spring 2013 newsletter message from the seo€¦ · page 4 sif spring 2013 newsletter current...
TRANSCRIPT
Gianna Esparza
Jane Ann Galiger
Elliot Gribaudo
Josh Hunt
Qiu Jin
Jie Ke
Matt Kocisak
Zongbei Lu
Kylan Martin
Douglas Meadours
Joey Moppert
Khoa Nguyen
Cynthia Onyechere
John Patterson
Peilin Shi
Shuang Song
Abram Stewart
Morgan Tipton
Bret Travis
Yang Wang
Natalie White
Christopher Worrell
S P R I N G 2 0 1 3 N E W S L E T T E R
F A C U L T Y
Message from the SEO
I would like to begin by ex-
pressing how great an honor it
has been to serve as Student
Executive Officer for the
Spring, 2013 SIF Class. I have
truly enjoyed my time working
with the 21 talented and very
hardworking members of SIF.
Elected as Student Executive
Officer for the spring semester
of 2013, I seek to continue the
outstanding performance of
the Student Investment Fund.
With input from the committee
chairs and all 22 members of
the Student Investment Fund,
we decided to more closely
track the S&P 500 in our sec-
tor weightings. Although our
investment policy allows a 50%
over or underweighting for
each sector from its bench-
mark we decided to immedi-
ately discuss and make appro-
priate changes within the Fund
whenever a sector was more
than 20% off from its bench-
mark sector weighting. This in-
class policy change had the
immediate effect of moving the
Student Investment Fund to
invest more in the under-
weighted financials sector.
Furthermore, we made an ac-
tive effort to target quality
higher beta stocks to more
fully reap the benefits of mar-
ket rallies.
Macroeconomic concerns
about the length of the reces-
sion and the continuing delete-
rious effects of high unemploy-
ment on the U.S. economy
challenged SIF members to
better understand the im-
portance of sector allocation
and its impact on the perfor-
mance of the Student Invest-
ment Fund. The Fed’s policy of
holding already historically low
interest rates constant provid-
ed SIF members the opportuni-
ty to examine more closely the
financial theory regarding equi-
ty valuation and to more criti-
cally apply the inputs into equi-
ty valuation models such as
CAPM. We further recognized
the cost of holding cash in a
low interest rate bull market.
Finally, SIF managed the chal-
lenge of firm-specific risk as
the poor performance of Apple
provided one opportunity to
diversify and reduce exposure
within the fund.
The performance of the fund
is ultimately the responsibility
of every SIF member fulfilling
his/her role within each SIF
committee. The Portfolio
Committee is the main driver
of performance as it makes
recommendations on specific
securities and optimization
within the fund. The Macroe-
conomic Committee examines
current macroeconomic condi-
tions and provides analysis
and recommendations on sec-
tor weightings to the Portfolio
Committee. The Operations/
MIS committee provides the
models that SIF members use
to judge fund and security per-
formance. Finally, the PR com-
mittee increases the visibility
of the Student Investment
Fund on campus and the Tulsa
community by arranging excel-
lent guest speakers from the
financial community and re-
cruiting new members for the
Student Investment Fund.
Participation in the University
of Tulsa’s Student Investment
Fund is a truly invaluable expe-
rience for its student members
and it has been a great honor
to serve as SEO. The course
has been the best learning
experience I have experienced
at TU and I know that the skills
that all SIF members have
learned during the course will
serve us all very well going
forward into our careers.
Regards,
Douglas Meadours
Student Executive Officer
Spring 2013
Message from SEO
PAR Committee Report
Current Holdings
Leaders & Laggards
New Securities
Macro Economic
Guest Speakers
Organizational Structure
C O N T E N T S
1
2
4
6
8
11
12
13
S P R I N G 2 0 1 3 C L A S S
Tally Ferguson
MESSAGE FROM THE SEO
PORTFOLIO, ACCOUNTING AND RISK COMMITTEE REPORT
Page 2 S I F S P R I N G 2 0 1 3 N E W S L E T T E R
The main objective of the Student Investment Fund is to increase value of the portfolio, while outperforming the
S&P 500. This was achieved by not only utilizing the analysis done by the Macro-Economic committee over the
optimal portfolio weights, but by considering the valuation and recommendations of the stocks done by the class.
