 everyone thank you so much for coming here before we begin I would like to introduce not only my cafe advisory board members can you please stand and I would start this presentation by having both Matthew Woznik and Avery Baruch come up and say a few words to you and then we will have the dean speak and then we'll get this party started all right well thank you so much and thank you very much board next time all right well great to have everybody here really appreciate it it means a lot to the program you know just seeing the friends family future student fund managers and alumni kind of gathering here to see like a huge culmination of an entire semester's work I know the student fund managers did an exceptional job this entire semester I was very fortunate I got to travel with them to London got to meet them and I think you know we really value traveling international traveling I will say in the cafe and that's because you get to experience different markets you have to talk to different individuals from you know where financial markets are a lot different than the United States is one thing I will say and personally I learned this on the trip is that in the UK they do not have fixed mortgage rates which I did not know it was a crazy concept to me but it was something that I had no idea was the case but again you really value you know the international travel you get a lot of different perspectives and you get a really great experience overall just getting traveled with people like this so I think that's one of the I think the best parts about this program as well yeah thank you all for being here I know I'm personally really excited to be back I'm coming up on my two-year two year mark since graduating and it's unbelievable time flies so it's exciting to be back here and see what these guys have to present cafes incredible community and bringing back students and alumni and parents you know these presentations is incredible and the work they do is incredible and they spend so much time together in the semester so it'll be great to see what you guys have today so thank you all for being here thank you everybody for coming my name is Dia Das and I am the newest member here is what I understand because all of you have been part of this incredibly fantastic program for many years now and and so I'm the one who's like kind of the new person in town and trying to understand what amazing kind of an educational experience this is right like and in many ways cafe embodies everything that is the best about this university because it is about experiential learning that we talk about it's about you know learning while doing that is the best example of that is in cafe it's also about this kind of close community building that is across the years so it's not just you know about the people who are working here pretty much all the time but also across the years when you guys come back and mentor and kind of help them and support them and they learn so much from this relationship so I can't tell you how proud I am of this whole program and how humbled I am to be able to take credit for it right so when I go out I can talk about this and brag about it with zero contributions in many ways because this is now coming to you know 20 years and that's a really fantastic thing because you know a lot of times you hear about amazing programs but an amazing program that is sustainable is is a mark of not just you know the faculty but also all of you guys who come back and make sure that cafe goes on for one more year and in that spirit it's going to be 20 years and we know that there's a lot of amazing stuff that's planned for the next year and I hope I will see you guys back here next year for multiple events here on campus and in many different parts of the country where we take the cafe on the road and but you know I want to first say that since I came here I've never seen the cafe empty so at every hour of the day whether it's weekend early morning late night I've seen students in there so I want to give a big round of applause to all these students because I know how much work they have to do and what it takes to stand here in front of you but most importantly I want to recognize and let's give a big round of applause for doc for all the work this is like the best thing that we can have in a university and you are you a you exemplify everything that is the best about this university so I'm not going to talk much more this is more about these guys so I'm gonna let them take over but thank you for inviting me today thank you so much you need us good afternoon everyone my name is camera devolve managing director of the center for advanced financial education as I'm here the associate directors hi everyone I'm Raphaela Burnetti hello I'm judge or bath on behalf of Dr. Michael Melon the founding director we're like to express a warm welcome to our esteemed alumni family and friends faculty and even the future of cafe in the back thank you guys for being here today we're so excited to have you all here today to join cafes fall 2023 final presentation today's just a glimpse into all the hard work and dedication these student fund managers have put in this semester alongside doc's guidance and countless hours dedicated to the program none of this would have been possible if it weren't for our alumni who paved the way before us the dedicated support of our board members and the ongoing contributions and generous donations given to this program every single year we honestly cannot thank you guys enough with that being said we would like to introduce to you our student fund managers to my left is hi I'm Jared Miller I'm Matt Helvin I'm Ramisa Wajid I'm Ethan Boivin I'm Van Gatz and I'm Dylan Chandler and to my right is I'm Alex Clinton I'm Gus Dutch I'm Rob Joseph I'm Phillip Call and I'm Kate Delaney we'd also like to give a special thanks to Ellie Molina a former student fund manager who is our conductor today as many of you guys know we managed two real dollar equity portfolios here in the cafe combined they're worth a little over $450,000 with having two funds we can focus on two different perspectives of investing which truly highlights our versatility here in the cafe our first portfolio is the cafe growth fund this funds objective is to see companies with strong growth potential in the short term through earnings revenue and market share our other portfolio is our gablee value fund this funds objective involves a longer time horizon where we look for companies that are currently undervalued our focus is geared more towards the company and what they do rather than looking at just the stock itself cafe is truly an environment like no other with how we run money on a daily basis reflecting an atmosphere that of industry no matter the job or industry these student fund managers plan on going into after college the skills they have gained will allow them to be successful no matter where they go aside from docs foundational lectures we as management like to hold additional meetings we do this to further evaluate our portfolios the economy in any potential market movements in doing so the student fund managers learn to process the impact of news and various mechanisms currently driving the sectors the industries within the sectors and of course our current holdings with these tools student fund managers are required to pitch buy hold and sell recommendations throughout the semester as you will learn this is an extremely detailed analysis necessary for our entire team to determine if this is the right action to perform as far as rent reports student fund managers are required to write forward the other reports and it is necessary under our active management approach they give you guys insight to why this is so important we're the only fund in the United States where students can execute their own trades producing these reports allows us to be able to find buy and sell opportunities within the market at any point during the day now don't get us wrong after reaching a consensus by the entirety of the group each trade has to be approved by the three of us and doc himself student fund managers not only required to incorporate what they have learned previous financial courses but every single business discipline is necessary to have all the tools necessary to reconstruct the portfolio from scratch besides difficult quantitative lessons we also incorporate qualitative issues as