 Well good afternoon everyone. I know a lot of you here in this room, but for those of you with whom I have not had the pleasure of a Conversation my name is Susan McTiernan And I have the great pleasure of serving as dean of the Gabelli School of Business here at Roger Williams University And I want to extend to all of you Particularly alumni and parents a very warm welcome to this presentation of the student-managed investment fund Otherwise known as the cafe We are very proud of this group of students for how hard they work and their performance and investing I have many weeks when I walk by and talk with them and hear what they're doing and want to write them a check myself But I'm not allowed to do that But you'll hear more from them today about their extraordinary work They're very hard work and their capacity for making good decisions in real time Which is what they do every day and every hour pretty much in the cafe program So I don't want to delay any further I'll have some comments a little bit later at the end of the program But I know they're anxious to get started and that we're very anxious to hear from them So I'd like to introduce to you Janetta Griffin who is the managing director of the student-managed investment fund Janetta I will let you take this over. Thank you. Thank you. Yeah. Thank you So my name is Janetta Griffin and I am the managing director of the cafe And I would like to welcome you all to this semester's final presentation and in doing so Thank you all to the cafe alumni as well for being here to celebrate the cafe's 15 year anniversary This is fabulous and in doing so I would like to invite Mr. Guthrie Carpenterot a cafe alumni as well as Cafe advisory board member to speak on behalf of the board Thanks, Janetta Thank you all for coming. You know this this program really is near and dear to me You know, so I appreciate you all coming down on the 15th anniversary. That's pretty incredible I'd like to start by first introducing the cafe advisory board if you guys can stand These individuals performance and risk Mentoring students to generating funds for the program, you know, it's really important to continue to drive for the future growth So, you know, again, thank you all for coming. It's you know, it's it's a commitment and it's worth it You know for this kind of program In addition, here are 65 other people who donate to the cafe. We were able to raise roughly $5,900 I think that's a pretty incredible. I think that deserves a round of applause One of the most important facets of this program specifically is our ability to Maintain relationships to be able to create that bond and none of this would have been possible without doc if you go to the next slide Actually Here are some clips Mine is the embarrassing one on the bottom left Past presentations and as I can say, you know from past experience you put in long hours You make lasting friendships. We go on incredible trips and there is nothing like being a part of this program You know myself included being here. It is stressful for sure You know and you spend a lot of time, but at the end of the day We are all better off in our careers as well as as our lives Absolutely, so I'll turn the floor back over to Janetta for what we all came to see And just to continue a little bit more off of that this presentation is really special because we recognize that Roger Williams current focus is on experiential learning and 15 years ago our founding director Dr. Michael Melton was truly at the forefront of such a concept By creating this environment that mimicked industry to a tee from the long hours Financial reporting professional dress and even the way that we're treated all of the tasks of the student fund managers Truly replicate industry and I would like them all to introduce themselves My name is Lucas. What I was an industrialist real estate consumer staples and utilities analyst I'm Bob McGinnis. I was a financial as in real estate analyst. I think it scares I was a second analyst for energy materials and consumer discretionary Cameron gas consumer staples real estate utilities and industrials Analyst Palimoge. I was a health care technology and communication service analyst Edmund Schecter financials energy materials and consumer discretionary analyst J. Cogren health care technology and communication services analyst Like Paul though technology health care and comm services analyst Kyle Leach industrials staples and reads analyst Ashley Climchuk analyst for consumer discretionary final but finance energy And Since 2004 when the very first group of student fund managers was selected There's been a various and vast difference in market conditions from a bull market to a bear market Many corrections and even a crash the one thing that truly remains constant across all of these groups is the process But don't get me wrong as I learned really early on each group has their own particular identity and their own way of Accomplishing tasks But the one thing that comes up at the end of every semester It's that each group of student fund managers have gone through the same process and focused on the one goal at hand to generate alpha The cafe portfolio management program differs in so many ways from that of other universities We have the unique opportunity to manage two portfolios with two differing objectives And as many of the alumni and attendants today know the one thing that remains constant from semester to semester is the process And given our two different funds and their differing objectives This allows student fund managers to use both their qualitative and their quantitative skills to find not only what a stock can do for us today And tomorrow but from 2020 and beyond Now in our growth fund We're looking for to stock and do first right now meaning over the course of this semester until the end of summer 2019 When the new group has a chance to be allocate the holdings this puts a major focus on a more active management strategy As we are looking for immediate growth here as analysts We place an emphasis on key growth metrics and increase in earnings per share quarter over quarter and year over year as well as any Potential earnings place for growth behavioral news can be a major driver in a stocks performance As well as using technical analysis to find the optimal buy-and-sell time to maximize the return of each of our holdings On the other hand for our value fund. We look at what the company can do for us in the long term This is more of a passive strategy where we incorporate a company folks approach seeking those catalysts that will drive success in the long term Key valuation metrics such as EV over Ibida can help us find of a company is truly beaten down and models such as discounted cash Flows help us find the worth for the next three to five years Value holding must show strength in its cash flows with a trend that's increasing at an increasing rate Once cash flows are online we then look for any potential drivers that will increase a company's earnings growth in the future No matter what our time horizon or our objective We're able to generate offer in our two funds due to our waiting scheme, which is derived from our top-down analysis And regardless of the time frame the core of our analysis is that top-down approach It's through this analysis that we're able to identify trends in both current and forecasted economies Domestic and abroad now this was my favorite part of the cafe and has led the doc referring to me as macroeconomist We seek to find economic catalysts that will make certain sectors outperform over others Then we dig deeper to find those industries