This allowed the Student Investment Fund to properly allocate the portfolio weight, while making sure we had the
best representation for the sector and their industry; this all lead to surpassing the market .
Performance Attribution:
As seen below, the SIF underperformed the S&P 500 for the 2012 year.
The Spring 2013 semester results are stated below:
SIF Portfolio Sector Weighting
The SIF follows the GICS structure, which consists of ten sectors. The following weightings include the indirect
sector weights of the S&P 500 ETF:
SIF S&P YTD Returns 10.44% 11.8%
YTD Difference Underperformed by .74% Jan-Apr Monthly Returns 2.514% 2.8%
Monthly Difference Underperformed by .22% per month
CONSUMER DISCRETIONARY
10%
CONSUMER STAPLES
13%
ENERGY11%
FINANCIALS14%
HEALTHCARE14%
INDUSTRIALS10%
IT18%
MATERIALS3%
TELECOM3%
UTILITIES4%
5/8/2013
Page 3 S I F S P R I N G 2 0 1 3 N E W S L E T T E R
GIS SECTOR as of May 8, 2013
GICS SECTOR DESIGNATIONS TOTALS
EQUITY VALUE
EQUITY %
S&P WEIGHTINGS
Consumer Discretionary $213,924 $334,834 10.48% 11.84%
Consumer Staples $314,044 $425,458 13.32% 10.91%
Energy $251,665 $360,729 11.29% 10.68%
Financials $283,363 $448,798 14.05% 16.20%
Healthcare $314,990 $443,253 13.88% 12.56%
Industrials $210,757 $312,673 9.79% 9.98%
IT $381,155 $564,460 17.67% 17.95%
Materials $65,563 $100,284 3.14% 3.40%
Telecom $54,505 $85,141 2.67% 3.00%
Utilities $82,873 $118,309 3.70% 3.47%
SPY $1,021,202
Cash $20,179
Total $3,214,220 $3,193,939 100% 100%
This semester 26 students applied for the Fall 2013 class, of which 20 out-standing students were selected.
“As members of the University of Tulsa’s Student Investment Fund, we will meet for the purpose of further-ing our knowledge of financial management, elevating our experi-ence in the investment arena, promulgating our objectives and pur-poses to the public, mastering the practic-es, habits, and ethics of finance profession-als, and for the promo-tion of social and pro-fessional relationships amongst our mem-bers. This background will provide us with su-perior knowledge and competitive ability in our professional field.
We will also, as benefi-ciaries, endeavor to provide superior re-turns to our sharehold-ers; those individuals who have enabled us to enjoy this experi-ence by donating to the Finance Excel-lence Fund.”
-Adopted January 23rd, 2001
S I F M I S S I O N
S T A T E M E N T
N E X T S E M E S T E R
Q1 Total Dividends received by SIF $13,839.38 Top 5 Dividend Paying Stock by Amount
