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Current Newsletter
Intel Grant Doubles Computers in Parker Center Classroom
Largest-Ever Cayuga Fund Class Takes Helm
Cayuga Fund Managers Win UNC's Alpha Challenge Performance Award
Center Hosts 7th Annual Cornell-Fidelity MBA Stock Pitch Competition
Professor Bhojraj named top Johnson School Executive MBA Professor in Wall Street Journal EMBA Rankings
Barbara Novick '82, co-founder of BlackRock, Lectures in Cayuga Fund Class
CFA Review Course Open to Undergraduates
Cayuga MBA Fund News
Cayuga Fund Stock Pick Ideas—Fall 2008
Recruit and Coach the Best MBAs
School Launches New Alumni Career Services
Our Thanks To...
Want To Get Involved?
Intel Grant Doubles Computers in Parker Center Classroom
Thanks to a grant from Intel Corporation, the Parker Center has been outfitted with 33 brand new Dell computers and monitors, doubling the number of computers in the center's classroom. Students previously shared 16 workstations in the 32-seat classroom. This marks Intel Corporation's second major gift in support of the Parker Center. Intel provided a major grant for the purchase of the original computers in the Parker Center classroom in 1998.
Largest-Ever Cayuga Fund Class Takes Helm
A new group of 31 students took the helm of the student-run, faculty-directed Cayuga MBA Fund in September 2008. This year's class represents the largest-ever group of student portfolio managers, and includes seven students from the Accelerated MBA program. Other interesting statistics: roughly 30 percent of the managers are international students, and 75 percent are primarily interested in buy-side career opportunities. The balance are focused on the sell-side. In a recent survey, the managers were asked to forecast broad market levels for graduation day, May 23, 2009. The averages of all responses were:
- S&P 500 at 1,093
- Yield on 10-Year UST at 3.95 percent
Fund Managers Win UNC's Alpha Challenge Performance Award
A team of Johnson School students, including Bethany Caster, Shawn Field and Alex Pan (all current Cayuga MBA Fund portfolio managers and graduating in 2009) recently won the Pat Hartley Performance Award from the 2007 Alpha Challenge, hosted by the University of North Carolina. The Performance Award is given one year after the competition and recognizes the team whose investment ideas made the most money over the course of the year. The Johnson School team shared top honors with Dartmouth's Tuck School of Business, because both teams coincidentally pitched the same stock recommendations. Given a list of 90 transportation stocks, the Johnson School team picked two that yielded a combined 97 percent return in the 12 months between November 7, 2007, and November 13, 2008. They recommended an investment in a railroad company, Norfolk Southern (NYSE:NSC) that was poised to take business from trucking companies and other rails. The team also recommended shorting stock in a shipping company, Dry Ships (Nasdaq: DRYS), based on concerns about management quality and its reliance on China's pre-Olympics building spree. The Johnson students competed against teams from 11 other schools, including Columbia Business School, London Business School, New York University's Stern School of Business, the University of Chicago's Booth School of Business, and Wharton.
Center Hosts 7th Annual Cornell-Fidelity MBA Stock Pitch Competition
The Cornell-Fidelity 7th Annual MBA Stock Pitch Competition was held on Friday, November 7, 2008, in Sage Hall. Dartmouth's Tuck School of Business won first place, followed by Pennsylvania's Wharton School in second place. Fidelity Investments once again served as the lead corporate sponsor. Jack M. Ferraro, MBA '70, was lead individual sponsor. Other sponsors include Barclays Global Investors, CFA Institute, Wellington Management, and State Street Global Advisors.
Harry Lange, the portfolio manager for Fidelity Magellan Fund, presented the keynote address at lunch to a crowd that was eager to learn from one of the most accomplished investment managers in the industry. Lange offered his thoughts on causes and implications of the current financial crisis, and how he has positioned Magellan Fund. He also provided his recruiting tips to the students, many of whom are eager to find investment jobs after graduation. His advice to all was to, "stay calm and stay focused."
The field was extremely competitive this year, with teams from leading MBA programs nationwide attending including: Columbia Graduate School of Business, the Johnson School, Dartmouth's Tuck School of Business, Duke's Fuqua School of Business, MIT Sloan School of Business, New York University's Stern School of Business, Northwestern University's Kellogg School of Business, the University of California at Berkeley's Haas School of Business, University of Maryland's R.H. Smith School of Business, University of Michigan's Ross School of Business, Wharton, and Yale.
The judges included Larry Rakers and Matt Born, MBA '98, of Fidelity Investments; Christine Fuchs of Wellington Management; Judah Kraushaar, MBA '80 of Roaring Brook Capital; Tom Sprague '79, Independent Investment Consultant; and Kerstin Ramstrom, MBA '01, State Street Global Advisors. Jan Squires, of CFA Institute, was a guest at the competition. Visit the Parker Center Web site for more on the MBA Stock Pitch Competition.
Professor Bhojraj named top Johnson School Executive MBA Professor in Wall Street Journal EMBA Program Rankings
Professor Sanjeev Bhojraj, faculty director of the Parker Center for Investment Research, garnered top honors in the Wall Street Journal's recent Ranking of Executive MBA programs. A total of twelve professors, each one from a different school, earned this designation by student vote. The EMBA program at the Johnson School was ranked number 8 in this survey.
