 Well good afternoon everyone. Welcome. We're very happy to have you with us this afternoon for the cafe presentations. I know a lot of you in this room, but for those of you I have not yet had the pleasure of meeting. My name is Susan McTiernan, and I have the great pleasure of serving as Dean of the Gebelli School of Business. I also have the great pleasure this afternoon of introducing our President, Dr. Donald Farage, who's going to offer a couple of words of welcome of his own. Dr. Farage. So the first thing we need to do is blow out the black back wall of this room and make it about 50 percent larger, because this is getting to be a very crowded space with these events. And I was just thinking, you know in in football games that you were right down to the very end of the game and as a team that's going to kick a field goal that will win the game and the opposing coach calls a timeout to ice the kicker. And my job today is I'm icing this team of people. They're ready to go. I am standing between them and they're ready and getting started. So I'm going to do this pretty quickly. I want to first of all once again congratulate and commend Professor Michael Melton who invented this whole idea. I mean he's been he's been docked for these this team of students for certainly as long as I've been here and one of my fun events is to come to these events twice a year to listen to the team talk about how they've done with their investments. And the reason why this is important is that they're not playing with matchsticks. They have real money to invest and they have to account for the fact that they either made a lot of money in which case we really congratulate them and I actually do turn over my personal retirement fund for them but or they lose money because the market's been tough that year. And they hold themselves up and accountable to other programs that are similarly doing similar kind of work around the country. And very very often we find that the team has done at least as well as every minute last two years ago. I think we won two of these major competitions. So these these students historically have been as good as any in the country in in making sound investments. And given the nature of what they are studying this is perfect for beginning to understand not just in theory but in practice what the world of finance and investment is all about. And in that sense Michael's having started this program anticipated in a very meaningful way the work that we're trying to do all across campus right now which is to prepare people for the world are going to enter once they graduate by giving them relevant experience to their major while they're here. And we're doing this so in such a broad mannered fashion right now that we this year said OK we're going to guarantee that every student coming to Roger Williams will have the opportunity to do at least one of these what we call project based learning experiences. And they vary a lot depending on the major and the nature of the program. Some of them are embedded in the campus community. Some like this are working right here on the campus but with these strategies involved behind effective investing. This is a very well educated young people standing behind me. I know that because all of their antecedents have been very well trained and Michael is not going to let the quality fall. So I'm really setting a bar of expectation very high just in case they weren't nervous enough. And I'm looking forward to a really elegant presentation and and particularly the Q&A session that follows because they can rehearse just so far. But they're at their very best when they're answering questions on the fly that come from the audience. So start thinking up some good questions put these people through their paces and all of the veterans of past cafe presentations. Welcome back guys. Good to see you and I think I see some proud parents in here as well. So I'm going to turn these people loose now that they're at the highest possible level of anxiety and we'll look forward to a great afternoon. Thanks for being here. All right. Thank you President Farish. I'd like to start by saying good afternoon and welcome everyone to the 2015 fall cafe final presentation. We'd like to thank all you parents and family members former cafe cafe fans whatever it may be for coming today because we wouldn't be able to do this presentation without you guys. So to begin the presentation I'd like to introduce everyone everyone here from the cafe. We have our program director Dr. Michael Moulton we call Doc standing in the back of the room. Each semester Doc selects 10 to 12 students who he trains as analysts and these analysts are responsible for the management of two real dollar portfolios. Those analysts are standing here in front of you today. I'd like to introduce the ones to my left. We have Rachel Batista, Jonah Schwartz, Kelly Fitzpatrick, Ryan Corey, Nicholas Fontaine. To my right we have Dave Buiz, Janet Squire, Brian Flanagan, Jake Guisarco, and Megan Albee. Conducting is Robert Buyer. Next to me is Zach Geering. My name is Eric Gilmatt and together we are the associate directors of the cafe. Before we begin this presentation I'd like to give a special thanks to Cons Christiansen at MJX Asset Management, Recon Capital Partners and our advisory board that sits before you today. So the students will be presenting the portfolio methodology for our Student Investment Management Fund and to begin the presentation I'd like to call up Rachel and David. Thank you Eric. So as you all know this hasn't exactly been the easiest year for investing. It's important for you to know that unfortunately year to date we have underperformed the market. However, since this group of student fund managers reallocated we have outperformed the market on both a raw and risk adjusted basis. We will later discuss the reasons the HIDAR funds underperformance but until then it is extremely important that we explain to you our process and explain how what has happened in the past is not nearly as important as how we've set up our fund to form the future. As Eric said we managed two real dollar portfolios. One with an objective of large cap domestic value and the other with the objective of large cap domestic blend. The blend portfolio we are preparing for you today encountered many changes over the course of the semester as we've seen many macroeconomic shifts. Despite all these changes we're fully confident that the portfolio we're presenting to you today is well positioned to succeed not only for the rest of this year but also no matter what happens in 2016. As we are speaking to both industry professionals and family members in the audience today we are going to explain our entire investment process from beginning to end. We are also going to incorporate many of our holdings as illustrations to represent how we've constructed our portfolio for success. From the moment we stepped into the cafe we took on the role of analysts. We understood that there are different obligations that come with this program than there are in a normal classroom setting. We understood that we had a fiduciary responsibility to our client as money managers. In this case that was Doc. The most important aspect of this class is to understand and learn every aspect of our top down analysis approach. From day one Doc teaches that his main goal is not to teach students but to train analysts. Whereas in a traditional investments class students are expected to simply pick successful stocks. Student managers in the cafe are required to wear many different hats. During the first stage of our top down analysis we took on the role of economists. We used global and domestic economic indicators to try to forecast the direction of the economies. We thought that these indicators were the best way to find a hint for where the market would go. After this we put on the hats of financial analysts where we then analyze both sectors and industries to determine what types of companies are driving the market. Lastly we examined individual firms. To do this we used key fundamentals financial statements behavioral news and technical indicators. All of these factors helped us determine whether