Q2 Total Dividends received by SIF $8,205.95
Top 5 Dividend Paying Stock by Amount
Page 4 S I F S P R I N G 2 0 1 3 N E W S L E T T E R
CURRENT HOLDINGS
Ticker Sector Shares Price Value % of Equity
Portfolio Security
AAPL IT 193 $463.84 $89,521.14 2.80% APPLE INC
BNS FINANCIALS 500 $59.21 $29,605.00 0.93% BANK OF NOVA SCOTIA
BTE ENERGY 1,300 $41.12 $53,456.00 1.67% BAYTEX ENERGY
CAT INDUSTRIALS 771 $90.31 $69,629.01 2.18% CATERPILLAR
CB FINANCIALS 1,240 $89.89 $111,463.60 3.49% CHUBB CORP
CCE CONSUMER STAPLES 615 $37.52 $23,074.80 0.72% COCA COLA
CF MATERIALS 80 $190.71 $15,256.80 0.48% CF INDS HLDGS
CNI INDUSTRIALS 1,181 $101.66 $120,060.46 3.76% CANADIAN NATL
CNL UTILITIES 1,267 $48.00 $60,816.00 1.90% CLECO CORP
COST CONSUMER STAPLES 200 $109.61 $21,922.00 0.69% COSTCO WHOLESALE
CSH IT 676 $68.15 $46,069.40 1.44% COGNIZANT TECH
DEO CONSUMER STAPLES 630 $123.55 $77,836.50 2.44% DIAGEO
DSW CONSUMER DISCRET 300 $66.47 $19,941.00 0.62% DSW INC
FCX MATERIALS 165 $32.39 $5,344.35 0.17% FREEPRT-MCMRAN
GILD HEALTHCARE 2,786 $52.38 $145,930.68 4.57% GILEAD SCIENCES
GIS CONSUMER STAPLES 2,127 $49.94 $106,222.38 3.33% GENERAL MILLS
HP ENERGY 650 $62.72 $40,768.00 1.28% HELMERICH PAYNE
IFF MATERIALS 564 $79.72 $44,962.08 1.41% INTL FLAVORS
INTC IT 2,500 $24.25 $60,625.00 1.90% INTEL CORP
ISRG HEALTHCARE 98 $489.31 $47,952.39 1.50% INTUITIVE SURGICAL
ITW INDUSTRIALS 311 $67.74 $21,067.14 0.66% ILLINOIS TOOL WORKS
JNJ HEALTHCARE 680 $85.46 $58,112.80 1.82% JOHNSON AND JOHNSON
JPM FINANCIALS 1,453 $49.76 $72,301.28 2.26% JPMORGAN CHASE & CO
KMB CONSUMER STAPLES 544 $104.27 $56,722.88 1.78% KIMBERLY CLARK
MA IT 192 $553.72 $106,314.28 3.33% MASTERCARD INC
MCD CONSUMER STAPLES 280 $100.95 $28,266.00 0.88% MCDONALDS CORP
NKE CONSUMER DISCRET 1,062 $63.90 $67,861.80 2.12% NIKE INC
NSR IT 546 $46.53 $25,405.38 0.80% NEUSTAR INC
OXY ENERGY 618 $89.28 $55,175.04 1.73% OCCIDENTAL
PCLN CONSUMER DISCRET 83 $735.27 $61,027.41 1.91% PRICELINE
QCOM IT 830 $64.12 $53,219.60 1.67% QUALCOMM INC
SLB ENERGY 499 $77.59 $38,717.41 1.21% SCHLUMBERGER LTD
SO UTILITIES 470 $46.93 $22,057.10 0.69% SOUTHERN COMPANY
SPY SPY 6,252 $163.34 $1,021,201.68 31.97% SPDR S&P 500 ETF TRUST
T TELECOM 795 $37.83 $30,074.85 0.94% AT&T INC
THI CONSUMER DISCRET 1,143 $56.95 $65,093.85 2.04% TIM HORTONS INC
USB FINANCIALS 2,100 $33.33 $69,993.00 2.19% US BANCORP
VAR HEALTHCARE 932 $67.59 $62,993.88 1.97% VARIAN MEDICAL
VZ TELECOM 460 $53.11 $24,430.60 0.76% VERIZON COMM.