Barbara Novick '82, co-founder of BlackRock, Lectures in Cayuga Fund Class
Cayuga MBA Fund students were privileged to hear from Barbara Novick, vice chairman and co-founder of BlackRock Financial Management in Professor Sanjeev Bhojraj's class in September 2008. As vice chairman, Barbara is responsible for business development, marketing, and client service on a global basis. In her talk, she described the origins and growth of BlackRock, and provided her perspective on the current economic and financial climate. Her talk may be viewed by Johnson School students on the Parker Center Web site, while alumni are invited to read a summary of the lecture.
CFA Review Course Open to Undergraduates
The Johnson School opened its independent study CFA Review course to undergraduates last spring, due to growing interest among these finance-oriented Cornellians in earning the CFA designation. The Parker Center administers this course for students who are registered for the CFA exam. Participants attend mandatory video tutorials, and also may purchase study notes at discounted rates.
The Johnson School is a CFA Program Partner. To earn this designation, the school was required to demonstrate that its curriculum currently covers the topics in the CFA's Candidate Body of Knowledge®, and also prepares students for professional practice.
Cayuga MBA Fund News
Third Quarter Performance
The Cayuga MBA Fund experienced a challenging third quarter, though it continued to perform better than most of its long-short hedge fund peers. Third-quarter return was -6.11 percent, versus -2.2 percent for the HFRX Equity Market Neutral Index, and -12.5 percent for the HFRX Equity Hedge Index. Year to date, the Cayuga Fund has returned 1.74 percent, versus 0.10 percent and -13.6 percent, respectively, for the HFRX EMN and the HFRX EH indices. Since the fund became market neutral in October 2002, it has generated cumulative returns of 95 percent for investors.
Cayuga MBA Fund Portfolio Managers Make Bloomberg News
A feature story in the Cornell Chronicle about the Cayuga MBA Fund and its student portfolio managers was picked up by Bloomberg News.
Cayuga MBA Fund Pilots New Assistant Portfolio Manager Roles
In response to student interest, the Parker Center has instituted a new opportunity for first -year MBA students to serve as assistant portfolio managers. These students are selected through an interview process, and assist student portfolio managers (all second-year students) with their sector responsibilities. The assistant managers also will pitch stocks to the Cayuga Fund class. Their picks will be subject to the same voting process as employed by their second-year peers—a two-thirds majority vote is necessary for their picks to be approved for inclusion in the fund.
Find Fund Managers Online
The Johnson Alumni Connection (JAC) database, accessed via the school's alumni Web site, can be searched for Cayuga Fund alumni. Enhance your networking by logging into JAC and clicking on the alumni/student organizations affinity field; choose the Cayuga Fund option, and the database will yield contact information for former fund managers.
April 2009: 10th Annual Cayuga MBA Fund, LLC, Investor Meeting
The 10th Annual Cayuga MBA Fund, LLC, Investor Meeting will be held in Ithaca in April 2009. Stay tuned for more details. Sector presentations by student portfolio managers will be available on the Parker Center Web site shortly after the meeting closes.
Cayuga Fund Stock Pick Ideas—Fall 2008
In this new feature of the newsletter, Cayuga MBA Fund portfolio managers will share some insights on two of their favorite stock picks. The class recommends shorting Steel Dynamics (NYSE: STLD) and going long New Oriental Education (NYSE:EDU).
Short Idea
Steel Dynamics is a mini - mill steel manufacturer that uses steel scrap as one of its key materials. Ritish Rangwalla, MBA '09, portfolio manager for the Basic Materials and Capital Goods sector writes: "We believe that widespread production cuts and inventory buildups in the steel industry will drive declines of more than 15 percent in top-line revenue and 57 percent in EPS in 2009. For STLD, this is expected to translate into inventory (FIFO-based) write-downs and impairment for goodwill and intangibles from large acquisitions of steel scrap and processing manufacturers in 2007. In addition, STLD has the highest debt to equity ratio (165 percent vs. industry median of 49.6 percent) in the industry, which is expected to exacerbate the market's negative sentiment on this stock. Based on an EPS forecast of $1.40, our residual income valuation yields a fair value of $6.75. On a 2009 P/E of 4.3x, this stock appears to be grossly undervalued. Our thesis, however, is that earnings revisions are not keeping up with the level of deterioration in global steel and steel scrap prices. Steel prices have declined 35 percent and steel scrap prices plummeted 82 percent in the last two months. We entered this position when STLD was at $9.24 and have already seen profits of more than 25 percent. We remain bearish on this stock, at current price levels."
Long Idea
New Oriental Education (NYSE:EDU) is the leading educational services provider in mainland China. Founded in 1993, the company offers language training, test preparation, primary and secondary schooling, and admissions consulting. Having such a broad base of services allows the company to target customers age 5 to age 35, which represents 476 million people.