or not a company was worth holding in our funds. As you can see as financial analysts we take on a diverse skill set in order to utilize all of the disciplines taught in the Gobelli School of Business. These include accounting management international business and marketing. And when you have to get up and present a fund that's underperformed the market for the year it's definitely going to take some marketing skills. Now I'd like to invite up Shannon, Brian, and Jonah to talk about the economic analysis. Thanks Dave. Now there are two main ways to begin an analysis for a portfolio. Top down and bottom up. Here in the cafe we use the top down approach as we believe it provides better context during stock selection leading to better company fix and greater returns. To begin our top down approach we performed an economic analysis on a global scale to determine if an investment opportunity lies broad. Focusing most heavily on areas such as China, Japan, and the European Union we found that many of their key economic indicators led us to an inconclusive decision on their future outlooks. Honing it on Asian markets we will first look at China. China boasts an incredible growth rate of seven percent. A metric that any developed nation would absolutely want. I mean how could we possibly ignore that? Not only that they're an integral part of any nation's economy as they are a global leader in imports and exports. Well Jonah on the other hand we must consider that China's GDP growth has been decreasing year over year since 2010. From 10.6 percent to 7.4 percent. Additionally we must consider the devaluation of their yuan. Now there hasn't been an economic event that affected the global markets with such magnitude since 2008. That's right Brian. Along with that imports and exports in China have also been decreasing year over year. All of this bearish evidence has led us to believe that China set it in the wrong direction despite being a global leader in growth. Headed east to Japan we see a new set of bullish indicators. Quantitative using in the country has done wonders for their stock market. Not only that exports have also been increasing since 2009. While that may be true Shannon we also must consider that Japan has been experiencing a recession as indicated by their decreasing GDP year over year. Not only that while Japan has recently had positive inflation their previous bouts with deflation were seriously concerning. Then looking from a more unsystematic or behavioral standpoint Japan seems to be frequently shaken up by natural disasters. As you can see while Japan had some bullish indicators there is still far too much risk associated with the country. And moving west to Europe Mario dragging the European Central Bank have been keeping the economy afloat. With the promise of flexible and aggressive quantitative easing their dedication to monetary policy was seen as a strong bullish signal. Unemployment in Europe has also been decreasing although it still remains quite high at 11%. The biggest concern going into the start of the start of the semester was Greek default. With Greek default all major economies specifically European ones would be affected. Also consumer confidence in Europe while trending upward is still below pre-2008 levels. Another thing we considered was the recent influx of Syrian refugees into a variety of the European nations. Economies such as Germany's and various others are going to face a hurdle during our time horizon that will affect them negatively. With all of this in mind we decided to keep our fund domestic. Now looking domestically you'll see on the slide behind me a list of bullish trending indicators. We noted a strong dollar and the Federal Reserve's promise to raise interest rates 2015 as signs of clear economic strength. And we also consider that certain economic indicators are trending bearishly such as CPI and industrial production. In a global context we found ourselves being bullish on the U.S. after our first analysis on September 2nd. While we originally believed that the U.S. economy was performing well, Jenny Allen's reluctance to raise interest rates had really shaken our confidence. Investors around the country were similarly discouraged and because of this volatility we thought we decided to revisit our economic analysis before our October 7th reallocation. Revisiting certain metrics like unemployment we realized that they were not as strong as we originally believed. Looking at unemployment in the context of labor force participation and discouraged workers we noticed bearish trends. Not only that, headline CPI, a significant factor in the Federal Reserve's decision to raise interest rates was far below their target level. With all this evidence in mind we updated our outlook to neutral and as you will see later in this presentation have prepared a portfolio to succeed not only during economic contraction but also during expansion. Now that we've completed our economic analysis I'd like to invite up Jake, Megan, and Kelly to discuss sector and industry analysis. Thank you, Ryan. Following our economic analysis we then move to the second state step of our top-down approach where we analyze both sectors and industries. The importance of this second step is that we're trying to determine which sectors are driving our economy and which specific industries are driving those sectors. Over the course of the semester we were to construct a defensive portfolio allocating across all 10 sectors to mitigate the risk of unforeseen variables. We followed a domestic large cap blend portfolio objective in order to create a defensive fund that would do well in all market conditions. The uncertainty and instability in foreign markets was the main reason we elected to remain domestic. We noticed that there was one particular company driving both its industry and sector. That company was Disney. Over the course of the year Disney has grown so much in value that the previous semester's weightings were no longer appropriate to fit for our portfolio. To give you an example the previous portfolio allocated 24 percent in consumer discretionary with nearly half that being Disney versus the 14 percent we hold a discretionary today. We decided not to deviate as much from the S&P 500 market weightings as compared to the inherited portfolio. To determine the appropriate weightings for our fund we analyze both sector and industry using S&P 500 weightings as our benchmark we decide to overweight underweight or market weight the sectors. We elected to overweight both the technology and the financial sector giving current macroeconomic conditions as well as our prospective growth rates heading into 2016. We elected to underweight the utilities the energy and the health care sector as there are a number of behavioral headwinds for multiple industries within those sectors heading into 2016. Also most analysts expect those three sectors to underperform the market going forward. Earlier this year and throughout the summer former student fund managers elected not to allocate funds into the energy utilities or basic material sectors as they were underperforming during these respective time periods. What we recognized was that it was extremely important to diversify across all 10 sectors of the S&P in order to create a fund that more consistently outperform the market. Now as you can see in the example behind me on a day when the market was down 38 bips the three leading sectors on that day were energy basic materials and utilities. By adding BP and holy frontier to our fund we had a great hedge as on days where the market was down energy was often one of the leading sectors. Next we decided to overweight the financial sector with FISA, Equifax, the Intercontinental Exchange and Berkshire Halfway. Given this sector's ability to perform well in a rising interest rate environment it warranted more attention. The Federal Reserve has waffled on whether or not to raise rates for some time however we realized that a rate hike is imminent. We also elected to underweight the health care sector as there are a number of behavioral factors for multiple industries within the sector heading into 2016. Most notably the biotech industry