stock by Amount

Q2 Total Dividends received by SIF $8,205.95

Top 5 Dividend Paying Stock by Amount


CURRENT HOLDINGS

Ticker Sector Shares Price Value % of Equity

Portfolio Security

AAPL IT 193 $463.84 $89,521.14 2.80% APPLE INC

BNS FINANCIALS 500 $59.21 $29,605.00 0.93% BANK OF NOVA SCOTIA

BTE ENERGY 1,300 $41.12 $53,456.00 1.67% BAYTEX ENERGY

CAT INDUSTRIALS 771 $90.31 $69,629.01 2.18% CATERPILLAR

CB FINANCIALS 1,240 $89.89 $111,463.60 3.49% CHUBB CORP

CCE CONSUMER STAPLES 615 $37.52 $23,074.80 0.72% COCA COLA

CF MATERIALS 80 $190.71 $15,256.80 0.48% CF INDS HLDGS

CNI INDUSTRIALS 1,181 $101.66 $120,060.46 3.76% CANADIAN NATL

CNL UTILITIES 1,267 $48.00 $60,816.00 1.90% CLECO CORP

COST CONSUMER STAPLES 200 $109.61 $21,922.00 0.69% COSTCO WHOLESALE

CSH IT 676 $68.15 $46,069.40 1.44% COGNIZANT TECH

DEO CONSUMER STAPLES 630 $123.55 $77,836.50 2.44% DIAGEO

DSW CONSUMER DISCRET 300 $66.47 $19,941.00 0.62% DSW INC

FCX MATERIALS 165 $32.39 $5,344.35 0.17% FREEPRT-MCMRAN

GILD HEALTHCARE 2,786 $52.38 $145,930.68 4.57% GILEAD SCIENCES

GIS CONSUMER STAPLES 2,127 $49.94 $106,222.38 3.33% GENERAL MILLS

HP ENERGY 650 $62.72 $40,768.00 1.28% HELMERICH PAYNE

IFF MATERIALS 564 $79.72 $44,962.08 1.41% INTL FLAVORS

INTC IT 2,500 $24.25 $60,625.00 1.90% INTEL CORP

ISRG HEALTHCARE 98 $489.31 $47,952.39 1.50% INTUITIVE SURGICAL

ITW INDUSTRIALS 311 $67.74 $21,067.14 0.66% ILLINOIS TOOL WORKS

JNJ HEALTHCARE 680 $85.46 $58,112.80 1.82% JOHNSON AND JOHNSON

JPM FINANCIALS 1,453 $49.76 $72,301.28 2.26% JPMORGAN CHASE & CO

KMB CONSUMER STAPLES 544 $104.27 $56,722.88 1.78% KIMBERLY CLARK

MA IT 192 $553.72 $106,314.28 3.33% MASTERCARD INC

MCD CONSUMER STAPLES 280 $100.95 $28,266.00 0.88% MCDONALDS CORP

NKE CONSUMER DISCRET 1,062 $63.90 $67,861.80 2.12% NIKE INC

NSR IT 546 $46.53 $25,405.38 0.80% NEUSTAR INC

OXY ENERGY 618 $89.28 $55,175.04 1.73% OCCIDENTAL

PCLN CONSUMER DISCRET 83 $735.27 $61,027.41 1.91% PRICELINE

QCOM IT 830 $64.12 $53,219.60 1.67% QUALCOMM INC

SLB ENERGY 499 $77.59 $38,717.41 1.21% SCHLUMBERGER LTD

SO UTILITIES 470 $46.93 $22,057.10 0.69% SOUTHERN COMPANY

SPY SPY 6,252 $163.34 $1,021,201.68 31.97% SPDR S&P 500 ETF TRUST

T TELECOM 795 $37.83 $30,074.85 0.94% AT&T INC

THI CONSUMER DISCRET 1,143 $56.95 $65,093.85 2.04% TIM HORTONS INC

USB FINANCIALS 2,100 $33.33 $69,993.00 2.19% US BANCORP

VAR HEALTHCARE 932 $67.59 $62,993.88 1.97% VARIAN MEDICAL

VZ TELECOM 460 $53.11 $24,430.60 0.76% VERIZON COMM.