well so better understand the psychology of investing therefore in the cafe doc always dresses you must be both left and right brain let's first talk about our left brain analysts these analysts bring forth a logically planned math and science based perspective into the investment landscape within the cafe they demonstrate their strengths within fundamental analysis risk assessment and financial modeling moving on to quantitative side we do address fundamental analysis but we also like to address qualitative issues such as behavioral analysis cash theory and uncovering new opportunities we also like to address the right side of the brain within our student fund managers we incorporate this approach into the cafe through our sector pairings for example Rob here is right brain while a sector partner Philip is left brain together they're able to share their different perspectives and collaborate with each other after taking a look at the different characteristics between our left and right brain analysts I know many of you in the crowd are probably thinking to yourselves the left brain dominates in the cafe no offense to you Rob however we should also mention to you all how many tasks are given to us under an autonomous environment where doc just simply tells us gang let's make it happen and I'm sure all the alumni in front of us can agree with that when the student fund managers first walk into the cafe they're prepared to take on the role of an analyst a portfolio manager a trader and a team leader as doc loves to say we wear a multitude of hats within the cafe the first hat is that of an analyst who is responsible for learning their sectors inside and out some of their roles consist of economic fundamental behavioral and technical analysis the next has student fund managers wear within the cafe is that of a portfolio managers portfolio managers focus on our set to set their allocation making sure that our portfolio aligns with our economic outlook next they also assess risk on a daily basis sifting through analyst reports identifying any key threats towards our portfolio and lastly they calculate performance metrics to make sure that we're in line if not outperforming our benchmarks in the cafe we also are a trader given our active management approach we are able to execute trades at any given point during market hours if you take a look at the screen behind me here's just some of the trades we've made within the month of December and end of November as we mentioned earlier leadership is a foundational role within the cafe each week we rotate between first and second shares who take on additional responsibilities these responsibilities are reporting directly to doc assigning tasks to the entire group and also making sure that agendas are met under an efficient work environment this rotation provides our student fund managers with an opportunity and a leadership position throughout the semester the cafe is built on a foundation of adaptability as the three of us were analysts this summer we were able to invest in one market environment and then moving in the fall we had the opportunity to see how the economic environment changed for us we truly experienced unique market conditions throughout our semester in the beginning we experienced heightened volatility due to the uncertainty and future movements of interest rates following that economic data came out supporting the soft-ledding narrative from the fed driving consumer confidence causing the v-save recovery to see towards the end of our semester through these various changes we were able to adapt at a moment's notice as our active management strategy has placed us in a position of success throughout the semester we also were able to sift through economic data on a daily basis ultimately evolving around our top-down analysis being able to swiftly navigate through these obstacles has not only prepared us for industry but the real world with that being said we'd like to hand you off to Jared and Ramisa who will take you in-depth on our approaches as to why and how we incorporate them within the cafe thank you ladies and gentlemen as mentioned before i'm Ramisa and let us walk you through our portfolio management strategy in the cafe in our world understanding the economic environment is like deciphering the ultimate puzzle but we do realize that some of you sitting here might not be interested in knowing about the u.s economy at this moment and of course we do not want to lose you so let's make this a little interesting when taking a look at the overall economy we have seen that the market has been volatile and with that we understand that we have an active manage approach so we can alter sector weightings as seen fit within the economy as analysts we have taken a close look at the economic calendar provided to us by the federal reserve we noticed that this data provides a direct influence on the market going forward so the consumer price index has been at the forefront of discussion being a leading economic indicator through that we see that the contributing factors have been the federal government's issuance of stimulus checks throughout the COVID-19 pandemic with that being said the federal reserve has been implementing policy in order to curb inflation attempting to bring it back to its two percent target as most of us have heard of the fed is aiming for a soft landing in the economy and is utilizing its tool of interest rates in order to achieve that soft landing with the economy throughout our holding period we have become vigilant of the fed electing to hold rates higher for longer which has eventually impacted our outlook and related sector rotation strategy aside from these measures we've also taken a look at the large fluctuation within oil prices throughout our holding period so if you look at the graph behind me from mid-september until now you can see a large downtrend forming in the oil prices with that being said their OPEC plus has been implementing supply cuts in order to try to prop the price of oil lastly looking at the unemployment throughout our throughout the year we've seen that it has been rising indicating a slowdown in the u.s economy overall when compiling all this information it is critical to understand the notion that everything reverts back to the economy through then we then target specific sectors and industries that we think are going to match that sentiment and building off that we understand that waiting drives all of our success so coupling that with short and long-term catalyst to reinforce that so one of the things that we focus on within our short-term outlook is closely analyzing upcoming quarters so going into quarter four we developed an optimistic view of the consumer discretionary sector but we also kept in mind the cyclicality of this sector when determining our waiting to do so looking at historical data and patterns we saw the apparel retail industry within the consumer discretionary sector performing really well during quarter four as you can see on the chart behind me at the top left corner we have illustrated the consumer discretionary sectors performance during the past three years and as you can see as we have highlighted there the how the consumer discretionary sector has been performing during those three years especially during quarter four bringing this notion forward our anticipation was further supported by black friday and cyber monday numbers we saw this year that increased to an all-time high anticipating good sales data for this year we decided to overweight consumer discretionary in the short term within our good portfolio looking at interest rate expectations we saw how much they correlate with the real estate sector etf looking at on the chart we see three circles highlighting each fomc meeting and the first two circles you can see a drop in the real estate sector etf as the interest rates were risen so the sector interest rate expectations remained high although on october 31st you see a run on the real estate sector etf as we saw the fed pause on rates indicating that there may be a recut as early as january 2024 extending our outlook to a longer term we also look at some of the global events that have a direct impact on the us stock market and specific sectors and industries moving forward specifically looking into the industrial sector looking at the ongoing tensions in the asia pacific region specifically between china