has become increasingly volatile over the last couple of months creating more risk averse sentiment among the student fund managers. Thus we decided to underweight the health care sector and not include any securities from the biotech industry as they just didn't fit our portfolio objective. Instead we chose companies from safer industries including Cardinal Health, Tiva Pharmaceuticals and Quest Diagnostics. After completing our sector and industry analysis we focused on company analysis which consists of fundamental behavioral and technical analysis. Fundamental analysis refers to the financial stability and success of a company. This form of analysis comprises approximately two-thirds of our overall selection process. Behavioral analysis is any positive or negative news that may impact the company's stock price and makes up roughly a quarter of our selection process. Lastly technical analysis comprises of the remaining 10 percent. Technical analysis refers to researching the most opportune time to buy and sell securities. I'd now like to invite up Ryan, Rachel and Dave to discuss fundamental analysis. Thank you Megan. The third and final stage of our top down approach is company analysis. Here we use three different analysis techniques to figure out which companies will best suit our portfolio's objective. As Doc teaches the three segments of fundamental analysis include valuation and risk ratios, efficiency and utilization metrics and cash flow analysis. The importance of fundamental analysis is that all decisions are based on a company's financial strength and these metrics convey that strength. We rely so heavily on fundamental analysis because it is the most educated way to discern whether a company is financially stable. You have to look at a company as both a business and as a stock. Just because a stock seems like a good deal does not mean that the business is worth investing in. Similarly, just because a business seems to be running well does not mean that it's the right time to invest. The first step into determining the true value of a company is to look at its earnings. We like to invest in companies that have earnings increasing both year per year and quarter over quarter. Doc emphasizes that trends mean everything and the interesting thing about trends is that they can be either visual or inferred by outside analysts. For example, we hold cognizant technology solutions which has demonstrated incredibly consistent earnings growth. Over the past five years, cognizant has doubled both their revenues and earnings per share offering impressive real potential for a large cap company. One of the most useful earnings metric we use is the P to E ratio which is a company's share price divided by its earnings per share. The P to E ratio is so useful because it allows you to assess value. It allows you to determine how much bang for your buck you'd be getting from investing in a company. Behind me, you'll see the current PE of Cardinal Health which is a current holding and online retail giant Amazon. Cardinal Health's current PE of just below 21 compared to Amazon's current PE of about 984. Now, Mr. Malafronti, let's pretend for a second that I'm your investment advisor and I come to you saying I have two investment options. Both will yield one dollar in earnings. Option one requires that you invest 984 dollars to receive that one dollar earnings. Option two only requires that you invest 21 dollars to get that one dollar back in earnings. Now which one of those sounds better to you? I'd like to believe I choose option two. Exactly and that's exactly what you see with Cardinal Health as compared to Amazon. Cardinal Health also has a forward PE of 16.36 meaning that moving forward it will only trade at a lower multiple in relation to its earnings. Now, earnings help us assess returns but in investing you always have to account for risk. To do this we use beta which is the level of systematic risk a company holds compared to the overall market. Some people say that in order to get returns you need to take a bunch of risks but we completely disagree. For example, Cardinal Health is a beta of 0.89 which is less than the market average of one so it's safer. However, its growth metrics show that it has plenty of room to appreciate. As you can see Cardinal Health offers impressive growth potential with a PEG and a G-prime that trumpled its main competitor and its industry. We believe that strong fundamentals will yield growth in the long run without the anxiety and potential losses that come from that come from risk. The next stage of our fundamental analysis is profitability and liquidity ratios. International flavors and fragrances is the perfect example of a fundamentally strong company based on cash management. As you'll see behind me, IFF returns over 11 and a half percent on its assets which is double the industry average. Similarly, IFF also returns over 26 and a half percent on its equity compared to an industry average that is merely half that. Clearly, IFF uses its resources very effectively to generate profits. However, they also use their resources responsibly. You can see that they have a current ratio of 2.3. That number shows that they can easily handle their short-term liabilities so they won't be caught in a cash crunch. The third and final stage of fundamental analysis is cash flow analysis. The three major types of cash flows are cash flows from operating, cash flows from investing, and cash flows from financing. Cash flows from operating shows the profitability of the day-to-day operations of firms major business practices. In that sense, it is the most important cash flow that we analyze because it shows whether a company's business practices are growing or not. Cash flows from investing shows how a company is purchasing and selling its capital assets. Lastly, cash flows from financing shows how a company uses both debt and equity to fund its business. Equifax has the strong cash flows that we look for in a company. Its cash from operating activities has been increasing each year since 2010 with consistency quarter over quarter as well. In addition, its cash from operations its cash from operations has been currently growing at a 26.5% rate with no signs of slowing down. I now would like to invite up Jake, Kelly, and Nick to discuss our behavioral analysis. Thank you, Rachel. The next analysis technique that we use to determine if a company is a good fit for our portfolio is behavioral analysis. Behavioral analysis is any positive or negative news that impacts a company's stock price and comprises 25% of our total analysis. Because of the amount of news available to us, we have to continuously decipher whether news actually impacts a company's overall value and which news is just there to sway the uneducated investor. Behind me on the board are a few examples of behavioral factors that we have encountered this semester. As Doc has always stated, the key to being a successful analyst is being an educated analyst, one who can determine what news has already been embedded into a stock's price and what's not. For example, there's been a lot of hype around the imminent release of Star Wars The Force Awakens and we believe that this has already been priced into Disney's earnings. However, many uneducated investors believe that this will still be a huge plus for Disney's earnings. Now, we recognize that the new Star Wars movie is expected to generate roughly $2 billion in sales over the next 12 months. Now, considering Disney is expected to earn $52 billion in revenue in 2015 alone, the new Star Wars movie will only count for less than 4% of their total revenues. Another example of the uneducated investor being swayed by behavioral news is Visa's recent acquisition of Visa Europe. When the company announced the acquisition on November 2nd, Visa's stock price dropped 3% that day as investors took the news of Visa acquiring the less efficient Visa Europe as a negative for the company. However, we recognize this as a positive for the company as this acquisition was expected to add millions of card accounts to Visa's already impressive portfolio. Therefore, we elected not to sell Visa and help the company through its