 Hello everyone. As many of you know me, I'm Dr. Michael Melton, founding director of the Center for Advanced Financial Education. I would like to welcome everyone to what is considered to be the second summer cafe presentation of the day. Although your commute is shorter these days, I know your days are still long, so we're really grateful to have you take the time to attend this webinar. But before we begin, I would first like to introduce Dean Susan McTiernan of the Mary O'Jagabilly School of Business. Dean, would you like to say a few words? I would. Thank you, Dr. Melton. Appreciate it. And I'm so glad to have an invitation to be with you for a few minutes this evening. I want to first welcome all of our alumni and friends of the Gabelli School of Business who are with us this evening. I just saw that Matt Page signed on. Hi, Matt. Special hello to you. It's a little hard to watch everybody signing on, but I was glad to see your name. I had the privilege of being with the students earlier today for the first presentation. And I can tell you, you are in for a real treat this evening. Some great thoughts and some wonderful analysis and great presentation and great answers to questions. So it's going to be it's going to be a really wonderful hour and a half or so. I think you'll find as I have, it has been very, very impressive how this group of students has managed to pull together, work remotely, effectively manage the two portfolios in the student managed investment fund and in general build up a set of relationships and collaborations with each other to do a great job with the funds and in learning new things, not just about finance and investing, but about themselves and the meaning of the word resilience. I know that's kind of overused, but I think it really applies in this situation. And I really want to also thank the everyone who's with us, who has contributed to the campaign for cafe, all of the alumni who have been so generous. I don't know if they're with us this evening, but a special thank you to Hans Christensen and to Mario Gobelli for their continuous support of the cafe program for over many, many years now. And we hope that they will hear how much we appreciate everything they've given to the cafe, both from a financial standpoint and from their the point of their expertise and their experience in this wonderful industry. So thank you to them. Thanks to all the alumni. And I'm a special thank you to those of you who are repeating this presentation for the second time. I was a little worried when I first heard about that. But having heard from you all earlier today, I know that you are more than up to the task. And I know it's going to be a great evening. So I will say congratulations in advance, because I know you're going to do a great job. So with that, I think I'm turning this over now to Matt for an introduction to the presentation. Matt, are you there? Yes, there you are. Hi, Matt. Thank you. So just to get started. Now all mics and video have been disabled for this presentation. Should you have any questions during the presentation, please feel free to use the Q&A feature and we will answer them all at the end. And we apologize for fixed picture presenters as we're trying to conserve on our bandwidth in order to bring you the clearest audio that we have. We will, however, be having a live videos of our presenters during the Q&A session. Also, this presentation is being recorded. Welcome everyone to the Center for Advanced Financial Education Portfolio Management Program's first ever summer presentation. Thank you to everyone for joining today and supporting all the hard work that has been done this summer. My name is Matt Woznik and I'm the Chief of Staff at the cafe. On behalf of Dr. Michael Melton, I would like to take this time to welcome and thank our distinguished panelists for being with us today. We are joined by Michael Corriell, Danny Walser, Brian Jones, Susan Wynn, Ryan Corrie and Matt Page. I also would like to introduce our moderator for today's Q&A session, Jacob Hallgrun from the Spring Class of 2020. I'd like to take this time now to introduce the Associate Directors, the Portfolio Managers, and the Student Fund Managers. My name is Brett Monofo and I'm one of the Associate Directors. My name is Madison DeSantis and I'm the other Associate Director. My name is Brandon Baez and I'm one of the Portfolio Managers for the Cafe Core Fund. My name is David Wollett and I'm the other Portfolio Manager for the Cabelli Value Fund. My name is Zachary Saunders. My name is Ricky Reimers. My name is Emily Gilday and we are the Financials, Energy, Industrial and Communication Services Analysts. My name is Neda Hashemi. My name is Molly Wilson. My name is Katie Smith and we are the Healthcare Consumer Discretionary Basic Materials and Utilities Analysts. My name is Gabe Rielli. My name is Alex Der Bartanian. My name is Frank Ziminek and we are Information Technology, Consumer Staples and Real Estate Analysts. Thank you guys. As you all know, the Center for Advanced Financial Education is traditionally run in the cafe room inside the Cabelli School of Business. Like last semester, the analysts have faced unique obstacles as the learning environment remained online for the duration of the summer. Thanks to the advent of Zoom and the Bloomberg Disaster Recovery Act, we were still able to continue the program into the summer and hold the program's first ever summer cafe presentation. Through working from home, the analysts have had the privilege of managing two real-dollar portfolios in a setting that truly replicates industry today. Incorporating Zoom into the cafe routine took some getting used to, but the challenges met head-on and led to the first successful, fully virtual cafe semester. To keep the cafe running at its usual pace, Zoom calls became a daily occurrence, often running all day long to help facilitate the flow of information and provide structure. As time went on, the Zoom calls only got longer for the analysts and management team alike. While the analysts were working diligently, management was working behind the scenes to not just keep things running smoothly now, but plan on how to keep it that way when classes resume and cafe returns to the Cabelli School of Business. This group of student fund managers started working together back in May when they all participated in Finance 380 or technical analysis. This course was specifically designed to prepare the students for the analysts and trader roles they have taken on today. Technical analysis also allowed for the analysts to become accustomed to the virtual environment we operated the cafe through. As the summer progressed, the market continued to run amid extreme volatility. We saw an experience sectors, industries and sub-industries falling in and out of favor at an unprecedented rate. This led us to conclude that expanding on market-width portfolio theory was the best course of action we could take to gain exposure to more industries and capture the underlying industry rotation that was occurring in the volatile market environment. Further diversification enabled our portfolios to deliver consistent performance amid this wide rotation. Our decisions to increase our asset breadth has paid off and has been our rule of thumb as the inconsistent market rotation continues. I'd like to turn it back over to Matt to discuss what differentiates the cafe from other programs of this type. The cafe portfolio management program differentiates itself from similar programs at universities in almost every way. It focuses on aligning more with industry rather than an actual college course. For starters, the cafe room is designed in a way that mimics a real investment pod. The architecture is extremely important as it allows for the natural flow of information to everyone within the room. Sharing ideas and debating each other is one of the reasons why the cafe has been so successful. We are also fortunate to have the opportunity to not only manage one but two real-dollar portfolios with differing objectives. By managing two different objectives, it allows the analysts to become familiar with the two main styles of investing. Having this opportunity to learn both sides of portfolio management only makes them more prepared post-graduation. The cafe also allows our analysts to make trades in real-time. Most universities that manage real money have advisory boards that are required to approve each security. This can be very time-consuming as this board may not meet on a daily or even a weekly basis. The cafe does not report to a board only the principal director and our founder, Dr. Michael Melton. Through the utilization of myself and the associate directors, the analysts bring forth companies to us and we bring it straight to doctor approval. This can take anywhere from three to five minutes. With this quick turnaround time, we were able to make trades at a moment's notice. Now it is because of all these differences that have led the cafe to be one of the foremost portfolio management programs at the university level. Now let me give you a little rundown on the cafe's chain of command. Docs are headhunter that oversees this whole operation. And then there's his right-hand man, who you've already met, Chief of Staff Matthew Wozni, who helps facilitate the background discussions and works behind the scenes. He also takes any and all pertinent information the associate directors have straight to doc, such as an opportune buy or an urgent sweep. As a team, during lengthy Zoom calls, management sifts through all of the company's analysts to bring forth and discusses which ones are the strongest candidates for our funds so only the best picks are brought to doc. The flow of information also works in the opposite direction. Matt really is information from doc to management who then disperses it to the analysts. Brett and I, the associate directors report directly to the Chief of Staff and work with the PMs to run the day-to-day operations. Through endless discussions with the analysts and helping shape our funds, we oversee the portfolio's daily performance. Last but certainly not least, we have our student fund managers, who work day in and out wearing three different hats as analysts, traders and portfolio managers. Now doc made the decision this summer to bring back the portfolio manager role, designed to provide an overall direction for the fund, while managing risk through determining aspects of our investments, such as sector allocation and individual company weightings, while managing portfolio efficiency. We look to compare our level of risk in both funds to the forecast returns expected based on historical data. Brett and I act as a guide to our analysts, having discussions on how companies they bring to the associate directors will fit into our funds. We look at measures of risk, such as standard deviation in beta, while also considering the correlation between each of our holdings within the funds. Now together, management makes tough decisions for