 I was like, just here a few years ago. Well, all right, look, I really appreciate you guys all coming out. This is a really great program that's near and dear to my heart. I was a student fund manager in these guys' shoes a few years ago, and it's been incredible for my own specific career, my own personal growth. I think it's a really great opportunity for these kids to be able to do something real life, and something that they might not have the opportunity to do, and definitely not at other schools. These guys were able to compete on a national level, which I did incredibly well at, and I want to be able to give the right thanks to the right people. First, none of this would have been able to happen, or none of it would have been able to be possible without Doc, Dr. Michael Melton in the back over there. It's hard work, late nights, not just from kids, but also from Doc. It would never have been possible without the actual support, and without the hard work from Doc. I'd also like to thank the faculty, as well as President Ferris, thank you for coming. I see you every single year, and I can't tell you what your support means to the group. I'd also like to give you a hand. So with that being said, I'll stop talking, and I'll give it up to Dean McTiernan. Thank you, guys. Good luck there. Great job. Everyone, I'm Susan McTiernan. I have the pleasure of serving as Dean of the Gebelli School of Business here at Roger Williams, which many of you already know. This is a great event, and it's wonderful to have all of you here this afternoon. This cafe program has been unbelievably successful under the direction of Michael Melton, and I think it is just about the best manifestation we have of the experiential learning focus that is at the core of everything we do at Roger Williams University and at the Gebelli School of Business. These are students who are very dedicated and hardworking. We have lots of alumni with us here today, which is really terrific. And I'm so glad that we have such a beautiful day. It certainly helps when the sun's out, and it's about 73 degrees here on our beautiful campus. I'm going to say a few words after the presentation about our reception, but I just want to put a little bug in your mind to please consider coming over to our building for our reception after this presentation. If you have not seen our new cafe space, the E.L. Wigan Center for Advanced Financial Education that was dedicated on March 2nd on a day that was not nearly as nice as today. As President Farrish probably remembers very well, and so does Dr. Melton, please make a point of coming over and having some repast with us and seeing our gorgeous new facility for this extraordinary program. So with that, I will turn it over to our extraordinary students to begin the talk. Good afternoon, ladies and gentlemen. As the Center for Advanced Financial Education has done past presentations, today we are pitching both our growth and value funds. However, unlike last time, we are going to be pitching our funds rather than educating you on each one of our holdings. Along with this new style of presentation, we have been granted the E.L. Wigan Center for Advanced Financial Education to use for the first time this semester. The new cafe has transformed our environment, where we now have more space and more technology that allows the program to accept more students. And as Dacoé says, with greater numbers comes greater ideas. The new center came equipped with large screen financial workstations. This allowed students to perform behavioral, fundamental, and technical analysis in real time. Additionally, we use industry-like financial platforms such as money.net, Bloomberg, TD Ameritrade, and Thinkorswim. With this industry-like workspace, professionalism surrounds everything we do in the cafe, from the way we dress to our daily reports. Not only are we in the cafe during market hours between 9.30 and 4.00, but we've spent countless all-nighters researching and preparing for various financial events that are involved in managing these two real-dollar portfolios. This is also, not to mention, the completion of a 4.00 AM report every weekday morning. Cafe is not structurally a typical class. Rather, we work as if an industry. Understanding the value of an autonomous work environment while pushing decisions up a chain of command is at the core of the cafe program. Through this, each student fund manager has gained the skills to become analysts, traders, and portfolio managers. As analysts, our first responsibility is to research aggregate economies and financial markets, both domestically and internationally. We then narrow down this approach to sector and industry analysis until finally looking at specific companies. During this process, we're searching for catalysts that we believe will drive these sectors and industries across the globe. Unlike our counterpart to the undergraduate level of academia, the student fund managers are able to execute their own trades. Just like an industry, we cast a collective vote on all potential holdings, only needing the approval of our AD, Stephen Karan, and ultimately Doc. It is important to note that this setting affords this immediate execution and provides us with yet another valuable industry experience that is rarely found in academia today, namely the opportunity to play earnings. All of these above responsibilities will be illustrated throughout the rest of the presentation, and we'd like to thank you all for allowing us time to give you a brief background on our cafe portfolio management program. As student fund managers, we're responsible for holding to our goals and objectives set in our investor policy statement to construct two all equity portfolios from scratch. For our growth fund, we use a momentum-based strategy focused on short-term gains and key catalysts. Through wisely constructed portfolio weightings, we have successfully diversified risk across countries, sectors, and industries. Holding period performance is benchmarked against the S&P 500 on a risk-adjusted basis using alpha as the requisite benchmark. For our value fund, we use the buy and hold strategy. Incorporating the theory of value investing introduced by Benjamin Graham and used today by influential value investors like Mario Gabelli and Warren Buffett, we use these specific metrics and models in order to find undervalued companies. Our focus is on finding those drivers that will make these discounted companies lucrative investments over time. Our target client for value is one who seeks returns through higher-than-average dividend yields and longer-term capital gains. Now I would like to introduce you to the different processes we use when constructing both our growth and value fund. We begin with a domestic and international top-down approach in order to target companies that limit exposure to both systematic and unsystematic risk. We started with an in-depth analysis of market, economic, and geopolitical climates in order to find the safest regions to invest in. When searching for growth stocks, we focused on key catalysts that would drive each sector and industry forward throughout our holding period. We used behavioral, fundamental, and technical analysis to determine where we still saw growth after years of substantial returns and bull markets pushing valuations to their highest levels. In contrast, when investing in value, we put emphasis on the long-term economic outlook driven by different catalysts. And as I mentioned before, we used a momentum-based strategy searching for stocks to strong-establish uptrends in the market. We asked ourselves, what can this stock do for us today? As our holding period for our growth fund is much shorter than that of our value fund, we wanted to find stocks with immediate high upside potential. In contrast, when