Annie Cheng, MBA '09, student portfolio manager for the American Depository Receipts sector, writes "The company is dominant from a market-share perspective and has experienced top-line growth of 47 percent in recent years. We believe the company is well positioned to sustain strong growth and expect increases of 41.6 percent, 38.4 percent and 34.8 percent yearly from 2009 to 2011. The primary drivers are ongoing urbanization trends in China, favorable pricing trends, and the widely held view among Chinese families that educational investment is the key to the future and a top spending priority, even in the context of a challenging economic environment. In addition, the company's financial position is strong. EDU has a $2.2 billion market cap, with $257 million of cash and no debt. The stock is currently trading around $40, while our DCF yields a price target of $75 over the next 12 months. Even at the low end of our sensitivity analysis, we would still expect a return of roughly 20percent from EDU. We are therefore confident that our investment in EDU will prove profitable."
Please note: Any recommendations made herein should not be construed as personal investment advice, and may not be appropriate for all investors. You should not rely on these recommendations in making investment decisions, but should conduct your own analysis and seek the advice of your own advisors.
Recruit and Coach the Best MBAs
In November, Dean Joseph Thomas announced two new initiatives designed to strengthen ties among alumni, current students, and admitted students. Please consider participating in one or both of these new programs.
JS-PALs (Johnson School Personalized Admissions Links) allows each admitted student to immediately experience Cornell connections and the value of being a Johnson and Cornell alumnus. Each newly admitted student receives an instant Cornell network of PALs (a first-year and a second-year MBA student, along with two alumni matched by career interest and geography). PALs will call the new admit to welcome him/her to the Cornell community and continue to be a resource throughout the decision-making process.
JS-Coaches matches interested students with an alumni coach, who can provide advice and counsel to them in their job search. Coaching activities should be agreed upon by the coach and student, and may include helping the student develop a marketing plan, communicate effectively to a broad network of contacts, and target industries, employing organizations, and jobs.
To sign up for these programs, log into Johnson Alumni Connection (JAC) and check the selection boxes provided. Alumni will be matched with admitted students throughout ongoing admissions deadlines. Since both JS-Pals and JS-Coaches are new programs, please bear with us as they are implemented. You may not receive a match right away, as matches will be determined by the geographic location and career interests of the students involved.
School Launches New Alumni Career Services
Almost 600 Johnson School alumni have already joined JohnsonJobs, a job posting listserve created to help alumni communicate with each other on job-related issues. You can either post or seek a position through JohnsonJobs, and also through Jobs on JAC. The postings on the latter change daily, and vary between 35 and 125 jobs. The school also introduced a new Alumni Resume Database that enables employers beyond the Johnson School community to access and view alumni resumes through an extensive resume book, or through the Global Focus database. Lynne Allen, the school's alumni career advisor, is available to help graduates with strategic positioning for promotional growth, career change, re-entry into the work force, entrepreneurial pursuits, and other career services. Due to current economic conditions affecting alumni, the school is waiving the normal charge for these services, until June 30, 2009.
Our Thanks To...
MBA Stock Pitch Competition Sponsors/Judges
We thank the sponsors and judges of the 7th Annual MBA Stock Pitch Competition for their generous support of the event. This year's sponsors, many of whom sent judges to represent their firms, include lead sponsor Fidelity Investments, lead individual sponsor and Johnson School alumnus Jack M. Ferraro, MBA '70, Barclays Global Investors (BGI), CFA Institute, Wellington Management, and State Street Global Advisors. Software sponsors included Capital IQ, FactSet, and Thomson.
Guest Speakers
Jason Tauber MBA '04, and Rasmus Gerdeman from Neuberger Berman, Steve Neimeth MBA '97, from AIG SunAmerica, Kerstin Ramstrom, MBA '01, from State Street Global Advisors, David Cleary, '87, from Lazard Asset Management, and Barbara Novick, '82, of BlackRock all took time from their busy schedules to guest lecture in Professor Bhojraj's Cayuga Fund class.
Technology Upgrade
Mark Vincent MBA '08 generously provided funding for a new flat panel TV for the Parker Center's Richard Marin Family Studio.
Want To Get Involved?
Help with Fundraising
Get your firm to be a corporate sponsor of the Parker Center, with a donation of $5,000 or more, and help us maintain our exceptional platform for investment-management education. In addition, donate whatever you can annually to the Johnson School, and make your donation for the benefit of the Parker Center for Investment Research.
Speak in Class
Volunteer to be a speaker in the Cayuga MBA Fund class or any relevant class. Both the faculty and students would appreciate your time.
Hire our students
If you work in investment management, research, or sales and trading, consider our talented and well-trained pool of Cayuga MBA Fund students and those in the Capital Markets and Asset Management immersion (formerly known as the Research, Sales and Trading immersion) for your open positions. Please contact Karin Ash, director of the Johnson School's Career Management Center, for information on recruiting on- and off-campus
Make Suggestions
Suggest improvements on anything related to the Parker Center or the Cayuga MBA Fund. We have already implemented some alumni suggestions and look forward to receiving more!
Update your records online!
Your current information is critical to helping us keep in touch with you and for student-networking purposes. Please go to the Johnson Alumni Connection and update your information now!