the fund, and we protect it to the downside, while determining how to take calculated risks. We would like to take a second to show you our PM fund reports, which we implemented this summer, as a way to monitor performance, as well as make suggestions for moving forward. Brandon and I write weekly reports as a way to continue the flow of information during these challenging times. These reports are sent to the ADs, our chief of staff, the cafe stakeholders and our client doc. The reports are vital for the management meetings that are conducted on Sunday nights. We track weekly alpha gains and report on things such as the current fund makeup, individual holding performance, current concerns and targets for the future. These, along with the heat map shown on the right side of the screen, lead the conversations during these meetings as we're able to hold discussions on a company's performance for the given week. This has allowed us to make more educated decisions as we're able to see companies that are slowly moving out of favor. One example of this was Alphabet Inc. purchased amid the ad boycott surrounding Facebook. After watching strong performance over the first month of holding, our reports showed a slowing down as Facebook once again began to take over. We brought our findings to the group, and with final approval from our chief, we made the decision to sell and locked in a 9.82% HPY for the holding period. These reports also give us as the PMs a chance to make objectives of the week and spot any concerns that need to be addressed to those above us. Through these reports, we've been able to stay on track of things like sector rotation and how the changes we are making truly alter our funds. As we move into the fall, Brandon and I will be utilizing these reports to meet our goal of coming back from the shock in the market that was the coronavirus. And we're proud to say that our value fund has finally surpassed a huge milestone in breaking even for the year. And CORE has made a step in the right direction as well, but we won't take the glory. Here are our analysts to tell you about this summer's performance. We'd like to jump right into the performance of our two funds over our respective holding periods from June 17th to August 17th. Looking at CORE investing, we look for companies that will be able to perform well in the short term. We look at industry rotation to determine which holdings are ideal, given current market conditions. We chose to look at different fundamental metrics, technical patterns, and behavioral news that will drive them in the short run. Looking more into portfolio metrics, we see that the CORE portfolio has performed well over our holding period. We used something interesting this semester to measure fund performance, a portfolio weighted benchmark. You're confident in our level of both systematic and unsystematic risk we've taken on in our CORE fund. We can see a healthy risk-reward relationship. While our CORE portfolio's alpha shows the excess return we made over our benchmark, we saw a 0.89% alpha using our weighted portfolio. It makes us proud to say that even though we are in line on a raw basis, using risk-adjusted measures, we are outperforming. What makes us even more proud is our value fund and the way it has been performing during our holding period. Value investing requires us to dig deeper. We take more into account the long-term health of the company and look less into current trends of the stock. According to the graph, we can see that the Gabelli value fund outperformed the S&P 500 on a raw basis. Our sharp and trainer ratios of 1.82 and 0.13 respectively outperformed our weighted benchmark, showing that our value fund realized more units of return for each unit of risk. While those two performance measures are important, the alpha of this fund is our pride and joy. You're extremely proud that our portfolio generated 3.3% alpha. Now that you have seen our fund's performance on both a raw and risk-adjusted basis, one of the main reasons why our funds were able to generate these returns is because we used the top-down analysis to determine portfolio allocation. Our top-down analysis gave us an indication into the state of global and domestic economic conditions. This led us to focus on specific sectors that would perform well in both the short and long-terms. Understanding which sectors would outperform helped us make proper asset selection, finding the strongest companies. For the following slides, we'll take you through our journey when conducting the top-down analysis. We'll begin by discussing some of the key economic indicators we felt were most important. Before we started the CAFE program, we watched the US GDP fall 5%, indicating contraction in the US economy. We all know the cause of this has been the pandemic and the growing number of cases. The Fed took action to lower interest rates to near 0% and introduced a stimulus package in hopes to stimulate the economy. By doing so, this would relieve some financial stress and increase investment spending by the public and private sector. The stimulus package had helped increase disposable income in the short run by 13.55%. However, the outlook on the economy became even more bleak, despite all of the efforts. With more closures of businesses causing higher unemployment rates and increasing cases of the virus, GDP fell even more by 32.9%. And it brought disposable income along with it. The economy over our time in the CAFE appeared to be unfavorable with the economic activity, dwindling right before our eyes. Since COVID cases are influential in the economy, we kept up to date without cases were constantly changing by implementing them into our daily reports. We used the John Hopkins COVID-19 website to track how cases were growing both globally and domestically. Shifting discussions over from domestic economic conditions to what actions were taken to protect the economy. Let's take a look at some of the fiscal measures that helped drive our market over our holding period. On March 27, the $2.2 trillion CARES Act was passed to provide relief to the American people. The CARES Act included benefits to both individuals and companies. One notable benefit was the Paycheck Protection Program that gave businesses grants to continue paying their employees. Other benefit programs that the government provided gave relief tax incentives as well as spending on health aid. This aid was given to hospitals and health care providers who were working on the front lines. These stimulus packages have been a driving force in the market and are one of the main reasons we have seen the V-shaped recovery. Many individuals and companies have only been able to survive due to the stimulus provided by the government. We recognized how influential these benefits were to the market and took advantage of that within some of our holdings. We took some positive positions that were able to capitalize on quick recovery and took others that were able to survive moving forward with or without more stimulus. Not only was fiscal policy implemented, but the Federal Reserve took measures to stimulate the economy during our holding period. As mentioned before, the Fed lowered interest rates to the lower zero bound. They also reduced the banks' reserve requirements in March and began purchasing corporate bonds. The Fed asked BlackRock to buy billions in corporate bond ETFs as part of its coronavirus relief effort, which allowed companies to receive money through loans. We recognized this utilization of BlackRock by the Fed, and when we were looking to further diversify our financial holdings within our two funds, we recognized that all the pieces fit with BlackRock. The fundamentals were there, as well as the behavioral drivers for the company, which is why we decided to hold them across both funds. Now that we have discussed multiple policies to stimulate the economy, we would now like to dive deeper into specific short-term market drivers. When we first started the portfolio management program, we had to quickly acclimate to the COVID-19 driven market and grew accustomed to deciphering the relevant catalysts in this environment. Everyone has probably read countless articles explaining our V-shaped recovery, but we would like to give you a quick refresher. The first driver that became apparent was the new demand for essential items. Another driver is states imposing and retracting stay-at-home orders to combat the spread of the virus as we tried to make plays accordingly. For two out of the five weeks of us being portfolio managers, we had to weather the volatility that comes with earnings season. We were able to use earnings to our advantage, and that, in turn, became a driver. With the aggregate earnings of the S&P, surprising by 21.86%, this shows how analysts overestimated the effects COVID-19 had on the economy and specific companies. After taking the short-term drivers into consideration, Netta and Molly will discuss our sector weightings. We saw more pessimistic economic indicators potentially leading us to a bearish outlook, but we saw the market driven more by behavioral news surrounding COVID, giving us a more bullish short-term outlook to start the summer. Over the past six months, we saw COVID-related sectors drive the market. As we continue to see the circumstances surrounding coronavirus deteriorate, we made the decision to overweight the health care and consumer staple sectors. When deciding what sectors to underweight in our core fund, we decided to focus less on those with weak fundamentals and valuation concerns. We decided to underweight the energy sector because it does not have any growth potential. Our outlook in the future for our core fund is moderately bearish due to the long-term driver that Alex will now discuss. In this unpredictable market, we had to keep up with various long-term drivers, including geopolitical tensions that forced us to focus on safer domestic positions, reducing our overseas risk, as well as the overall risk associated with the upcoming election. Last week, initial jobless gains came in below $1 million for the first time since March. This movement shows the first step the U.S. labor force is taking to adapt to the new work environment. We can see certain sectors adapting quicker than others, and in turn we weighted our value fund accordingly. Given the influx of investors entering the market, there has also been an increase of speculative investors. The increase of these investors has caused the market to become more volatile than ever before. After taking these long-term drivers into consideration, again, here are Netta and Molly to discuss our sector weightings. Based on our long-term drivers, we determined our weighting scheme per value. The main sectors we decided to overweight were the communications services and the real estate sectors. With interest rates at all time lows and not increasing for the next two years, we predict that the real estate sector will outperform. In regards to the communications services