Newswise — A Babson College team of MBA and undergraduate students won the CFA Institute inaugural Global Investment Challenge. The Challenge is an educational initiative between Babson College, Stillman School of Business at Seton Hall University in New Jersey, The Chinese University of Hong Kong, and the Jesse H. Jones Graduate School of Management at Rice University in Texas.
In 2002, the New York Society of Security Analysts (NYSSA), a founding member society of CFA Institute, introduced the Investment Research Challenge as a means to promote best practices in research among the next generation of analysts. Enthusiasm for the event spread, resulting in the CFA Institute Global Investment Challenge.
Babson College's six-person team presented the winning report on Analog Devices Inc. (NYSE: ADI). As host of the winning team, Babson College received $10,000. Members of the Babson team are:
· Anil Agarwal
· Paul Fruin
· Michael Hess
· Sri Krishnamurthy
· David P. Wellinghoff
· Dennis R. Yuscavitch
· Warren Johnson, CFA (Babson College Team Leader)
The Babson College team analyzed Analog Devices Inc. (NYSE: ADI) and determined a buy recommendation with a one-year price target of $40.98. This recommendation was based on the team's analysis of ADI's underappreciated strategic position; product and financial strength; strong growth of revenue drivers (ADI amplifiers and converters); anticipated costs and margin improvements across most of the ADI product line; improvements in ADI's inventory cycle; and the unlikely possibility of leveraged buy-out and/or divestiture of DSPs. ADI produces analog and digital integrated circuits that serve a global customer base.
"These four teams are already winners for their hard work, perseverance, and analytical skills that have carried them this far," said Jeff Diermeier, CFA, president and CEO of CFA Institute. "When I first heard of the NYSSA program, I was reminded of how important my university education was to preparing me for entering the investment industry. These students are the future of our profession and their dedication to ethics and competency is a perfect match for the CFA Institute mission. Congratulations to all the teams team for setting the benchmark for this program and for Babson College's successful investment research analysis and presentation."
The Challenge is an educational initiative whereby leading industry professionals teach business and finance students how to research and report on a publicly traded company. This event spanned one academic year, and consisted of the following components:
· Training in Research and Report Writing " Students received training by attending seminars on Internet Research, Report Writing, and Ethics. Seminars were taught by investment professionals and were held on campus at participating universities.
· Analysis of a Public Company " University teams researched a public company, selected by the participating CFA Institute member society. The research process included a question and answer session with company management.
· Mentoring By a Professional Research Analyst " Each team was mentored by a professional research analyst or portfolio manager who reviewed and critiqued the report.
· Assessment of Written Reports " A group of volunteer graders selected from the membership assessed each team's written research reports and chose four finalist teams to present to the panel of experts.
· Presentation of Research to Wall Street Expert Panel " On April 26, 2007, the teams presented their research to a panel of respected Wall Street experts. Panelists were Jeff Diermeier, CFA, president and CEO of CFA Institute; Jack Rivkin, chief investment officers of Neuberger Berman; Frank Fabozzi, CFA, adjunct professor of finance and Becton Fellow at Yale University School of Management; Jason Trennert, managing partner and chief investment strategist for Strategas Research Partners; and Reiner M. Triltsch, CFA, managing director and head of international investments for U.S. Trust.
The judges ranked the teams from highest to lowest to each of the following weighted criteria:
* Materials (20 percent)* Investment Case: -- Argument (did the team use data effectively to support their recommendations) (25 percent) -- Poise (was the team confident in their recommendation and were they convincing) (20 percent)* Ability to Answer Questions (25 percent)* Use of Resources (10 percent) Each team was sponsored by a CFA Institute member society. Including NYSSA, the participating societies were the Boston Security Analysts Society, the Hong Kong Society of Financial Analysts, the CFA Society of Dallas/Fort Worth, and Houston Society of Financial Analysts.
"Our team took on a particularly challenging company, with a very technical product and market," said Eric Wetlaufer, CFA, a member of BSAS' judging panel and group chief investment officer at Fidelity Investments. "They had very tough competition and did a fine job in Boston. The team members deserve so much credit for their work and charisma."
"I believe that more CFA Institute member societies will participate in The Challenge because it is a perfect combination of investment professionals and industry experts partnering with universities to benefit the future of our industry," said Diermeier.
CFA Institute:
CFA Institute is the global membership association that administers the Chartered Financial Analyst® (CFA®) and Certificate in Investment Performance Measurement (CIPM) curriculum and exam programs worldwide; publishes research; conducts professional development programs; and sets voluntary, ethics-based professional and performance-reporting standards for the investment industry. CFA Institute has more than 90,000 members, who include the world's 77,000 CFA charterholders, in 133 countries and territories, as well as 134 affiliated professional societies in 55 countries and territories. In 2007, CFA Institute celebrates the 60th anniversary of "the founding of a profession." CFA Institute has offices in Charlottesville, Va., London, Hong Kong, and New York. More information may be found at http://www.cfainstitute.org. (Bloomberg users can find CFA Institute at 497458Z).
Babson College:
Babson College in Wellesley, Mass., is recognized internationally as a leader in entrepreneurial management education. Babson grants BS degrees through its innovative undergraduate program, and grants MBA and custom MS and MBA degrees through the F.W. Olin Graduate School of Business at Babson College. Babson Executive Education offers executive development programs to experienced managers worldwide. For information, visit http://www.babson.edu.
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