Greystone Equity Fund
2013-2014 Annual Report
Marist College
Contents
Contents
Director’s Letter ............................................................................................................................................ 4
President’s Letter .......................................................................................................................................... 5
Letter from Students ..................................................................................................................................... 6
The Greystone Equity Fund........................................................................................................................... 8
Portfolio Guidelines ...................................................................................................................................... 9
Fund Performance ...................................................................................................................................... 10
Portfolio Return 2013-2014 .................................................................................................................... 10
Historical Portfolio Return ...................................................................................................................... 10
Portfolio Allocation ..................................................................................................................................... 12
Sector Weights ............................................................................................................................................ 13
Current Portfolio Holdings ...................................................................................................................... 13
Economic Outlook ....................................................................................................................................... 14
Business & Market Cycle ......................................................................................................................... 16
Manufacturing Data ............................................................................................................................ 16
Global Economic Highlights .................................................................................................................... 16
Market Volatility ................................................................................................................................. 17
Holdings Analysis ........................................................................................................................................ 17
Consumer Discretionary ......................................................................................................................... 17
Nike (NKE) ........................................................................................................................................... 17
VF Corporation (VFC) .......................................................................................................................... 18
Michael Kors Holdings Ltd. (KORS) – New Position ............................................................................ 18
Thor Industries Inc. (THO) ................................................................................................................... 19
Consumer Staples ................................................................................................................................... 20
Anheuser-Busch InBev (BUD) – New Position..................................................................................... 20
Pepsi Co. (PEP) .................................................................................................................................... 21
The Hershey Company (HSY) .............................................................................................................. 21
ConAgra Foods, Inc. (CAG) - Divested ................................................................................................. 22
Energy ..................................................................................................................................................... 22
Diamondback Energy, Inc. – New Position ......................................................................................... 23
Sasol (SSL)............................................................................................................................................ 23
2
Energy Select Sector SPDR ETF (XLE) .................................................................................................. 24
Market Vectors Unconventional Oil & Gas ETF (FRAK)....................................................................... 25
TransCanada (TRP) - Divested ............................................................................................................. 25
Financials................................................................................................................................................. 26
M&T Bank (MTB) ................................................................................................................................. 26
Capital One Financial (COF)................................................................................................................. 27
Goldman Sachs Group (GS) - Divest .................................................................................................... 28
Health Care ............................................................................................................................................. 28
Jazz Pharmaceuticals PLC (JAZZ) - Divest ............................................................................................ 29
Pfizer Inc. (PFE) ................................................................................................................................... 29
Abbot Laboratories (ABT).................................................................................................................... 30
Gilead Sciences Inc. (GILD) - New Position ......................................................................................... 31
Industrials................................................................................................................................................ 32
Industrial Select Sector SPDR ETF (XLI) ............................................................................................... 32
Cummins Inc. (CMI) ............................................................................................................................. 33
Union Pacific Corporation (UNP) – New Position ............................................................................... 33
Information Technology.......................................................................................................................... 34
Technology Select Sector SPDR ETF (XLK) ........................................................................................... 34
Corning Inc. (GLW) .............................................................................................................................. 35
Micron Technologies (MU) ................................................................................................................. 36
Fair Isaac Corporation (FICO) - Divested ............................................................................................. 36
Materials ................................................................................................................................................. 37
Freeport-McMoRan Copper & Gold Inc. (FCX).................................................................................... 37
Ternium S.A. (TX) - Divested ............................................................................................................... 38
LyondellBasell Industries N.V. (LYB) – New Position .......................................................................... 38
Telecommunication Services .................................................................................................................. 39
American Tower Corporation (AMT) .................................................................................................. 39
T-Mobile US, Inc. (TMUS) - Divested................................................................................................... 40
Utilities .................................................................................................................................................... 41
NextEra Energy (NEE) – New Position................................................................................................. 41
Guest Speakers ........................................................................................................................................... 42
Student Analysts ......................................................................................................................................... 44
Disclaimer.................................................................................................................................................... 47
3
Director’s Letter
June 2014
On behalf of the students who participated in Marist College’s student‐managed investment program in
2013 and 2014, I am pleased to present the Greystone Equity Fund Annual Report for the period ending
May 31, 2014.
The Greystone Equity Fund was launched in April 2011 with an initial seed capital of $100,000 allocated
from the College’s endowment. While it may not have been a propitious time to launch a fund
benchmarked against the S&P 500 index, with the market dropping almost 20% in the five months
following the fund launch, the continuing Great Recession and a lingering debt crisis in Europe have
provided our students with an unequaled opportunity for learning.
Students who participate in the program are tasked with managing the equity portfolio over the course
of a single semester. They are responsible for all aspects of the portfolio management process, from
evaluating the current state of the economy to screening, analyzing and evaluating potential stocks and
writing analyst reports, and voting on portfolio allocation decisions. Each class has had to make
decisions in the face of uncertainty and incomplete information, and they have done an excellent job. In
fact, over the past twelve months they have outperformed their benchmark, the S&P500 index.