sector, we are predicting that the coronavirus will cause more people to be working from home, which will drive the sector. We have chosen to underweight sectors that are very volatile. Information technology, utilities, and energy are the top three sectors we underweighted. Our weighting scheme and value contributed to our positive alpha. Our outlook in the future for our value fund is also moderately bearish due to the coronavirus and other long-term drivers that were previously mentioned. We not only take sector weighting into account, but we also diversify across different industries. Here are Brett and Maddie to discuss further. As the market pushed higher, there were periods where it wasn't the companies with the strongest growth project leading it higher. Instead, it was the beaten-down sectors in industries where there was still a good bit of uncertainty, such as energy, financials, and industrials. Moving into the summer, we focused on finding companies with cash flow statements and balance sheets strong enough to weather a recession. We also actively seek out companies that offer products and services with inelastic properties. These companies were more concentrated within the information technology, healthcare, and consumer staples sectors. We also knew things weren't quite right when there were some days when consumer staples and discretionary were moving in tandem. These market movements led us to further diversify our funds, not to lower unsystematic risk, but to better capture the performance of the market by holding the most favorable assets in these more volatile sectors and industries. Since equity markets hit their peak back in February, the underlying foundation of systematic risk in markets has flipped. Stocks from the technology and healthcare sectors, for example, used to amplify market movements, rising higher when the market went up and falling further when it declined. But in the COVID-19 market, they actually display lower volatility. At the same time, defensive stocks that previously exhibited a dampening effect have lagged the spiking or declining market, now having sharper ups and downs. Markowitz portfolio theory holds that proper diversification of a portfolio across 25 assets can't prevent systematic risk, but it can reduce if not eliminate unsystematic risk. However, in the current investing environment, we felt building on Markowitz portfolio theory and holding up to 32 assets was the best course of action to efficiently capture the rapid sector and industry rotation while we were seeing to effectively minimize risk. These next few charts should help show you how the diversification has improved our funds performance. Building off what the ADs have just explained, when our summer group first took over the funds in the end of May, we were only diversified in 20 assets in our core fund and 25 in our value fund. We realized that the market was not following the traditional patterns of sector and industry rotations. On any given day, risky industries that we would not normally hold due to the inherent risk would be driving the market. This led our decision to further diversify our funds to hold 30 and 31 assets. On June 17th, we began the reallocation process of our funds. Being invested in 30 and 31 holdings in each fund has allowed us to be exposed to multiple industries within each sector across funds. This reallocation has improved the overall consistency of each fund's performance. But don't just take our word for it. As you can see on the screen, our current funds in white are compared against our old funds in blue. With both our funds, you can see that this added diversification allowed us to increase our returns while minimizing our downside risk. Now, here are Gabe and Katie to show you the current holdings within our two funds. Thanks Emily. After seeing how our performance has changed with our reallocation of our funds, here's a snapshot of our core and value specific holdings. The core fund consists of 31 holdings and value consists of 30. One of the aspects that was most important within asset selection was ensuring that we are diversified across a large number of industries across funds. After taking a look at a list of our current holdings, we will move into our rationale we took when building our fund. To pick specific holdings of our funds, we can't just throw a dart at a dartboard and pick the company it lands on. We have to get into a specific state of mind, and for both funds, the mentalities differ. For our core fund, we have to think about how we can gain the most profit in a short amount of time by taking key actions such as major earnings plays, researching short-term drivers for undervalued opportunities, and having a sweep in the back pocket ready to bring to the table. On the other hand, our Gabelli Value Fund has a longer time horizon. We look at what this company can do for us in the long term by using a buy-and-hold strategy. We focus on fundamental metrics and financial statement analysis to project stable growth when constructing our value fund. Now that we have given you the rundown of how our objectives differ, Katie and Alex will now explain how technicals play a role in asset selection. Now all of us in the cafe have actually been together longer than the five weeks the program was scheduled for. We took technical analysis way back in May and were able to learn how to become a trader. What we would like to showcase for you is our ability to execute trades at the most opportune times. We're able to not only buy while stocks are at a low, but sell at times that help us obtain the highest possible HPY. In technical analysis, we used measures like the relative strength index and stochastic oscillators to determine trade triggers. With Viva Systems, RSI was an overbought territory for most of the month. The short term stochastic oscillator crossed the long term from above and the MACD increased its negative divergence, leading us to exit the position as all three indicators pointed to a perfect selling point. When actively managing a fund with a growth objective using technicals such as these present under the trend chart on your screen becomes essential for choosing the most opportune positions within the fund. Now the strategies the student fund managers learned in technical analysis are used most frequently within our core fund due to the active management strategy. We rely on short term global economic and market conditions to help with our investment decisions. The core fund objective requires a strong focus on behavioral news and immediate catalysts due to the short term time horizon. One of the first companies that we would like to show to you is Monster. They exemplify the core fund objective and how we have taken advantage of a short term buy opportunity to obtain a quick gain. We represented the opportunity to buy Monster soon after Coca-Cola's price to earnings ratio has flipped. For all the professionals in the crowd you know it's our responsibility to stay current with our holdings so if the metrics flip to show a negative growth rate we will quickly sweep the company. And sure enough when Coke's flipped we took profits and ran. Luckily we had found Monster when we did and had a good price for that matter. At the time Monster was outperforming its industry and competitors on a year to date one month and ten day basis. This is due to rumors about a potential hard sell-ser and a new T being added to their product line. This expansion of their drinks is allowing them to further their customer base which contributed to our buy decision. And as you can see we did miss out on some potential gains through earnings. But prior to the call we went back and forth for a hold or a sell. But in the end we felt that the nine percent nine and a half percent yield was good enough given our twenty five day holding period. We took profits and in doing so we protected ourselves from the downside risks that it posed. All in all these profits we gained in the short term because we performed our responsibility is a great example of our core funds objective. Other than just checking to make sure our forward earnings are greater than our previous we also make other quick decisions such as our sales force to Sienna situation. As we kept up with our active management style and core we recognized a sweep opportunity subbing out sales force for Sienna. As we have learned over the past five weeks industry is fluid and we need to be ready to make changes at any time. We felt that this industry was a good hedge in comparison to our other holdings because it didn't follow the trend of bigger technology companies. This was a decision based on possible industry rotation but mainly behavioral drivers. Since we are constantly changing our outlooks on industries and specific companies within the tech sector our decision to sever ties with sales force and incorporate Sienna has paid off tremendously. Now we know that sales force has gained a positive return since we said goodbye but we were able to gain a higher HPY by holding Sienna. Not only do we make sweeps when necessary to gain HPY but when earning season came around we took advantage by making several earnings plays. Ricky will now discuss further with UPS. We all hate to admit how many times UPS has dropped off one of our online purchases throughout the lockdowns but we recognize this short term driver in the transportation industry and took advantage of it. As we move towards UPS's earnings on July 30th we had to decide whether to take profits prior or hold them through. Before earnings we had an HPY of 14.76%. Through our earnings analysis we looked back at analyst revisions for earnings and revenue estimates for the four weeks prior. These revisions led us to believe that the street was uncertain on how UPS would report. Additionally UPS had been trending up in the 10 days prior to their earnings. After performing our due diligence we decided we were confident to continue holding them through earnings. UPS beat on revenue and UPS showing the demand throughout coronavirus had a very positive effect on the company. UPS had truly delivered on their earnings. Since their earnings report UPS has grown nearly 20% more. This successful earnings play along with our continued growth after earnings helps contribute to our current HPY of over 48%. Over the five weeks of the CAFE program three of them were highly focused on earnings analysis. Another one of our favorite earnings plays was Netflix. Our relationship with Netflix is a powerful representation of what it means to have an active portfolio. I'll admit we spent countless hours watching Netflix over the last few months. As we moved into earnings with around 20% HPY we noticed a number of short-term indicators that signaled a potential downside on earnings. We began by putting on our analyst caps and scoured for information that would support a hold or sell decision. They had risen nearly 8% in the 10 days prior to earnings and we noticed that the stock may be getting overheated due to this