initial sell-off. Now, let me tell you, this volatility was a scary time for us as we couldn't be certain of Visa's outcome. Our patience was rewarded as on the next day, Visa's stock price rebounded 3.5% back to its prior trend channel. Insider buying and selling is another behavioral factor that influences our portfolio on a daily basis. The SEC requires that all insider transactions be made public and investors can use this information to get an insider's perspective on the company. One example of insider buying that we have seen this semester is by the well-known tech juggernaut Apple. On August 24th, Apple CEO Tim Cook purchased roughly 46 million dollars worth of Apple share. He wanted to reassure investors that Apple's stock price was a huge bargain. Investors recognized this act of confidence by the CEO and began to pile back into the company over the next couple of weeks. Another behavioral factor that greatly influenced our portfolio throughout the semester was changes in analyst opinions. Now one of our top holdings in the technology sector this semester is checkpoint software technologies. After about a month after buying into the stock, it was upgraded by Oppenheimer and company to an outperform rating with a $95 price target. On that day, the stock moved higher by about a half a percent even though the S&P 500 fell by 1.4%. And as you can see, Checkmate have received many positive analyst recommendations prior to November 12th. This just emphasizes the importance of analyzing luxury sentiment and trends within analyst recommendations when studying behaviorals. Now having an actively managed portfolio, we recognize that there will be times that we will need to sweep a company based on behavioral factors. A company can have the strongest fundamentals imaginable, but if its stock price is continually impacted by behavioral news, it is an educated decision to sweep it for something better. I would now like to call Brian to join me in discussing modeling. Now while we use various financial programs in the Southern Cafe, we also spend a lot of time this semester constructing models of our own to evaluate companies further. And we use these models to confirm our initial decision to hold companies. To complement our research using Bloomberg and Quote Equity Plus, we use Microsoft Excel to construct these models. We then use these models to verify what current holdings still have growth opportunity and which ones we should sell off. We constructed a discounted free cash flow model. This model tells us if a company is over or undervalued with respect to its underlying cash flows. We incorporated a variety of factors into this model, including EPS growth, return on equity, and the weighted average cost of capital. The weighted average cost of capital, or WAC, is computed by summing the weights of debt, preferred equity, and common equity, multiplied by their respective costs. WAC acts as the discount rate for discounting 10 years of forecasted free cash flows back to the present. It is pivotal that we confirm that all inputs to this model are correct, as a small change in WAC, can cause a large fluctuation in the company's overall value. At the corporate value, less total debt yields the intrinsic value of common equity. In summary, we compare the intrinsic value per share to the current price per share. Now behind me are a few examples of companies we hold that our model confirms are undervalued and have significant room to the upside. For example, Apple, Cardinal Health, and Estee Laver. We also incorporated a factor into our model that takes into account a 1, 2, and 3% increase in WAC. As you can see, even with a 1, 2, and 3% increase, all three companies still show incredible room to the upside. And we hope that our model holds true in this regard. I would now like to invite up Megan and Ryan to join Brian in discussing portfolio construction. Thanks, Nick. While constructing our portfolio, the three key approaches we used were stock valuation, portfolio correlation, and weighting strategy. Each of these played its own unique role in ensuring the strength of our portfolio against its competitors. Now in stock valuation, we examine the underlying fundamentals of each potential olden. In portfolio correlation, we examine the directional movement of each of these picks within against each other. And in weighting strategy, we use a number of factors to determine the proper sector weights. It was important that we analyze the fundamentals of each of these companies to make sure that our portfolio weighted statistics fell in line with our growth objective. We sought out companies with a high G prime, and what that means is that the company has a maximum growth potential. Our portfolio weighted trailing PE of just over 22, and our portfolio full repeating of 16.86 ensure that our fund is trading at a low multiple in relation to its earnings. Another important metric that we looked at was the PEG ratio. The PEG ratio is calculated by taking a company's PE and dividing it by its expected growth rate. Our portfolio weighted PEG ratio of 1.75 aligns with our goal of finding companies that have growth persistence. After researching each company and pitching it to the group, we made a list of what we would like to hold in each sector. As you can see from the correlation matrix behind me, the next step was to measure how each stock moved with and against each other. In addition, the sales of red to green measure positive and negative correlation respectively. Now without proper diversification, an all green portfolio on one day could easily turn into an all red portfolio on another, increasing volatility and exposure to losses. Now through the correlation process, we're able to diversify our portfolio in a way that reaches the target of 60 to 70% positive price movement during any given day in the market. We also utilized Markowitz portfolio theory to construct a minimum variance portfolio by spreading our fund across 20 to 25 assets in at least 18 industries and across 8 to 10 sectors. By doing so, we were able to decrease our risk and increase our gains. Through further analysis of our portfolio, we learned that we are not properly diversified against market's potential losses. As a result, we reallocated into energy and basic materials to protect ourselves on the down days. For example, we added weight to the energy sector by adding Holley Frontier Corp and by sweeping our energy holding Valero for the more sector-correlated BP. Now this reallocation has effectively lowered our weekly standard deviation and fund volatility throughout the semester. The combination of sector correlation and diversification became even more prominent during this time as we looked to hedge our losses and increase our alpha. Behind me, you'll ultimately see the sector weightings that we decided upon. After figuring out our sector weightings, we then decided on each company. For example, in the industrial sector, we currently hold Nielsen Holding Zinc, Raytheon, and the Toro Company. In consumer staples, we hold CVS and Estee Lauder. And at the bottom of the screen, you will see our diversification into the basic materials and utility sector, where we hold international flavors and fragrances and WEC Energy Group. At this time, I would like to invite up Shannon, Rachel, and Nick to discuss our portfolio performance. We're going to discuss our performance in two frameworks. First, from the standpoint of time, meaning year-to-date and sensory allocation, and secondly, on both a raw and risk-adjusted basis. Displayed on the screen behind me is an intraday graph of the S&P 500 from August 20th through August 27th. You can see the market contracting going into the close of August 21st, falling nearly 4.5% in the previous few trading days. On the morning of Monday, August 24th, the market opened down an additional 6.5%. Now, at this time, CAFE bylaws required all holdings in both the growth and value funds to have trailing stop-loss orders to mitigate downside risk. Therefore, when the market opened, all of these stops triggered and, by 12.30 in the afternoon, the market had rebounded roughly 4.5% from its bottom. Now, at this time, all summer student fund