within each sector that will perform well Finally, we invest in fundamentally strong companies that are not only performing well in the short term will experience continued growth moving forward A good example of this is our overweight position in the energy sector Supported by rising oil prices in the short term, which will slate upstream drillers and midstream oil transfer companies to outperform We also anticipated that heavily levered sectors like industrials would benefit from the stable interest rate environment As the cost of borrowing stabilizes It's easier for customers and companies especially to maintain their debt. This might let them bring out more debt We also inherited a really strong labor market coming into the semester Which we expected to boost discretionary income and consumer spending Justifying our overweight position in the growth fund in the consumer discretionary sector Well in sectors with more poor short-term outlook like real estate We seek to identify industries that will perform regardless with increased federal spending And more consumer sentiment regarding the 5g movement. We thought tower providers was the place to go Crown Castle International is one of our holdings and a real estate investment trust that operates within this 5g node Moving into the long term. We acknowledge that the future is very unpredictable And for that reason we compose a value fund that will stand the test of time For example in the value fund You'll notice that we underrated the technology sector because we're looking for more sustainable dividend growth rather than immediate price Appreciation and this immediate price appreciation can be seen on the chart behind This is the sector rotation chart and it plots the performance of all sectors on a weekly basis from year to date Now looking up high at the technology sector. We could see that they're more pricey, but we're okay with that in some senses Yeah, that green streak at the top that Bob just mentioned shows the incredible run of technology so far year to date But we can also see some other good stories from this semester Including the yellow line right below tech, which is the good run of industrials until Boeing's troubles derail the sector Almost a reverse mirror image of technology is the red line trailing off the bottom of the chart and that's healthcare And it's no secret that healthcare has been pretty beaten up year to date. This is largely due to the behavioral factors regarding the sector Anyways, we we still held market weight in the sector and that's because of the confidence We have in those underlying holdings that have to be really excited to tell you about later Momentum metrics like this sector rotation model help us to identify where we are in the business cycle and what sectors will lead as a result Now going back to technology and that PE ratio deal. We wanted to show that on this chart Now because investors really enjoy technology stocks and investing in them when the sentiment increases So does the price think about tech stocks is that they're really growthy But that's not always shown in current earnings because of that they usually have higher PE ratios in the market For this reason while technology stocks may be really great for our growth fund. They're not as good for our value fund Now going back to the macroeconomic sense We understand that the US is facing more competition from abroad regardless of this We still found ample opportunity to invest overseas Top-down helps us pile our funds into those industries and sectors that will perform well No matter what stocks we picked though We do try to pick the greatest stocks in the world a correct weighting scheme based on current economic conditions is what truly drives Our funds to consistently outperform the market Now to begin our discussion regarding the performance. We first had to analyze our funds Raw return compared to that of the market and their competitors. I can see the two charts behind me in our growth fund We actually outperformed not only the S&P 500, but all our competitors were in the value fund We underperformed the S&P 500 but outperformed almost all of our competitors This is outstanding news But because we're in the cafe and we mirror industry what we focus on is our risk adjusted returns and to do that We must first analyze our funds risk characteristics So far this semester you've experienced a bull market with the S&P 500 breaking through multiple levels of resistance Although there's constant risk of a market pullback Therefore, we've minimized our systematic risk with a beta of 0.92 in our growth fund and 0.75 in our value fund It's important to keep in mind that although our markets have ran year-to-date not every day is an update year-to-date We have seen year-to-date We have seen 77 trading days and out of those 77 trading days We have seen 51 updates, but we have also seen 26 down days as well From the chart you can see that on average our two funds do slightly underperform the market on updates However, this is because of the risk characteristics used to gain alpha through down days to preserve wealth You can also see a clear difference between our two funds valuation multiples The PE forward for our growth fund is 21.69 compared to that of the value fund at 19.06 To continue on with the comparisons you can see that our dividend yield in our growth fund is just over 1% Compared to that of our value fund, which is at 2.41% for more steady income Looking behind me, you can see that our growth fund has outformed the S&P 500 on a raw basis while continuously Maintaining a beta of less than 1. You can also see that our value fund slightly underperforms the S&P 500 However, to measure how successful these funds are we take into account risk-adjusted performance And as you can see by our sharp ratio, we manage our total risk well Outperforming the market in both our growth and value funds. The sharp ratio states that for every one unit of risk We take on we are receiving 1.22 units of reward in our growth fund and 1.16 in our value Which is greater than the S&P 500 When taking into account our systematic risk You'd see that we've outperformed the market in both our growth and our value fund with a risk-adjusted return of 2.17% growth and 1.51% value Clearly see the difference between both our value and our growth funds through our risk characteristics and valuation multiples Now we've been able to garner these returns through the specific analysis techniques that we used to choose great Holdings as well as our various weighting schemes that was discussed And now that we've presented our process as well as our performance year-to-date The student fund managers are going to continue this discussion about the analysis that we use to create these holdings For six of the 11 sectors however a listing of all of our holdings can be seen on your fact sheets and your folders The discussion will start with information technology So in the short term technology stocks offer a lot of potential with their continuous Modernization as well as the products and services that we rely on so heavily We expect industries such as semiconductors IT services as well as hardware to be the drivers in the near future Due to their extremely competitive nature over the long term a vast majority of technology holdings not fit a value fund objective Do their run-up nature inconsistent inconsistent cash loads and a lack of dividend therefore in our growth fund We have overweighed at 22.5% where in our value fund we've underweighed at just 18% As Bob stated earlier over the past semester behavioral news has been a clear driver in