I would like to thank President Murray and the Board of Trustees for allowing the Greystone Equity Fund
to manage a portion of the College endowment and for providing the Fund a home in the state‐of‐the
art Investment Center in the Hancock Center. John Pecchia and Jay Pantaleo have helped us
enormously, as has Dean Lawrence Singleton, while our guest speakers have been overwhelmingly
generous with their time and support. Students also benefited from our trip to the GAME forum, a
conference for student‐managed investment funds.
Our experience with the Greystone Equity Fund has been exciting and rewarding. The students have
demonstrated a tremendous capacity for hard work and a thirst for knowledge. I am confident that the
team‐based, practical learning experience gained by the student participants will serve them well in
their future careers and, notwithstanding the challenges of the world economy, I believe that the
Greystone Equity Fund will continue to provide our students with the opportunity to excel.
Congratulations and best wishes in the future to the 2013‐2014 Greystone Equity Fund alumni.
Brian J Haughey, CFA, FRM, CAIA
Director, Marist College Investment Center.
4
President’s Letter
My name is Michael LaCasse and I held the position of Fund President of the Greystone Equity Fund for
the Spring semester of 2014. The 13 other exceptional students and I worked diligently throughout the
semester to expand our knowledge of equity markets and the financial system. The progress that we
have made as a class is not limited to our intellectual understanding of finance. We each grew as
individuals by enhancing our public speaking, character, as well as our ability to work and cooperate in a
professional setting. Our primary goal was to not only pick securities with positive financial returns, but
to choose securities that we felt would outperform the S&P 500 based on our in-depth research and
analysis.
We began our selection for potential securities by utilizing a screening process that was customized for
each sector. This resulted in a small group of potential companies to invest in for each sector and
eventually the groups responsible for each sector narrowed their choice down to one company.
Throughout the rest of the semester each sector team carried out an intensive fundamental analysis,
making use of the Bloomberg Financial terminals and other financial sources. Ultimately, the student
analysts developed target price estimates using an array of valuation methods.
Each team then presented their research and estimates to the rest of the class. After carefully
discussing all the findings that were presented by each team, we collectively decided what securities
would be believed to be best for the Greystone Equity Fund; a majority vote was required for each
decision. We also employed strategies to sell or hold our current positions as well as determining if we
should over or under weight a specific sector based on our economic outlook.
All of the students benefited from the resources available in the Investment Center, with the entire class
becoming Bloomberg Certified.
The opportunity that has been provided for us has been one of the most beneficial opportunities during
my time as a student at Marist College. Professor Haughey and numerous guest speakers were able to
provide real world insight into the financial sector as well as career advice that simply cannot be
obtained in a typical college course.
It has been an honor and a privilege to work with the individuals within the Fund and it was refreshing to
be surrounded by a group of peers that shared the same desire and passion to learn about the equity
markets and financial system. We have learned invaluable skills and intangibles that have set us apart
from many students here at Marist and I am sure that every member of the Greystone Equity Fund will
be successful in their future careers. We would like to thank the administration at Marist College and all
others responsible for making this opportunity possible, and we hope to see this program grow and
develop more young and talented individuals.
Michael LaCasse
President, Greystone Equity Fund
5
Letter from Students
The Greystone Equity Fund was initiated during the spring semester of 2011. The first class of this
Student-managed investment fund met in January of that year and since then, six additional classes
have participated in the program. The first set of students selected a group of exchange traded funds
(ETFs) that covered each major market sector for the initial allocation of portfolio assets. As the
semester progressed, the class then analyzed individual stocks that they later pitched to the class and,
after a vote, liquidated a portion of the ETF investments and allocated the proceeds to the selected
equities. During subsequent semesters each incoming class examined the ETF and stock selections of the
preceding students, choosing to either maintain the current investments or sell and invest in new
holdings. At the end of each semester, the current class voted to accept the stocks that were pitched,
and liquidated some of the existing ETF and previous equity holdings to fund the stock purchases.
Each student cohort learned how to access and evaluate the market environment by using tools such as
MorningStar and Bloomberg. Each member of the class was responsible for specific roles that would
help the whole team achieve the best conclusions. Members responsible for the analysis of the
economic environment kept the class updated about facts that could affect final decisions. In addition,
the class used valuation models developed by Bloomberg and themselves to help analyze the chosen
stocks.
The benchmark used for the fund assets is the S&P 500, and we analyzed the market using sectors
defined by Standard and Poors: Consumer Discretionary, Consumer Staples, Energy, Financials, Heath
Care, Industrial, Information Technology, Materials, Telecommunication services, and Utilities.
We sought to generate Alpha, or outperformance relative to the benchmark, by overweighting sectors
we thought would outperform, as well as picking what we considered to be superior stocks within each
sector. We discuss our sector weights in a subsequent section. Our stock research primarily focused on
fundamental analysis, although we did pay some attention to technical analysis, and the Investment
Center’s Bloomberg terminals provided the class with an extensive array of stock screening tools which
each student could tailor to fit their own preferred criteria. Students also made use of company financial
statements (Income Statement, Balance Sheet, Statement of Cash Flows, and Statement of Retained
Earnings), with company filings available in some cases all the way back to the 1960s.
The most popular initial screens used by students were the Price/Book ratio, the Price/Earnings ratio,
Price/Sales, and Earnings per Share. The Price/Book (P/B) ratio provides an excellent measure regarding
the relative value of an underlying stock. It compares the current price of the stock to the proceeds
likely to be realized if the company were to be liquidated today. Typically, investors searching for a
bargain purchase should buy a stock with a P/B ratio of less than 1. This suggests that an investor will be
buying a stock at a “discount”.