steep price appreciation proceeding the announcement. We transitioned from being an analyst into a trader when we decided to sell out of Netflix prior to their earnings announcement. We sold Netflix and secured an HPY of 21.59%. We knew that if Netflix dropped the following day after earnings we would want to buy back in as they are a fundamentally strong company. Netflix dropped 6.5% after their earnings were announced and we were able to buy back in at a discount below $500. By selling out we saved 24 fifths of weighted performance. Yes the chart has been trending down since quarter to earnings but we still feel that Netflix has the drivers to retouch their 52 week high. We saw strong subscription growth and good guidance shows that Netflix will continue gaining those subscribers. Moving away from individual equities Molly will now discuss in further detail how we diversified our core fund with the addition of ETS. When properly diversifying our funds we took a closer look at implementing ETFs. An ETF for those of you who are unfamiliar is short for exchange traded fund which can hold equities commodities or bonds. An ETF has the capability to package together various financial instruments. In turn we gained exposure to sums of companies within the target industry but most importantly we minimized the downside risk. ETS have certainly proved success given the volatile market. Going more in depth on one of our ETF holdings Molly will now talk about iBuy in the consumer discretionary sector. We are sure over the past few months most of us have spent a number of hours sitting on the couch still in our pajamas online shopping which drew our attention over to this ETF. iBuy formerly known as the amplified online retail ETF is constructed of 48 companies. They focus on the traditional retail industry which holds around 60% of the ETF. The companies within iBuy obtain 70% or more of their revenue from online or virtual sales. Due to the amount of people shopping online during the pandemic iBuy was the perfect ETF to add to our funds. Looking at iBuy compared to their sector ETF we can see that they have been outperforming which has given us over a 70% HPY. iBuy is weighted at 5.23% in our core fund and has attributed to 3% of the core funds alpha. We plan to continue holding iBuy through quarter four as lots of holiday shopping will be online this year. Without holding an ETF in our funds we will be limited to one company and consequently one industry. In an effort to capture the industry cyclicality within the sector we knew performance would benefit from the broad industry exposure an ETF offers than a single company could offer. We were able to properly diversify by not only utilizing ETFs but through holding an international company as well. We now turned it over to Emily, Rikki and Zach to discuss UBS, one of our only international holdings. With UBS we took a step back and looked at global trends rather than a solely domestic centric viewpoint. We noticed that globally wealth management would be an opportune segment to focus on in both the short and long term. With the idea to look into wealth management we looked at UBS because it was one of our few positions focused outside of the US. Foreign countries make up over 50% of their revenue showing that if one country is facing negative economic pressures it will not significantly impact the company's revenue. This reach across the globe along with UBS's growing involvement in China signaled it was a good value option for our fund. Interest in asset management is growing in China which will benefit UBS as they have large exposure to this region. This global diversification allows for exposure to various economic and interest rate environments. This protects to the downside which is what helped UBS fit within our value funds objective. When looking at UBS from our core objective certain revenue segments stood out to us leading us to believe that it would outperform the financial sector in the short term. Wealth and asset management makes up over 50% of the company's revenue which was a key reason our attention was brought to UBS. This segment has been on the rise since March and as we see the volume of investors in the equities market is increasing we knew we wanted to capitalize on this short term driver. We also see UBS having a positive G prime which is better than competitors Bank of America and Morgan Stanley which both have lesser G primes. This positive growth rate differentiates UBS from many of its competitors. Moving on from our core portfolio Matt will now introduce our value fund and its objectives. Within our value fund we hold companies that we plan to keep throughout your throughout year's end. To truly understand the long term growth potential of a company we heavily rely on fundamental analysis to seek out undervalued assets. As most of you may know firms mainly incorporate the bottom up approach. However we take a different approach than the norm when it comes to value investing by using a modified top-down approach. When talking about our value strategy we dig a hole two feet wide and two miles deep. This narrows down the companies within our selection and are able to get a deeper understanding of what the company does along with how they are performing. To explain how we were able to select these companies in order to fit our value fund time horizon. Gabe and Ricky will explain more in depth our modified top-down approach. With our value strategy we use a similar method to our core fund. However we focus on a longer time horizon which in turn changes the outlook we have on specific companies. The reasoning as to why we say modified is because of the current environment we are in. Positive economic indicators do not necessarily depict a positive reaction and vice versa with the negative ones. Therefore we have to dig deeper within the company itself to find specific catalysts and drivers to match our time horizon. We look at the overall health of the economy but also which sectors will be leading several months from now. Lastly we make sure any company we choose has the structure to withstand any economic changes that the pandemic may bring. Emily, Zach and Alex will now discuss why you should follow our lead. With the high volatility in the market we need it to be patient and remember what truly makes a value company. We looked for undervalued companies that have strong cash flows and fundamentals, high dividend yields and future catalysts. We chose our value companies to ensure that we were not taking on too much risk and would be protecting our funds to the downside. Thus price stability and continuous earnings growth became key points of analysis in our funds. We find the best companies for our value fund by extensive analysis of every holding. Some of those companies we would like to highlight have a high upside downside ratio, strong fundamentals and solid financial statements. As we move into our value holdings the first company we would like to highlight is O'Reilly Auto Parts. O'Reilly Auto Parts within the consumer discretionary sector was one of the first companies we were able to get into the value fund. Within the discretionary sector we needed a company that had the capacity to perform even with the setbacks related to COVID-19. The automotive industry immediately intrigued us as it had been performing well thus far. Their investing cash flow statements started to drop as O'Reilly expanded to Mexico and Puerto Rico. O'Reilly capitalized on NASCAR being one of the few sports still operating during the pandemic, sponsoring the O'Reilly Auto Parts 500 race this summer. This led to the beating of their EPS and revenue estimates for quarter two. We didn't see any of O'Reilly's competitors have a price reaction that was as high as theirs. This led us to the discussion of holding the company or selling them and taking profits. We decided to continue holding them based on our prediction of the resurgence and COVID cases leading to negative implications in new car production supply chains. These supply chains will continue to be disrupted forcing consumers to repair their current vehicles instead of buying a new car. Within Value the most important analysis tool is often times fundamentals so we would like to showcase two companies we believe to have strong fundamentals in very different ways. Gabe will now discuss NVIDIA, another company with long-term gains also held in our value fund. You all may be thinking how can a company with an HPY over 57% be in value? Shouldn't we be taking profits? Let us show you why this semiconductor company is a solid pick for a buy and hold strategy. Before our time in the cafe program NVIDIA was bought and it had a consistent upward trend. When analyzing this company it still showed great strength with constant drivers to propel its momentum forward. Within the trend channel displays when our summer group acquired NVIDIA from the spring group and it was on the lower end of the channel at that time. On the other hand you might be thinking what about advanced micro devices? It has returned more in a shorter time period. Well through our analysis AMD is too volatile of a stock to expose to our value fund given its daily standard deviation of 3.7%. NVIDIA is one of our value holdings that has strong fundamental analysis but continues to grow with the behavioral drivers surrounding it. When we first analyzed NVIDIA with the strong impact of work from home we saw that the race with 7nm processing chips was happening between NVIDIA, AMD and Intel. NVIDIA was the only company at the time that had the 7nm chips along with rumors of it already working on the 5nm chip. And as of recently we have seen a continuous and consistent growth of NVIDIA and this is due to the following behavioral drivers that Gabe will discuss. NVIDIA is in discussion with SoftBank in order to purchase the chip business ARM. ARM's technology appears in products like connected appliances and Apple devices including the recently announced custom silicone for Macs. On top of that they have recently come to terms with the acquisition of Melanox technologies. NVIDIA will use them for the execution of AI and networking as there has been a recent global surge. All of these drivers exemplify the following demand that the semiconductor industry depends on. Now looking at a company with strong financial statements we would like to move on to Honeywell. One industrial holding in our value fund is Honeywell International. They are an industrial conglomerate with the ability to generate revenue through different segments. We wanted to reduce risk by exposing ourselves to companies that are less susceptible to industry rotation. Honeywell being a conglomerate we expect more modest continual growth moving forward. Honeywell has products that you have probably heard of like thermostats, fans and PPE. Also Honeywell has industrial automation and aerospace segments diversifying the product offerings. We knew that Honeywell having diversification within itself would be a