and taiwan and russia and ukraine we have seen that the us has been ramping up its production in its military while it vows to protect taiwan and ukraine's against any potential adversaries looking at that we have spec and specifically the aerospace and defense industry we decided to overweight the industrial sector within both our growth and value portfolios through the national debt crisis we have also seen excess consumer spending through that we have decided to underweight the financial sector as we see liquidity issues within the banking industry however we see ample opportunities for investment within the credit services industry as this industry does profit during periods of heightened consumer spending taking a look at the graph behind me you can see our growth weighting scheme and which sectors we have overweight and underweight as previously mentioned in our economic outlook we do have the consumer discretionary as well as industrial sectors overweight but we do think it's worthwhile to mention that we have the consumer staples sector overweight as well so you may be asking why we chose to overweight both the consumer discretionary and consumer staples sector within our funds for consumer discretionary we noticed that with the sentiment regarding excess spending we could capitalize on holiday and quarter four sentiment and for the consumer staples sector we simply overweighted this sector in order to hedge against any systematic risk that we see after quarter four shifting gears to a value perspective we carry a moderately bearish outlook moving into 2024 and with that outlook we decided to overweight sectors such as consumer staples health care and utilities at our gravelly value funds we decided to underweight information technology financials and consumer discretionary considering that they underperform in a moderately bearish market so taking a closer look into our weighting scheme you can see that we underweighted technology in both of our funds but with that being said we do have more weight within our growth fund in comparison to value the main reason for this is we saw AI development drive short-term growth within the software industries which we decided to target within our growth fund on a longer-term scale we have seen more political implications between the United States and China so we decided to stray away from that going back into consumer discretionary as you would have seen in the slides in the previous slides we decided to overweight consumer discretionary given a short-term outlook and one of the short-term drivers to overweight consumer discretionary as discussed earlier was quarter four however as we move into into 2024 and we carry a moderately bearish outlook we decided to underweight the consumer discretionary sector within our value fund looking at some of the potential events coming up in 2024 considering the elections and the tax season that would eventually impact the quarter one earnings of some of the companies when looking at the real estate sector within our funds we're seeing that in the growth fund we do not hold any weight as we're seeing in the short term the Federal Reserve's uncertainty regarding interest rates has posed too much systematic risk for our fund within this time however as we shift to a longer outlook in the Gabelli value fund we actually do hold weight in the real estate sector keying in specifically on the REIT specialty industry as we're seeing tangible real estate increase in value as prices remain high in the financial sector you can see we're underweight in both funds this is due to the banking industry due to the basal changes in the framework as well as we're seeing what we're targeting in the short term exchanges as well as credit services while the long term we're targeting insurance in conglomerates due to the inelastic demand for their products and services so now what is growth to us within the cafe growth fund we look for companies that are on strong upwards chart trends overpacing outpacing the overall market and their relative sector so building off what Caden said when we start thinking about the growth mindset we tend to focus on catalysts for various sectors and industries that are going to drive the market today tomorrow and in the coming quarters within our growth fund it's important to note that we invest in the stock not the company in contrast with the Gabelli value fund we switch our mindset to a long-term objective as we have an outlook of two to five years we the goal of this fund is to maximize our returns by minimizing our risk we do this by finding companies that are undervalued based on their price fundamentals in the Gabelli value fund we target companies with low investor sentiment but strong catalysts that are going to propel the stock price into the future with our buy and hold strategy my colleagues will lead you through a few detailed examples later on the presentation now after understanding the difference between growth and value we're going to take you through our three pillars of analysis now starting off with our first pillar of analysis when conducting a fundamental analysis for our growth fund the first thing we look for are potential catalysts that could drive the company's stock price upwards then we look at their growth metrics and earnings in the coming quarters to see if it aligns with our overall growth objective within our growth fund we tend to put a heavy emphasis on quarter over quarter increases in key metrics such as revenue free cash flows and cash from operations we feel that these quarter over quarter metrics give us a better understanding of where the company may move in the short term a headline within our growth fund based on its fundamentals is icon plc icon plc as you can see from the three charts behind me have perfect quarter over quarter metrics as you can see with revenue free cash flow and cash from operations are all increasing and increasing rate when analyzing a company's price to earnings ratios we do see that that forward number is smaller than that trailing leaving room for that growth and earnings or that g prime we'll take a look behind me we'll see the icon at a g prime of 128 percent now looking at their coefficient of variation the way that we calculate this is the company's standard deviation so their risk divided by their return so their reward and you can see icon sits at 0.72 so they're taking on fewer units of risk per unit of reward now going to the last metric on the screen current ratio current ratio measures if a company has enough current assets to cover its current liabilities in the case of icon plc you can see that they have a current ratio at 1.2 meaning they do have enough current assets to cover their current liabilities which we deem favorable within our growth fund now icon's core business is what is influencing these positive fundamentals their services encompass the entire drug development process from start to finish and with the increasing trends in drug development lately you can see this reflected in their stock price as they've already returned 7 percent within our holding period now switching gears to a value perspective we favor different fundamentals of those of growth as with a long-term objective you have to look at different metrics so in our fund specifics we want to take you through the health care in the industrial sector i'm looking at the health care we want to target health care plans industry specifically united health group as they have an inelastic demand for a lot of their products and services as well strong growth from its optimum rx business segment looking at their one-year cash flow growth you can see they have a cash flow growth of 17.29 percent meaning they have consistent and strong growth that will propel them into the future as well as a beta of 0.31 meaning they are taking on less risk than the overall market none of these metrics mean anything to us unless we compare them to a competitor so we decided to compare them to elements health another industry leader in this in the same industry and on the basis of these metrics we see the element that united health group is a better investment adding on to what alex said we can see that unh is a dividend yield of 1.37 percent compared to their competitor which has a dividend yield of 1.24 percent the higher dividend yield signals to us that the company has greater confidence within their profits and their