The Price/Earnings (P/E) ratio tells an investor how much he is paying for a company’s earnings power.
Some stocks feature a high P/E (20 or more) stock; in such cases an investor is prepared to pay more for
the stock because of its higher expected earnings power, although these stocks typically carry more risk
than a low P/E (15 or less) stock. Examples of this observation are the new, innovative tech companies
such as Apple, Google, and Micron Technologies. Investors in a stock that features a low P/E (15 or less)
expect the company to maintain a steady cash flow. These companies include General Electric, NextEra,
and Verizon, and they usually pay dividends. Conversely, high P/E stocks do not tend to pay dividends.
6
The Earnings Per Share (EPS) screen is a useful indicator that shows how much profit the company
produced for one share of common stock. EPS provides investors with a solid screen because if EPS
increases year after year, the stock has consistent earnings growth or earnings momentum, while a
history of paying dividends is attractive also. We also used a variety of other screens, such as the
Pietrowski F‐score, to rank stocks.
The portfolio’s weighted‐average Beta is 1.17, slightly higher than that of the Benchmark, the S&P500,
which has a beta of 1.00. The beta of 1.17 gives us a relatively safe position considering the market’s
uncertainties while still allowing for excess expected growth over the benchmark. Our opportunity to
generate Alpha arises from the quality of our equity selections and allocation. In accordance with
current economic conditions, we believe we have addressed both the risk of an economic downturn and
the opportunity for continued expansion.
Professor Haughey organized a consistent stream of guest speakers through the semester. This
complemented the in‐class lectures and provided the students with some interesting real‐world stories
and great networking opportunities. Students benefited tremendously from the question‐and‐answer
segment at the end of each presentation. These personalized questions allowed the speakers to tailor
each of their presentations toward the students’ interests, which helped them further improve their
analysis in this class. We are very grateful to the speakers for contributing to our learning experience.
On March 20-24th, four of our students, together with Professor Haughey, attended the Quinnipiac
G.A.M.E forum, an annual conference for participants and faculty in student‐managed investment funds,
held at the Sheraton hotel in Manhattan, New York. Upon arrival on Thursday, the students attended
four keynote presentations, where the speakers expounded on topics such as the economy, alternative
assets, stocks markets, and corporate governance. On the following day, student attendees were able to
choose from a multitude of different breakout panels, workshops, and keynote perspectives that piqued
their individual interests. For the most part, the four Greystone students attended different sessions and
each got the chance to learn more about topics that matched their personal interests from the diverse
group of experienced members of the financial industry. Upon their return to Marist they shared their
insights and lessons learned with their classmates.
Though we did learn a lot from attending the GAME event it was nice to realize that our program here at
Marist has even more to offer us. Our professors have a lot of knowledge to spread and are almost
always available. On top of that it was nice to see that Marist’s Investment Center is significantly better
equipped than almost every other school whose students were attending the conference. Overall it was
a great experience in that it allowed our students to learn about topics they had interest in, and then
bring back their newly acquired knowledge and share it with their fellow classmates.
Attending the G.A.M.E. Forum illustrates the great opportunity Marist provides for its students by
funding the Investment Practicum Program and through their gracious investment in the institution’s
state-of-art investment center.
7
The Greystone Equity Fund
The Greystone Equity Fund – a student‐managed investment fund (SMIF) – was established in 2011 to
provide Marist College students with “hands‐on” experience in investment management, by bridging
the gap between traditional classroom instruction and “real world” application. The aim of the program
is to maximize the long‐term total rate of return on fund assets, while providing student managers the
opportunity to gain experience in identifying, analyzing, valuing and investing in securities, in the
management of a portfolio, and in the reporting of portfolio performance.
Student participants in the SMIF submit to a recruitment process that is designed to be both highly
selective and representative of what students will be exposed to when they graduate. Each applicant
was required to complete an application form, and to provide a letter of recommendation from one of
their professors. Other than in exceptional circumstances, only applications from those students with a
GPA of 3.0 or better were considered. After an initial screening process, selected applicants were invited
to take part in an interview process. Students who acquitted themselves satisfactorily in the interview
were then invited to participate in the class.
The class is organized just as an investment management firm might be. Each student has responsibility
for one of ten market sectors, and is responsible for identifying and researching potential stock
investments, and writing an analyst report on his or her stock suggestion. The entire class comprises the
investment committee, responsible for asset allocation and formulating investment strategy, subject to
the provisions of the fund’s Investment Policy Statement, and votes on each investment proposal. A
super‐majority is required for a proposal to be accepted. Students meet formally for regularly scheduled
classes, as well as informally while performing research, and are required to dress professionally when
in the Investment Center.
Students in the SMIF learn how to assess the current state of the economy to determine the likely
performance of industries and companies. They work on their own and in small teams, and gain
experience in performing both quantitative and qualitative analysis, and in presenting their findings
both verbally and in written analyst reports. Equally importantly, they gain experience in decision
making with incomplete information, and in weighing and evaluating several prospective outcomes.