XOM ENERGY 693 $91.70 $63,548.10 1.99% EXXON MOBIL CORP

CASH CASH 20,179 $1.00 $20,179.00 0.63% CASH

Equities $3,194,040.67 100.00%

Equities + Cash $3,214,219.67


Transactions in the Spring 2013 Semester

Securities Purchases

Date Security Ticker Quantity Price Cost Basis

2/5/2013 QUALCOMM, INC. QCOM 84 $67.00 $5,635.56

2/5/2013 INTEL CORP. INTC 2500 $21.27 $53,400.00

2/5/2013 COGNIZANT TECH SOLUTNS CTSH 26 $77.62 $2,020.46

3/12/2013 VARIAN MEDICAL SYSTEMS,INC VAR 690 $72.32 $49,962.90

3/12/2013 CHUBB CORP. CB 590 $85.65 $50,587.31

3/19/2013 BANK OF NOVA SCOTIA BNS 500 $58.35 $29,219.90

4/9/2013 HELMERICH&PAYNE, INC HP 650 $58.54 $38,107.62

4/30/2013 JOHNSON& JOHNSON JNJ 250 $84.92 $21,251.25

4/30/2013 CF INDUSTRIES, INC. CF 80 $190.83 $15,273.60

4/30/2013 BAYTEX ENERGY CORP BTE 1300 $39.13 $50,989.70

4/30/2013 SPDR S&P 500 ETF SPY 125 $158.81 $19,862.50

Securities Sales

Date Security Ticker Quantity Price Cost Basis

2/5/2013 SPDR S&P 500 ETF SPY 400 $149.83 $59,893.66

3/12/2013 LULULEMON ATHLETICA, INC. LULU 750 $69.11 $51,763.59

3/12/2013 INTUITIVE SURGICAL, INC. ISRG 98 $511.73 $50,140.00

3/19/2013 SPECTRA ENERGY CORP. SE 977 $28.86 $28,112.48

4/9/2013 EOG RESOURCES INC EOG 300 $125.12 $37,507.80

4/30/2013 VARIAN MEDICAL SYSTEMS, INC. VAR 275 $63.98 $17,569.36

4/30/2013 INTL FLAVORS&FRAGRNCE IFF 200 $76.82 $15,344.96

4/30/2013 FACTSET RESH SYS,INC. FDS 734 $91.25 $66,908.18

4/30/2013 AGRIUM, INC AGU 60 $92.34 $5,534.88

The goal of the Student Investment Fund is to add value to the portfolio. After thoroughly analyzing existing and po-

tential securities, the SIF analysts provided buy, sell, or hold recommendations for each security. Additionally, the ana-

lysts considered the current and anticipated macroeconomic environment and the impact that it could have on each se-

curity’s performance. This allowed the SIF analysts to allocate portfolio weight to sectors we feel are likely to outper-

form the market. Once the sector weights and individual stock recommendations were determined, a risk-return opti-

mization procedure was applied to construct a portfolio with a superior risk-return relationship while satisfying sector

weighting decisions and other constraints. The listed securities are sorted by total exposure (which includes indirect

S&P 500 exposure).


H I G H L I G H T S

S P R I N G 2 0 1 3

LEADERS and LAGGARDS (TOP 5)

LEADERS for Spring 2013 % Return Price Change Value Gained

GILD 50.19% 18.43 $51,346

GIS 25.48% 10.3 $21,908

NKE 25.10% 12.95 $13,753

KMB 24.81% 20.95 $11,397

VZ 21.75% 9.41 $ 4,328

LAGGARDS for Spring 2013 % Return Price Change Value lost

AAPL -18.04% -99.05 ($19,117)

CTSH -12.52% -13.03 ($6,442)

FCX -10.70% -9.53 ($615)

VAR -9.36% -3.73 ($6,319)

CAT -6.97% -6.78 ($5,027)

At the end of Spring semester, the SIF portfolio value crossed the $3,000,000 thresh-old for the first time since its im-plementation in 1997! The portfolio is now valued at $3,214,219 as of May 8th, 2013.