many sectors Including technology and given the culture of Silicon Valley's research and development to use rounds of funding Me moved our main focus in technology to be all about the behavioral which is my favorite analysis technique Now Levi would like to thank you for taking a step away from Rexbox to come see us today And we know you'll love this company Logitech Logitech is a growth holding of ours due to its commanding presence in a high-growth industry Logitech is a gaming peripherals company that makes items such as headsets keyboards mice and more for gamers and everyday computer users alike Like I said Logitech is a gaming peripherals company and this segment is growing rapidly in 2018 It grew 15% to 7.5 billion dollars in revenue with Logitech being responsible for 37% of that revenue Now this presence and growth is expected to continue especially with the recent acquisition of astro gaming a gaming headset It's a company and one of its biggest rivals and if you look at the graph behind me You can see eSports draft Logitech revenues and you can see in 2020. They are both expected to explode Even with their recent acquisition of astro gaming and their constant roll on new products Logitech has been able to maintain a balance sheet with zero debt This lesson the flexibility make future purchases an extremely fast-paced industry They're 8.29% HPY in just four weeks. This is type of price appreciation We as growth investors look to capitalize on now moving to value We look for a company that has exposure to the tech sector but one that displays the safety that's rarely found within it Corning was founded in 1938 and is now a leader in 5g optical fibers as well as displays for TVs phones and tablets It is it is an innovator in multiple technologies ranging from foldable phone screens to ceramic car exhaust filters Corning is poised for long-term value multiple contracts extending through 2023 with some of the largest names in technology such as Samsung LG HTC Google and most importantly Blackberry Even with these large contracts, they have almost double the net margins of their two closest competitors and of 95% of the market share With all this with this vast list of products We can expect them to continue growing into the future in their fiber optic segment Corning sells the largest 4g and 5g providers in the world including China mobile AT&T Verizon and Vodafone in Multiple business segments Corning doesn't fight for market share. They are the market Corning holds the highest weight of our value fund tech holdings because we as analysts believe in its future due to its Consisting contract renewals and its innovative mindset and we have been able to capitalize on growth in the technology sector Even with their expensive valuations, especially when compared to least favorable sectors Next we would like to talk about a sector that I've had the privilege of working with for the entire semester health care Although I have thoroughly enjoyed my time as a health care analyst. I haven't necessarily loved how it's been performing We've a moderately bearish outlook in the short term considering a sector that's had minimal returns year-to-date in a bull market Stagnating earnings projections and a large impact from legislation driving the sector downwards with that being said We are at market weight in our growth fund. Although we're bearish in the sectors a whole We are bullish on our individual holdings and their ability to capitalize on growth opportunities An example of this would be zoetis one of our holdings in the growth fund in health care That's returned 18% thus far in a sector that's been severely beaten down. We're really proud of this holding Aerolical with a long-term was also mildly bearish hence our underway position With the sectors for profit margins that are expected to decline as well as the sector G prime only 0.40% We do not see health care being a drabber of our fund in the future Even given our bearish outlook on the sectors a whole we are very confident on holdings such as zoetis a health care company in the Pharmaceutical industry that develops manufacturers and commercializes medicine and vaccines for livestock and companion animals worldwide Every sector requires a slight variation of analysis, but with health care fundamental analysis is very important Health care kind of faces threats as a whole considering recent Legislations that have targeted inflated drug costs for example when we invest in a fundamentally sound health care company We don't necessarily have to worry about these threats Zoetis separates itself from the competition and solidifies itself as a strong company our growth fund do its fundamental metrics The companies incredibly liquid and has plenty of cash on hand even after its most recent acquisition of a maxis They also opposed the strongest return on asset return on best of capital and return on common equity in the industry and against a direct competitor And if you look at the growth rate of zoetis along with their risk characteristics this holding screens growth Comparatively to their competitor mark which has low risk characteristics and favorable value metrics, which is why we do hold it in our value front So it has seen incredible growth in their cash flows in the last two years They produce superior products and services for your companion animals a major driving force in the revenue segments Ultimately being reflected in their cash flows as you can see behind me Zoetis has also shown superb strength in their earnings hitting for the last 11 quarters while showing a positive price reaction in eight of those quarters With a value lines earning predictability score of 90 and stock price stability of 85 This just helps solidify why zoetis is perfect for our growth fund We've invested in zoetis due to the many underlying reasons we've discussed here But one thing to be clear this was not an earnings play when investing in zoetis We did realize fiscal year quarter four earnings was right around the corner After further analysis, we felt confident holding zoetis going into earnings, which proved to be correct They realized a five percent price appreciation After this we then grew more bullish on zoetis increasing their weight to become the number one weighted healthcare company in the growth fund As i previously mentioned, they've capitalized on 18 percent return this far in a sector that's been very beaten down This just really shows their ability to capitalize on growth in a sector that may not be so favorable Similar to healthcare financials has also failed to offer market beating growth so far this year But this wasn't actually the case for the first part of the semester In fact, for the first half of it financials was actually outperforming the s and p 500 One of the reasons that i love being a financials analyst is because of its close connection to monetary policy And we got good experience dealing with a significant change to the interest rate outlook halfway through the semester Which pegged it to underperform after such a hot start On march 20th, the federal reserve announced that they would likely not raise rates for the rest of the year This was detrimental to the financial sector who can increase revenues and net interest margins from those increasing costs of borrowing For these reasons, we had to reevaluate our sector weights, especially in banking On march 21st, we actually cut weight in our growth holding PNC PNC is a regional bank that derives most of its revenue from banking Negative catalysts that bob just discussed who earlier really altered our short-term outlook on this company Instead we