They perform “top‐down” analysis to determine the fund’s sector weighting, by evaluating the
macroeconomic environment, examining leading economic indicators and keeping abreast of political,
economic and regulatory news. They then perform a “bottom‐up” fundamental analysis, screening for
stocks in a given sector on the basis of relative value to identified undervalued securities, and
performing a comprehensive evaluation of their selected stock. This analysis entails evaluating the
company’s financial statements, earnings guidance, competitive position and industry research, and
using discounted cash flow models and relative valuation metrics to determine what the students
believe is a “fair value” for the security.
The emphasis in the program is on bridging the gap between the academic and the practical, and in this
we have been assisted by a group of Wall Street professionals who have generously devoted their time
to visiting the class and making presentations. Students in the Greystone Equity Fund also benefit from
the resources available in Marist’s world‐class Investment Center, featuring a dozen Bloomberg
terminals, the Morningstar data service, stock tickers and TV displays, and their rich learning experience
would not be possible without the resources provided by the College administration.
8
Portfolio Guidelines
The investment objective of the Greystone Equity Fund is to maximize the long‐term total rate of return
on fund assets, consistent with prudent risk limits and diversification requirements, while providing its
student managers with the opportunity to gain experience in identifying, analyzing, valuing and
investing in securities, in the management of a portfolio, and in the reporting of portfolio performance.
The portfolio is managed against a benchmark, the S&P 500 index, with student managers being subject
to the provisions of the fund’s Investment Policy Statement. Consistent with this policy, student
managers may only invest in stocks that are either domiciled in the US or that have ADRs traded on a US
exchange. Permitted asset classes include equities, convertible bonds, ETFs and cash. The fund may
invest in common and preferred stocks of US domestic equities with market capitalization of at least
$100 million. No more than 20% of fund assets may be invested in small‐cap stocks, and no more than
40% may be invested in medium‐cap stocks, where small‐cap stocks are defined as those with a market
capitalization of between $100 million and $2 billion, and medium‐cap stocks are defined as those with
a market capitalization of between $2 billion and $5 billion.
The fund seeks to outperform the index by overweighting those market sectors the managers believe,
on the basis of their analysis, will outperform the market over the next 12 months, and underweighting
those sectors they believe will underperform. Within each of the market sectors the managers seek to
identify individual stocks that will outperform their peers.
The portfolio remains fully invested over the summer and winter breaks, in order to replicate the
performance of a buy‐and‐hold portfolio. The class could choose to liquidate the portfolio between
semesters, but to do so would expose the Fund to basis risk, that is, the risk that the market could
recover from a decline, or appreciate significantly leading to significant underperformance by the cash
only portfolio.
9
Fund Performance
While the ultimate purpose of The Greystone Equity Fund is to serve as a vehicle through which
students can learn to perform research and to make decisions, we do nevertheless compare the
performance of the Fund to that of the S&P 500, its benchmark. While its performance lagged between
January 2012 and May 2013, largely due to the European crisis, the Fund return in the 2013-2014 period
has been impressive.
Portfolio Return 2013-2014
The performance of The Greystone Equity Fund relative to the S&P 500 in the most recent twelve
months, from May 2013 through May 2014, has been quite satisfactory, as shown in Figure 1. The Fund
earned 21.04% while the benchmark returned 20.41%, with the student fund outperforming by a margin
of 0.63%. This is particularly impressive when one considers that the students rebalanced the portfolio
just twice, in December and in May.
FIGURE 1 - PORTFOLIO RETURN FROM 05/31/13 – 05/31/14
We expect that in the future new students joining the Fund will, through their participation in Marist’s
Student Investment Club, be familiar with the portfolio and stock valuation prior to joining the class, so
that future classes will be able to rebalance the portfolio more frequently, and respond proactively to
market moves.
Historical Portfolio Return
Figure 2 shows the cumulative performance of the Fund since its inception in May 2011. The Fund did
not fare as well as the benchmark in 2012. In large part the portfolio’s relative underperformance in
2012 and early 2013 was due to a flight to quality in response to turmoil in Europe; as uncertainly about
FIGURE 2 - PORTFOLIO RETURN SINCE INCEPTION
the possibility of a Euro breakup spread, asset managers eschewed European and global stocks and
sought the relative safety of US large cap stocks. In consequence, the performance of the MSCI World
index suffered relative to that of the S&P500, while the MSCI EAFE (Europe, Asia and Far East) fared
even worse. Portfolios such as the Greystone Equity Fund, that had some exposure to European and
international stocks, tended to underperform US domestic large caps, as shown in Figure 3.
FIGURE 3 - RETURN OF US, EUROPEAN AND WORLD STOCK INDICES
In a similar fashion, as assets flowed into US large cap stocks, the large cap indexes outperformed small
and mid-cap stocks during this period. Figure 3 shows the relative price performance of the S&P500, the
Nasdaq Composite and the Russell 2000 (a small cap index) for the period since January 2012. It can be
11
seen that in 2012 large cap stocks outperformed, so that portfolios such as the Greystone Equity Fund
that contained smaller stocks were more likely to underperform the large cap S&P 500 index.