safe investment given the current volatility. Additionally we knew we needed a company with strong enough cash flows to facilitate continued growth throughout the pandemic. As seen here operating cash flows for Honeywell have been increasing over the last four years indicating that Honeywell is improving its operational efficiency. Although 3M shows higher cash flows their growth rate is much more stagnant. This past performance does not show the entire story. Looking ahead we are also confident in Honeywell's future performance. Despite the challenging first half of this year Honeywell was able to beat EPS expectations over the last four quarters beating its competitors 3M and GE that were unable to do the same. Although we currently have a slightly negative HPY for Honeywell we continue to hold them into the future because we believe in their long term drivers. We bought into the company at the beginning of the summer knowing that they had value characteristics. We expect that in the future we will see a resurgence and demand for their currently underperforming segments. Not only do we put an emphasis on fundamentals and cash flow statements for our value fund holdings we also take into consideration behavioral drivers of each company. Thermo Fisher Scientific has many catalysts to drive its price through the year's end. Thermo Fisher Scientific is a life science tools and equipment company that manufactures consumables and chemicals. Some institutions they cater to are pharmaceutical and biotech companies as well as hospitals. In response to COVID Thermo Fisher introduced a new type of testing system that is able to detect nucleic acid in the virus. This new system is capable of processing up to 6,000 COVID-19 samples a day and they have been taking and they have plans of taking this new system globally. Thermo Fisher's business segments are growing at a minimum rate of 8% quarter over quarter. Last quarter we saw Thermo Fisher's life science solution segment grow by over 29% quarter over quarter. And this contributed to almost half of their revenue along with the consumable segment. The consumable segment is the one producing necessary COVID-19 test kits. The United States is planning to increase COVID testing across the country which is a big driver we saw for Thermo Fisher. Now Bloomberg is only one of the many tools that we utilize in the cafe to make informed investment decisions. As you can see here, Value Line has rated Thermo Fisher a timely investment. One of the reasons Thermo Fisher has such a strong timeliness rating is because of the continued demand for their reagents and how it has driven sales since the COVID-19 outbreak. As the screenshot of this article shows, the CDC has established the IRR as the United States struggles with a shortage of reagents which are essential to coronavirus testing. In addition to behavioral drivers, we measure future potential a company has through calculating the upside-downside ratio. This ratio gives us a better understanding of how much upside the company has compared to their downside. One company we wanted to mention due to their upside-downside ratio is Ball Corporation. An upside-downside ratio tells us where the company sits in relation to their high and low PEs. Ball Corporation is continuing to show a strong upside-downside ratio of 10.39, meaning we have 10.39 units to the upside for every one unit to the downside based on their behavioral drivers that Malio is about to talk about. On June 30th, Ball announced to deal with Blue Ocean Innovative Solutions to represent their aluminum cup that is going to be sold in Walmart and Sam's Club's locations across the country. Recently, Ball and Crown Holdings had a pullback in price due to a small competitor, CANPAC, announcing the construction of a new plant in Scranton, Pennsylvania. This allows more to the upside potential and price growth that is shown above. Moving away from our specific holdings, Molly and I will now discuss the Value Fund's correlation matrix. We ran correlation matrices on both our core and value funds, but wanted to showcase the value fund to you here and explain the significance of this type of analysis. For those of you who may not do this for a living, imagine investing in two completely unrelated companies in different sectors, let's say Clorox and Lowe's, both of which are held in our core fund. These two companies are highly correlated appearing in red. Despite having some highly correlated companies, we have seen that both our core fund and value fund mostly hold companies that are moderately correlated in yellow. Now our value fund is slightly less correlated than our core fund. We are seeing a number of the 30 holdings within our core fund, within our value fund that have a correlation that is almost zero and represented in green. These two companies that represent this inverse correlation are CVS and Amazon. While these two companies might have some product overlap, they almost never trend together on any given day in the market. Now we would like to turn it over to our portfolio managers, Brandon and Dave, to discuss how we use the minimum variance portfolio. Now as you have learned, the significant focus of our portfolio methodology lies within our weighting scheme. This summer, Brandon and I as portfolio managers investigated how to create an optimal portfolio with our objective to reach 30 and 31 holdings within our value and core fund respectively. Now the CAFE has put an emphasis on Microsoft Excel and through utilizing the data analysis tools within it, we created a minimum variance portfolio or MVP sheet designed to determine an efficient weighting scheme. The sheet uses historical data to determine efficiency and we set parameters to design a fund around weightings within the S&P 500 with key over and under weightings. The sheet then creates an efficient frontier, a graph of standard deviation versus return created by a point with maximum return, minimum variance and minimum return. An efficient fund sits on the line of the frontier, taking on a healthy amount of standard deviations for projected returns. We began by considering the differences between our funds and what optimal truly meant. We looked to construct value to limit standard deviation and variance while focusing on undervalued equities with barriers to entry in their respective industries that overall produced a stronger way to give it a yield. Normally we would expect this fund to lie further to the left on the frontier and on the lower end. Now pictured here is core where we are willing to take on more standard deviation at the expense of greater returns. Now we focused our portfolio on short term growth in order to achieve this. Core we would expect to see on the farther right of the frontier and higher up, indicating a higher return coinciding with that higher standard deviation. Now as shown here, the move from 20 to 30 on assets benefited the core fund significantly. Now while we may have given up some returns, we moved up to a more efficient portfolio. Similar to core, value reacted in the same way and we accomplished the same results by minimizing risk and maximizing return. We created a portfolio that lies in the efficient frontier. Models like this have aided in the creation of these funds during the volatile market conditions as we move past the coronavirus. Now as portfolio managers, Dave and I are always looking for ways to improve the funds and manage risk. This MVP sheet along with the weekly PM fund reports sent to our board members, stakeholders and doc keep us on track to navigating the way through this tough market. We would now like to revisit our funds performance over our holding period. We showed you at the beginning how we performed against our weighted benchmark and now we will show you how we ranked against our competitors. Our cafe core fund performed well over our time as student fund managers. As we looked at our competitors, we saw that we outperformed some and underperformed others in different risk-adjusted measures. In both fund performance comparisons, we used Jensen's alpha because we cannot record the comparable funds weight accurately as they did not report their weights on a daily basis. Our Jensen's alpha is .68% and it beat all but two of our competitors during our time horizon. We will now continue by looking at performance by moving into the Gabelli value fund. Our Gabelli value fund performed well during our time as student fund managers as we returned to Jensen's alpha of 3.91%. Similar to our core fund, we see that our fund is outperforming some but underperforming others in different risk-adjusted measures. Now, I'm sure you're all thinking how impressive everything you've seen thus far is, but we'd like to let you know we aren't perfect. So, we're going to talk about a day where we lost some major points in alpha due to unforeseen circumstances and the lessons we learned from them. Over the week of July 13th, our core fund lost 37 bits of weighted return. On this day, we learned that not every day is sunny with a positive return. As many of us New Englanders know, a Northeaster can come out of nowhere and cause some pretty shocking damage. Three of our holdings that had been recently added to the fund following our core pitch weekend led this drop. Beginning with Salesforce, we saw a company that was at the top of its industry for performance to then pull back in price and continue to underperform. CRM continued to drop at an extremely high rate in comparison to its competitors throughout this day. Now, switching to Chegg, it had been showing significant growth for the past month and all news pointed to it being a solid buy. Based on our predictions about COVID-19 and schools not being in person in the fall, we thought it was a solid buy opportunity. On Monday, there was a major server outage that rendered none of Chegg's services useful. This outage was unpredictable, but because of how much Chegg had been running recently, it caused a massive shock to the stock price. And lastly, we have Coastar Group, a company who provides relevant information in the commercial property industry within the industrial sector. We thought that this company had capitalized on a niche market within the industrials and had a lot of growth potential. A few days after we purchased Coastar, it was replaced by Moderna on the NASDAQ and this led to the stock falling 5.2% that day. All these events occurred on the same day and our funds were hurt by it. It took the initiative to minimize more losses by trading out of these positions. With loss comes the opportunity to learn and be better, both of which we believe we have in the month since. After seeing how we can be used by the market, we will move into our forward planning to reduce this risk in the future. At this point in time, several financial institutions are still in disagreement as to where the market will end up through year end. The great news is, the PM reports are forward looking. There are some signals promoting a moderately bearish