share for their focus to other industries to just consumer finance where we hold synchrony financial A creditor that was partnered with wet, excuse me, with many well-known retailers such as amazon, flows, gat, and even walmart But we don't expect interest rates to stay this low forever For that reason, we didn't have to cut a lot of weight in our value holding JPMorgan Chase We think that JPM is a driver in its industry and will continue to perform over the longer time horizon of this fund Although this analysis lets us keep our weight relatively consistent JPM We truly understand the value this company actually provides JPM only derives roughly 46 of its revenue from banking. The company is also an investment bank, a creditor, and an asset manager Another holding that we love to flaunt in financials is chub limited Chub is one of the biggest names in insurance. They underwrite customers worldwide across a varied number of insurance types Chub operates in 54 countries across four continents Now this allows them to diversify and pool all of this risk to minimize payout variance For this reason, we're really bullish on the company. They've also never stopped growing and continue to acquire the competition In the financial sector that has been played by low interest rates We try to excuse me. We try to mitigate this risk by diversifying across multiple sectors for not only short-term growth, but also long-term value In contrast to the financial sector, the consumer discretionary sector has led the market year today The consumer discretionary sector holds our largest discrepancy between waiting in our growth fund and waiting in our value fund In the short term, we are more bullish on the sector, hence our over-weighting of the growth fund by 1.82 percent But in the long term, we're a little bit more cautious on the sector shown by our underweighting in the value fund by 3.78 percent This sector has returned more than 20 percent year to date and because of this consistent growth and cyclicality We decided to overweight it in the growth fund We did the contrary in the value fund making more room for safer sectors like consumer staples The two companies best representing our consumer discretionary holdings are Home Depot in growth and Alta in value When analyzing these two companies, we used economic data as well as strong fundamental analysis, both of which surpassed expectations After identifying macroeconomic trends in home ownership, we decided to look deeper into the home improvement industry We found Home Depot, a company that can better appeal to both homeowners and contractors and its direct competitor lows On the other hand, Alta derives its value characteristics from the recession-proof goods it produces Makeup, as we all know, or as the boys have learned Has no substitute. This allows Alta to generate wider margins than the rest of the retail industry Behind me, you will find a graph that compares consumer real cosmetic spending to real household spending The stability of cosmetic spending juxtaposed to the greater market Really proves its status as an inelastic product Identifying growth in home improvement, we looked at Home Depot's financial statements and found consistency We see that Home Depot is incredibly strong in the earnings department The company has not missed on earnings in over two years and has consistently generated surprises to the upside Learning how to analyze earnings is one of the most valuable concepts that I've taken here from the cafe Not only is this company fundamentally strong, they offer really promising business structure as well This company has recently been inorganically growing by acquiring companies like U.S. Homes and Blinds.com This, in addition to their ability to cut less profitable segments of their stores, are two catalysts driving this company in an already growing industry Now Alta is a one-stop shop for all things cosmetics This value frame understands their competitive advantage harping on their tagline all things beauty all in one place Alta sells everything from perfume to hair products to makeup Although most brick-and-mortar stores have been experiencing decreased growth rates because of increasing e-commerce pressure Amazon has had little effect on Alta in recent years. The company has embraced the online movement Alta CEO Mary Dylan recognizes the threat of online retail and has been expanding their e-commerce brand When Mary Dylan became CEO in 2013 She really brought the company into the future with this e-commerce segment The customer's ability to both go into the store find a good they like Purchase it online and receive loyalty benefits are two symbiotic sections of the company that drive revenues The more you shop the more points you can earn or she can not only use on Alta's products But also in its beauty salons Alta's product stability customer loyalty and brand diversity are all reasons why it is here to stay So we have presented to you a company that we have overweighted in our growth fund Lucas will now talk to you a little bit more about a company that we have under overweighted in our value fund Contrary to consumer discretionary in our consumer staples sector We've decided to underweight it in our growth fund and over weight it in our value fund The decision to underweight in our in our growth fund is due to the lack of growth for the sector But to bolster our returns. We decided to allocate this excess weight into more bullish sectors such as consumer discretionary or technology In the value fund We wanted to capitalize on the price stability and risk characteristics that these holdings demonstrate And that's why we are currently overweight One of our more unique holdings in our growth fund is MetaFast Now you may not have heard of this company, but they produce distribute themselves clinically proven weight management products What makes them so unique is their incredible growth within an industry that averages negative 3.83 percent growth Their focus on health-centric foods allows them to capture market share as people care more about what they put in their bodies MetaFast boasts increasing margins and an exceptional growth rate of 43.93 percent Their attractive upside downside ratio is greater than some of the largest and growthiest companies in the world And their growth rate is lining with our growth fund's objective to garner short-term capital gains Now as you can see behind me the profitability ratios and share values that are all are exponentially increasing Yet when we looked at MetaFast their stock their price chart was still very low only 10 or 15 percent off their 52 week low At that point we believe that there was underlying growth within this company And we're super excited to see almost a 20 percent return in less than three weeks Now rarely is energy discussed in a cafe presentation But rather than bore you guys with something like communication services We'd like to highlight this extremely relevant sector, but to do so I'm going to need you all to put on your cowboy boots because we're going to the Permian basin in texas In the energy sector we are saying that changes in oil prices are the main factor that will drive this sector's performance Change this applied demand list to conduct a thorough analysis to remove the future of the sector Last semester the cafe held a minuscule weight in energy across both of their funds And from october to december oil prices collapsed dropping roughly 40 percent which greatly helped to justify their overall outlook However moving into this semester opec held a meeting in december where they decided that cutting production would