FIGURE 4 - RETURN OF US MARKETS SINCE 2000
Portfolio Allocation
The student managers seek to outperform the benchmark by overweighting those sectors in the S&P
500 that they expect to do well, and underweighting the sectors they think will perform worse than the
average. Within these sectors they seek to invest in stocks that will outperform their sector peers.
Occasionally a potential stock investment will not ultimately be accepted; in such cases the student
managers will instead invest a portion of the portfolio assets in a sector exchange-traded fund (ETF). As
a result, the portfolio will typically have a modest exposure to ETFs.
At times the class may decide to sell a position in
advance of rebalancing the portfolio, with the
proceeds being held in cash or in an index ETF.
There is also a delay, when rebalancing the
portfolio, between the sale of holdings and the
reinvestment of the sale proceeds in new
holdings. This delay, typically three days, can be
a source of portfolio underperformance in a
volatile market. Figure 5 shows the Fund
composition over time.
FIGURE 5 - PORTFOLIO COMPOSITION
12
Sector Weights
As discussed above, the student managers seek to
out-perform the index by overweighting sectors they
believe are likely to perform better than average, and
to underweight sectors they expect to under-perform.
Each class updates the portfolio weightings, and the
most recent portfolio reallocation was performed in
May 2014. Figure 6 shows the current (May 2014)
sector weights of the S&P 500 index.
FIGURE 6 – S&P 500 CURRENT SECTOR WEIGHTS
The sector weights for The Greystone Equity Fund prior to, and subsequent to, the May rebalancing are
shown in Figure 7.
FIGURE 7 – CURRENT GREYSTONE EQUITY FUND SECTOR WEIGHTS
Relative to the S&P 500 sector weights, the student managers decided to overweight Consumer Staples
(13% vs. 10%), Energy (15% vs. 10%), Healthcare (15% vs. 13%) and Industrials (12% vs. 11%). They chose
to underweight Consumer Discretionary (9% vs. 12%), Financials (10% vs. 16%), and Information
Technology (13% vs. 19%).
Current Portfolio Holdings
In preparation for the Fall 2014 semester, the Fund holdings have been realigned to reflect the
economic expectations of the current student managers. There are several new additions to the
portfolio, including Michael Kors, which we expect to continue its recent momentum. Anheuser Busch is
expected to profit from continued growth in the alcohol market, with its premium brands and core
brands both having good prospects. Meanwhile, Diamondback Energy, Union Pacific, and LyondellBasell
should all benefit from the burgeoning renaissance in the US energy and petrochemical markets, while
NextEra has been a solid performer in the utility sector. Figure 8 shows the current portfolio holdings.
13
Holding
Cash
NIKE INC CL B
THOR INDS INC
V F CORP
MICHAEL KORS HOLDINGS LTD
THE HERSHEY COMPANY
PEPSICO INC
ANHEUSER-BUSCH INBEV SPN ADR
SASOL LIMITED ADR
MARKET VECTORS UNCONVENTIONAL OIL & GAS ETF
AMEX ENERGY SELECT SPDR
DIAMONDBACK ENERGY INC
CAPITAL ONE FINANCIAL CORP
M & T BANK CORPORATION COM
ABBOTT LABS
PFIZER INC
GILEAD SCIENCES INC
CUMMINS INC.
AMEX INDUSTRIAL SPDR
UNION PACIFIC CORP
CORNING INC
MICRON TECHNOLOGY INC
AMEX TECHNOLOGY SELECT SPDR
FREEPORT-MCMORAN COPPER & GOLD INC
LYONDELLBASELL INDU
AMERICAN TOWER CORP
NEXTERA ENERGY INC
Ticker
NKE
THO
VFC
KORS
HSY
PEP
BUD
SSL
FRAK
XLE
FANG
COF
MTB
ABT
PFE
GILD
CMI
XLI
UNP
GLW
MU
XLK
FCX
LYB
AMT
NEE
Acqusition Date Sector
May 9, 2011
Consumer Discretionary
December 12, 2013
Consumer Discretionary
May 20, 2013
Consumer Discretionary
May 23, 2014
Consumer Discretionary
May 20, 2013
Consumer Staples
December 14, 2011
Consumer Staples
May 23, 2014
Consumer Staples
May 9, 2012
Energy
December 12, 2013
Energy
May 9, 2011
Energy
May 23, 2014
Energy
December 14, 2011
Financials
December 20, 2012
Financials
May 20, 2013
Health Care
May 9, 2012
Health Care
May 23, 2014
Health Care
December 12, 2013
Industrials
December 13, 2013
Industrials
May 23, 2014
Industrials
May 9, 2011
Information Technology
December 12, 2013
Information Technology
May 9, 2011
Information Technology
May 20, 2013
Materials
May 23, 2014
Materials
May 9, 2011
Telecommunication Services
May 23, 2014
Utilities
FIGURE 8 – GREYSTONE EQUITY FUND HOLDINGS
Economic Outlook
U.S. GDP
Q1 2014 proved to be very disappointing in terms of overall GDP. After a modest decrease in growth
during Q4 2013, GDP took a nose dive down to -2.9% QoQ. The second quarter will prove to be very
influential for the state of the U.S.
economy; a rebound would build optimism
and equate the depressed quarter to tough
weather conditions, while a negative
growth number would put us on the verge
of a recession.