cash flows moving into the coming future then if you could direct your attention to the two charts on the right side of the board this is cumulative average growth rate in other words keger and how we calculate this is looking at historical data to create a growth rate to predict where the company is going in the future alex will walk you through the eps and ebeta charts when looking at the eps and ebeta charts we look at the past five historical years and then calculate it into the future we make sure it's increasing at an increasing rate well being sustainable moving on to the next slide we want to introduce you to the industrial sector where we're currently holding packer incorporated now you might be asking yourself why aren't we not investing in the direct competitor dear or the industry leader in sector leader category well at the time this company was pitched and bought into the packer was actually outperforming both dear and caterpillar making it a good opportunity to buy in ebeta ebeta in basic terms gauges the company's cash flows relative to their size we can see that packers ebeta ebeta is 7.15 which shows that they have greater confidence than caterpillar and they're more financially stable than their competitor now when looking at their coefficient of variation as i mentioned in the growth fund regarding icon you can see that packer sits at 0.56 while the industry leader caterpillars is 1.76 this means that they are taking on fewer units of risk than their industry leader when looking at total assets right over ratio this is how efficiently a company could use its total assets to generate sales and on this basis we see that packer is a better investment and use generating more sales for its total assets than caterpillar after evaluating our ebeta ebeta in our activity ratios here in the cafe we actually conduct a price multiple analysis to deem a big company is truly undervalued in the chart in the top right here you can see our analysis on price to cash flow we weight price to cash flow the most heavily heavy we weight price to cash flow the heaviest as cash is king and based on this basis cash flows cannot be manipulated by a company and it shows the underlying productivity of business able to generate cash from its underlying business now looking at the chart at the bottom right here you see that we don't only do price to cash flow we also do price to earnings price to book and price to sales as Alex just mentioned we heavily weighted the most at 40 percent where everyone else is at 20 percent mean that we have a target price of 108 dollars and 46 cents where packers currently trading at 97 dollars and 63 cents giving us an upside potential of 12.10 percent now moving on to our second pillar of analysis behavioral analysis one key component of behavioral analysis is herd behavior so when we're sorry when we're see a massive investors moving towards a stock we like to perform our own analysis to see if it aligns with our growth objective so we actually utilize this method when we bought into Decker's outdoor we saw more demand for their hoka as well as their ugg segments which drove their revenues quarter over quarter and this was actually reflected when they beat their earnings estimates on October 27th and resulted in a massive price increase and as we mentioned earlier we are moderately bullish on the consumer discretionary sector moving into quarter four and as we saw black friday and cyber monday sales surprised to the upside so all of this affirmed our decision to invest in Decker's so moving on to the health care sector we have seen more volatility within this sector during our holding period the main reason we believe for this is because big pharma has had its run when it came to the COVID-19 pandemic leading to most of these companies becoming overvalued in that industry with that being said we decided to look for more stable industries within the health care sector one of those more stable industries that we invested in was health care plans as they've seen pretty steady demand throughout our holding period and then one of our holdings within this industry is malina health care this company stood out to us because of its recent target price increases by major firms including jp morgan as you can see reflected on the chart behind me behavioral analysis has guided the reconstruction of archival value fund specifically within the communication services sector as we are moderately bullish on the entertainment industry we use these catalysts to avoid buying into value traps we look for short-term and long-term catalysts that are going to drive the stock price up so the catalyst that we saw in the summer and the fall have differentiated in the summer we saw that the market was being driven by the information technology as propelled gains were seen by the magnifs in seven however shifting into the fall we've seen that the market has become completely reliant on the federal reserve stance on interest rates a show of hands how many of you in the audience have ever seen a disney movie now how many use disney plus when we decided to hold disney a major reason was due to the familiarity bias of the company familiarity bias in bodies investing in companies that a person has heard of perhaps by using their products or services with disney being a household name this is a catalyst within itself making the company seem like an attractive investment we also saw value being generated as a result of integrating hulu in their disney plus reunion platform disney plus expecting to reach profitability in fiscal year 2024 there's 7.5 billion dollar cost cutting plan and and the most recent announcement to bring back their dividend payment to shareholders starting in january following nearly four year long drought but the biggest reason why everyone this is just magical to illustrate the impact of behaviors on disney you can clearly see the impact on the above chart when looking at the above chart we see the announcement of that 33 percent acquisition of hulu and we see that the stock price was driven up as well as we see that cost cutting plan driving up the stock price again all in all we want to buy the company not the stock so next time we want to highlight the industrial sector and the behaviors we saw behind that in the short term we saw that the israel hamas war was driving up general dynamic stock on october 8th we saw that the declaration of war by israel and we saw the stock price drive be driven being driven up well on the long-term aspect we see that the ukraine war going nowhere anytime soon as well as the asia pacific tensions to continue to be a driver behind the stock again we also see year over year defense spending to be increased with a 4.64 keager and a general dynamics is being very pivotal in landing contracts with its electric boat division as well as an annual dividend increase for the past 29 years being a catalyst within itself for the company now if you look on the right hand side of your screen here this is the six month chart for general dynamics you're also going to notice that there are two moving average trend lines and brown is the short term 50 day moving average trend line and in purple is the 200 day moving average trend line and you're also going to see that the 50 day crosses the 200 day from beneath would signal that this company is currently experiencing upward price momentum now this is actually a segue into our third and final pillar of analysis which is technical analysis technical analysis is something that isn't necessarily taught at other institutions especially at the undergraduate level but because here in cafe we execute our own trades we need to find bullish trade triggers as well as optimal buying points and we do this through not only the utilization of chart patterns but momentum indicators as well so as gus would just mention we kind of split our technical analysis into two separate parts both those chart patterns and those momentum indicators when we look at those chart patterns where we are actively seeking our patterns such as inverse head and shoulders bull flags and double bottoms these all give us those bullish trade triggers and allow us to enter a position at the optimal point to maximize our profits after performing both the fundamental and behavioral analysis of this company we ultimately decided to buy it we looked at different price charts over different time horizons in order