1-  Final Research Project

Each student will write a 20+ page research paper, modelled on the work available through the Library database from Standard and Poors’Net Advantage.  This paper will be an expansion of one of the Power Point and Word documents described above, and contain both qualitative and quantitative reasoning supporting the logic that this company should become part of our holdings.  This paper will be graded on the quality of the logic, quantitative and qualitative,

Pace University Lubin School of Business

Student Managed Investment Portfolio (SMIP)

Undergraduate Finance Elective

Fin 357 CRN #20086

Spring 2019

SYLLABUS

Text: (websites)

Yahoo!Finance. (user name: pacesmip; password: PLVpny2018)

Damodaran, Aswath; see Focused Valuation Spreadsheets from his home page

The Dark Side of Valuation also by Damodaran

Barron’s, Wall Street Journal

Standard and Poors’ Net Advantage (from Pace University Library site)

Moneychimp, YahooFinance, MSN, CNN Money, Stockalicious

Google Finance, etc.

Instructor:

Ronald Filante, Ph.D.

Associate Professor of Finance

Goldstein Academic Center, PLV: Suite 106; (914) 773-3708

[email protected]

Office Hours: Tues, Wed , Thursday 9 – 11 AM and by appointment

Meetings:

Thursdays 6:10 – 9:00 PM

Mortola Library (Smart Classroom)

Catalogue Description:

This course deals with the valuation of corporate securities, primarily stocks, for the purpose of making investment decisions for a Student Managed Portfolio funded by money donated and loaned to the University for this undertaking. Log into YahooFinance using the user ID pacesmip and the password PLVpny2018. See the portfolio “Spring 2019” for our current holdings. Students will learn how to incorporate macro-economic, firm and industry-specific data into discounted cash flow and relative valuation models. Although this is a Finance offering, students with diverse backgrounds and educational experiences are encouraged to enroll, since their perspectives are a valuable addition to those of the traditional finace major.

General Learning Goals (All BBA Programs)

1. Communications

2. Critical Thinking, Problem Solving and Decision Making

3. Interpersonal Interaction, Social Responsibility and Ethics

4. Global Perspectives

5. Quantitative Applications

Finance Major Goals

1. Demonstrate knowledge of financial management principles

2. Demonstrate knowledge of valuation and pricing techniques and their applications

3. Develop the ability to analyze and interpret financial data

4. Apply basic forecasting techniques using econometric models and financial and economic data

WRITING-ENHANCED COMPONENT

This is a writing-enhanced course that requires an effective amount of writing, in addition to exams, to help students learn course content. Formal writing elements, such as clear focus, good organization, development, and editing are considered in grading, as well as content. Students will receive detailed written handouts for each writing assignment, specifying criteria and clearly setting forth expectations. Students will receive feedback for revision on at least one writing assignment before it is graded. The writing in final drafts will be evaluated, along with content, based on evaluative criteria from a checklist or rubric.

Grading and Course Requirements:

Students enrolled in the course will be the investment managers for the University’s Student Managed Investment Portfolio. This portfolio was created on January 24, 2002 and has since that date made some 900 transactions. Thus you will inherit positions that others recommended and approved. Your first task will be to analyze each of these and make recommendations as to whether we should keep them, sell them, or add to the existing share balance. During the remainder of the semester you will recommend the establishment of new positions. Some students will also accompany me on March 28-30, 2019 where we we attend the Global Asset Management Education Forum , (GAME),. Pace will compete against 325 other SMIPs at that conference. The approximate weights in my grading process will be as follows.

1- Analysis of existing portfolio = 10%

2- Stock Screening Paper = 15%

3- Recommendations for new positions = 15%

4- Re-write of assignment #1 = 10%

5- Attendance, Participation & Commentary on others’ recommendations = 10%

6- Final Research Paper = 40%

Writing Enhanced Requirements

1- Analysis of Two Positions in Inherited Portfolio

Each student is assigned two positions and writes a short (4 page) presentation recommending a “buy”, “hold” or “sell” based on the relationship between the stock’s price and its “value”. The latter is calculated using a Capital Asset Pricing Model discounted cash flow analysis. This assignment will be collected on 2/14/19 and returned with suggested revisions. The final version is due on 3/7/19.