Troubling signs from the Q1 numbers
include a decrease in personal
consumption, business fixed investments,
and change in private inventories, all three
of which point towards depressed economic conditions. FIGURE 9 – QUARTERLY CHANGE IN GDP
14
Weight
0.22%
1.50%
3.00%
3.00%
1.50%
5.00%
2.00%
6.00%
1.72%
5.19%
3.00%
5.00%
5.41%
4.53%
4.92%
4.00%
6.00%
4.00%
1.58%
6.00%
5.77%
5.26%
2.39%
2.00%
5.00%
2.00%
4.00%
Consumer Sentiment
The University of Michigan Survey of Consumer Confidence Sentiment index has been relatively steady.
From February to March consumer sentiment decreased from 81.6 to 80. This shows that consumers
might be a little wary of the market. However, consumer sentiment increased to 84.1 in April which was
more of a bullish sign, but it declined again in May to 81.9. Future consumer spending will very likely be
highly correlated with consumer sentiment.
FIGURE 10 – CONSUMER CONFIDENCE
Unemployment and Labor Force
An indication as to why growth is slowing may be seen by examining the employment situation. At first
glance a falling unemployment rate seems promising, but as we can see in Figure 11 the rate of underemployment (as reflected in the U-6 rate) remains stubbornly high, indicating that many workers are
employed less than optimally. Perhaps more importantly, the declining labor force participation rate
completes the story, illustrating that the decrease in unemployment has been driven in large measure
by potential workers exiting the workforce.
FIGURE 11 – EMPLOYMENT, UNDER-EMPLOYMENT AND LABOR FORCE PARTICIPATION
15
In addition, the ADP National Employment Report private nonfarm job additions data compared to
Initial Jobless Claims show the latter outpacing private sector job additions, further supporting the
aforementioned assumption.
Business & Market Cycle
With 10 and 30 year Treasury rates falling at an elevated pace and short term rates prepped for a
significant rise as the Fed’s experimental Quantitative Easing program is tapered to an end, a flattening
yield curve provides substantial evidence that the U.S. economy is approaching the peak of its business
cycle. In terms of the market cycle, the Energy
Sector is currently the third best performing
sector YTD while health care has recently
surpassed it to become the second best
performer YTD. This has historically indicated
that the economy is near its peak and is
heading towards a contraction. Utilities at the
top is also an indication of a flight to safety by
investors.
FIGURE 12 – TREASURY YIELDS
Manufacturing Data
Any recovery from negative returns YTD will be signaled in PMI, Durable Goods and Factory Orders
growth. The most recent Durable Goods report (May 2014) was just 0.6%, 3.1% lower than the previous
period although better than the -0.7% estimate. Factory orders grew by 0.7% in April, 0.2% greater than
estimates but below the 1.5% in the previous period. A positive sign is that PMI has been on an uptrend
in 2014, increasing from 51 at the end of January to over 53 in February and leveling off above 55 in the
most recent period.
Global Economic Highlights
Emerging from a recent recession, the Eurozone is projected to post positive yearly GDP growth for the
first time in two years.
China is an area of concern with recent export numbers falling in February, down 18% from the
comparable number a year prior, although showing a recovery in May to a growth of 7%. A slowing
Chinese economy could have major global implications including but not limited to rising input and
manufacturing costs and decreased sales to Chinese consumers.
Japan’s recent increase in sales tax to 8% from 5% on April 1st could result in decreased Japanese
consumption moving forward, after the jump in sales prior to the April tax hike is accounted for.
Emerging Markets as a whole look promising outside of the recent selloff resulting from investor fear
over U.S. tapering and Geopolitical issues in the Ukraine and Russia. Emerging markets have taken
precautionary measures such as unpegging their currency to the USD in order to safeguard themselves
16
against a U.S. decline if that were the scenario to unfold. Cheap funding is also anticipated to be
available to emerging economies as tightening in U.S. monetary policy is widely expected to be met with
loosened monetary policy by the ECB. However, Chinese demand for raw materials will have an impact
here.
Market Volatility
22
75
1850
21
20
65
1650
19
55
1450
18
45
1250
17
35
16
1050
15
14
12
1/2/2014
15
650
5
1
86
171
256
341
426
511
596
681
766
851
936
1021
1106
1191
1276
1361
1446
1531
1616
1701
1786
1871
1956
2041
2126
2211
2296
2381
2466
2551
2636
2721
2806
2891
2976
3061
13
25
850
2/2/2014
3/2/2014
4/2/2014
5/2/2014
S&P 500
VIX
FIGURE 13 – S&P 500 VOLATILITY
After increasing at a 45 degree angle over the past two years the S&P has been relatively flat YTD,
oscillating over the zero line into both the red and black. This has resulted in significant swings in
volatility, despite the VIX index being at historical lows, year to date. With regard to the historical lows
of the VIX Index, an inverse correlation between the index and the S&P 500 can be seen. Any sustained
increase in volatility is likely to result in a broad market contraction.
Holdings Analysis
Consumer Discretionary
The Consumer Discretionary sector is the 4th largest sector in the S&P 500, making up 11.86% of the
index as of May 13, 2014. Consumer discretionary companies sell non-essential goods and services.