XOM ENERGY 693 $91.70 $63,548.10 1.99% EXXON MOBIL CORP
CASH CASH 20,179 $1.00 $20,179.00 0.63% CASH
Equities $3,194,040.67 100.00%
Equities + Cash $3,214,219.67
Page 5 S I F S P R I N G 2 0 1 3 N E W S L E T T E R
Transactions in the Spring 2013 Semester
Securities Purchases
Date Security Ticker Quantity Price Cost Basis
2/5/2013 QUALCOMM, INC. QCOM 84 $67.00 $5,635.56
2/5/2013 INTEL CORP. INTC 2500 $21.27 $53,400.00
2/5/2013 COGNIZANT TECH SOLUTNS CTSH 26 $77.62 $2,020.46
3/12/2013 VARIAN MEDICAL SYSTEMS,INC VAR 690 $72.32 $49,962.90
3/12/2013 CHUBB CORP. CB 590 $85.65 $50,587.31
3/19/2013 BANK OF NOVA SCOTIA BNS 500 $58.35 $29,219.90
4/9/2013 HELMERICH&PAYNE, INC HP 650 $58.54 $38,107.62
4/30/2013 JOHNSON& JOHNSON JNJ 250 $84.92 $21,251.25
4/30/2013 CF INDUSTRIES, INC. CF 80 $190.83 $15,273.60
4/30/2013 BAYTEX ENERGY CORP BTE 1300 $39.13 $50,989.70
4/30/2013 SPDR S&P 500 ETF SPY 125 $158.81 $19,862.50
Securities Sales
Date Security Ticker Quantity Price Cost Basis
2/5/2013 SPDR S&P 500 ETF SPY 400 $149.83 $59,893.66
3/12/2013 LULULEMON ATHLETICA, INC. LULU 750 $69.11 $51,763.59
3/12/2013 INTUITIVE SURGICAL, INC. ISRG 98 $511.73 $50,140.00
3/19/2013 SPECTRA ENERGY CORP. SE 977 $28.86 $28,112.48
4/9/2013 EOG RESOURCES INC EOG 300 $125.12 $37,507.80
4/30/2013 VARIAN MEDICAL SYSTEMS, INC. VAR 275 $63.98 $17,569.36
4/30/2013 INTL FLAVORS&FRAGRNCE IFF 200 $76.82 $15,344.96
4/30/2013 FACTSET RESH SYS,INC. FDS 734 $91.25 $66,908.18
4/30/2013 AGRIUM, INC AGU 60 $92.34 $5,534.88
The goal of the Student Investment Fund is to add value to the portfolio. After thoroughly analyzing existing and po-
tential securities, the SIF analysts provided buy, sell, or hold recommendations for each security. Additionally, the ana-
lysts considered the current and anticipated macroeconomic environment and the impact that it could have on each se-
curity’s performance. This allowed the SIF analysts to allocate portfolio weight to sectors we feel are likely to outper-
form the market. Once the sector weights and individual stock recommendations were determined, a risk-return opti-
mization procedure was applied to construct a portfolio with a superior risk-return relationship while satisfying sector
weighting decisions and other constraints. The listed securities are sorted by total exposure (which includes indirect
S&P 500 exposure).
Page 6 S I F S P R I N G 2 0 1 3 N E W S L E T T E R
H I G H L I G H T S
S P R I N G 2 0 1 3
LEADERS and LAGGARDS (TOP 5)
LEADERS for Spring 2013 % Return Price Change Value Gained
GILD 50.19% 18.43 $51,346
GIS 25.48% 10.3 $21,908
NKE 25.10% 12.95 $13,753
KMB 24.81% 20.95 $11,397
VZ 21.75% 9.41 $ 4,328
LAGGARDS for Spring 2013 % Return Price Change Value lost
AAPL -18.04% -99.05 ($19,117)
CTSH -12.52% -13.03 ($6,442)
FCX -10.70% -9.53 ($615)
VAR -9.36% -3.73 ($6,319)
CAT -6.97% -6.78 ($5,027)
At the end of Spring semester, the SIF portfolio value crossed the $3,000,000 thresh-old for the first time since its im-plementation in 1997! The portfolio is now valued at $3,214,219 as of May 8th, 2013.
The sector weights in the current SIF portfolio were done to match the S&P 500 and recom-mendations issued by the macro-economic commit-tee
Page 7 S I F S P R I N G 2 0 1 3 N E W S L E T T E R
SPRING 2013 SEMESTER BREAKDOWN
SPRING 2013 SEMESTER PORTFOLIO OVERVIEW
Page 8 S I F S P R I N G 2 0 1 3 N E W S L E T T E R
NEW SECURITIES PURCHASED THIS SEMESTER
New Securities Purchase this semester
BAYTEX ENERGY CORP. (NYSE: BTE)
Baytex Energy Corp. is an oil and gas company which engages in the
acquisition, development, and production of crude oil and natural gas
in the Western Canadian Sedimentary Basin and the Williston Basin in
the United States. The company offers heavy oil, light oil, and natural gas liquids.