The sector weights in the current SIF portfolio were done to match the S&P 500 and recom-mendations issued by the macro-economic commit-tee


SPRING 2013 SEMESTER BREAKDOWN

SPRING 2013 SEMESTER PORTFOLIO OVERVIEW


NEW SECURITIES PURCHASED THIS SEMESTER

New Securities Purchase this semester

BAYTEX ENERGY CORP. (NYSE: BTE)

Baytex Energy Corp. is an oil and gas company which engages in the

acquisition, development, and production of crude oil and natural gas

in the Western Canadian Sedimentary Basin and the Williston Basin in

the United States. The company offers heavy oil, light oil, and natural gas liquids.

Baytex Energy Corp. is a mid-capital equity. SIF believes it has potential for growth because its inner valua-

tion is far lower than its trading price. At the same time, macroeconomic commitment suggests adding equities

in the energy sector. SIF believes Baytex Energy Corp. is the best to satisfy this requirement. Its performance

is outstanding in the year to data, and expected to be better in the future.

CF INDUSTRIES, INC. (NYSE: CF)

CF Industries Holdings, Inc. manufactures and distributes nitrogen and

phosphate fertilizer products worldwide. It operates in two segments,

Nitrogen and Phosphate. The Nitrogen segment principally offers ammo-

nia, granular urea, urea ammonium nitrate solution, ammonium nitrate, urea liquor, diesel exhaust fluid, and

aqua ammonia. The Phosphate segment primarily provides diammonium phosphate and monoammonium

phosphate.

The company also owns 50% interests in the GrowHow UK Limited, a nitrogen products producer in the Unit-

ed Kingdom; Point Lisas Nitrogen Limited, an ammonia producer; and KEYTRADE AG, a fertilizer trading

company. Its customers include cooperatives and independent fertilizer distributors.

Basic Material sector only covers three equities before purchasing CF industries, INC. CF Industries, Inc.

helps diversification this sector. SIF believes this equity is underpricing according to results of inner valuation.

This equity has strong financials and high dividend yield. Deleveraging and better cost-control situations also

add value to this equity.



HELMERICH & PAYNE, INC (NYSE:HP)

Helmerich & Payne, Inc. engages in the contract drilling of oil and gas wells. It pro-

vides drilling rigs, equipment, personnel, and camps on a contract basis to explore

for and develop oil and gas from onshore areas and fixed platforms, tension-leg

platforms, and spars in offshore areas.

The company is also involved in the development, and operation of commercial real estate. Its real estate in-

vestments comprise a shopping center containing approximately 441,000 leasable square feet; multi-tenant in-

dustrial warehouse properties with approximately 1,000,000 leasable square feet; and approximately 210 acres

of undeveloped real estate.

This security is in the watch list for a period of time. SIF finds this equity has excellent overall performance

and is expected continue in the future. At the same time, this security has a high beta which SIF is looking for-

ward to. Adding this equity diversifies energy sector.

Intel Corporation (NasdaqGS: INTC)

Intel Corporation designs, manufactures, and sells integrated digital technology

platforms worldwide. Its products include PC, data, other Intel architecture,

and software services. The company also provides mobile phone components

comprising baseband processors, radio frequency transceivers, and power man-

agement integrated circuits.

The macro group suggests adding weigh in the technology sector. So SIF decides to buy one security and add

weights of three originally holding. This action can increase technology’s sector’s diversification. Intel Corp.

is the best choice because it has high dividend yield and pretty fundamental performance in the last year.



BANK OF NOVA SCOTIA (NYSE: BNS)

The Bank of Nova Scotia, together with its subsidiaries, provides various

personal, commercial, corporate, and investment banking services inter-

nationally. The company operates through four segments: Canadian banking, international banking, global

wealth management, and global banking and markets.

Currently, SIF is underweight in the financial sector. SIF believes it is a good addition because this equity had

high dividend yield in last 5 years and higher EPS compared to other peers in the bank industry.


M A C R O E C O N O M I C E N V I R O N M E N T

The Spring Semester of 2013 provided unprecedented challenges for the Student Investment Fund. Above all, SIF

dealt with the uncertainty on the economic recovery in the United States. Most discussion was dominated by con-

trasting data and results. For example, equities in the US rallied while unemployment remained high and economic

insecurity remained the norm in Europe.