stabilize the market Therefore coming into the semester We had a pretty good idea that oil prices would rise significantly When oil prices rise companies are involved in exploration and production tend to benefit the most The oil they are joined for is now more valuable and thus can be sold for a greater profit We chose in particular to focus on these companies in the short term as we believe they would Benefit from the short term price appreciation So overall we chose to overweight our energy openings in our growth fund due to such a strong short-term outlook And the company that we really love in our growth fund that matches up with this short-term outlook is pro petro holding corporation Pro petro provides highly specialized hydraulic fracturing services to oil and gas companies operating out of the permean basin A shale oil rich area of west texas and new mexico hydraulic fracturing is technically used to gain these resources To obtain these resources such as oil and natural gas that has been guarding a lot of popularity recently This type of fraction has been gaining this popularity because they contain these resources like oil and natural gas Um instead of using normal drilling operations per usual As oil and gas companies in the permean drill for more oil when these oil prices rise their demand for pro petro services also increases And because of this, uh, we have seen that pro petro is outperformed This year, especially as uh, they're due to the oil environment that we are currently in We have seen almost a 25 percent hp y you're in this holding and are extremely proud of it To give you more visual representation of this stock success you can see a six-month price trap between crude oil and pro petro Clearly as crude oil has appreciated and stabilized throughout the semester pro petro has also increased as well This is exactly the kind of exposure we want to see with our energy holdings and our growth fund When shifting our focus to the long term for the value fund We still have a very favorable outlook on the sector However, we acknowledge that any long term outlook in energy is subject to major fluctuations in oil prices And for that reason in the value fund, we decided to keep our weight a little bit more in line with the market And to hedge against this volatility risk We decided to focus on a different different aspect of the energy chain and moved our attention to midstream energy companies Ones that own and operate pipelines and other infrastructure for the transportation of oil and natural gas Thus in our value fund, we chose enterprise product Product partners a company out of use in texas. That's a leader in this midstream energy industry Enterprise represents a strong company in our value fund due to its increase in cash flows 6% dividend yield that has been increasing for the past 15 years and extremely low risk characteristics When trying to find a strong value company to hold we understand it takes a lot of research not only for that company But the industry specifically This is my favorite part of the cafe has led to us finding a strong value company such as enterprise And we'll we believe will provide long-term value not only for the sector but our fund and of course three to five years It also shows strong competitive advantages relative to the rest of the industry Because of the vast network of services and pipelines that it offers When oil and gas companies are looking for somebody to transport their resources They look for somebody like enterprise Additionally enterprise boasts a strong and sustainable dividend that has grown over the years Which sets it apart as a leader in the industry in a stark contrast of one of its direct competitors kindre morgan kindre morgan actually had the slosh their dividend payout in 2016 due its Unsustainability being paid out and also due to crash and oil prices in 2016 But on the contrary enterprise actually increased their distribution to their investors in 2016 Enterprise also boasts $5.1 billion of projects in its backlog some of which are already generating revenue and cash flows for their operations today They're also investing in the creation of export facilities to world markets This has been an incredible demand due to the amount of supply that's coming out of the united states We truly believe the future for this company just could not be brighter Now that we have shown you a couple of the behavioral and fundamental analysis techniques that we use in the cafe We would like to introduce a third technique that we use when trading technical analysis Technical analysis is a securities analysis technique in which investors will Focus on price patterns and technical indicators as a way to discern trends and make future predictions And it is also a perfect example of what differentiates the cafe from other from our peers Due to the fact that we actually had to take a technical analysis course that is usually only provided at the graduate level Behind me, you'll see the five-day chart for metaphas along with some relevant technical indicators The first two the awesome and a rune oscillator now oscillators are not complex. In fact, it's just a manipulation of price or volume in order to create Extreme values that become our oversold overbought or an oversold territories And these actually become our sell and buy signals And following down the line We then have the rsi or relative strength index as following followed by the mac d or moving average convergence Divergence indicator and we actually have a great example of how we use this Specific indicator to perfect to almost perfectly time of trade in uh in energy And then finally we have the atr the average true range. This is a unique indicator because unlike the oscillators This looks at the undermining volatility to the asset and can help discern when there should be stark price Appreciation or depreciation and can help hedge your bets or make profits One move we'd like to show that really exemplifies our use of technical analysis in the cafe Occurred when we decided that mplx a midstream energy company that we once held in our growth fund was underperforming So we decided to sell the company We then went to our buy list and chose cabot oil gas the company on your right This company is a leader in natural gas and oil industry and had extremely strong fundamentals that we believe will be a Perfect fit for our growth fund We then went to the chart to maximize our opportunity for when to buy in and that's essentially what we did As you can see behind me mplx demonstrated two strong recurring sell signals at around 12 p.m Well almost simultaneously we saw two recurring buy signals from our potential sweep and cabot oil and gas We then decided to exit our position and mplx based on these indicators at 12 13 And watched as the price depreciated throughout the remainder of the session whereas in our And then decided to enter into our other position and cabot oil and gas at 12 16 p.m And watched as the price saw an immediate point appreciation followed by appreciation throughout the remainder of the session This just shows how different the cafe is from other programs at the undergraduate level because we were able to execute this trade In a matter of just three minutes Though we only use technical analysis to support predetermined trades Small decisive moves like this help us to garner tiny amounts of alpha That over the course of a semester add up to a modest but significant boost to our performance Now technical behavioral and fundamental analysis are all imperative to successful investing as we have just outlined for you here today However, there's