investing in value, we took on a buy-and-hold strategy, looking for companies that were undervalued but that we believe will outperform in the long term. Since our holding period for our value fund is a lot longer than our growth fund, we can't expect to see the same short-term gains that we saw in our growth fund. Instead, we emphasize patience in the performance of our value holdings in the long term. And as Badi mentioned before, our top-down analysis allowed us to learn a significant amount about every sector and industry that we looked at. This allowed us to play earnings, however, it was extremely important for us to have sweeps at the ready to be prepared for any situation. In contrast, when investing in value, we looked for companies that were trading at a discount to their average price. We put together key metrics that represent value and looked for companies that best fit this criteria. Additionally, we looked for increase in cash flows to show that although a company had been beaten up, it was still generating profits. And lastly, we looked for catalysts that would drive the company in the long term while also taking into consideration the company's long-term debt. We would now like to introduce you to our growth holdings. Although the main focus of today will be on our value fund, it is important to discuss the holdings, weightings, and key aspects of the cafe growth fund methodology, which differentiate our program from our peers. As mentioned before, the cafe growth fund is a portfolio and a cafe. As mentioned before, the cafe growth fund is a portfolio constructed entirely from scratch, never inheriting a company from the prior semester. The main goal or objective of this fund is to have each student fund manager perform every aspect of the top-down approach, starting with an initial economic analysis through company selection, portfolio allocation, and finally reallocation. As you have seen, our growth holdings are diversified across nine different sectors and 26 different industries. We chose to weight each sector based on various short-term drivers that we discussed in our original economic analysis. Here you can see our weights relative to the S&P 500. We chose to overweight the healthcare sector, being known that this is known to be more of a defensive sector. We also really liked this sector because it was unaffected from rising interest rates, trade wars, and tariffs. On the other hand, we chose to avoid the real estate sector due to the rising interest rate environment that causes more risk than reward in the sector as a whole. As illustrated in our last slides, our momentum-based strategy seeks alpha through our sector weightings. But before we get to alpha, we'd like to talk to you about our raw performance and other risk measures that we use in the cafe. This chart shows the performance of our growth fund over our holding period. As you can see, our fund has outperformed the market on a raw basis as we have lost less than the S&P. Our sharp ratio is calculated by finding the risk premium, then dividing this number by the portfolio standard deviation. Our sharp ratio is larger than that of the S&P 500, meaning for every one unit of risk-adjusted return, we're beating the market. The trainer ratio is calculated by dividing the risk premium by the portfolio's beta, which is its level of systematic risk. As you can see, our trainer ratio is larger or less negative than the S&P. This means that for each unit of systematic risk, our fund is losing less than the market. This means that we are outperforming. Although we take sharp and trainer ratios into account, we place the most emphasis on alpha. Alpha can be described as the risk-adjusted return of an investment relative to its benchmark. We find the portfolio's expected return using the capital asset pricing model, or CAPN, in which the portfolio's return is predicted by its beta. We then compare this predicted return to our fund's actual return to find alpha. Our positive alpha means that we're beating the market on a risk-adjusted basis. We're protecting our clients from the downside while also preserving their wealth. But properly waiting our growth fund holdings is not the only way that we attempt to generate return in the short term. We also use technical analysis. As we previously talked about that he has, that we as a student fund managers put on, we would like to use the CAFE growth fund to illustrate how the student fund managers are traders. As traders, we use technical analysis to determine the optimum buying or selling points for our holdings. This is one of the major differences that sits the CAFE portfolio management program apart from other academic institutions with a student managed investment fund. Typically taught at a graduate level, technical analysis is a form of financial analysis that uses charts and price patterns to determine the optimal buy and sell positions. Now, since CAFE is an actively managed fund, it's very important that the students understand the various sell and trade triggers to indicate if a company's either overbought or oversold in the short term. Now we would like to show you an example of how technical analysis was implemented for the purchase of our holdings, film 66. In this example, we looked at various indicators that triggered our buying signal. The first thing that we noticed was the divergent crude oil against the energy sector, including film 66, which was unusual since energy companies are highly correlated with oil price movements. Another indicator was the confirmation of a double bottom. Now in technical analysis, a double bottom indicates a long term price reversal. And when we saw this, we knew that PSX had found their price floor. The last thing that we looked at was the moving average convergent divergent, or MACD, which serves as price momentum indicator. Looking at the MACD, we noticed a divergent of the 12-day moving average, the red line, from the 26-day moving average, the white line. This led to a crossover of the centerline showing that upside momentum is increasing. Because we're an actively managed fund, we're always prepared to make any necessary to our changes to our portfolio if need be. If a macroeconomic event were to change our investment thesis, we would be prepared. During our semester, this was the case. Throughout holding our fund, we experienced various negative impacts from trade wars that affected the global economy. The first thing we noticed was in late February, when steel and aluminum tariffs were imposed, this affected all global markets. And shortly after this, in mid-March, additional tariffs were imposed that further increased the probability of a global trade war coming to fruition. We chose to hold 3M in the earlier part of the semester because of their strong fundamentals as a diversified industrial conglomerate. However, we saw that 3M would be one of the companies that would be affected the most from these proposed tariffs due to their international exposure, especially in East Asia. Ultimately, we're forced to change our alloc on industrial conglomerates and sell the company. Although global issues like these do arise, it's events like these that we try to prepare ourselves for in the cafe. We sold 3M and moved to a company in an industry that was less exposed to this type of risk. Specifically, Jacobs Engineering, an engineering company that focused on construction and engineering in the services segment rather than manufacturing. And since Jacobs is in the servicing industry, they are far less exposed to the various trade risks and price fluctuations than one would see with a global trade war. When buying JIC for the growth fund, technical analysis was also implemented to determine the optimal buying point. Looking at the chart behind us, there are several factors that confirm the