As said, however, equities have been performing positively. Both the Dow Jones Industrial Average (+14% year-to-

date) and the S&P 500 (+13% year-to-date) are at all-time highs. However, interest rates have remained at pro-

longed lows and unemployment at constant highs near 7.6%. Although the employment situation appears to be

gaining some traction, the Federal Reserve will at some point have to deal with continued low rates that are provid-

ing markets with substantial liquidity.

As of now, the Macroeconomic committee has taken many of these indicators into consideration in order to devel-

op guidance in our portfolio’s sector allocation. A summary of our recommendations is found below.

Our main reason for underweighting financials is due to the interest rate uncertainty that the sector faces. As the

economy improves, the Federal Reserve will have added pressure to change interest rates and curb inflation.

Uncertainty is also the norm for consumer discretionary. Although unemployment has dropped, many of those

without work are simply not counted in the statistical measurement used. As unemployment remains high, SIF ex-

pects the consumer discretionary sector to come down from its solid performance so far this year.

In contrast, we expect good performance from both healthcare and consumer staples. These are two sectors that

been the top performers in the S&P. Much of the reason for this is that individuals are only spending on the prod-

ucts and services that they need.

Energy is expected to continue to deliver solid returns, but nothing extraordinary. Given the variables surrounding

the economic recovery, the sector is experiencing uncertainty in demand for its products. That said, natural gas

supplies are down and prices are up. In addition, oil prices are at a healthy level that allows companies to continue

to explore.

Sector Weight Recommendation

Basic Materials Underweight

Consumer Discretionary Underweight

Consumer Staples Overweight

Energy Market weight

Financials Underweight

Healthcare Overweight

Industrials Market weight

Technology Market weight

Telecommunications Market weight

Utilities Market weight


G U E S T S P E A K E R S G U E S T S P E A K E R S

J. Brian Henderson, CFA, President of Cavanal Hill

Investment Management, was our first guest speaker for

the Spring 2013 semester. Mr. Henderson spoke to the

class the various career paths available to finance stu-

dents, leading into a background about his company and

his job within it and description of other positions. Mr.

Henderson provided insightful information from his expe-

rience at Cavanal Hill Investment Management and the

value of earning various certifications such as the CFA.

Bryan K. Guderian, Sr. Vice President

of Operations at WPX Energy was our

second guest speaker this Spring 2013

semester. Mr. Guderian opened with a

background about himself and on the

company and its history. He then spoke

in an inspiring way about the numerous

opportunities for careers in finance in

the energy industry and about how im-

portant financial tools like hedging can

be for an energy company.

David Dunham, VP Trading and

Corporate Planning at Unit Corp, was

our third and last guest speaker for

the Spring 2013 semester. Mr. Dun-

ham first spoke to us about his back-

ground, including his education and

career progression. This led into an

interesting discussion of his trading

disciplines, including technical analy-

sis, limiting losses, adjusting positions, etc. Mr. Dunham also spoke on some derivative tools for

risk management such as puts, calls, delta hedging, etc. Finally, Mr. Dunham concluded with

insightful information and expectations for the SIF class.

The Student Investment Fund would like to thank our speakers this semester!

We had the pleasure

to have Mr. Brian

Henderson, Mr. Bry-

an Guderian, and Mr.

David Dunham as

guest speakers in the

SIF class. They pro-

vided the SIF analysts

with interesting in-

sights about the world

of finance and shared

their views on the

present economic

environment.

If you are interested

in speaking with an

SIF class, please con-

tact Tally Ferguson.


If you have questions or

are interested in learn-

ing more about the SIF,

please contact Tally

Ferguson.

The Spring 2013 Student Investment Fund would like to give special thanks to all of

our supporters and contributors who make the Fund possible.

S I F O R G A N I Z A T I O N A L S T R U C T U R E — S P R I N G 2 0 1 3

Visit our website at: www.utulsa.edu/sif

Newsletter published by

the Spring 2013 SIF Class

Write to us!

We would love to

hear from you!

Spring 2013 Content, Revision and

Layout: Cynthia Onyechere,

Douglas Meadours & Judy Adair

C O N T A C T

I N F O R M A T I O N

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