managers were in New York City at the New York Stock Exchange. This was problematic as no one was in the CAFE to buy back into our positions in a timely manner. Thus, we were sitting on cash as the market was running. The market rebounded nearly 7% from its floor by the end of the week. Regrettably, these few days taught us that improper diversification and stop losses can really hurt a fund in times of extreme market volatility. Therefore, we now know that it is imperative to have a student fund manager in the CAFE at all times to monitor the funds. Although this may be hard to imagine, the events of these few days took our National Championship Caliber Fund to 1 out of 5% deficit to the market. It brought our alpha from positive 5% to negative 2.5%. And just a few days later, we inherited this fund. That's right, Shan. As student fund managers, we walked into a very difficult situation in which our preceding economic analysis, sector weighting scheme, and company selection proved pivotal to set up the fund for success going into the third and fourth quarters. Now, as we mentioned before, this year is a function of two stories. So let us first tell you what our overall year-to-date performance is. As you can see, we have returned 0.23% year-to-date, unfortunately underperforming the S&P 500. Although we were punished for not being well diversified, we were not alone in this situation as other mutual funds with similar objectives also underperforming the S&P 500 to a similar extent. We wanted to stress how we worked to get our growth fund from where it was when it stopped out to where it is today. Our goal was to create a more defensive portfolio in order to salvage some of our losses. Since reallocation, we have returned 5.5%. In addition, we then compared our performance against mutual funds with similar objectives. When talking about returns, it is important to understand the difference between raw returns and risk-adjusted returns. We use Jensen's alpha. This metric accounts for the level of risk we have taken on when evaluating our returns. Our holding period alpha is 0.8%, which shows that we outperform the market in terms of the capital asset pricing model predictions. We believe this to be further augmented by our low beta, which reaffirms our goal of creating a portfolio that can succeed in any market environment. By looking for companies with low beta, we have been able to effectively minimize the downside to our portfolio. Our portfolio-weighted beta is 0.88%, which shows that when the market moves, we do not move as much. Again, this only serves to reaffirm our goal of creating a defensive portfolio. I would now like to invite up Brian, Ryan, and Robbie to talk about the use of technical analysis in our portfolio. Thanks, Shannon. Purchasing and selling securities is a critical step in achieving our portfolio's ideal weightings. Now, one might think that this is an easy process, but it's actually one of the most stressful. Now, I'm sure we've all heard the phrase buy low and sell high. What happens when you're tasked with purchasing an entire portfolio over the span of one week? And in that one week, the market is rallying. What are we supposed to do? Wait for a pullback? And what if the market continues to run? Or on the other hand, what if we buy it at the high and when does the market actually encounter a pullback? In either scenario, we do not look all that educated. This is exactly what happened to us during our buy-in week on October 5th. All that we could do was make most educated decisions based on technical indicators and intraday trading. Technical analysis is the practice of analyzing historic pricing in an effort to capitalize on future market fluctuations. It provides real-time visuals through the use of Quote Equity Plus and Bloomberg for us to see when certain stocks are in both overbought or oversold scenarios. Now, it also allows us to see when stocks near relative levels of support and resistance, which indicate buy or sell opportunities, respectively. An example of a time in which we incorporated technical analysis was through the purchase of GAP, a leader in the retail industry. Now, as you can see, our science stochastics are both moving into the oversold territory below the level of support, indicating a great buy opportunity. Our forecasts prove true, as bullish indicators in the stock ran for the next week, yielding our fund over a 3% gain. Through our active management strategy, we were able to capitalize on the short-term price movement. Now on the selling side of things, Skechers USA was one company in which we were able to time our exit particularly well. We initially added Skechers into the fund as an industry leader with increasing upside potential. However, one day, we noticed several alarming factors surrounding the stock, which told us to get out of the company and get out fast. One of these alerting factors was decreasing revenues in international markets while the stock steadily grew upward. International markets, which account for 37% of Skechers' total revenue, was decreasing and as the stock was moving in a steady upward trend. Thus, the stock price was growing artificially. After further analysis, we became increasingly anxious about the stock's gain in volatility. And as the company approached its earning state, you'll see that the stochastics indicator moved into the overbought territory, indicating a good time to sell out. Now, we sold out of Skechers on October 15th. On October 22nd, the company released its earnings and immediately plunged 35%. Because investors realized that the company wasn't nearly as it wasn't nearly as strong as they initially believed. Through the use of technical analysis, we were able to preserve our wealth and prevent the loss of more than one-third of our position's value. Now that you've seen the way we use technical analysis in both buying and selling opportunities, I would like to call Dave, Rachel, and Kelly to discuss with me our lessons learned. Every student fund manager can tell you that we treat every day in the cafe as a job. We do recognize that the academic component comes from the lessons we've learned throughout this semester. We can stand in front of you and list off every lesson we've learned this semester, but we're going to focus on the ones that directly apply to working in industry. One of our most encouraging lessons we learned this semester was our earnings play on Nike. We learned early on that if we adhere to our top-down strategy and perform our due diligence, we can achieve great success in industry. When analyzing Nike as a potential earnings play, we first began with a macroeconomic background. Global markets were silphing the effects of China's currency devaluation, which we felt would help boost profit margins as well as overall guidance moving into 2016. In addition, the company had not missed a fiscal quarter one earnings estimate in over 10 years. By holding Nike through their earnings release, we were able to gain our portfolio a 9% hike. This was great as a confidence booster because early in the semester we were still fairly inexperienced as investors. But if only every earnings play went so well. One painful lesson we learned was when we tried to do an earnings play on NXP semiconductors. This trade taught us that even when the stars seem to be aligned with 100% certainty, the market will still find a way to use you. This company hadn't missed earnings since quarter three of 2011. They were also up 18.5% year-to-date prior to the earnings call. The company boasted increasing cash flows and forecast expected substantial growth out of this company over the next three years. We thought the company would hit their earnings estimates and we were right. They actually set their company record for profits. They went up 1% after hours and we thought we had nailed the earnings play. Except then the next day we were listening to their CEO's earnings call and he started to rip lower management. He also said he had no idea where the revenues were going to come from next year. Not surprisingly, investors didn't think too highly of that and they started panic selling in Europe. But the time our markets even opened they