buy for JIC. The first element that we saw was the sale of we had been seen as industrials were getting hit by trade news. Turning to RSI, you'll notice JIC was very oversold as RSI was measuring under 30. After this, we saw them input a higher low indicating they were an upward price pattern. And this indicated our buy in point. We also saw a confirmation from this in the divergence of the MACD that showed this upward price momentum was going to continue. Now, Pete and Austin will talk to you about how we approach earnings in the cafe. Thanks guys. Now let's put on two hats, both an analyst and a trader. At the beginning of earnings season, Doc requires us to make earnings plays knowing that a thorough analysis, like the one behind me, is necessary for us to call it right. That means that a company not only reports solid earnings and revenues but has superior guidance moving forward. Applying earnings can be a very exciting process as large price swings tend to follow these announcements. As many investors knows, we can see these exponential gains as well as substantial losses. And we've been on both sides. In order to make a proper earnings analysis, we must do our due diligence in order to make a recommendation on whether or not to buy, hold, or sell a company through its earnings. Some of the key factors that are part of this analysis include looking at prior track records earnings reports, the time of these reports and whether or not any main competitors have reported. By looking at prior track records, we can see if this upcoming quarter is historically a successful one for this company. Also, if any main competitors have reported and seen a positive price reaction after, it's usually a good sign for a company. There are also other things that we look for when a company is about to report earnings. Primarily, we start with price movement, then we look for a company for street expectations and any news that could affect guidance for that quarter. If we see a stock's price increasing with positive guidance revisions, this tends to be a good sign. We put our analysts outs on to determine if we want to hold Zotus through earnings or sweep them with laboratory quarter. After looking into Zotus more, we felt that they'd become overvalued during our holding period with a strong yearly gain of 50% and then trading near the price target. After discussion, we decided that laboratory corp had more upside, so we decided to take profits from Zotus and sweep them. We'd also like to announce that as of this week, Zotus reported their earnings and saw a negative price reaction of negative 5%. Laboratory corp is a healthcare service and provider that offers clinical laboratory testing, patient diagnostics, especially testing of operations and monitoring the treatment of diseases. We saw more upside in laboratory corp because of their exposure into the diagnostics and service industry, which we are very bullish on due to Trump's plan to expedite FDA approvals. Many companies are losing drugs and patents. With this plan, companies in the biotech and pharma industry are gonna be able to increase the number of drugs they get approved. The easiest way for them to do this is to go through contract research organizations such as LH. Due to the increase in demand of clinical trials, we felt that laboratory corp was gonna benefit this quarter and report solid earnings along with a positive price reaction, so we decided to buy it. After due diligence, they reported and pop 4%, beating both earnings and revenues and raising guidance for the rest of the year. We are more than confident in holding laboratory corp moving forward and we made the correct decision to sweep Zotus. My colleagues and I are now gonna talk to you about how we were able to make an earnings play with a company we already hold in our fund, Texas Instruments. As we first analyzed the broad industry of semiconductors, we were very skeptical on holding TXN through earnings as we saw a constant trend of negative price reaction after less than expected earnings from competitors. There was definitely some concern as Texas Instrument had a negative holding period yield which was hovering around our stock loss quota. However, our confidence within the company never faltered. We liked how Texas Instruments was more diversified compared to other semiconductor companies who strictly focus on chips for handheld devices. For example, their automotive and industrial segments are the greatest growth catalyst moving forward and these segments are gonna mitigate the losses from others that are expected to lag. In this chart above, you can see TXN has been outperforming its two main competitors, Lam Research and Taiwan Semiconductor Manufacturers. Not only this, but the day before their earnings at the end of the trading session, we saw a huge pop in their price which boosted our confidence as investors ran in to get in on the play. After the earnings report, the stock popped 4.7% beating both top and bottom line estimates. By making these earnings plays, this is how we outperform the market, i.e. generating our beloved alpha. We hope this brief introduction to our cafe growth front demonstrates all the time, effort and analysis that goes into actively managing our fund. Oh, and what we forgot to mention was that because we're an actively managed fund, talk requires that we stay up on our global news, our market sector performance, our funds performance and our analyst opinions over four daily reports. In your folders, we'll find examples of these reports that we write on a daily basis. We would like to emphasize our pre-market 4am report in which we start off each day with an update on international markets. Our remaining reports at 10am, 12.30pm and 5pm give us updates throughout the turning day on the performance of the market and our fund. We now like to introduce to you our Gabelli Value Fund. The fund that demands attention today is our Gabelli Value Fund. As we all know, 2017 was an exceptional year with the S&P 500 yielding 18.87%. We'd also like to point out that the cafe group during this time returned a whopping 26.75% outperforming the market. As former student fund managers will attest, given what we consider to be an over-inflated bull market in 2017, it was not easy to find value. Ben came 2018. We're sure that most of the industry professionals here will agree it has been one wild ride this semester. With volatility reaching new highs, news of potential trade wars, rising interest rates, oil price rally, and overall uncertainty in the market, many companies have seen significant re-evaluations. Investors are buying and dumping shares all brought about by this uncertainty in the market, which is shown in the volatility chart behind Lily and I. We've seen this period as an opportunity for traditional value investing. As Doc has said, rather than the new normal of 2017, we may be moving back into an old normal market environment where we can now seek value using the cafe's unique approach. The foundation of value investing is finding those companies whose stock price does not reflect the strength of their fundamentals or financial trends. Thus, most firms incorporate a bottom-up approach where they find a company that meets their ideology and they continue researching into the company's operations, their industry, and sector as a whole. Now, one might believe that with our value objective, we would take on this bottom-up approach. But we in the cafe do things a little differently. As discussed earlier in our growth fund, we've already incorporated a top-down approach that requires thorough domestic and international, economic, and financial market analysis. Now, if this has already been accomplished, do we as analysts just ignore these findings? No. Instead, we looked to factor in this information as well