outlook, but because we have an actively managed funds, we continue to search for specific triggers to shift the funds' weight. The S&P is currently trading of upwards 30% over its historical price metric averages, as you can see in the table on the right. We're concerned that the market is heavily reliant on government aid, which is not guaranteed through year end. We are thus taking a moderately bearish stance but have prepared a weighting scheme for either scenario. Now something we're looking at within our core fund is shifting our weighting scheme for a bullish along with a bearish scenario, driven by short-term developments. Now in a bullish scenario, we would look to overweight sectors like industrials, while underweighting consumer staples that will surely lose sentiment if the market pushes further. However, in a bearish case, we would underweight technology significantly due to valuation and overweight sectors like healthcare that have acted defensive during this new normal. Now within value, we're looking a bit further ahead. In a bullish scenario, we would look to overweight sectors like financials due to favorable valuation still, while in a bearish scenario, we would underweight consumer discretionary as we would see retail spending fall off if the economy just simply cannot recover at the pace that this market has. Zooming back out to cafe as a whole, Emily will now discuss how our program relates to the real world. Through this program and running real money from home, we truly were able to experience what many industry professionals are doing today. We executed trades, performed company analyses and managed our portfolios remotely. Our experience from home mimicked being in the cafe room as much as it possibly could. Our group has created a bond with each other over Zoom, even though some of us have never even met in person. Working from home is going to be a new normal from now on, as businesses are starting to realize how much they can save without paying for office space. By being the first cafe program to be done exclusively at home, we are gaining the experience that is going to be considered this new normal. As you can see from this picture, we learned that the markets never sleep and neither did we. Next is Gabe to talk about the specific skills we have learned that are parallel to industry. Having the opportunity to be a part of the cafe program this past summer helped us garner a better understanding of industry. Docs showed us the ins and outs of how industry professionals think, work and make crucial decisions. While switching through our three hats, we put in endless hours to shape not only the funds, but us as future business leaders. Being a student fund manager helped us improve on a variety of practices such as communication, flexibility, time management, expressing thoughts, and so on. We learned to talk through our disagreements and come to a conclusion as a group. Through this process, we learned how to adapt to working remotely. We also developed professional skills as well, including a multitude of qualitative and quantitative characteristics. Katie and Netta will now talk about how the cafe program here at Roger Williams University relates to industry after graduation. Many of us have had internships so far and would tell you that while they are demanding, cafes prepared us for industry in ways that they could not. Repetition through four reports a day, necessary quick thinking and asset selection within an hour's notice, we are prepared for just about anything that industry can throw at us. Many of you in our audience today are alumni of the cafe program. You have shown us that the work we have done in the cafe will only help us once we are working in the real world. Furthermore, we would like to take a moment to thank our ADs, PMs, and doc for the privilege of being in the cafe program. On our transcripts, cafe appears as a three credit course, but the experience of having been in the program is much more like a full-time job and then some. The skills that we have been able to build upon this summer will be useful in so many more applications than just a job or resume builder. We are still learning and although we now wear three hats, analysts, trader, and portfolio manager, we learn life skills from this program that we will never forget. And thank you as well to our audience for your patience, time, and allowing us to present to you. I'd like to turn it back over to Matt to open the Q&A. On behalf of doc and myself, we would like to turn it over to Jake Holgren from the cafe class of 2020 who will be moderating our Q&A session today. Thank you Matt. I would like to start off the Q&A by turning it over to our panelists to see if they have any questions for our student fund managers. Hey guys, how's it going? This is Mike. Great job. I know it must have been pretty difficult to get this all together, working on Zoom. Looks like you guys, you know, pretty organized. I'm sure those long nights definitely helped. I guess I'll start off, you know, one of my questions. When I was in the cafe, I loved the technology stocks. I know right now some of these valuations are crazy. You know, if you're looking at a company like Tesla or something more familiar to you guys like Amazon. I'm just curious your guys thoughts on evaluation like that and how does that fit into the overall, you know, idea behind what you guys are trying to do in the cafe. Thank you for so much for the question. So when looking at technology, evaluation was definitely very high and it was definitely hard to look at. But one of the big things that we really noticed when looking at them was things that they were doing now to have them progress moving towards the future. So like a lot of companies and specifically a company like Nvidia or Amazon and even going towards Apple, they have a lot of progress moving into quarter four towards the end of the year, which a lot of investors want to look at now to try to find good buy-in times to continue seeing growth towards year end. So I think that a lot of behavioral drivers to follow where the stock price is going can definitely help moving forward. I hope that answers your question. Yeah, absolutely. To add to that, also we kind of looked into hedging a lot of our technology companies. As we talked about, Sienna was one company we put in there for more of a hedge. That aspect of communications and our like bullish outlook on communications is really forced us to look at it that way. And it helped us on days where technology was not looking too good and it helped us out in the long run. That's great, guys. Great answer. I'm also just kind of curious on that same point. I know it's obviously been a pretty crazy summer in terms of the volatility and companies like Amazon could pop one day to 10% or in some cases even more depending on the company. How do you guys decide when you want to take your profit or make the decision where this could run another 25% over the next few weeks or months or whatever it may be? What's like the indicator for you guys to say, all right, let's sell now. Let's lock in this game. We like to look at technical analysis and look at the stochastics and the MACD to see when the good sell time is and see whether they're going to get out of their trench in or not. So that's one way that we really like to look at when to sell and when to take profits. I can also add to that point in the PM fund report that myself and Brandon write on a weekly basis. We keep track of how our holdings are doing on weekly basis. So we're able to go back and see when things start falling out of favor. Maybe we'll watch a company that's been performing very well for us for a couple of weeks start to see two weeks in a row of it say underperforming its sector. So that's when we start the discussion of, okay, can we find a better company that might be a better sweep? Do we still see more upside in the company and stuff like that? I hope that answers your question. Great. Thank you. All right, Ryan, do you have any questions for the group? Yeah, I wanted to ask you about your real estate picks in the core fund, I believe, specifically EQIX and what sort of led you to pick that specific read. Well, I believe that the Equinox is in our value fund. We're in our core fund, we have AMT, but what led us to pick Equinox is in the real estate sector right now because of COVID having such a large impact on that market. We were basically trying to find the company that was performing the best and Equinox had seemed to have the best valuation metrics. Hope that answers your question. Yeah, quickly just jumping on to that as well. We sort of looked at the sector itself and the industries within it. And as you could tell from the makeup of the REITs within each of our funds, we sort of went a little bit more technology and specialty based as opposed to something like an industrial REIT. So for right now, we just currently see the environment a little bit more favorable towards those technology REITs, but we have specifically in the core fund been starting to wait for that turnaround point where we'll start to see those underperforming REITs start to come back. So once we start to see growth potential coming back from those as the economy moves into a safer direction, we will start to reassess our current REIT holdings and possibly shift. I like to pick. I definitely like EQI acts. Then also, have you considered adding electric vehicle exposure to either portfolio and then like, you know, if you can't or why not, you know, what has sort of prevented that, you know, preventing you guys from making an investment in that space. It's not something that we've done a whole lot of research into solely based on the focus that we've had so far in both of our two holdings. We've kind of just been within our core fund looking at a shorter time horizon and looking to capitalize on, you know, getting those kind of quick gains and based on the way the economy is performing and the current volatility that we're seeing. We don't think that it's a market that is going to do well right now. If that answers your question. And just quickly adding to that, you know, from a portfolio manager and risk perspective, it really comes down to valuation for us. You know, with the huge influx in speculative investors that we've seen this year, we've seen heightened volatility specifically within that industry. And currently with our with the way that we manage risk within our fund, we don't believe that it is an investment that we're willing to make at this time. But we currently see that the consumer trends have been shifting towards that industry. So that is something that we're going to continue to look at once valuations come a little more in line. So further to that, I think, you know, sometimes there are new companies that might not have, you know, years of fundamentals that you can analyze to sort of make the case for. Were there any specific companies that you wanted to buy this year that, you know, maybe their lack of