Perfect Pitch

Penn State Smeal College of Business Nittany Lion Fund students will compete in the 2014 Americas Regional final, after delivering a winning pitch at the Chartered Financial Analyst (CFA) Research Challenge.

We know about perfect pitch in music and pitching a perfect game in baseball. Now, students from the Smeal College of Business are participating in a competition where their ability to pitch their research has advanced them to the next level.

A team of Smeal’s Nittany Lion Fund students recently won the regional CFA Research Challenge stock pitch competition. The next step: Students will compete in the Americas finals in Denver. Winners of that competition will advance to the global contest in Bangkok.

Emily Zheng reviews financial information in the Smeal College Trading Room.

Nittany Lion Fund student analyst

Emily Zheng reviews financial information in the Smeal College of Business Rogers Family Trading Room. The Trading Room is an advanced learning laboratory that replicates real world trading experience and provides access to 54 workstations, real-time tickers, and stock boards.

Image: Penn State

The Nittany Lion Fund is a student-managed investment fund with more than $6 million in assets and is one of the few student-managed funds supported by actual investor money, not endowment dollars.

CFA Research Challenge participants were tasked with analyzing the financial outlook of PPG Industries—a global supplier of paints, coatings, optical products, and glass—and defending their market valuation of the company to a panel of CFA judges.

The Nittany Lion Fund team consisted of Emily Zheng, Alec Lucente, and Matt Manocchio. The three are junior Finance majors with senior leadership positions in the Nittany Lion Fund.

Before arriving in Pittsburgh, each team submitted a 10-page report; at the competition, they delivered 10-minute presentations to the judges, who then asked tough questions about the students’ findings.

The Smeal team predicted that PPG shares would be priced at $200.50 one year from now, or about a 7.5 percent increase over market close at the time of the competition.

Lucente explained that the rigorous Nittany Lion Fund activities he and his teammates were accustomed to prepared them well for the competition.

“As part of the Nittany Lion Fund, we’re constantly pitching stocks, and we’re used to handling questions like the ones the judges asked us.” —Alec Lucente

“We went into the competition with a level of confidence because we’re used to presenting in this capacity.”

The team was also familiar with PPG, as they own the company’s stock in the Nittany Lion Fund.

The CFA Research Challenge is organized by the CFA Institute, a professional group for certified financial analysts based in Charlottesville, Virginia. The annual challenge is organized to give students real-life experience analyzing a publicly traded company.

The Nittany Lion Fund offers a unique opportunity for high-performing Finance students to connect to real-world investors. The fund’s student managers operate out of the Rogers Family Trading Room, a state-of-the-art classroom and laboratory that replicates real-world trading experience.

Television Appearance

Another group of students from the Nittany Lion Fund had a day in the sun recently—actually, it was day in the TV lights. Three students represented the Nittany Lion Fund on the Fox Business television show “Money with Melissa Francis” on a segment that aired in mid-November.

On the live segment, Jarrod Bruno, Dylan Beil, and Emily Zheng answered Francis’ rapid-fire questions about what stocks the fund is currently investing in and how various sectors are performing.

“Because we have real investors instead of being endowment-based, our decisions are very real.” —Emily Zheng

Though the live show required the students to think on their feet and answer questions quickly, Zheng says that’s the kind of environment that J. Randall Woolridge, professor of finance and president of the Nittany Lion Fund, ensures the fund managers are prepared for.

“We take questions like that regularly from Professor Woolridge, and there’s an expectation—both from him and from our peers—that we’re keeping up with what’s happening in the market,” said Zheng, who currently serves as the director of education in the Penn State Investment Association and was previously lead analyst for the energy sector. “We’re really trained to think dynamically and on the spot.”

The Nittany Lion Fund meets three times a week. One of those meetings is devoted to an overview of the market and how various stocks have performed; the other two meetings revolve around stock pitches, and students give presentations and take questions.

“There is a lot of dynamic discussion that goes on around each pitch, and we vote on every decision,” said Zheng. “Because we have real investors instead of being endowment-based, our decisions are very real.”

Bruno and Beil are both members of the Nittany Lion Fund Executive Board and will graduate next year. Bruno is president of the fund and previously served as the lead analyst for the healthcare sector. Beil is the chief investment officer and was previously lead analyst of the financials sector. Both Bruno and Beil will begin full-time positions with Goldman Sachs after graduation. Zheng, a member of the Nittany Lion Fund leadership team, will intern with Goldman Sachs for the second time next summer. She is slated to graduate in 2015.

 

Rogers Family Trading Room

The Rogers Family Trading Room was established in spring 2001 as an advanced learning laboratory for students at all levels: undergraduate, MBA, Ph.D., and executive education.

The Trading Room functions as a classroom and a laboratory. Smeal was among the first business schools in the nation to invest in such a learning environment.

Televisions offer access to live coverage of CNBC, CNN, and other financial and news networks. Real-time tickers and stock boards surround students with important financial information.

Each of the 54 workstations in the Trading Room is equipped with two monitors, a powerful computer, and the software needed for simulated trading, deal capture, settlement, analytics, pricing, portfolio management, derivatives pricing, and other finance-related challenges.