one concept of analysis. We have not yet gone over earnings analysis Earnings announcements can make or break a stock So when deciding if we want to hold a company through an earnings announcement, we analyze the following metrics To exemplify some of these metrics, we picked three different companies with three different stories The first of which cadence designs is going to tell us the importance of earnings history and precedence Moving down the line to a fan favorite lulu lemon They told us how to stick to our guns and monitor price movement 10 days prior to the earnings announcement Finally, we'll talk about united healthcare or unh This had a less favorable outcome But still the whole goal here is to garner alpha. That's the one thing all of these companies have in common So in addition to gaining alpha through our waiting scheme The cafe program is unique as it's one of the few programs in the country that actually encourages us to play earnings Our active management style allows us to play the price reaction on quarterly earnings reports In order to gain quick returns like we did with cdns And looking at cadence once more we see the earnings consistency This company has only missed earnings twice since 2008 Coming with this is an average price reaction the following day of six percent to the upside So we started looking at the cadence design 10 days before the earnings announcement As we saw volume and price start to trend upwards We bought in february 12th at 52 16 per share and maintained faith in our decision Even after seeing it fall in the following two trading sessions And it turns out this faith paid off because the company beat earnings estimates and moved forward with positive price guidance This resulted in a jump up after hours on february 19th The following day we came into the cafe and sold the stock for 55 59 a share Now this garnered us an average hpy of around six percent, but also 27 basis points worth of alpha The road to lululemon's earnings was a bit of a different story though We bought into lulu in the beginning of the semester due to the unbelievable growth aspects of the company A few of which can be seen behind me However, due to the time of the buy-in found ourselves down nearly six percent on the company before they reported quarter one earnings So when earnings season rolled around we decided whether or not to hold the company while monitoring them closely We saw that they had higher than average price movement 10 days before earnings But that wasn't enough information for us to make decision Therefore we had to dig deeper to figure out how their earnings might play out Similar to cam doing deep into earnings was my favorite aspects of cafe and doing so we found some very convincing data The upcoming quarter quarter one included holiday sales looking at industry projections We saw that holiday sales were supposed to be the greatest that they have ever been in over six years Combining these industry projections with an unprecedented growth and athleisure We expected lululemon to lead this charge the streets increasingly bullish stance going to earnings only solidified our decision to hold the company We stuck with their analysis and watched as the company units 14.63 through earnings Despite conducting such a thorough analysis when playing earnings sometimes we can still get it wrong An example of this would be united healthcare We felt confident in holding unh going into earnings which proved to be right They'd be both earnings and revenue and even had a positive 3.5 Pre-market movement despite these positive signs and indicators unh went on to lose four percent that day after reporting earnings This really exemplifies the volatile nature and how risky earnings can be and shows just how lucky we are to have this opportunity To play earnings that many other schools do not Now the student fund managers did just get to present six of the 11 sectors with holdings across both our growth and value Funds however, like I previously mentioned That's not our only holdings as we are completely diversified across all sectors and industries and that can be seen on your fact sheets The cafe program is always trying to implement new vest practices And in doing such we have taken advice from our advisory board as well as just looking to mimic industry that much more By creating our own weighted industry With that being said we no longer bench our performance just against s and p 500 in competing funds But we have now created our own weighted benchmark which is constructed by using our specific sector weights As some of you may know tracking our funds performance includes a large amount of data tricky calculations and a high attention to detail Despite this I found this to be one of the biggest challenges for me But also one of the largest takeaways that I got from the cafe program And when creating our weighted benchmark we ran into some trouble And with the addition of new companies sweeping a boulder once the introduction of sector ETFs as well as individual betas That all had to be implemented into the calculations And unlike industry we have to do all these calculations on a single very large excel file And in order to show you the process that we undergo on a daily basis bob and are you going to go step by step So before we can compare our funds to that of the market We need to ensure that they are similar in composition Looking behind me you'll see that companies and industries such as information technology and consumer discretionary The weights vary vastly uh than that of the market From this we got our weighted sector performance which shows how the s and p 500 would have performed Had it had the same weightings as our two funds Behind me is an example from april 8th where you could see the clear differences between the weighted sector performance Now all of this is calculated on a daily basis So when we plot it on a single chart we could see the difference between the weighted and raw performance of both of these funds And you as we were talking about before you could see that we've outperformed We've outperformed our s and p 500 the s and p 500 benchmark with the risk-adjusted basis On a risk-adjusted basis with an alpha of 2.17 percent in our growth fund and 1.51 percent in our value fund But what's new is we're now comparing against our weighted benchmark Which you can see we've also outperformed on a risk-adjusted basis with an alpha of 2.17 percent in growth With 1.32 percent in growth. I'm sorry and 2.55 percent in value To come to continue on with the comparisons you can see that the betas between the two funds Were also changed because we're now running our regressions against a weighted benchmark as opposed to the s and p 500 You might also notice that the tracking error is slightly higher with our new weighted benchmark Which we're looking at to make the improvements into the future Now these new practices as well as the traditional process of the cafe is truly what the program is all about And consistency is key and oftentimes is what drives success I have been lucky enough to be a part of this special program for the last year now In witness all of the success as well as the ever ever changing environment that it is as well I can only assume and i'm confident that moving into the future it'll continue to stay the same We have all learned a lot as we have progressed through the cafe program this semester Cafe produces student fund managers who are able to comply with the process and similar to industry We take on a large role of responsibility and have certain expectations. We must meet as a result We develop our