in hopes of finding those catalysts that may be more sector or industry-specific rather than just specific to the company itself. For example, we hold Torchmark Corporation for a number of reasons that are attributable to the company, including strong fundamentals and increasing cash flows. As we first did our economic analysis, we found drivers on this company that made us believe it's gonna succeed in the future. For example, them not being affected by natural disasters and their main segment is selling life insurance where there's always an ongoing need. We'll now further discuss our investment strategy. Despite the high volatility we're seeing in today's market, we don't see the need to panic. Rather, we as student fund managers stress patience. With value investing, we see companies with strong cash flows, high dividend, and a catalyst that will drive each one of our holdings forward. How do we obtain such investments? The old-fashioned way. We live in the cafe, and as many of the alumni know, we literally never sleep. When searching for value, we stress the importance of increasing earnings and increasing cash flows. In addition to increasing earnings and cash flows, companies that have a stagnant price provide us a great opportunity for us to see a breakout. One company that is a good example of these increasing earnings and cash flows is Snap-On. Snap-On is a machinery company that manufactures and markets, tools, equipment, and diagnostics for professional users worldwide. You can see Snap-On's strong financial health through its cash flows. It is grown at a compounded annual growth rate over the last eight years at almost 30 and a half percent, while its operating cash flows have grown at a compounded annual growth rate of almost 22 and a half percent. Snap-On's cash flows are also better than those of its competitors. For example, Illinois Toolworks has more scattered cash flows with a less consistent positive trend. On the other hand, Stanley Black and Decker has had decreasing cash flows for the past two years. Snap-On has also continued to increase its wealth to its shareholders, as you can see through its earnings per share, growing at a compounded annual growth rate at almost 10 percent over the last eight years. In spite of these increasing earnings and cash flows, we saw that Snap-On was trading near its floor, as it had been on downward trend and underperforming its sector year to date. But as its stock price grows to catch up to these increasing earnings and cash flows, we expect to see a breakout from this trend. We saw some of this breakout with Snap-On's recent earnings beat after which we've seen the stock price hitting higher lows. In addition to financial statement analysis and cash flows, we also stress the importance of fundamental analysis when searching for value companies. Pfizer is one of our value holdings that we selected based on fundamental analysis. Pfizer is a pharmaceutical company that offers medicines, vaccines, medical devices and consumer healthcare products for oncology, inflammation, cardiovascular and other therapeutic areas. By analyzing key company and market fundamentals, we see that Pfizer is poised for solid growth in the near future. Compared to its competitor, Merck and its industry, Pfizer outperformed on the basis of all key valuation metrics, as Pfizer is undervalued on its trailing and forward price earnings, as well as its price to book and cash flow. In addition, Pfizer's margins including net profit, operating profit and cash flow margins are all greater than those of its competitor and its industry average. Return on assets and return on equity also far exceed those of their peers, as well as their debt ratios, as both are lower than their direct competitor Merck and their industry average. Another key fundamental, especially in a value fund is the dividend yield, which for Pfizer is greater than that of its peers. These strong fundamentals combine with the depth of their pipeline and strengthen their top line drugs with a driving factor in us selecting Pfizer for our value fund and are the reasons why you should consider Pfizer as well. We'll now discuss those fundamentals that are particular to the financial sector. Even though in the previous slide, we discussed key fundamentals we look for in every one of our potential holdings, there are some sectors that have other fundamentals that apply to them specifically. For example, the financial sector has several new fundings we need to look at when searching for companies. Some of these new metrics include efficiency ratio, return on invested capital and net interest margin. The efficiency ratio shows a bank's ability to turn its assets into revenues. A lower ratio means that a bank is operating more efficiently. Return on invested capital shows how well a company is using its money to generate returns. And lastly, net interest margin shows how successful a company is at investing its funds in comparison to its expenses. Also when looking at the financial sector, we looked at net interest income, loans to liabilities and price to book. The first two are good indicators of a firm's current performance and their stability regarding their expenses. A price to book ratio is a valuation metric that is especially good to look at for big banks. A low price to book ratio shows that company could currently be undervalued. US Bank Corp is one of our value holdings based on fundamental analysis. Analyzing company and market fundamentals, we see that US Bank Corp is poised for solid growth in the near future. When comparing US Bank Corp to its direct competitor, JP Morgan and the industry as a whole, we see that US Bank Corp shows more value based on this criteria. When looking deeper into the financial sector, we felt that diversified banks like US Bank Corp carry less risk over the long term. As you can see from their beta and standard deviation, they're less risky compared to JPM and the industry average. They're also a perfect company that beats their peers on dividend yield, cash flows and key fundamentals. We also see the current rising rate environment as a huge growth catalyst for this company moving forward. Outside of just looking at fundamentals, we also utilize financial analysis to common-size income statements and balance sheets giving us the ability to compare companies regardless of their market cap. This gives us a clear idea if a company was in a strong financial health as well as improving their performance. We calculated liquidity, activity, leverage, profitability and market ratios to study and analyze trends in a company's past performance. This also gives us sound understanding of a company's history as well as gaining insight to their future performance given these trends. We focus on certain ratios more than others depending on the sectors. For example, activity ratios are key indicators for consumer discretionary and staples which measures the operation of efficiency. Inventory turnover is the most important activity ratio for these two sectors because it measures the level of demand for a company's products and their ability to generate profits. Liquidity ratios like the current and quick ratio measure a company's ability to meet near-term obligations and their overall financial health. These were central when looking into sectors that rely on mergers and acquisitions for growth, namely the healthcare sector. However, when analyzing utility companies, we focus more on leverage and profitability ratios due to the fact that the sector is highly levered. Liquidity ratios, on the other hand, are not as important because most companies are subsidized and highly regulated. WEC is one of our holdings in the utility sector and it was immediately clear to us that their financial trends are much stronger than that of their competitors. Leverage