Baytex Energy Corp. is a mid-capital equity. SIF believes it has potential for growth because its inner valua-
tion is far lower than its trading price. At the same time, macroeconomic commitment suggests adding equities
in the energy sector. SIF believes Baytex Energy Corp. is the best to satisfy this requirement. Its performance
is outstanding in the year to data, and expected to be better in the future.
CF INDUSTRIES, INC. (NYSE: CF)
CF Industries Holdings, Inc. manufactures and distributes nitrogen and
phosphate fertilizer products worldwide. It operates in two segments,
Nitrogen and Phosphate. The Nitrogen segment principally offers ammo-
nia, granular urea, urea ammonium nitrate solution, ammonium nitrate, urea liquor, diesel exhaust fluid, and
aqua ammonia. The Phosphate segment primarily provides diammonium phosphate and monoammonium
phosphate.
The company also owns 50% interests in the GrowHow UK Limited, a nitrogen products producer in the Unit-
ed Kingdom; Point Lisas Nitrogen Limited, an ammonia producer; and KEYTRADE AG, a fertilizer trading
company. Its customers include cooperatives and independent fertilizer distributors.
Basic Material sector only covers three equities before purchasing CF industries, INC. CF Industries, Inc.
helps diversification this sector. SIF believes this equity is underpricing according to results of inner valuation.
This equity has strong financials and high dividend yield. Deleveraging and better cost-control situations also
add value to this equity.
Page 9 S I F S P R I N G 2 0 1 3 N E W S L E T T E R
NEW SECURITIES PURCHASED THIS SEMESTER
HELMERICH & PAYNE, INC (NYSE:HP)
Helmerich & Payne, Inc. engages in the contract drilling of oil and gas wells. It pro-
vides drilling rigs, equipment, personnel, and camps on a contract basis to explore
for and develop oil and gas from onshore areas and fixed platforms, tension-leg
platforms, and spars in offshore areas.
The company is also involved in the development, and operation of commercial real estate. Its real estate in-
vestments comprise a shopping center containing approximately 441,000 leasable square feet; multi-tenant in-
dustrial warehouse properties with approximately 1,000,000 leasable square feet; and approximately 210 acres
of undeveloped real estate.
This security is in the watch list for a period of time. SIF finds this equity has excellent overall performance
and is expected continue in the future. At the same time, this security has a high beta which SIF is looking for-
ward to. Adding this equity diversifies energy sector.
Intel Corporation (NasdaqGS: INTC)
Intel Corporation designs, manufactures, and sells integrated digital technology
platforms worldwide. Its products include PC, data, other Intel architecture,
and software services. The company also provides mobile phone components
comprising baseband processors, radio frequency transceivers, and power man-
agement integrated circuits.
The macro group suggests adding weigh in the technology sector. So SIF decides to buy one security and add
weights of three originally holding. This action can increase technology’s sector’s diversification. Intel Corp.
is the best choice because it has high dividend yield and pretty fundamental performance in the last year.
Page 10 S I F S P R I N G 2 0 1 3 N E W S L E T T E R
NEW SECURITIES PURCHASED THIS SEMESTER
BANK OF NOVA SCOTIA (NYSE: BNS)
The Bank of Nova Scotia, together with its subsidiaries, provides various
personal, commercial, corporate, and investment banking services inter-
nationally. The company operates through four segments: Canadian banking, international banking, global
wealth management, and global banking and markets.
Currently, SIF is underweight in the financial sector. SIF believes it is a good addition because this equity had
high dividend yield in last 5 years and higher EPS compared to other peers in the bank industry.
Page 11 S I F S P R I N G 2 0 1 3 N E W S L E T T E R
M A C R O E C O N O M I C E N V I R O N M E N T
The Spring Semester of 2013 provided unprecedented challenges for the Student Investment Fund. Above all, SIF
dealt with the uncertainty on the economic recovery in the United States. Most discussion was dominated by con-
trasting data and results. For example, equities in the US rallied while unemployment remained high and economic
insecurity remained the norm in Europe.
