Regional business school students examine PPG stock
January 15, 2014 9:19 PM
University of Pittsburgh students, from left, Sean Yeager, Andy McClaine, James Founds and Harris Vuadens analyze the value of PPG, part of an annual Chartered Financial Analyst Institute contest.
By Len Boselovic / Pittsburgh Post-Gazette
University of Pittsburgh business school students Harris Vuadens and Brad Murtonen are like well-conditioned college athletes defending their school's conference title. They want to upgrade Pitt's claim from four-time defending champion to five-time defending champion at the big game next month.
"We definitely feel there is a target on our back," said Mr. Vuadens, 35, an MBA candidate and the oldest of a team of five Pitt students competing in the 2014 CFA Institute Research Challenge.
The global competition pits teams of business students from 775 universities in 54 countries against each other, with the prize going to the team that writes and presents the best analysis of a public company. The contest is sponsored by the CFA Institute, a Charlottesville, Va.-based professional group for certified financial analysts.
Pitt is one of seven area schools competing Feb. 17 at the Rivers Club, Downtown. The winner goes to the regional finals in March. The second round winner advances to the global finals.
The Pitt team, advised by professor Manoharlal Sukhwani, has won the local competition all four years it has been held and has placed as high as third in the second round.
"You definitely don't want to be the ones to end the streak," said Mr. Murtonen, 22, a senior from Ann Arbor, Mich.
The purpose of the contest is to give students real-life experience evaluating a public company the way a Wall Street analyst does. Teams of three to five students, comprised of undergraduate and/or graduate students, must prepare a 10-page written report and make a 10-minute presentation to a panel of judges who grill them with questions.
In addition to getting up to 10 hours of advice from their faculty adviser, the students get a maximum of six hours to consult with a professional CFA.
"It's an excellent way for our industry to reach down and mentor people who want to get into this business," said Malcolm Polley, president and chief investment officer of Stewart Capital Advisors and mentor to the Indiana University of Pennsylvania team.
Mr. Sukhwani said developing the presentation skills of the students is an important element of the competition. A few years ago, the Pitt team was tripped up in the regionals when it was asked why it based its valuation of EQT on natural gas prices of $3.17 per million Btu when the current price was $2. The students couldn't come up with a good answer, even though natural gas hit $3.50 a few months later, Mr. Sukhwani said.
This year, the seven local schools in the competition are analyzing PPG Industries. That's good news for Penn State University finance professor Randy Woolridge. His squad is familiar with the paint producer because it's the best performing stock in the student-managed Nittany Lion Fund. Mr. Woolridge said the fund, which manages $6.3 million of private investors' money, bought PPG for $60 a share in 2009 versus its current price of about $190.
"I wish there were other numbers like that in our portfolio," Mr. Woolridge said.
The Nittany Lion fund's student managers regularly tear apart a company's financials and make buy, sell or hold recommendations. Mr. Woolridge said his team is composed of four juniors who, as sophomores, won a similar competition at Rutgers University last year. It includes the president and chief investment officer of the fund as well as the student who was responsible for keeping tabs on PPG last year.
"I've got a real good crew going down there," he said.
The other local schools competing are Duquesne University, Carnegie Mellon University, Washington & Jefferson College and Penn State Erie.
Federated Investors portfolio manager Ryan Bend, who will be one of three judges for the oral presentation at the Feb. 17 event, said students spend hours of time preparing.
"These kids, they are not seeing the inside of a bar," he said.
That comment elicited a few chuckles from the Pitt students, who admitted preparing for the event has cut down on time for other things. Like looking for a job.
"I could be putting a lot more time into that without this," said Andy McClaine, 26, of East Brady.
Len Boselovic: email@example.com or 412-263-1941.
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