ratios show the mix of financing between debt and equity, and WEC not only has the lowest debt to equity but also a rapidly decreasing debt to total assets. And here's a ratio we'd probably like to see in this bishop. The company's interest coverage ratio. WEC's is higher with an increasing trend while the direct competitor and industry leaders are lower with a decreasing trend. Profitivity ratio measures the company's overall performance and their ability to generate cash. WEC has the most consistently increasing profit range among its peers, and it's the only company within its industry with a positive free cash flow. And lastly, market ratios were the most useful metric in determining if a company was undervalued or not. As you can see here, WEC's price to earnings ratios have been decreasing and their price to book on another key fundamental metric when looking at the value is decreasing and increasing rates. All of these trends indicate that WEC is one of the best value companies in the utility sector and it's positioned very well for the future. Thanks guys. Now that we're done talking about the very exciting utility sector, we'd like to talk about another thing that we look for when searching for value. We look for cash from investing activities and whether or not this will help or hurt a company's operational free cash flows. We use Cisco as an example. Cisco's four core strategies are enhancing consumer experience, achieving operational efficiency, stimulating the power of their customer base and optimizing business. As you can see from the start above, Cisco's operational cash flows were unaffected even with the recent cash outflow of mergers and acquisitions. In increasing their existing US presence, Cisco has recently acquired HFM and Durley food services. Cisco not only looks to expand domestically but internationally as well. They recently purchased the remaining 50% stake and make a food distributor, a Costa Rican food corp, as well as Kent Foods, a leading service in the UK. Both of these are expected to bring strong sales growth in the future. All of these buyouts, both domestically and internationally, are expected to capitalize on Cisco's growth opportunities, thus strengthening its core business and maximizing shareholder value. News and mergers and acquisitions aren't the only things that we look for when searching for value companies. We look for those companies who have been absolutely punished after earnings. Sometimes maybe too badly. We felt as if Oracle exemplified this as they saw a negative price reaction following their earnings and we felt as if this was an opportune time to buy it as they were trading in as a discount. Oracle is an infrastructure software company that's specialized in supplying software to enterprise information management. We also feel a key catalyst for the company moving forward is their exposure into their cloud segment which will drive top line growth. Technology companies tend to sway more than other companies in other sectors especially through earnings. I'd like to point out Oracle's last quarter results. Having a surprise of over near 15% on its EPS while just missing revenue of only eight basis points but still having a negative price reaction. The day after the earnings report this stock got absolutely pummeled losing 10% in just a day. We salivated at this opportunity in order to buy in as it was trading evaluation metrics below its historical average. Since our April 2nd buy-in point we've seen a positive trend in Cisco's price and if you check your fact sheets we actually have a whopping holding period yield of 68 basis points. We now like to talk to you about how we model in the cafe. We also use modeling to help us analyze companies and one of these models looks at the potential upside and downside for the company. In other words risk versus reward. The model takes the price to earnings ratio has been the past two years. It also looks at the earnings for the prior and future four quarters. From there it finds the highest, the lowest and the average PE over that time period and then calculates the price at each of those PEs. The upside downside and moving to average are found from calculating the difference between the current price and the price at high, low and the average PE is respectively. Finally the ratio is calculated by dividing the upside by the downside. We use this model to help us see how much potential upside and downside there was for each of our potential holdings. We want the ratio to be as large as possible but we set a benchmark of at least three so the upside is at least three times the downside. For example we use this model to look at the potential upside and downside for our holding selenize. Selenize is a producer of chemicals and advanced materials serving customers worldwide. Here you can see the upside and downside for our holding selenize, it's competitor, Eastman Chemical and it's industry leader, Monsanto. Looking at this model, the upside refers to the potential reward or return for holding a company whereas the downside is a potential loss or risk. As you can see, selenize has far greater potential return than risk, namely about 13 times more. While it's main competitor, Eastman Chemical has slightly more risk than reward. While Monsanto has significantly more downside than upside. When buying a company, you clearly want to have more upside than downside. So looking at this example, you can see that our holding selenize is the superior choice. Compared to its peers that have more risk than reward, our holding selenize has far greater upside. When evaluating companies, we not only looked at quantitative methods like modeling, but also qualitative techniques such as behavioral analysis, which Austin and Lily will talk about. We're sure that most of the parents in the room can attest that when it comes to buying clothes for young children and babies, Carter has the upper hand in other retailers. Between Carter's Inc. and Oshkosh-Pagosh brands, new parents make it a must visit. Hence why it is the largest marketer of apparel to children these ages. In the previous quarter, Carter's announced strong US results driven by an expanded relationship with Amazon.com and further e-commerce growth. As returning customers become more familiar with this brand sizing, it makes sense that these busy parents would resort to purchasing online to save time. Carter's is also actively trying to improve their brick and mortar sales, while expanding into certain international markets. Carter's is continuing to dry margins and increase their free cash flows so that the company could use that to buy back shares, increase dividends and maintain low debt. As long as people are having children, this is a must-own stock to have an evolved market. Another company we focus on due to behavioral news was CERNR, who operates in the healthcare technology industry. CERNR provides hardware and software solutions that allow medical facilities, pharmacies and hospitals to access clinical and financial data as they completely shift away from a paper-based system and fully integrate an electronic system. The overall outlook for this industry is very positive. However, CERNR has been held back after seeing significant growth. In early January, news came out about them possibly losing a Veterans Affairs contract worth $10 billion. After this news came out, their price dropped significantly. Their price then fell again, when it looked more uncertain that they wouldn't receive this Veterans Affairs contract as President Trump was planning to assign a new VA secretary. We felt that at this point, sir, this was priced in. We bought at the bottom. And I'll also talk about their phone numbers. So we really think that this is a great value company based on that it hit all of our value metrics