were down 17% and we stopped out to cut our losses. This just goes to show you can never be too confident because the market can always backfire. Another important lesson we learned this semester is that timing is everything. After deciding what assets to allocate into our fund buying in required a large amount of technical analysis. One stock we were particularly bullish on Comfort Systems USA unfortunately didn't make it into our fund due to technicals that didn't align. As we waited for cash to clear in our account Comfort Systems USA ran to its 52-week high so we felt that we had missed our buy-in opportunity. Thus we had to quickly go back to the drawing board and find another industrial pick that would yield our fund substantial growth. Comfort Systems would have made a valuable addition to our portfolio. However the lesson that we learned is you can't chase the perfect stock if it's not the perfect time. Aside from the financial lessons learned this semester we also learned some valuable life lessons. Doc made it very clear on the first day that this should not be treated as a class but a job. In that sense we were thrust into an environment where we would have to use both teamwork and time management to meet a substantial amount of hard deadlines. When you have the privilege of managing real money there's different expectations that go along with that than the normal classroom. For example every morning when the market's open we had a report due at 4 a.m. That was about foreign markets and commodities. We have to stay up to date on any news that's relevant to the fund at all hours of the day. With real money on the line we didn't have time to argue personal differences but rather we were challenged to utilize those differences for the benefit of our portfolio. In these valuable life lessons and experiences have provided us with the potential to travel abroad and present our portfolio in a professional setting. I would now like to invite Jonah and Nick to assist Dave in discussing our forecasted performance. Thank you Kelly. As we have said we've had a tremendously difficult time forecasting whether economic or market conditions are going to be moderately bullish or moderately bearish. With this in mind we do have a fairly neutral outlook for our forecast. I would now like to recall our current holdings and take you through a few examples of companies that will do well in either a bull or a bear market. In the possibility of a bear induced market by an oil supply shock we have BPPLC a company directly tied with oil. They also boast an incredible dividend yield of around 7% which will provide us with some income during bearish environments. War and acts of terrorism are two forms of systematic risk that are extremely hard for investors to prepare against. Fortunately we hold Raytheon. Given all the turbulence going on in the world nowadays we felt it was necessary to hold a company with such close ties to the U.S. Defense Department to prepare. Then we have Tiva Pharmaceuticals a generic drugs producer. Generic drugs are considered economically inferior which means during times of contraction and recession their demand actually increases. This was made evident by their stock price appreciating during the bottoming out of the S&P 500 in the financial crisis of 2008. Berkshire Hathaway is a massive company with over 60 subsidiaries and minority holdings and many more. This incredible diversification will allow Berkshire Hathaway to perform well in any market environment. Additionally the company sits on a healthy bed of cash which will allow it to succeed going forward even if the market takes a turn for the worst. So that's the bear case but now let's try the glass half fall. If the market does run Cognizant Technology solutions should thrive they handle the data processing and outsourcing needs for companies in many different sectors so if the market is running they are poised to capitalize on that success. In a bull market driven by a rise in interest rates the financial sector will do extremely well. One of our holdings in particular the intercontinental exchange will succeed in a rising interest rate environment. The intercontinental exchange generates a majority of its revenues from futures transactions and over the counter market fees both of which are expected to increase in a rising interest rate environment as can be seen from the period between 2004 and 2008. And in a bullish market we can have some bullish consumers so the consumer discretionary sector is going to succeed and so will certain holdings that we have such as Home Depot and Starbucks. People, consumers who have more money to spend will look to buy more premium goods such as more luxury coffee and home improvement products. Realistically not even the most seasoned analysts can predict the market the market's direction accurately a hundred percent of the time. So we feel we've done a great job preparing our fund for whatever conditions may present themselves. And now I'd like to invite back up our associate directors to close out the presentation. All right, you guys have heard it from everyone up here. We can say without a doubt our portfolios prepare to successfully perform in whatever environment we encounter over the coming year. We constructed a defensive growth fund to protect ourselves to the downside without limiting our upside potential. This is a staple of how we do things in the cafe and is what differentiates us from fund management programs in academic institutions across the nation. While this may be hard to believe everything you've heard today is just the first step of being a student fund manager. We also require these student fund managers to write four daily reports the 4 a.m. the 10 a.m. the noon and the market close. These reports include vital information about our holdings and also allow these student fund managers the opportunity to express their opinions to everybody without having everyone in the cafe. To further drive home and emphasize what makes us stand out in the cafe is our work ethic. Now as many of you former student fund managers and future student fund managers are aware it is not an easy task managing a quarter of a million dollars every day for four months. They did so while it's being full-time students and they gave up countless hours on their weekends and nights and sleep to work towards bettering our investment fund. Eric is absolutely correct other than our stunning good looks our work ethic is truly what makes us stand out. This the cafe is also a perfect example of experiential learning that you just cannot get from a normal classroom. At this time we would like to thank all of us from the cafe would like to give a big thank you to Hans Christensen for sponsoring our trip this upcoming spring to Edinburgh, Scotland and London, England. So let's get a round of applause you couldn't be here today. We would like to thank everyone who donated today or pledged to donate the Cafe Advisory Board Cafe Alumni Mr. Eric Rolo we would like to thank all of you because this sponsorship money is huge for us because without it we can't go on these foreign trips and we're not just going on foreign trips and sightseeing we're going and presenting to you know institutions and we're going to academic programs so this is experience that you don't get at most undergraduate programs so it's huge to us. So another round of applause for all of you guys. At this time we'll call up everyone from the cafe and open the floor to questions and comments so you guys may have. I guess I'll lead off first of all congratulations I think you guys all did a great job so tie yourselves on the back just a quick question regarding stop losses roughly how many companies did you guys stop out of and out of those how many were you able to reinstate into the portfolio? Yes, Fendi. On August 24th we stopped out of every company that we held the market was down 6% all of our companies were down over 10% so they all stopped out I was over the summer so we bought back into some of them but we didn't buy back early enough and we missed about 5% bump that the market came back And unfortunately all of us didn't walk into the room until I think it was August 