to get a better understanding of the company from a technical standpoint this ultimately led us to our optimum buying date which was on october 27 2023 so if you take a look at the chart behind me you will notice this is the most recent technical analysis we have performed on our company of visa so starting from the left you will see that strong level of resistance around that $230 per share mark from the middle of May to the end of June and you'll also notice on the end of June that there was a price breakout point through the level of resistance and this level of resistance turned into the level of support which was tested multiple times throughout the month of September come october 20th we did see a major sell-off in the stock which ultimately led to a negative price movement thankfully enough this did rebound right away and at the top of that rebound this is where our sector analysts really started to closely monitor this looking for that optimal buying point and on our purchase date on october 27th we saw a double bottom form on top of the level of support which is an immediate trade trigger for us so we instantly took a position within this company and this has worked out in our favor as our current holy period yield is 13.54 percent so here we have supplied you another example of how we perform technical analysis but with a heavy emphasis on those momentum indicators this is for one of our holdings of Intuit it's a technology company within our growth fund so like Dylan just mentioned we look at three momentum indicators the first one is RSI which is relative strength index this measures the speed and magnitude of a stock price while when trending below 30 this means the stock is currently oversold so casics is the next momentum indicator that we look at so this is an oscillator meaning that there's two moving or two trend lines and this also measures whether a stock is oversold or overbought the last one is MACD which is the moving average convergence divergence so this is an oscillator just like stochastics but this takes a short-term moving average line and a long-term moving average line to help depict whether a stock price is currently experiencing up order down with price momentum so if you take a look at the bottom of the chart you'll see all three of those what's important to take away here is that all three of them are trending downwards towards that oversold threshold especially when looking at stochastics and MACD you will see that short-term line is trending below that long-term line and after our buying data did cross from below ultimately this did make out to be a profitable investment as mentioned previously time-goal analysis plays a role in our individual stock selection and our buying and sell times in value we use tentacles to ensure a company is at least 10% off of its 52 ECHI and to help aid in avoiding value traps meaning avoiding buying into a company is simply due to the fact that it dropped significantly in the price recently one company that we were really excited to introduce is Ulta Beauty by a shoulder hands who has recently bought an Ulta beauty product in the recent months i want to personally thank you for contributing to our fully period deal to making us a lot of money i really appreciate it now going back into the presentation at the same time period you can see that there was two upwards trending trend lines and as well as the drivers in 2022 it was a black friday pick of the year as well as positive earnings guidance going to the end of 2022 moving down to the bottom right chart we saw positive guidance moving into 2024 and this was due to the increase in beauty demand that we saw along with our partnership in target after our buy-in day on october 2nd we noticed a downtrend starting to form but we stayed resilient within our prediction expecting an increase after their release of their earnings as we predicted on november 30th when they released their earnings report the stock price jumped 10.81 percent which contributed to our overall holding period yield of 20 percent as many of you know earning season can be your very best friend for your very worst enemy it's an ambient the volatile market during this time we perform an earnings analysis prior to the announcement to determine to determine any related news changes in analyst estimates and lastly investor behavior leading up to the announcement this allows us to take a proactive approach by implementing stop losses altering company weight or ultimately selling security as a whole over the semester's earnings season our funds have had a whopping total of 56 hits and only six misses with 40 securities having upward price movement and 22 decreasing over the following trading day this speaks to the quality of our analyses of the companies we held in each of our funds our overall average change in price in that following trading day was a 1.44 percent gain for security within earnings season there were hits there were misses and there were mistakes in the case of vectin dickenson within our growth fund we noticed declining price sentiment leading into the report and to be honest with you we submitted the earnings analysis too late the market had closed preventing us from putting a stop loss on the company when the company had reported earnings in the pre-market the next day they missed and when the stock the stock market had opened this led to a the stock had dropped just over nine percent prompting us to sell immediately this led to a holding period loss of 7.6 percent now if you look in the bottom left you will see an example of one of our one of the front pages of our earnings earnings analyses these can be very descriptive and multiple pages in length here in the cafe if a company's price reacts poorly to its earnings we carefully sit down and analyze the earnings report to see what could possibly gone wrong with the company google being one of the com services giant saw a massive drop in its price right after the company reported its earnings and we were actually on our way to the new york stock exchange the day google reported its earnings being the sector analyst for google me and my sector bear sat down and carefully evaluated the company in all aspects and actually found potential in the company so we decided to dollar cost average our position which at the end it turned out to be a positive investment for us in both of our portfolios as you can see on the behind me when it comes to every season future guidance means absolutely everything a company can be all its estimates yet if it lowers its future guidance it can immediately fall out of investor favor we use guidance as an indicator to determine what a company's future likely look like and ultimately make decisions to buy or sell company as a result so in order to illustrate an example of this strong guidance behind me you can see sales force which is in our value fund this company actually ended up shooting up nine percent after beating its earnings as well as reaffirming its guidance for the coming quarters the main driver for this was the integration of ai into their slack platform so this actually ended up increasing their revenues for the future quarters coming forward all we think it's important to show you a strong example it's also important to show you a weak example so behind me you can see sysco which is also in our value fund this company ended up dropping nine percent after weaker than expected guidance came out for the future the main driver for that was the slowdown in new product orders for this company but with that being said we ultimately decided to continue holding it based on its very strong fundamentals little lemon is the company that we purchased on the 29th of september and this was due to high performance expectations as we were heading into quarter four now we knew that this company was set to release quarter three earnings on the 7th of december so my colleague matt and i performed the adequate earnings report analysis in our earnings analysis we looked at historical data to make an educated decision on why we should sell the company as you can see in the two charts up here there is a 2021 chart and 2022 chart December 5th is really important because that's when we thought we should sell the company two days before their earnings report came out we thought history repeated itself as you can see on December 5th of 2021 see immediate price drop and then the