history, recent IPO or unprofitability sort of prevented you from being able to pull the trigger. Especially when pitching it to doc. So throughout the semester, we didn't necessarily focus on companies like that with IPOs given that they did not have a lot of fundamental background. We wanted to look given the volatility of the market to focus on where companies stand and how they can show that they're going to keep up with the way they cope with is affecting the market and the future growth potential that we're seeing. So given that one of the companies that we look for here in there that I had pitched potentially was a company like Qualcomm, but one of the reasons why there was further discussions to rejecting it was because of overseas risk because of risk in China. So given that relates to a point prior how we looked for a lot of domestic investments. Building off of that, when we analyze companies, we don't solely base on their fundamentals, we like to look at their behaviorals and personally I this summer have found a real joy with technical analysis. So those are two other kind of tools in our toolbox that we utilize so we're not solely basing our investment decisions from fundamental analysis. Very good. Very good. And then my last question here which is sort of a layup but Bloomberg. So did they set you guys up with Bloomberg anywhere so that you could like remote in from home because you know you talk about the cafe mimicking real life experience and like you know I've been in my apartment for the last six months just as you guys have probably been in your bedrooms or homes or wherever. So, so yeah, did they set you guys up so that you could get in remotely. They did through it's called the Bloomberg Recovery Act, and all of the analysts have access to terminals. We do have to share each of us. There's three of us that share it, but we all have access to Bloomberg. Very good. All right, I'll pass the torture. Thank you guys. Thank you. Sorry, Susan, do you have any questions for the student fund managers. I do actually but first of all congratulations you guys did a great job especially given the situation and not being able to see each other in person and have long late night sessions. Like we all know but the question that I have is you mentioned a comeback from the COVID shop in the fall. So I'm just wondering if you're also considering the risk and impact of a second wave and how are you preparing for that. Well, we're always preparing ourselves for the risk of a second waves as we, you know, have seen that this pandemic could actually happen, you know, prior to the pandemic who would have thought that the pandemic would have happened but we now that it has we are always preparing ourselves. That's why we implemented the COVID-19 tracker and we are always keeping up to date with what industries are leading which ones are improving which ones are starting to weaken just so we can keep up to date information on whether or not our holdings are going to be affected by a certain country that is being affected over another country. Building off of what Frank said we also in the cafe program taken active management style of investing. So we're constantly on our toes 24 seven monitoring our funds as well as the market as well as our pms are risk management so through their pm weekly reports they manage how much risk our portfolios taking as a market changes. Thank you. And then another question that is related to the perfect storm situation that you guys faced in July. So I'm just curious as to how you came to this decision to eliminate those positions instead of holding on and writing that writing out the difference. So based on the kind of perfect storm situation that we had, we saw such significant loss that for us it was just a decision of we can't continue to hope like we can't wait this one out and see this loss occur because of the overall like the shortness of the term that we were managing the fund as well as that with some of the companies that did cause us this loss. Their potential to grow was cut by this this perfect storm. So their capacity to make us money as a as a company was just gone at that point. To continue on with that specifically for Salesforce one of the things that we had noticed was industry rotation Salesforce being the application software industry. We have seen that start to lag and communications equipment start to expand and increase. So CN was a very big option for us to go into and make this feed to keep up with industry rotation. All right Danny do you have any questions for the student fund managers. Hey all thanks for the presentation appreciate all the efforts that you guys put in. I think it's pretty clear how much work is it entails, especially over the summer and throughout COVID. Just a question on one of the slides you showed your performance relative to some comps, some funds. How did you go about selecting those funds that you compared your performance to because it seemed like a few of them were sort of all over the spectrum. Looking for competitors we all came together as a group and we started looking through Morningstar we use their screener and we put some of the important parts of our funding like we're going for. So for core for instance you know it's a core fund with a shorter time horizon and then we just started looking at some of like their waiting schemes and top holdings to see what would similarly work with the fund that we had. Building on full exact set as well. We felt that it was more difficult in finding competitors as our time horizons are different. Our holding period was from June 17th until August 17th. So our holding period was definitely different. Okay I appreciate that and you know that said then must commend you on a job well done on the app performance that the fund showed. That's it for me but I know Matt Page here has a question. Yeah I think for me I'd be curious to know what stock or stocks you guys would consider shorting right now and what kind of level you'd be looking to close that position. Yeah I could definitely answer that one so I mean within the fund right now we don't actively look to short anything but maybe in the future if there is an opportunity that would be discussed with management and with doc but as of right now we don't look to do that anytime soon. Yeah okay but maybe through your analysis there have been companies that you decided not to buy. Did any of those rise to the level where you would you know do the opposite and actually take a short position if you had the option to do that. Yeah I mean something that we're looking at right now as was mentioned before was technology and within certain industries within that sector we are seeing some overheated companies there and some opportunity to possibly benefit from a pullback from technology. Due to the fact that we can't necessarily short companies within both of our waiting schemes we've actually taken pretty significant underweightings within tech something that we're looking to protect ourselves to the downside. So within that sector we believe that there's probably a couple shorting opportunities there along with a lot of the speculative investments this year. Something to keep an eye out for our commodities right now like gold and silver that have been running really hot as a dollar has fallen so something else to consider to make money to the downside as well. Alright I'm going to move over to do some of the Q&A feature questions. Sean Sweeney Cafe alumni asked what was it about UBS's wealth management division that you liked versus all of their competitors. So to answer that as many of you probably are familiar with UBS's wealth management division is one of the largest globally and we really liked that about them because that added to their value side and limiting their risk being such a globally dominant company. In addition to that with their global exposure they're not just in the Americas or within Europe and they're somewhat not equally dispersion across their different segments but having that substantial hand in not just Europe but also in Asia and the U.S. really protects them to the downside depending on the different outlooks of any specific countries economic environment so that's what really drove us to UBS specifically over their competitors. And just adding a little bit on to that we see a lot of markets being driven more by behavioral news surrounding COVID rather than the traditional economic indicators so seeing how certain regions are coping better with the pandemic we'd expected more growth so just having the global exposure kind of like mitigates that risk. And also just to kind of wrap up with the question they simply outperformed anything that was domestic so that was something that we really like to see especially within core looking beyond the U.S. so it was really great to see. Alright the next question is from Anthony Barrillo he asked did the move to online classes in the spring help you manage the funds remotely this semester. I would say they have while it was definitely more intense over the summer cafe course versus you know just going into a lecture through zoom at school the ability to like learn and like have an exposure to how you're supposed to operate in these conditions helped us tremendously. I hope that answers your question. I mean and adding on to that I know me and the fellow fellow management we were all here for the semester that was unfortunately cut short and we ended our semester online. So the summer program didn't necessarily get to have that huge transition something that we noticed was the level of camaraderie that we have within the cafe room is something that we look to replicate in any way that we can. And you know as you saw through the presentation we really focus on the zoom meetings and you know we're talking to doc constantly along with the rest of our analysts to make sure that the flow of communication continues because that's really what we pride ourselves on within the cafe. So as long as this environment continues cafe is going to do whatever we need to do to keep running. If I may jump in and be able to add to that real quickly. The one thing that I have noticed and I'm sure most of the cafe alumni and industry today can attest to this is that with the advent of remote meetings across zoom. I'm more excited about the fact that we no longer have to worry about being in the cafe which allows me to meet more with them. So I can call a meeting at midnight one o'clock in the morning so on and so forth. So in terms of actual on contact hours under this scenario or this environment right now. I think the summer group will attest to say that we've had a tremendous amount of contact hours and they can't run and hide from me so that's that's all right well thank you. All right. I'd like to go to Cafe alumni Dean Kaskaris. Do you think with recent news such as the president expanding access to drilling in parts of Alaska or companies such as Chevron looking to Iraq for new exploration deals. There could be any