30th or September 1st so for the most part there was no one in there to buy back in and it really left us in a hole as mentioned on the presentation Guthrie? Kind of taking back up well first of all congratulations guys you guys really all did an incredible job and we all know you know the effort that it takes to get to this point so hats off to you guys My question taking back up with him as well is as your group now how would you guys have handled buying back in your portfolio after stopping out? I think a big difference that we would have had is just to try to stay vigilant about the fund we are an actively managed fund here in cafe and so we really are reliant on kids being there during the day when the markets open two people have to be in cafe at all times so when you are in New York obviously you are not in cafe but I think we would keep that active management mindset and just be more vigilant going forward not to mention we all took technical analysis with Doc over the summer so you know that was freshening our minds in terms of like a great buying opportunity so we would rely heavily on technical analysis in terms of when is the proper time to buy into those stocks I'm assuming you are here you heard the New York Stock Exchange is going to stop doing the stop-limits yes it is back to the class branches on it but have you ever this thought about stop-limits you know stop-limits are also a good mechanism to use in terms of trying to reduce your risk and we will consider those especially if stop-losses are removed however the key for us going forward is really to focus on that active management that way we are not caught in a situation like we were this August again now do you guys you are in domestic equity right now correct for the most part yes and how many how many holdings per we have 27 funds in our portfolio is that usually 27 funds in our portfolio it's usually between 20 to 27 depending on how we allocate who you guys have a decision maker when you want to go off to emerging markets when you see an opportunity or to cash fund markets no matter what no matter what trade they make it has to be approved by I think it's 80 percent of the student fund managers themselves and it has to be approved by one of me Zach or Doc so if they do want to go in the emerging markets that's fine like we did with NXP semiconductors but like we said and there is an order of a becking order that you have to adhere to you have to buy one stock right now what would it be cognizant technology solutions they're from our top down approach they're in the perfect industry for success the IT services industry is fantastic in tech right now they have great margins and they're really poised for success going forward another possible company that we'd consider would be intercontinental exchange we see a lot of benefit for them going forward especially with the new acquisition of the New York stock exchange the job on this day to see those yeah I mean I think that they're definitely gonna positively impact Yellen's decision coming up but who knows I mean truthfully unemployment's a very interesting factor especially when people such as Janet Yellen discuss it however when we viewed unemployment we still notice even to this day that labor force participation marginally attached workers and discouraged workers even underemployed workers are still very very bearish in terms of trends so despite seeing positive jobs postings we still don't see unemployment as healthy as it could be essentially we don't think unemployment is as healthy as the U3 rate that's showing it is this year's being stopped out of everything gave you a clean slate to create a portfolio from scratch this year typically do you have any strategy or method to create continuity or consistency from semester to semester year to year or does each team every year recreate the wheel so a lot of the time in our growth fund we are allowed to change things up frequently we make trades and different things like that it's more of the learning aspect of it however in our value fund which is the other fund that we operate that is more of a buy and hold approach so we consider reallocation every semester in that but that fund tends to have much more continuity than this one were both funds stopped out though? both funds stopped out both funds were required to have at least 10 percent stop on everything and for the most part 95 percent of our funds stopped out and Cheryl it's from personal experience and I remember we went to the exact same thing we all we have a pretty sure responsibility at cafe but when we also think about you know this is this is one investment of our life we also think about all these other investments we're doing like a show of hands on in your personal portfolio is how many of you is your your timeline so like how many of you wouldn't even have stop losses? I would say since you know the advent of technology being able to just do it on your phone you know manage money on your phone it's very easy to you know check it every hour when you get out of class so for the most part I would say that stop losses are kind of a dying breed especially especially after all of us have been snake bitten by them after walking into the environment we did so for the most part I would say stop losses as the New York stock exchanges proposing are going to be gone you guys experience any times when you stopped out of something or you had a a stock go down greatly in you so we typically we this semester we've you know whatever you see something fall by a drastic amount you want to figure out the root causes of it is this an anomaly is this something we would be overreacting to and panic selling or is there something fundamentally that's changed about this company so we evaluated on a case-by-case basis and just taking a look just for an example Nike this semester which we talked about we held for an earnings play you know we sold out and took our gains there and then retail sales data came out and consumer discretionary and retail companies as a whole went downward and we ended up purchasing Nike again for short term later in the semester I agree exceedingly good-looking groups you guys worked very very hard congratulations all that thank you very much something that you guys enjoyed that you had fun doing yeah and had up to the whole group someone else can talk personally I really had fun on the day it was a bad meeting in September when we were all bedding on Mother Janet Yellen which used to rate interest rates not and we had all the monitors going in the classroom and we were watching everything so intense but everyone was in there and working and I thought it was really fun personally I really enjoyed going through the selection of choosing companies me and Dave our tech sector analysts and looking for value companies when everything is run up to it's 52 week I was a little difficult but the challenge was really a lot of fun for us we were able to sift through pretty much every company so now I can say I have a really good grasp on the tech sector so you guys did a great job but what you've used on the energy sector right now with the oil prices going something is actually as well as the interest rates yeah so we found energy to be an extremely important hedge for our portfolio this semester prior semesters had in allocating any capital towards the energy sector but again we found that when Dave was in the market was down usually energy would be one of the sectors that was leading so again it was important to diversify into energy and then from an interest rate perspective I mean just yesterday Janet Yellen and the Federal Reserve were giving strong indications for an interest rate hike coming in very soon even in December however a lot of the things that they cited the two things they cited in September for example headline or in their in their case headline PCE and global markets were are still not at the level that they like along with that labor force slack is still there so while many economists feel that an interest rate hike may be coming in December I think a lot of the group is still fairly bearish on that and believe it could be later also to touch on that as you know probably