same thing happened on December 5th of 2022 now on the 7th of december lou lemon reported an earning surprise of 10.72 percent which led to a 5.37 percent stock price increase on the following trading day now for the first time in three years history did not repeat itself and we ultimately missed out on capital gains although we did miss out on capital gains we were able to take profit as we did have a holding period yield of 20 percent moving on to our active management strategies student fund managers are responsible for creating pitch decks for not only the management but our fellow colleagues as well to reiterate what the ad said earlier we need to be prepared with a buy list in order to sweep a company at a moment's notice over the course of semester we performed 37 buys and 30 sellers with our growth fund and 54 buys and 52 sellers within our value fund this level heightened activity can be attributed to our extensive portfolio construction process requiring well over 100 value pitches in and of itself also the constantly shifting economic environment and lastly the active management style the cafe program in and of itself one key scale that the cafe has instilled in us is adaptability looking at the economic environment when we inherited our funds we had to adapt to a sink or swim approach given our thorough top-down analysis we were able to analyze the economy first target specific sectors and industries moving forward and create a waiting scheme that eventually led to the success of our portfolios this mindset allows to respond to evolving market conditions and adjust weights accordingly you all heard in this presentation how we had to adapt to the fence constantly shifting stance on rate hikes and cuts an actual example of how it's affected our portfolio was initially at the start of the semester assigned to underweight the industrial sector with the expected rate hike in the near future however over the course of semester we witnessed conflicting economic indicators and the growing possibility of a sooner than expected rate cut this in turn led us to add more weight back to the industrial sector as we resolve positive price momentum in the near future so based off of that active management strategy something that we are constantly doing is monitoring our fund but not only that each individual holding this helps us know when to collect profits or cut losses and in this case we collected profits on one of our top gays of sonoco so as you can see sonoco is up 15.74% within our holding period and then we noticed some concerning factors so they released new numbers and announced that they had a negative growth in earnings predictions which as we mentioned in fundamentals does not align with our growth approach so alongside those negative growth and earnings prediction there was also some other concerning factors with sonoco such as they were trading extremely close to the 52 week high only a few percent off with no real strong drivers behind it to push them through that level on top of that sonoco is very heavily dependent on those oil prices and with that prices being so volatile throughout the semester especially to the downside we felt that this was an opportune time to seek growth in another company and upon the sale of sonoco we immediately swept the company with target resources when we were evaluating these two companies we felt that target had much more upside potential with a growth in earnings predictions of 50.50 percent this is due to the development of two new natural gas plants with that being said it's important to note that target has made us 0.25 percent while if we continue to hold sonoco they would have lost 0.39 percent in that period overall leading us to a total gain of 0.64 percent on the other hand we also have methodologies in place for cutting losses within our funds a prime example of this was Hubble Incorporated within our value fund where we saw that inflation was eating at the margins of companies within the electrical equipment and parts industry this prompted us to sell with a holding period loss of 11.41 percent diving deeper into Hubble the company did have very strong metrics across the board but unfortunately was experiencing daily price volatility which was leading to downward movements in the price this is something that we truly want to avoid in the cafe and in order to mitigate that risk we eventually decided to sweet Hubble with another company within the industrial sector in order to achieve the certainty we always strive for so like sonoco we immediately swept this company and took a position within Packer as you heard earlier Packer has extremely favorable fundamentals but also some strong drivers behind it they're releasing a new truck model as well as the starting the construction of a development center in Germany so since our sweep on October 27th Packer has returned us about close to 17 percent while holding Hubble would have only returned us about 11 percent and still a negative holding period yield of about negative 0.25 percent so all in all this change in investment did lead us to to make capital gains with our value portfolio well being an actively managed fund means that sometimes you have to walk away from an investment now this can be due to maybe this company is in matching your performance expectations or maybe it's not aligning with your fund's objective in the case of amazon you can see that we had initial buy-in date on September 1st 2023 and we decided to liquidate that position three weeks later into our analysts seeing a lack of performance as it was down more than negative 5 percent we then decided to buy in later on on October 2nd 2023 now at the time our analysts saw strong short-term drivers with this company as we were heading into quota four so on October 2nd we took another position within this company and we have returned a holding period yield of 8.5 percent going off that holding period yield of eight and a half percent if we maintain that initial buy-in date we only have a holding period yield of six and a half percent meaning that we saved an extra two percent holding period holding period excuse me which contributed to our overall alpha in our value fund to wrap up our growth fund performance in metrics we want to show how proud we are of our growth fund performance in our raw return we returned six point six nine percent outperforming the s&p 500 as well as taking out a really similar standard deviation going into our performance metrics we're extremely happy to tell you that we have a four percent alpha in our growth fund this can be contributed to our holding period yield as you can see the bottom right hand graph that we actually outperform the s&p 500 fidelity vanguard american funds and camco itself taking a look at our trainer and sharp ratios you can see that we are generating more excess return in comparison to the s&p 500 on a systematic as well as a total risk standpoint looking at it our beta we take on a zero point nine one beta which shown we're taking a much systematic risk than the overall market as well as a cv of zero point two nine or zero point five eight excuse me which shows that we're taking on zero point five units of risk for each unit of reward so if you look at that table on the top right you will see those weighted price to earnings ratios ultimately leading to a growth in earnings with that g prime of 33.48 percent which we are extremely proud of moving on to our value fund although we are outperforming and underperforming throughout our entire holding period we want to show you after we rebuilt the value portfolio on october 12th how we performed and we actually outperformed on this measure with that alpha of 1.06 percent taking a look at our trainer and sharp ratios we did not generate as much excess return during our entire holding period but we are happy to say that we did given our value fund reconstruction going into our market risk ratio the beta of zero point seven one it contributed to our overall alpha and that reconstruction date and then going into the price earnings group also knows the peg ratio we had this 0.68 ratio which means that our funds companies were undervalued based upon their earnings group although underperforming the s&p 500 we want to show that we're outperforming other value funds if you look at the graph it was compared to fidelity schwa in Gabriella themselves we outperformed them so after a challenging