integrity each and every day as we strive to meet these expectations The cafe has a set of moral principles that everyone acclimates to through this process These valuable life lessons hasn't not only just prepared for industry, but primed for success I would now like to take this time to highlight the international travel that myself and the rest of the group were able to participate on this past semester During our spring break We traveled to Montreal, Quebec where we visited the Montreal exchange and as as well as presented to McGill University our practices We are so thankful for opportunities such as this And it wouldn't be able to be done without the generous support of our alumni sponsors And of course, mr. Hans christensen I would now also like to invite up mr. Garrett Paola to talk more about the international travel that the cafe has been able to do through the 15 years Thank you. Well, although i haven't been apart for 15 years. I have for 10 And i've been a big supporter of the program as well as the board and the rest of the alumni for the last 10 years and I had the opportunity to travel to both Frankfurt, Germany, Heidelberg Dubai so a couple of extra trips than some But it's a huge opportunity. I think it's a huge differentiator in the program Some universities I think over the last 10 to 15 years have tried to You know copy docs, you know program and what they've been able to do But none of them have ever been able to offer the international travel And so if I could just ask raise the hands of who had the opportunity to do some international travel with the program just to show some hands so As you can see, I think it's a it's a huge component of the Of the program and the opportunity that the the students get and I would like to also thank Hans christensen for his huge support over the last, you know 10 plus years of the Organization and it's a close knit group of alumni So as you can see we all come back to support the program But we also all talk on a daily or weekly monthly basis We get together for certain events in new york and boston and this is where I personally this program was it was the differentiator for me in getting a job In the industry about 12 years ago and I think this is an opportunity and We would ask for everyone else to continue with their support And keep with the alumni connections and and help on another app as they proceed so Thank you. Thank you and thank you all for coming today to listen to this presentation We're so proud of our work through the entire semester And with that being said we're going to move on to open the floor up to questions Really great job guys. That was incredible. I'm sure there's a huge weight off your shoulders So, you know showing your performance you guys did excellent, which is great You know, we've seen a large run-up in equities and valuations are a little stretched and you guys talk about How you did a little bit of profit taking maybe some trimming on some of your overweights, you know, and how you kind of manage that Yeah, so we've definitely taken a lot of profits through the semester We've taken big gains in our value fund from holdings like Cisco, which we sold earlier on in the semester and Garmin We sold earlier on appear earnings And also the same market fund as well. We had a semiconductor model of technologies that perturbed us almost 20% And we're kind of adjusting more towards a you know more risk inverse type Type fund right now, especially as we've just reached our all-time high And you could definitely see that through our data. So we're trying to, you know, minimize risk where we can I think also just another example to you and our growth fund We're all able to use technical analysis in this program And I just remember one of our holdings a dime back energy in the growth fund Was actually going through this trend. There was another profit taking profit taking example, like you said That just came to my mind because the beauty of type fund analysis that we just are so afforded to use Should really help us make that trade A Dutch economist a couple years back referred to the current international trading environment as globalization restrictions like brexit Declined in multilateral trade agreements and movement more for bilateral trade wars tariff I'm wondering if anybody could comment on the international outlook and how that might affect some of your folder Yeah, so that's actually a great question as we saw with the gdp numbers on friday net exports were increasing at like 3.2 So at the beginning of this semester, we were really worried about that and we tried to stay away from countries like china and countries like The uk we actually warmed up to that as some more numbers came out as sentiment increased and changed And now we actually hold a number of countries in china and one in the uk I want to talk about the three minute trade the sweep of one company and you're able to buy another Having as many analysts as you do along with the hierarchy within the cafe Can you speak to how did that process happen and how were you able to sweep something? Through your approval process in three minutes Um, so first of all before we do any trade. We have authorization from Doc and from rmd genetic riffin And for this specific trade how it went down. We had We had ran it by both of them the day before and decided that at some point during the day if the trading was optimal We'd execute the trade And so I kept getting my phone blown up while I was sitting in human behavior because And indeed wanted to make an energy trade so I scrambled back after class and We pretty much saw exactly what we showed on the screen. It was Two very strong cell signals from the holding that they wanted to exit and two very strong buy signals from the company They wanted to get into so it was actually like relatively easy decision. It was very unique how it lined up with the timing usually Once we get out of a position that's unfavorable. There's a They always want me to just like tell them it's the right time to buy it But I can't do that like I have to see some sort of signal to indicate that so it was really nice So we were able to not be in cash For a long time and actually just get right back into it into a holding that was really unique Yeah, and also that we were diff sweeping into different industries within energy Because we swept out of the midstream industry that that day was relatively flat and into cavit Which is more of a producer and that day they had started around midday to run a little bit more So the fact that we were actually sweeping industries also really helped us out So two part question So multiple animals feel free Take us a little bit into your process on How you distinguish when a company in the growth fund perhaps has has reached a ceiling and it's time to sell The other side of that coin being You know when a company is continually going down when you decide to give up on it I'd start with the upside and then if you want to come on the downside So, uh, I think a good example that comes to my mind Which Dean mentioned a little bit earlier was Garmin Garmin had a 17 jump after earnings which then I drove them to be 30 percent over our holding period yield And after earnings a lot of times we'll see it go one of two ways it either continues to Rise over the coming weeks or it drops down and corrects over the next few days And with Garmin we we determined that it would probably drop a little bit because we thought 17 percent was a little bit of an excessive Price reaction So we decided to take profits there sell the company and get into a different discretionary holding Yeah, so