the strong dollar is infersely correlated with the price of oil so an interest rate hike should strengthen our dollar even more so we may have to reevaluate our BP holding and get out in case oil plummets even further going back interest rates Janet Allen has also emphasized not the timing of interest rates but the pace at which at which she delegates them so we're also fairly neutral for the question questions so I wonder it's okay it's okay go right ahead sorry would you guys ever buy a newly listed company after its IPO? why or why not I would say as a rule of thumb we don't really buy a company as if unless they've IPO'd after four years for us it's just a little too risky for our growth portfolio or for blend portfolio we try to remain a little more we've on the safer side so anything that has IPO'd in the past four years we'd probably be away from also if you're just looking at the past six months if IPOs for the most part have been fairly unsuccessful so it's it would be a pretty volatile move and risky move on our part to invest in any of your portfolio we don't we don't have any gold in our portfolio we did consider it as a hedge but it has been kind of hammered down recently so we currently don't hold that in we actually initially when we selected companies did hold a bank people's united bank and we were able to realize a six percent gain on this however due to the Fed continuously pushing off the interest rate hike banks in particular have been really hammered down this year so far so because of just our uncertainty over when Janet Yellen will raise rates we've elected to stay away from them by the time being and with regards to the insurance industry they've been hammered so so in terms of like our growth objective we didn't really foresee growth within the next few months and in addition we didn't hold any big banks due to some concerns about the TLAC uh requirements that are come out and also I'm sure a lot of you know the Federal Reserve just announced that they're no longer the Bank of Last Resort for banks so we thought that was a lot of risk that they're going to have to adjust their lending and see if they're probably becoming more conservative I'm assuming with the lending that they bring them out one company we were very optimistic about was Wells Fargo but like Zach mentioned with the TLAC requirements if you tend to rely on risky or lending you're going to have to pay penalties or increase your tier one lending and so as banks adjust to these regulations we decided to stay out of the fray for a while so if you could waive a wand and short a stock which one would it be and uh does your kind of views on insurance tempt you to short it or not do you imply by our portfolio waive a wand I thought you can't short so I'm saying if you could if you had the power to short would you and where do you see opportunities to short if you could I mean I'm sure that we all have different opinions as as to what's the most overvalued thing out there but for example Weight Watchers after Oprah just said she was going to buy 10% stake in the company we know that that isn't actually as viable of a stock considering it's ran up almost over 150% yeah since the event so that's one stock I guess we would sure but everyone else has different opinions on certain stocks if you guys want to weigh in we recognize that the risk profile for shorting is a lot different than the risk profile for going long in a stock it's a lot more risky to short a stock so even if we have the opportunity to short we might not unless we want it to reduce our overall net exposure to the market but in that case we might just move more to cash then then go short in regards so I know we talked a lot about the portfolio but I think one of the other key aspects from the cafe is around leadership and being able to build relationships and figure out who you can and cannot work with so could you guys give some instances on where you may have had cafe tips and kind of how you guys worked through it together as a group and resolved what's maybe what's stocked by and kind of how that brought you better to kind of get get ready for the industry because you're not always going to get along with your co-worker I think this is a great experience for all of us because I can definitely say there are some big egos in the room mind being one of them we all were pretty highly achieving students as part of the requirements for being in the program and everybody has their opinions and wants to get their two cents in but I think we all learned to work together as a unit and we were a lot more cohesive by the end you definitely you know we always say that we treat each other like family so there's a good side of that and that we all like each other and also we're willing to argue with each other when it's time to do that so it was a great learning experience from that angle just the peer amount of time that we spent together I mean we're forced to be together all the time all the time every day we're forced to spend over nights with each other we really spent that time trying to figure out our differences and work to better the fun instead of personal differences well that seems like a really good place to conclude the question and answer period so I hope you'll join me in giving a round of applause not just to the students up here but to their advisor and mentor Dr. Michael Melton let's see the college a few people who have been very very supportive of the cafe program from the standpoint of our trying to raise additional resources and Eric already mentioned Hans Christensen who has been a great supporter unfortunately he could not be with us here today I'd also like to recognize David Costano who is an alumnus of Roger Williams University and with Bank of America who could not be with us and Deborah Stokes an alumna of Roger Williams University who also was a big supporter of the cafe and who unfortunately also could not be with us today but I would like to recognize all of those three people as being incredible supporters of this activity for the students and for all of the things that they try to do and accomplish in their work in the cafe and I'd like to just kind of take off on that okay well it helps that make this opportunity to make a very special announcement which we made to the alumni earlier today at lunch but I'd like to make it to all of you while you're in this room we are announcing today the launch of the campaign for the cafe and this campaign has three component parts to it one component part is the alumni initiative where we ask the alumni at lunch to provide some support for student travel the students take two trips a year outside of the United States to present their portfolios and their research methodologies and these trips requires support and we've asked the alumni to gather together and to help support this effort through a crowd sourcing hubbub activity that's going to open in January on the 15th there were two other components to the campaign for the cafe one is the major gifts component and one is the corporate support component and we already have three major gifts under the under the major gifts portion of the campaign from the people who I just mentioned we are building relationships with organizations companies to help support the cafe as well and there's information about this new campaign for cafe in the folders that you were given when you arrived today and so we hope that you will look at that information and consider the possibility of supporting the cafe in some way a small or large any and all support is very gratefully accepted and welcomed and appreciated so I'd also like to invite all of you parents friends alumni to join us and stay with us for the reception that will should be set up right outside we can continue the questions and answers there I hope to have a chance especially to meet all the parents who are here today and I want to extend a special thank you and welcome to you and to our corporate friends that have taken the time and trouble to join us today as well so thank you so much for being here we hope to see everybody back in May for another great presentation but you guys did a wonderful job thank you again thank you