and rewarding semester the cafe has taught us life lessons that we will be thankful for for the rest of our lives and i'm pretty sure our alumni sitting here can relate as well by replicating industry and learning high value skills such as paying attention to detail adaptability and using industry software the ca the cafe has instilled in us the hardworking mentality that is needed to be successful in the highly competitive industry that lies ahead of us now throughout the semester we had an office hour schedule but only for structural purposes us as student fund managers live by the phrase of not leaving until the job is done and this increased efficiency while also replicating industry and we were also very fortunate enough to go abroad and present both our value and growth portfolios to industry professionals at gamco in london upon returning home we brought in key valuable insights that we incorporated into our portfolio imagined strategy and of course made made a lot of memories that will stay with us for a lifetime and then another great experience that the cafe program provided us with was a trip to gamcos headquarters in new york here we chatted with industry professionals about their merger arbitrage fund as well as we're lucky enough to speak with mario gobelli himself after this trip we really had a new appreciation for how much doc makes the cafe replicate industry additionally we would like to express our gratitude to alumni jacob hallgren for inviting us to new york stock exchange this was an opportunity like no other and it provided us with an industry rich experience being the only school in the entire nation to be able to experience the closing bell on the floor itself is something really special and what we all are very thankful and grateful for bouncing off for an invaluable experience this semester we're truly challenged on our ability to navigate through uncertainty embrace change and make informed decisions now before we end if we could please ask all the cafe alumni to please stand up for a round of applause thank you so much guys now we would like to open the floor for any questions so someone asked me this question earlier about working in industry but i would like to ask you about working in cafe what was the most rewarding moment and perhaps the most difficult moment i think the most rewarding moment was when we were doing our value reconstruction and we were learning how to pitch companies and then when you finally got a company in the fund it was like a real weight off your shoulders so that felt really good and then something frustrating would probably be the beginning part of it when you would keep trying and try to find companies and they would just keep getting rejected so that was just part of the learning process building off of kate it was incredibly rewarding to not only get companies in the fund but also to see them perform well after a couple of weeks and see that your actions as an analyst actually paid off uh to segue off of that give me a few names that were shut down that you guys still really like to step i can start off can you want to go uh darman was shut off um i we all love this company but doxy on no growth even though he had earnings by 10 percent they're suckers i'll also say that me and june fits the company's uri united rentals and this company saw our best gains in the following weeks that we pitched it i mean lastly i mean i'm a healthcare analyst so i kind of took the brunt of the pain on the rejection so i mean thermo fisher one of them bristol meyer to name a few just to start bristol meyer is not worth it but as a as a quick question i see that in both funds you guys have some international exposure you guys didn't really touch on that too much during the presentation is there additional analysis that goes into these international companies you know can you talk a little bit about the differences between analyzing these international companies versus some of the domestic ones track and start off with that so a major company in our valley fund that was international was lind plc and so we were comparing them against other competitor apd so lind is was actually the industry leader and not only do they have identical um business models apd extracting hydrogen but that they also use the hydrogen for things like powering hydrogen trains and other vehicles within europe so we saw it as a major driver for the european markets another international company we hold is chubb as you're probably looking at right now uh with uh financials being so all the time right now we we figured we'd branch out and give another give another region a chance so we're looking outside of the u.s. and financials chubb was the one that kind of just dug out to our analysts the most yeah just building off of that too it's within the insurance industry we were looking for more inflation in elastic industries so we decided to start with that one next guess given the feds dovish tone yesterday how do you feel the funds are you know relatively positioned going into next year i think the street kind of thinks that we're going to get a lot more cuts next year than uh than the fed does so sure i can take that one so inflation still has not reached the fed's potential target of two percent they've stated for almost what two years now that they want to get inflation down to two percent they will not stop their high for longer policy or for the rate cuts until this is achieved so until this happens we will not see the fed doing those cuts and so our moderately bearish outlook still stands can you speak a little bit to the cash position on both funds i noticed i think it was somewhere around seven and a half percent i'm just curious what you're saving it for if that's a strategic decision yeah so we decided to hold the cash addition of both funds ultimately because of the fact that we have to make those intraday trades that are almost noticed we can't go out on margin so we need something there to but as you probably noticed that it is higher in growth whereas growth usually sees like outside of the reconstruction our growth funds need a lot more trade so that's why it is slightly higher in growth so we can't make those positions thank you and then in our value fund we do hold the five the route of five percent cash positions limit volatility that we've seen in the market as you guys have saw it was a very volatile market through our holding period so having that higher cash position gives us a little bit of a head show and i guess that volatility and we also did um sell lula lemon so this is going to be that we have yet to sweep which we are holding a higher cash position so i'm going to look at your growth fund here ftai industrials who is your highest holding period yield in this sector but the market has only 4.37 percent how do you guys actually go about finding this thing actually settling on that position sure i can take that so doc told a couple of students to an investor conference at the beginning of the semester and the investor conference had a bunch of CEOs presenting their companies one of them was ftais so doc came back and he asked me and jared to pitch ftai to the cafe and so we found incredible drivers for them in the airplane repair industry their engines and so when we pitched it to doc he really saw their strength in the fundamentals and he really put in the company despite their low market value can you guys speak to a time where you took profits because we all know it's hard to sell when things are up they're fomo and easier to sell when they're falling so you guys have an example of what you might have looked at to make the decision well i mean right now we're looking at burtex they had a they're in a i think the second phase of a trial for a non-addictive painkiller for diabetes nerve pain so they're i think their price went up 13% yesterday and they're only dropped 2% today so as a health care analyst with jared we are considering that right now another company we took profits on was novella nordis we held in the growth fund at one point as we do not see like the ozentic craze lasting for very long so we wanted to take our profits out and sweep up the more stable position in the long term do you guys have a favorite nickname in here? um yeah i would say well it wasn't it was just gusts at first but then it changed to mumbles and then we changed it to stumbles after that inflation cooling off in