made evident in the fact sheet above, beating both the competitor and industry average. Due to this, we believe that CERNR will see significant growth in the long term during our holding period. This behavioral news that Mike and Austin talked about can really move a stock's price, but sometimes it becomes overblown. This is why we thought looking at insider and institutional transactions was a good indication of a company's future. Our current holding Broadcom is a perfect example of this. We viewed Broadcom's failed merger with Qualcomm as an opportune time to buy into the company. When the deal was supposed to go through, this inflated the stock's price. However, when the deal was blocked, we saw investors pull their money out, thus deflating the price. We felt as if this was a market overreaction. A good measure of this was looking at Broadcom's insider transactions. Over the past few months, Broadcom insiders have bought near 10 million shares while only selling 70,000. This confidence that management has in the company shows that they're still in a successful path despite this failed merger. As any educated investor knows, insider transactions that are positive can sometimes artificially inflate a stock's price. In knowing this, we look to institutional positions and whether they've increased or decreased. We see an increase in active positions as well as more institutions taking on new positions. All this insider activity about Broadcom reassures us about them and solidified to us that this price drop must have been an overreaction. We will now discuss our value holdings. As you can see, our value holdings are diversified across nine different sectors and 26 different industries. We chose to weight each sector based on various long-term drivers that we discussed in our original economic analysis. You can see our top weightings are in financials, technology and healthcare. Moving on, you can see the remaining value holdings in our portfolio. We would like to point out that Salonese and Royal Dutch are our top performers thus far, yielding over 8%. Now you can see our holdings weightings compared to the S&P 500. One sector that we chose to avoid was real estate due to the high amount of risk and lower reward compared to other sectors. This sector also didn't offer much in terms of value as it is highly debt-liveraged and it's been consistently underperforming, especially in this rising rate environment. While weightings are a vital part to constructing our portfolio, we also need to diversify it. Now that you've seen examples of how we selected some of our holdings as well as our entire value fund, we would like to show you how we determine if such holdings are optimal for our fund. The key to a successful portfolio is to minimize risk or maximize your return and this is only possible through proper diversification. For those of you who may not do this for a living, imagine investing in two completely unrelated companies in two different sectors. Let's say TG Max and Chevron. If both companies tend to move in the same direction, there really is no reason to help them both since their performance is what we call highly correlated. The best way to show our diversification, as you know, Faisal, is with the correlation matrix. Now, this is a value fund, so we decided to take a matrix further back due to our fund's time horizon. The matrix behind me shows our firms have moved with one another within the changing markets the past three years. The matrix includes the S&P 500 and the rest of 2000 showing how our holdings are correlated with the market and with each other. Walgreens and AT&T are the two stocks in our fund that are the most negatively correlated with other holdings. These two companies will move inversely with the rest of the fund which will act as a hedge on down days. As we try to find companies that are consistently underperforming their sector or industry, our matrix shows that the predominant amount of our holdings are mutually correlated with one another, as seen in yellow. Our matrix shows that we have put together a well-diversified fund and with this moderate correlation, we should be able to outperform on both up and down days. Once we had our holdings and their correlation, we needed to decide what weight to give each company in our fund. To help us do this, we used a model to graph the efficient frontier for our portfolio. Here's the model that we used to calculate the efficient frontier. The model incorporates the written and standard deviation of our holdings as well as the correlation between the companies. The model manipulates the weights of each of our companies to find the portfolio's maximum return while also minimizing our risk or standard deviation. The model also includes a set of constraints. These constraints can have a significant impact on the efficient frontier that you get. We started off with basic constraints requiring each company to have a weight between two and 5.5% and the sum of all the weights being 100%. Then we incorporated additional constraints requiring each sector to have a weight equal to the SMPs. The model plots the points of the maximum return, minimum return and minimum variance portfolio. From this slide, you can see where our portfolio sits on the efficient frontier. We're looking to move our portfolio closer to the efficient frontier, but we're not there yet because some of our holdings have higher standard deviation due to the fact that we were looking for value companies that have been beaten up. The model also only incorporates the historical data of the company's returns and standard deviations, especially with value. We're looking for these performances to turn around. This may be another reason why our weights aren't as optimal as the minimum variances. This model is important because the weight that you give each company in your fund can have a significant impact on your return, standard deviation and overall performance. Here you can see our value funds performance compared to the S&P 500. And clearly, we have currently been underperforming the market. Now, given the fact that we just recently reallocated an entire fund in one single day and given the relative size of our fund, these transaction costs have a great impact on our fund's performance metrics in the short term. As many of you can attest, this has been a volatile market. Now, add on to the fact that we're in the middle of an earnings season, this should just increase the volatility. We cannot stress enough that these metrics behind us do not indicate how our fund will perform in the future. And in our value fund, we have to learn to swallow these short term bumps while maintaining our outlook on our companies moving forward. We have done our due diligence in researching every single one of these holdings. And we're confident that these companies will turn around even by year end and that we will hold them for our three to five year time horizon in our value fund. We stress patience in this presentation because we have to wait for these companies' strong fundamentals and financial trends to drive these stocks prices up in the long term because that is what value is all about. That's right, Louie. The S&P isn't the only thing that we benchmark ourselves against. As a group, we stress that there is fact within industry and any investor would ask, why should I park my money with the Gabelli Value Fund and not another institution? We look for those other funds with similar objectives as well as similar weightings, returns, and risk characteristics. Raw returns are not the only thing that we take into account. When looking at funds that we benchmark ourselves against, we want to make sure that they have the same risk tolerance as us. In addition, we like to add core funds. These are funds that track the market over an extended