favorable outlook in the performance of oil and gas exploration companies in 2021. So the energy sector obviously we know that it's going to be heavily dependent on demand and the coronavirus and depending on how the coronavirus is contained and if there's a vaccine. And I think we with the new expansion to Alaska in the Arctic National Wildlife Refugee although that is could be groundbreaking for some companies having to build all of the infrastructure and put set up all of that is going to have very high investing costs for the few years that it's going to take and over the time that in just for next year they're not going to be able to see those returns especially since there's such a lack of demand. Looking towards next year. And now like to go to Cafe alumni Clayton Cagallano what holding that either got in the fund or was rejected cause the most debate among the team. Well one that I definitely remember that caused a big debate was General Mills we had a lot we had a discussion that lasted. You know what probably went over two three days and it I mean it just caused so much there was there it didn't get into the fund some of the student fund managers didn't like it some of the student fund managers were really for it. And obviously within Cafe we need to have a consensus so that's why it didn't get in but I definitely said General Mills was the one that caused the most debate that I saw. Another huge debate that we had just literally consistently throughout the entire semester was within the technology sector specifically within placing weight within semiconductors and semiconductor equipment. You know our analysts were dealing with China trade tensions along with domestic issues as well for certain companies along with the entire coronavirus pandemic and high valuations as well within that sector. So those those were companies that were our long discussions five hour long discussions and that went days at a time to figure out so that was definitely a sector that caused a lot of debate this semester especially among the pms as well. All right Cafe alumni Carsten Fredrickson asked are you at all concerned about the divergence between the market and real economy given given weakening macro indicators such as the UK recession slowing down GDP growth but all major indices hitting all time highs. We've definitely taken a look at that and have recognized that huge divergence that we've seen. We looked as we mentioned with our top down analysis we analyze global and domestic economic conditions and saw that with many different things they have been declining. We've started to see in the past few months a comeback from the lows that were seen in March and April but it's still not at the level that the market is at in the market being historically a leading indicator of the economy that the market is very would be very forward thinking because the economy is pretty much very supported based on the federal stimulus. Currently. All right Cafe alumni Brian can have asked with the rise of apps like Robin Hood allowing uneducated investors to enter the markets at any time. Have you seen this have a strong driving force in the markets. This is a really good question. I would say that on a day to day basis. We're definitely seeing that people that are kind of working with day trading and utilizing apps that like Robin Hood and not being fully aware of what they're doing might have a small impact. But there's a reason that we look at a very different time frames we look at you know a one day we look at a five day 10 day one month. And being able to do that it kind of mellows out that change that you'll see with people that are not educated and what they're investing in. I would also just say to add to that one of the things that we weren't too worried about was most of the uneducated investors that were using Robin Hood or any of those type of day trading apps. They were looking towards something that we maybe would never look at based on our fundamental technical or behavioral analysis. So that was something that gave us a little bit more comfort to know that we were working probably against one another just we were not looking in the direction they were. So that was one of the main things that didn't worry us too much. Now from Chris Leach we have you mentioned using cash flow statement as evidence of recessionary resisting companies. Which ratios and trends did you look at. So looking into at least when we're looking at Honeywell for value we we saw the operating cash flows showing that they were increasing over time. And then that was just being able to see that could still grow going into this kind of environment would help us believe that it would be strong. We also looked at like price to earnings price to book valuation metrics to see if like they were still expensive now or if we could get them cheap relative to their other valuation metrics. In addition to that we look at operational efficiency because it just gives us an idea of how that company is able to really perform given all of their putting into the company and that's really important given the current climate with COVID-19. We also looked at cash flows from investing activities. We looked at O'Reilly's in particular and they were getting more negative as the years went on which was a good indicator that the company is investing more money and growing. I see that panelist Brian Jones has his hand raised. Hey guys can you talk about holding ETFs within the growth fund and sort of how you know when do you decide to like let's buy this ETF or not. And then you know the mutual funds ever come into the conversation as well you know when you're talking about that. Yeah happy to answer that so I'm going to start out with mutual funds. We shy away from them solely based on the fact that we don't want to have to pay the fees that are in line with mutual funds and being able to hold an ETF we're saving a good bit of money of what we're able to invest. And then for how we choose them specifically it really depends on the sector and being able to capitalize on an ETF that has a couple like companies within different industries that are performing. So if we see if I buy for example is one of my favorite ETFs and has capitalized on the Internet marketing retail industry and then looking at like how it's compared to its sector and then looking at the other industries that are within it. It's able to capitalize and perform despite you know COVID-19. And then we also run specifically technicals fundamentals and behaviorals on the top five weighted holdings within that ETF and that gives us kind of a better picture of not only how the ETF as a whole will perform but anything that might stray us away from it we get like from that analysis. Also to add to that one place in particular where ETFs really fit a role for the possible future of the funds is in the biotech industry we were kind of searching in there for a possible ETF because we really wanted to capture the performance that the biotech industry had. But we really were afraid of the downside risk that it could do to our funds performance. So that sense very good. Thank you. I would now like to go to Cafe alumni Rev who says good job. Can you give us your base case expectations for all things COVID. So looking forward into the future obviously the coronavirus is going to continue to play a very influential role in the market in our economy in our day to day lives. With that as we have mentioned the portfolio managers have very forward looking reports and we have prepared waiting schemes for both a bear and bull market and we're constantly keeping up to date with our daily reports that we send out four times a day. This is enabling us all to be ready to make any adjustments in our funds at the drop of a hat in order to keep up with the changing conditions. I now like to go back to Matt Page who asked how do you view the risk of COVID related shutdowns impacting your portfolio in the future and how are you defensively aligned. We are rather bearish and we've designed our funds to capitalize on the volatility that's seen within the market right now. And then we're currently over waiting the health care and consumer staples sector in our core fund. And those are both very defensive sectors as we see COVID cases rising. Just quickly adding on to that. It's been an ongoing discussion between Dave the other PM along with me about sort of how to construct the funds along with the SFMs to minimize risk. And part of what we do there is looking at individual company holdings within our sectors. The best example of this is probably consumer discretionary. You know something where we see brick and mortar stores that will lead on days where the market is having a great day and then lags significantly behind when not. So something that we look for is consistency among our sectors and to get that consistent consistency. We looked at our individual company holdings. So something like Lowe's as an example sort of a recession proof company within sort of this environment where when we saw the stay at home orders happen. People began going out in order to purchase goods and things like that to better their houses things of that nature. So these sorts of companies are the ones that we're looking at to sort of act as hedges to the downside if we are to see a resurgence while also looking at those bullish companies that we expect to perform if we are to see a best case scenario for COVID. I'd now like to turn this back over to our chief of staff Matt Rosnick. Thank you, Turtle. Now if anyone would like any more information regarding the Center for Advanced Financial Education, obviously please contact Dr. Michael Melton at M. Melton at rw.edu. And additionally, if anyone is interested in more information about the student fund managers, the Q&A session after the Q&A session, which is now please contact myself, Matt Woznik at mwoznik537 at g.rw.edu. I'd like to turn it back over to Doc. I just want to simply finish up by saying great job, gang. It's wonderful presentation and I'd like to thank everyone in attendance today, especially the moderator and the panelists for taking time out of your schedule to be able to ask the tough questions and everyone in attendance. What we don't know is we've had Tom Custon's call in from Texas. We've had Trevor Cybert's call in from South California, SoCal. We've had Mark Rockmall calling in from San Francisco. We have representation in this presentation from all over the United States and it makes me very proud that the alumni still want to take time out of their schedules no matter where they are to be able to listen into our program. We've had great performance and hopefully we're carrying or they're passing the torch to us and we're carrying that torch and still providing the outfit that they would expect. So, everyone, I would like to thank you again for all of this for a wonderful presentation and I wish you the very best as we move forward throughout the rest of the year and thank you again. Good night, everyone.