almost every area except friends how do you see this impacting bc profits in your value? so when we were allocating into our real estate sector for value we noticed that we had to be specific with the industry that we keyed it on as i stated with our top-down analysis so when we looked into re-specialty we noticed that vissy properties is it's what it is is a spin-off of caesars palace so they own a lot of real estate in a lot of different areas so they own casinos golf courses amongst other things so we noticed that with casinos and gambling being seen as an inelastic catalyst we were seeing that this posed us to a good position within our value fund in the real estate sector especially i uh touched upon that presentation where we don't hold any position in growth as we see that in the short term the real estate sector has been beaten up as we've seen uncertainties regarding the federal reserves interest rates stance but as i mentioned with our top-down analysis and value given our two to five year outlook we keyed in on that specific industry and then we found that company within it that we thought was going to prosper despite the uncertainty uh yeah we actually had to wait into discretionary consumer discretionary as i stated also with the idea of holiday and quarter four sentiment and our growth fund in the short term yeah so we decided to overweight staples just as a hedge simply against the systematic risk after quarter four because we waited the consumer discretionary sector so heavily so just wanted a bit of a hatch there to what extent did you guys use like financial models and then do you have any examples of like making buy and sell decisions using those models if you use them at all well to start off with we have the fact sheets and then we also uh Rob actually made this for us he used the price multiples he made an excel sheet to show us that they were under overvalued based on those multiples those are the two i would say main things we use for our pitches guys uh great job was there a contrarian amongst the group or multiple contrarians i feel like we all kind of build upon each other and just kind of argue back and forth there's not really no one's everyone's kind of having their own opinion so there is a lot of arguing back and forth but ultimately ultimately we do have to reach a consensus together so that's usually the end result building off that we're seeing that we'd rather it's i would use a different term as well um we're giving each other constructive criticism within our group we don't want to all agree with each other because then we get that confirmation bias so we think that seeing a different viewpoints and different perspectives that's important within our group and investing in general i just want to say a good presentation also load your attacks how will your 4am reports this this year because i know those are a point of contention with many other classes i just want to know how that went for you guys yeah i can take that one the 4am reports were definitely a struggle at first but over time it definitely got easier and we learned a lot by looking at like the international analyses and everything yeah and also we started off them taking two hours and after we figured out how to do it in like 40 minutes they're a lot better yeah we also have a very big group too so if we're splitting up among all of us it's not that bad was chat gbt you said maybe a little that helped to get it down to 40 minutes yeah i think the largest thing that that impacted was the industrials with us taking more positions within aerospace and defense but we didn't want to only rely on that aerospace and defense so we also in both funds we have that aerospace and defense heavy and industrials but we also have another holding to heads like in our value fund that we took a position in packer because we wanted to have sustainability behind it to head against it just with the healthcare sector it's huge over there as well specifically with pharmaceutical companies so we tried to stay away from that then also the energy sector as well we tried to find companies that were not as correlated with oil prices so we moved into the oil and gas industry more i think target is in that as well so that's one of the reasons that's you know those price and earnings were stuff for the weighted average price targets that you guys calculate what's the time horizon for like the realization of to get into the price target is it like 12 months is it 24 months so just curious about that so like the historical i can you elaborate more so like the historical day is like five years right i think so the um i forget what i thought it was on the uh oh yeah 12 months are perfect sorry sorry thank you thank you um when looking at your turnover ratios i think you touched on a bit in presentation but can you uh talk to me about what you saw in value that requires you to turn over so much more than growth which is typically more passive passive sure so during the summer there was a disconnect in the economic outlook the fence hire for longer policy officially didn't officially didn't start until around june or july so when the summer group had the portfolios all the companies are in the value fund were positioned for that outlook however since the economy has cooled down a bit all the companies that were inherited to us in the fall suddenly start performing very poorly so as a result we had to completely reconstruct our entire valuable foot in order to get one get a new one that more resembling more was more resembled to perform in that new environment while the growth portfolio was better set up by the summer group thank you notice you guys mentioned software when you're talking about ai as a parent uh i was going to ask if you see any other winners technology because of the ai race i'm sorry could you we should we said the question again you mentioned software as sort of a winner in the whole ai space is ai spiraling do you see any other industries like the form well i think one of the biggest ones is uh semiconductor specifically with broadcom broadcom is as new ai chips that helps save on power consumption and also um just overall cpu processing power so because of that they went up nine percent i believe a couple days ago so so working off of them all right one last question for you guys um so coming into cafe i'm sure none of you were financial analysts before um how has cafe impacted your career outlook or maybe changed your minds about working in finance i'll go first uh to be completely honest before i came into cafe i had no interest in the analyst rule i wanted nothing to do with it i wanted to know it was 100 set up the sales rule but now that i've had like the hands-on experience and understand what i'm doing i feel like i'm leaning a lot more towards that rule so i mean i can speak to myself that i think it's like actually changed my mind in a good way yeah i was actually one of the people that went to the cafe before in the semester that didn't take 3.25 with doc so i kind of went to the semester not not knowing as much and trying to do as much as i can to kind of catch up i didn't really have an idea of kind of what that financial analyst mindset and career outlook was but being in the cafe it's kind of opened my open my kind of network of kind of looking people towards the industry as well by broadening my knowledge about it and i've kind of found it a lot more interesting interesting than i originally thought it i definitely think the cafe helped me a lot with the presentation skills and just simply present presenting in front of a lot of people i mean i've never done something like this before it's honestly crazy that i just did okay did great i would also say that you know i was worried about you know working at nine to five you know there's a street excruciating hours but i mean here in the cafe i mean it's absolutely fantastic presentation from these guys it's clear their industry knowledge shines through their preparedness and their overall work ethic so you guys are ready to work in finance one more round of applause for these guys once again thank you to all of our alumni who are here supporting cafe again the faculty that are with us as well as the friends and family and prospective students that are here today with us so thank you all for being here and one final thank you to to the director of the center front for advanced financial education doc