time horizon, such as the S&P 500. All in all, our objective is to compare an apple to an apple rather than an apple to an orange. This semester, we reallocated 100% of our funds for one distinct reason. We had the opportunity to change trading platforms to garner the ability to execute pre-market and after-hour trades. Due to a contractual conflict, Doc chose to stay with TD Ameritrade, who by the way, now offers these opportunities to clients. Upon learning that we are going to stay with TD, we reallocated our growth fund first. Initially, our second fund had an international blend objective, which is why we spent more time at the beginning of the semester researching and trying to fully grasp certain international markets. Later in the semester, we came to a group consensus to stay predominantly domestic in both funds and maintain our value objective in the second fund. This time spent researching these companies allowed us to understand how they operate inside and out. After doing this extensive research, we allocated our fund on April 2nd, explaining our shorter holding period for our value fund. Now, going back to the beginning of the semester when we were sitting in cash and witnessing a bull run similar to that of 2017, the decision was made to put our money to work by investing in the S&P 500 market index, referred to as the SPI, until we were able to construct a proper value fund. We all know that we can't time the market. In fact, an unfortunate stroke of unlockiness caught us on the wrong side of a five-day market correction. After seeing almost no volatility in 2017 and understanding that after seeing almost no volatility in 2017, we understood that this uncertainty in the market we wanted to get out. We reverted to cash and we lost 6.5% of our investment in the SPI. In the cafe, we have the opportunity to experience life as an analyst, trader, and portfolio manager. In this experiential learning environment, we are bound to make mistakes and in turn learn valuable lessons that further prepares for industry. This particular mistake has only increased our need and awareness for proper due diligence and patience moving forward. Through volatility, we've experienced both the ups and downs of this year's market. From our hard work and due diligence, we as a group understand now the importance of proper diversification as well as thorough company, industry, sector, and economic analysis. As portfolio managers, our goal is to outperform the market on a risk-adjusted basis while preserving wealth for the long run. With value investing, we seek to minimize all foreseeable risks through diversification, deep economic analysis, and finding a catalyst that'll drive each single company over the next three to five years. We have the utmost confidence in our funds ability to outperform the market in its longer time horizon of three to five years. Our two foot wide, two mile deep approach covers all grounds on each and every company to make sure that they perform while in both bold and bare markets. We're not only confident in every company that we presented to you today, but also every company in our portfolio and you should be too. We fully recommend that you take advantage of the opportunity to hold these companies if we have spent countless hours researching to find the best in each respective industry. It is imperative that with the ups and downs of this year's market, the student fund managers were able to handle this volatility. Through this, one of the most important lessons we've learned was patience and this will continue going forward. From day one, we take on the role of analysts. The minute we walk through the cafe door, we realize we're no longer in a classroom setting, but in the real world. The cafe is the exact replica of industry and in this program, we are no longer just students, but industry professionals. Understanding this helps us to recognize that we have a fiduciary responsibility to our client, Doc. In the cafe, we seek to analyze, strategize, and execute our own trades. From this, we make the ultimate choice and live by our portfolio results. Each of the student fund managers day and next to me has garnered the skills to become analysts, traders, and portfolio managers. Speaking of skills, the cafe program has given us the opportunity to build on two sets of skills, both quantitative and qualitative. At the beginning of the semester, we each lean more towards one than we did the other, but after working together as various clause and quants, we found an equilibrium between the two skills. Through modeling, fundamental, technical, and financial statement analysis, we learned quantitative skills. These skills specialize in mathematical and statistical methods. Through behavioral analysis, communication, daily reports, and presentations like the one today and in Shanghai, we enhance our qualitative skills. These skills focus on uncovering trends through thoughts and opinions. By building upon both of these skills, we're better equipped to find the best stocks. And as we have learned, you can't be the best investor until you're both a quall and a quant. These are just two of the various skills that we learned in the cafe program this year. And I'm sure as all of you on the test, it better prepared us moving forward. Through the sheer time we spent in cafe and the various assignments we took on, we gained a taste of what industry will be like after we graduate. Every day within the cafe program, we are learning important information through real life experiences. And that's what this program's all about because we'll be able to take these experiences and apply them to industry in the near future. We not only learn valuable information from this program, but a work ethic like no other. Ladies and gentlemen, thank you all very much for coming down to listen to our growth and value presentations. We will now invite down our ADs, Steve Bianco and Corinne Haymack to talk about our most recent trip to Shanghai, China. So we'd first like to start by thanking Mr. Hans Christensen and MJX Asset Management, as well as all the cafe alum for supporting the program. Without your generosity, these trips that we take internationally wouldn't be possible. So this semester we had the opportunity to travel internationally to Shanghai and present our portfolio management methodologies at the Valley's Gamco Office. At Gamco, we were able to gain valuable insight into their approach and value investing. And on top of this, we were also able to visit both the Shanghai Stock and Futures Exchange. And here we were able to learn a little bit more about how their financial markets operate on a day-to-day basis. So these opportunities wouldn't be possible if it weren't for the immense amount of cafe alumni. So at this point, we would like all of the alumni in the room to stand for a round of applause. We'd also like to recognize all the student fund managers standing beside us. We've witnessed firsthand the incredible amount of hard work and dedication that they've put in this semester, making this presentation possible today. We're extremely proud of all of you and you guys did a great job. Before Q&A, we'd like to thank the executive director of the cafe program, Dr. Michael Mellon. Without his hard work and dedication, the success of this program would really not be possible. So thank you, doc. Open the floor to Q&A. What's your best idea going forward? To you. What? Best idea going forward? What do you mean by that? What stock do you like the best for the next year and next year? I see. I'd say from a value perspective, one of our favorite stocks would be Cisco Food Stributors. So basically, the M&A that they're going through right now, as they were talking about earlier in the presentation, as well as their strong cash flows and the metrics we