As said, however, equities have been performing positively. Both the Dow Jones Industrial Average (+14% year-to-
date) and the S&P 500 (+13% year-to-date) are at all-time highs. However, interest rates have remained at pro-
longed lows and unemployment at constant highs near 7.6%. Although the employment situation appears to be
gaining some traction, the Federal Reserve will at some point have to deal with continued low rates that are provid-
ing markets with substantial liquidity.
As of now, the Macroeconomic committee has taken many of these indicators into consideration in order to devel-
op guidance in our portfolio’s sector allocation. A summary of our recommendations is found below.
Our main reason for underweighting financials is due to the interest rate uncertainty that the sector faces. As the
economy improves, the Federal Reserve will have added pressure to change interest rates and curb inflation.
Uncertainty is also the norm for consumer discretionary. Although unemployment has dropped, many of those
without work are simply not counted in the statistical measurement used. As unemployment remains high, SIF ex-
pects the consumer discretionary sector to come down from its solid performance so far this year.
In contrast, we expect good performance from both healthcare and consumer staples. These are two sectors that
been the top performers in the S&P. Much of the reason for this is that individuals are only spending on the prod-
ucts and services that they need.
Energy is expected to continue to deliver solid returns, but nothing extraordinary. Given the variables surrounding
the economic recovery, the sector is experiencing uncertainty in demand for its products. That said, natural gas
supplies are down and prices are up. In addition, oil prices are at a healthy level that allows companies to continue
to explore.
Sector Weight Recommendation
Basic Materials Underweight
Consumer Discretionary Underweight
Consumer Staples Overweight
Energy Market weight
Financials Underweight
Healthcare Overweight
Industrials Market weight
Technology Market weight
Telecommunications Market weight
Utilities Market weight
Page 12 S I F S P R I N G 2 0 1 3 N E W S L E T T E R
G U E S T S P E A K E R S G U E S T S P E A K E R S
J. Brian Henderson, CFA, President of Cavanal Hill
Investment Management, was our first guest speaker for
the Spring 2013 semester. Mr. Henderson spoke to the
class the various career paths available to finance stu-
dents, leading into a background about his company and
his job within it and description of other positions. Mr.
Henderson provided insightful information from his expe-
rience at Cavanal Hill Investment Management and the
value of earning various certifications such as the CFA.
Bryan K. Guderian, Sr. Vice President
of Operations at WPX Energy was our
second guest speaker this Spring 2013
semester. Mr. Guderian opened with a
background about himself and on the
company and its history. He then spoke
in an inspiring way about the numerous
opportunities for careers in finance in
the energy industry and about how im-
portant financial tools like hedging can
be for an energy company.
David Dunham, VP Trading and
Corporate Planning at Unit Corp, was
our third and last guest speaker for
the Spring 2013 semester. Mr. Dun-
ham first spoke to us about his back-
ground, including his education and
career progression. This led into an
interesting discussion of his trading
disciplines, including technical analy-
sis, limiting losses, adjusting positions, etc. Mr. Dunham also spoke on some derivative tools for
risk management such as puts, calls, delta hedging, etc. Finally, Mr. Dunham concluded with
insightful information and expectations for the SIF class.
The Student Investment Fund would like to thank our speakers this semester!
We had the pleasure
to have Mr. Brian
Henderson, Mr. Bry-
an Guderian, and Mr.
David Dunham as
guest speakers in the
SIF class. They pro-
vided the SIF analysts
with interesting in-
sights about the world
of finance and shared
their views on the
present economic
environment.
If you are interested
in speaking with an
SIF class, please con-
tact Tally Ferguson.
Page 13 S I F S P R I N G 2 0 1 3 N E W S L E T T E R
If you have questions or
are interested in learn-
ing more about the SIF,
please contact Tally
Ferguson.
The Spring 2013 Student Investment Fund would like to give special thanks to all of
our supporters and contributors who make the Fund possible.
S I F O R G A N I Z A T I O N A L S T R U C T U R E — S P R I N G 2 0 1 3
Visit our website at: www.utulsa.edu/sif
Newsletter published by
the Spring 2013 SIF Class
Write to us!
We would love to
hear from you!
Spring 2013 Content, Revision and
Layout: Cynthia Onyechere,
Douglas Meadours & Judy Adair
C O N T A C T
I N F O R M A T I O N