Some of the major industries within the consumer discretionary sector include: Luxury Goods,
Automotive, Travel & Lodging and Retail Discretionary. Because the sector sells non-essential goods and
services, it is greatly affected by changes in economic conditions, as well as changes to disposable
income, the unemployment rate, and consumer sentiment.
Nike (NKE)
Nike is one of the world’s most recognizable brands for footwear, apparel and accessories and has a
market capitalization of $67B. The company has demonstrated that it has the ability to succeed in an
economic climate that is not advantageous to the sector. The class has decided to divest a percentage of
the Fund’s position in this security to fund an investment in Michael Kors. The class has also decided to
underweight the Consumer Discretionary Sector, so that the future position for Nike will be about 1.5%.
17
VF Corporation (VFC)
VF Corporation was founded in 1899 and is currently a leading global lifestyle apparel company. The
company contains a widely diversified portfolio of brands that includes apparel, footwear, and other
consumer goods. VF Corp has gained success in over 100 years of business through their strategy of
purchasing brands that reflect specific customers’ interest and activities. Some of the most notable
companies that are owned through VF Corp are North Face, Wrangler Jeans, and Nautica. The Fund has
decided to take some profits and divest a percentage of the position, to fund a new position in Michael
Kors. The new weighting for VF Corporation is about 3.0%.
Michael Kors Holdings Ltd. (KORS) – New Position
Michael Kors Holdings Ltd is one of the world’s leading global luxury lifestyle brands. The company has a
market cap of $18.62 billion and primarily generates revenues through its wholesale and retail
segments. Currently, 89% of Michael Kors’ revenues are attributable to North America, 10% to Europe,
and 1% to Japan. The company sells its products under a multitude of brands, including MICHAEL KORS,
MICHAEL MICHAEL KORS, and KORS MICHAEL KORS. The company is focusing on investing in new retail
stores, shop-in-shops, and other technology initiatives to enhance the shopping experience for its
18
customers. For the third quarter ended December 28, 2013, KORS experienced its 31st consecutive
quarter of growth. The strong performance experienced by KORS is largely attributable to the vision of
Michael Kors and his design team.
The class voted to invest in Michael Kors Holdings Limited (KORS) based on the company’s substantial
brand popularity, future planned projects, and strong fundamentals. After analyzing the firm’s cash
flows the analysts generated a price target of $112, which represents an upside of 23% from its current
market price. This investment will be funded from the proceeds of selling the entire stake in ConAgra
Foods Inc. and reducing the percentage of the Fund’s other Consumer Discretionary investments. The
new portfolio weight for Michael Kors is about 1.5%.
Thor Industries Inc. (THO)
Thor Industries, Inc. produces and markets a wide range of recreational vehicles. The company sells its
products through independent dealers that are located throughout the United States and Canada. It
operates through two segments: Towable Recreational Vehicles and Motorized Recreational Vehicles.
The class decided to take some profits to help fund the Michael Kors purchase. The new Fund weight for
Thor is 3.0%, down from the prior 5.15%.
19
Consumer Staples
The Consumer Staples sector is the 7th largest sector in the S&P 500, making up 9.79% of the index as of
May 13, 2014. Firms in the Consumer Staples sector provide those goods that are considered basic
necessities for consumers and are generally used on a daily basis. Within this sector there are subsectors
including: food and beverages, tobacco products, personal products and household goods. Because this
sector deals with basic necessities, the industry is defensive in nature, and so in difficult economic
periods tends to exhibit less volatility than other sectors.
Anheuser-Busch InBev (BUD) – New Position
Anheuser-Busch InBev is the world’s largest manufacturer of beer products and has a market cap of
$174 billion. The company primarily produces ale, lager, stout, and bitter beer for its large portfolio,
which includes global brands Budweiser, Stella Artois, and Corona; international brands Becks,
Hoegaarden, and Leffe; as well as a multitude of local brands such as Bud Light, Bass, Shock top, and
Labatt Blue.
The firm generates the majority of its sales from its beer products. Its revenues are primarily
attributable to North America (37.1%) and Latin American (32.7%) while other revenues come from
sales in Western Europe, Asia Pacific, Mexico, Central & Eastern Europe, and its global export and
holding companies. The company’s continuing investment in its current brand portfolio as well as recent
acquisitions and combinations with other breweries has increased beer production and revenues per
hectoliter to over $101, which leads the beer industry. BUD plans to take advantage of its dominant
presence in large beer markets as well as enter growing markets by continuing to make investments and
acquisitions that will drive future growth.
Improving U.S. consumer confidence, paired with an improving job market, suggests future sales growth
in alcoholic beverages. Consumer confidence has risen 18.34% since April 30, 2011 and has shown
correlation with personal expenditures on alcohol for off premises consumption. Additionally, for the twoyear period ended March 31, 2014, U.S. alcoholic beverage spending has risen 3.54% for at-home
consumption, which accounts for 62% of all alcohol spending. With a slightly improving economic picture,
alcoholic beverage companies should perform better than the overall industry. Furthermore, AB InBev
has significant exposure to many commodities including aluminum, barley, corn, hops, malt, natural gas,
rice and wheat, among others, many of which have been on downward trends throughout the last year.
For example, over the last 12 months generic barley futures are down 5.51%, corn futures are down
25.09%, aluminum futures decreased 4.79%, rice experienced a slight decline of 1.09%, and wheat is down
3.39%. If these trends continue, AB InBev will be in a position to improve its margins in the near future.