look for for value, will we drive that company over the long term? We also really like Snap-On. As you saw from the presentation, they have increasing cash flows. They're trading near their 52-week low and we really think they hit their bottom. They're only gonna see a positive price reaction after this. Can you talk to us a little about, I think you can chime in about kind of your decision not to hold Amazon? I think the main case for Amazon was that just the sheer price-to-evaluation ratios were way too high for our fund. If we were to put this company into our portfolio, it would just skew all the other fundamental metrics for us. Great job, guys. I know firsthand how difficult it is. You guys did a really incredible job. So, you've already done all the round of applause, but really, really fantastic job. You guys touched a little bit on the sort of macroeconomic analysis that you guys did, and you were sitting to sort of stay a little bit more domestic. Can you talk about your economic analysis and why you decided to stay away from international always? So, with traditional value investing, more about the citizen himself, you invest in what you know, and we felt as if we didn't have sort of a full cost on the international markets, so we decided to stay domestically and just sort of stay within what we do. Great job. Excellent presentation. One of the best lessons I took away from my time in the cafe was how to deal with differing opinions and have constructive disagreements in the workplace. Can you talk a little bit about what that was like during your stock selection process and how you came to a decision? So, I feel like we had all-nighters before our growth pitch week, which was our first allocation, and we definitely found out everybody's strengths and weaknesses, and we learned to build off of that. Like, we didn't steer away from anybody in the group. We became a cohesive unit and worked so well together, and I feel like somebody else will attest that during their trip to China, they became a closer group. Yeah, so definitely, like, when we were picking our stocks, like, Doc always tells us to, like, challenge everyone, and so this room has allowed us to bounce ideas off of each other and challenge and make us, like, you know, to our due diligence to find really why this company is gonna drive the future. Did the changes in the federal tax system around corporate taxes play into your decision-making processes? Yeah, thanks, Dad. So, yes, they did, actually, especially with value moving forward. We saw that through earnings with a few of our companies and financials, and, you know, with the whole, the amount, the sheer amount of earnings that they were able to gain from the lower tax rates did drive a few of our companies throughout this year. We also felt as if this is one of the reasons why we needed sort of that exposure within telecom. They do see across the board sort of the highest effective tax rate by sector, so we thought that they would benefit the most. From a technical standpoint, where do you guys see the market setting now and where do you guys see it ending at the end of the year? From a technical standpoint, that's a great question. So, right now, you're seeing, you know, when we saw the first sell-off in February, you know, we're trading on a downward wedge, so what happened is we have a lot of, we have a strong price floor right now with all the drops or you want to call corrections we're seeing in the market, but most recently, it's kind of a sideways trading where we're testing price ceilings and price floors, up to one of the other sides, either up or down. It'll be hard to tell which way the market's going to go, purely technical speaking. You touched upon tariffs and trade wars and everything else. Somebody that's felt the impact of the 30% increases on steel and those sort of things. Do you guys have an outlook on, you know, what that might be, you know, is a lot kind of to be seen, but does anybody have an outlook on commodities? For steel and aluminum, we think that it's already priced in, but for other commodities, we see, like for oil prices, we see oil should be, if like President Trump decided to withdraw from the IRA deal, we see oil prices might spike additional 10% like 10 to 15%. As far as steel and your other commodities go, you know, your coppers, palladium, et cetera, et cetera, we are seeing within certain commodities that we are seeing, you know, sort of an exponential gain within them based around a lot of tariffs. However, we do keep this into account when we're sort of doing our economic and domestic analysis. To add onto that, due to the uncertainty of these tariffs, this is why we chose to wait sectors like healthcare to stay away from or to just get exposure or a hedge against that uncertainty. Well, as a cafe alumni, we wanted to again congratulate you on your great presentation today and also offer you the mentorship and the support of everyone here that is a cafe alum and the advisory board. So congratulations again and feel free to reach out to any of us here in the audience as you move forward in your careers. Thank you. It just seems to get better and better every semester. I don't know how, but you guys did a great job and I think you deserve one more round of applause. I'd just like to thank you all again for being here. I also want to extend thanks as the students did to Hans Christensen who has been such a big supporter of the cafe program and to Mario Gabelli who has also been a strong supporter of both the school that bears his name and the cafe program and of course to Michael Melton who had the great idea for this program. What was it, 14 years ago? Are you old enough for that? Okay, so 14 years ago. And obviously the program has grown and flourished and it has launched dozens and dozens of careers, successful careers in financial services, many of which stories are represented here today. So another great presentation. I want to also acknowledge Dr. Donald Farrish who's our president who's here with us today. Thank you for being here in this busy season. As has been said already, Dr. Farrish is of course a big supporter of this program and has been from the very beginning. So thank you for joining us today. We appreciate it. So I will again invite all of you to attend the reception over in the Gabelli School which will begin as soon as all of you get over there. If you have not seen our new facility, as I said before, I know I'm repeating myself but I'm just so proud of it and I'm so proud of all the hard work of so many people that went into making the new Yale Weekend Center a possibility. So please come see our great new technology and please enjoy the rest of your day here in beautiful Bristol with this lovely weather. I look forward to having a chance to chat with many of you over at our building. So thank you again for a great afternoon. Time you start representing. Yeah. Everyone thanks to the generosity of the Cafe Alumni. We have right now the opportunity to be able to advertise. Let's call it Cafe Swag. So if anybody wants outside you'll be able to see all of the different types of sweatshirts, t-shirts that we have. You know I'm looking at you alumni. Time to represent. But otherwise also as most of you know after our reception over in the Gabelli School of Business and at that time please take the opportunity to be able to talk to the student fund managers about what they did in the Yale Weekend Center for Advanced Financial Education because I promise you they were there more so than probably in any other classroom on campus including probably their apartments or dorm rooms. So they'll be able to truly fill in and tell you about their home away from home and also I hope to see everyone tonight at Christian's Restaurant afterwards. Thank you very much for coming today.