you have the other side of that um an example This will be united healthcare. So we held united healthcare in our value fund this semester We saw them fall about 8 to 10 percent over the course of two weeks Then you had earnings as I talked about before we were pretty confident going to earnings that didn't be But based on the behaviorals that were going on the time with the managed care for all that was discussed about The ceo commented on it and it was just a large impact from behavioral drive downwards. We didn't feel that it was Really worthwhile being in them anymore Very viable options elsewhere. So we got out of unh we feel like the falling knife And that proved to be correct as they started to continue to decline and I think also heading towards elections You're also going to see massive amounts of behaviorals to continue to drive down the managed care sector So I think we made the right choice there I would also really quickly like to add on to the fact that like These students are constantly as all the alumni know In the room in monitoring all of the holdings at every time of the day that the markets open So with that being said, I mean they get the phone call from doc in the morning Like are we under performing what's down what's driving the fund down and is it underperforming? It's competitors the sector yada yada and the list goes on So they're very well aware of what has been trending to be outperforming and more importantly What's been underperforming and we know when we need to like be more boisterous and get out of that position We constantly have a bylist ready to go Yeah, I'd love to hear your opinion on maybe the diminishing effects of the tax law changes that went into sort of boost corporate profits and earnings And we've had a relatively long full market and a great run in 2017 leading up to the lobbying past and then last year Metrocky the last quarter But what is your you know, what would you warn the next group that comes in over the next year or two? Where that sort of diminishing bump? Go away from the tax Yeah, that's a great question So you mentioned that the benefits of that boost from fiscal policy is diminishing and that's absolutely true But what we are also seeing is that this sentiment From that the business sentiment of that more business favorable policy has continued to extend So as a warning to the next group who's standing in the back and on the side I would say that don't count on Tax cuts to continue to boost U.S. Real GDP going forward But I think that the business sentiment the positive business sentiment is still going to be there moving forward First off really well done Collective weight, what was your favorite part of traveling in Montreal? I really like going to the derivative exchange It was really cool like being in the building being in the environment Being around like you know professionals that have done this for years On the other hand the gill is kind of cool because we have to see that they asked their questions during the presentation So doc said maybe four words and he just got lit up by about 10 kids And the rest of us maybe got to say five words before they just told this kid to stop talking Just the bonding experience was pretty great too. I mean I've now had the opportunity to do it with two different groups And it's just the memories that you make there are really cool. And it's something that you'll definitely carry on with you Or I'm sure you guys can agree. Yeah, I can honestly say I'd never been in a rooftop Hot tub before so that was No one's gonna say it I enjoyed the snowmobiling That was a great job and you beat me to Inviting you all to give them a big hand because there's a lot of preparation that goes into this and as you might imagine Rehearsals and a lot of time and effort so great job guys really terrific really good presentation and lots of insights for us And I'd also just like to reiterate our thanks to the alumni for joining us for this very special event That takes place at the end of every semester And also to those of you who have so generously Contributed to the campaign for cafe which has been underway now for a couple of years When we first ventured into this space in terms of trying to initiate a special campaign To provide funding for the special activities of the cafe program We weren't sure actually what we were getting into or what kind of response We were going to get and the response has been overwhelmingly positive And we hope to keep this going because it really does help to keep the cafe the very special program that it is And I'd also like to join with the others who have thanked hans christensen who has been a real Supporter and sponsor of a number of the cafe activities, especially the international travel If any of you wish to visit the cafe space while you're here and you haven't been there, especially parents I think alumni have visited it But you'll see around the room are all the pictures from all of the international trips and those trips just Wouldn't have been made possible without the support of mr. christensen And we really appreciate all of his generosity and his support for the program I'd also like to thank mario gebelli who has been a consistent supporter of the program over many years I think since its inception he had a little something to do with that as I recall I wasn't here, but I've heard lots of stories about those things So I'd like to thank mario for all of his support for the the cafe program and for the school that bears his name And I'd also like to acknowledge dr. Michael melton who founded the program Who was a pioneer in so many ways and still is you've you've heard about the differences In this program as compared to other university programs It's very different from the other business schools which with which i've been affiliated which have all been good business schools But this program is unique and distinct in so many ways because the students are really managing the money in real time They're making the decisions you've heard about how they actually execute the trades And they have to live with the consequences and usually they're pretty positive consequences. So we're glad of that It's also very different because of the international travel that the students participate in I know that the students had traveled to uh, tokyo earlier this year I as the dean I worry a lot about how our students are going to survive a 14 and a half hour flight to narita But nobody seemed the worst for wear And everybody had a great educational and cultural experience and that's Really what we're all about in terms of our emphasis on experiential education Helping students to learn what it's like to practice What they're what they're learning in the classroom in a real world environment And the fact that they can do that without leaving our building It's pretty super and the fact that they can travel abroad and present their ideas and their research and Their strategies to other schools and to practitioners around the world is also a pretty exciting thing So I thank you all for being with us. I wonder if we could Close by giving our students one more round of applause for that terrific A little reception set up. I hope outside for you I hope you'll stick around and talk with the students and visit with the alumni and Spend a little a little more time with us this afternoon. So thank you all for being here and To the parents of the seniors who are here I guess we will see you in not so long not so long from now at commencement on May 18th So we look forward to seeing you there. Thanks everybody and enjoy the rest of your day and your week