2- Stock Screening Exercise

Each student defines an applicable “style box” and generates a 25 security portfolio whose members satisfy the criteria that characterizes the style box. These range from portfolios emphasizing growth to those emphasizing value investing styles. The screening software is available on various sites including Yahoo, Google, CNBC. An accompanying 4 page essay describes the characteristics chosen and the parameters each student used to generate the qualifying stocks. For example a “value” investor might use Price /Earnings ratios less than 10, Price to Book ratios less than 2, with high liquidity. A “growth” investor might choose stocks with high recent earnings increases, high profitability, with low dividend payouts

3- Essay (5 pp Word doc.) and Power Point Presentation:

New Stock Recommendation

Each student recommends one or more new positions for the portfolio. The presentation is oral, accompanied by a Power Point document highlighting the recommended firm’s history, products, competitors, financials, and future outlook. The decision to buy needs to be supported by quantitative analysis valuing the firm’s shares above their current selling price.

4- Final Research Project

Each student will write a 20+ page research paper, modelled on the work available through the Library database from Standard and Poors’Net Advantage. This paper will be an expansion of one of the Power Point and Word documents described above, and contain both qualitative and quantitative reasoning supporting the logic that this company should become part of our holdings. This paper will be graded on the quality of the logic, quantitative and qualitative, used to support the recommendation.

Tentative Schedule of Instruction, and Topical Coverage

Weeks 1-3: Introduction to SMIP:

Presentation of existing portfolio: What we own, and how the positions have fared since they were purchased. In addition to a review of the materials from Finance 351 on equities and the markets in which they are traded, students must also learn how to use the Moneychimp and Damodaran software. You must research each of the existing positions since we need to sell them when we buy the common stock of other individual companies.

Sample presentations from prior semesters: During the prior 31 semesters, student managers have made over 500 presentations. The best of these will be discussed. Specific attention will be paid to the form of these presentations, (PowerPoint), and the need to include discussions of company performance as well as risk factors.

Establishment of research groups: An attempt will be made to unite students whose strengths complement one another. Issues of portfolio diversification will also be discussed.

Week 2– Preparation and Analysis of Financial Statements: Using Standard and Poors, Yahoo!Finance and Edgar. What are these information sources? Where can we find them online? How do we compare them with those of the firm’s competitors?

Week 3– Equity Valuation Modeling and Review of Recent Performance in the Equity Markets: The cyclical nature of stock prices and the relationship between stock indices and individual security prices are discussed in this module.

Following Damodaran, we will trace the evolution of equity value determination using various discounted cash flow methodologies.

Week 4– Quantitative Analytics and Technical Analysis in Portfolio Formation: This module introduces the class to the infinite variation of quantitative strategies

Week 5– Presentation and Recommendations from Individual/Group I

Week 6– Presentation and Recommendations from Individual/Group II

Week 7- Presentation and Recommendations from Individual/Group III

Week 8 – Presentation and Recommendations from Individual/Group IV

Week 9 – Presentation and Recommendations from Individual Group V

Week 10 – Presentation and Recommendations from Individual Group VI

Week 11 Presentation and Recommendations from Individual Group VII

Week 12 Presentation and Recommendations from Individual Group VIII

Week 13 Presentation and Recommendations from Individual Group IX

Week 14 & 15- Preparation for next semester: Price targets and stop-loss strategies will be discussed and set in place so that trading during the 15 weeks between the Spring semester’s end and the Fall semester’s start can be modeled.

Guest speakers appear 2-3 times per semester and speak to the class about their work in the field of equity management. To date these speakers have included Joel Levy of Salomon SmithBarney, David Selvers of TMT Investments, Aswan Damodaran of NYU, Michael McFarland of NetReit, Bill Yost of MarketNeutral, Joe Sclafani of UBS, Natalia Tchechoulina of HPM Partners, and Dan Shaffer of Shaffer Asset Management.

Special Note:

If you have a disability for which you are or may be requesting an academic accommodation, you must register with the Coordinator of Services for Students with Disabilities. You can contact the coordinator at 212-346-1526 in New York and 914-773-3710 in Westchester.

used to support the recommendation.

 

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