The class decided to invest in Anheuser-Busch InBev based on the company’s powerful brand portfolio,
presence in the world’s largest and most profitable beer markets, continuing capital investments,
favorable cash flows, and position to take advantage of rising alcohol consumption. Based on discounted
cash flow and relative valuation models, the company has a price target of $138.46, an upside of 27.14%
excluding an expected dividend yield of about 2%. An over-allocation to the Consumer Stapes Sector
coupled with the divestment of ConAgra Foods has funded the investment in Anheuser-Busch InBev.
20
Pepsi Co. (PEP)
PepsiCo is a global snack and beverage company that manufactures and distributes both carbonated and
non-carbonated drinks. In addition to its beverage production, PepsiCo also produces sweet and salty
snacks. The company primarily operates under four business divisions: PepsiCo Americas Beverages,
PepsiCo America Foods, PepsiCo Europe and PepsiCo Middle East and Africa. Some of the most
prominent brands within the company are Frito Lay, Tropicana/Dole, Quaker and Gatorade.
The Greystone Equity Fund originally invested in PepsiCo in Dec 2011 at $64.02 per share. The
company’s price was $87.37 in May 13, 2014, a 36.5% return. The class decided to reduce the position in
PEP to fund the new position in Anheuser Busch. The future position for PepsiCo will be about 2%.
The Hershey Company (HSY)
The Hershey Company is the leading North American manufacturer of chocolate and non-chocolate
confectionary and chocolate-related grocery products. They are also the leader in gum and mint
products. In addition to being the leading producer of chocolate and non-chocolate items in North
America, the company also carries a significant presence with operations in more than 90 countries.
21
The Hershey Company has a solid reputation of being morally and ethically sound, based in part on its
continuing relationship with the school named the Milton Hershey School which provides free worldclass education, meals, clothing, a nurturing home, career training, counseling and health care for 2,000
children that need financial help. The class has decided to increase the position in this security based on
financial analysis that suggests future upside. The future position for Hershey will be 5%.
ConAgra Foods, Inc. (CAG) - Divested
ConAgra Foods Inc. manufactures and distributes packaged foods for retail consumers, restaurants, and
other institutions. The company offers a wide variety of food products including meals, condiments,
snacks, dehydrated vegetables and seasonings. The class decided to sell this position, due to
fundamental and technical analysis that indicated that continued future losses were likely.
Energy
The energy sector involves the production and supply of energy, with firms operating in a couple of
principal industries and a large number of sub industries. Each of these sub industries provides a
22
different use of energy to supply the demands of consumers. These principal industries are Oil, Gas &
Coal and Renewable Energy. Oil, Gas & Coal includes Coal, Crude Oil, Drilling & Support, Refining &
Marketing, Integrated Oils, Nat Gas Production, and Midstream Oil & Gas. Each of these forms of energy
involve non-renewable fossil fuels, which are finite resources. Although there is a push towards
renewable energy, particularly in Europe, the majority of energy globally is derived from fossil fuels.
Renewable Energy, comprised of Biofuels, Solar Energy and Wind Energy, is relatively young compared
to the Oil, Gas & Coal, but is becoming more important and may show strong grow in the future.
Diamondback Energy, Inc. – New Position
Diamondback Energy, created in December of 2007, is an independent oil and natural gas company
headquartered in Midland, TX. The company implements a growth strategy primarily based around
acquiring, developing, exploring & exploiting unconventional, long-life, on-shore oil and natural gas
reserves in the Permian Basin of West Texas. Within the Permian Basin itself Diamondback focuses on
the Clearfork, Spraberry, Wolfcamp, Cline, Strawn and Atoka formations, also referred to as the
Wolfberry Trend. The company initially purchased 4,174 acres of land over the Permian basin, but has
continued to expand with additional purchases and now controls nearly 51,600 acres. Within their net
acreage of the Permian Basin the company own and operates approximately 225 wells.
A key reason that the class decided to invest in Diamondback Energy, Inc. is the booming growth of the
Energy industry and more specifically U.S. crude production. As oil resources and conventional oil wells
begin to deplete many companies are attempting to diversify their actions and switch to unconventional
oil operations. Diamondback was also selected because of their vast amount of land and their potential
to create new drilling operations on the Permian Basin in West Texas, one of the country’s largest and
richest oil fields, and one which presents a great opportunity for the Company. The price in mid-May
was $69.43, and the target price is $86.37.
Sasol (SSL)
Sasol Limited is an integrated energy and chemical company that is headquartered in Johannesburg,
South Africa. The company operates in 38 countries and has over 34,000 employees. The firm divides its
operations into two main areas, chemicals and energy. Sasol has seven different business segments in its
23
chemical division, producing products like industrial explosives, petroleum jellies, alcohols, and
polymers, and has six segments in its energy division, producing oil, jet fuel, and natural gas.
Sasol’s market cap has increased from $29.24B in May 2013 to $36.72B, demonstrating that the
company has been growing consistently. The chart below shows Sasol’s price return over the last year in
comparison to the S&P 500 and the S&P Energy indices. Overall, Sasol has performed better than both
indices having returned 26.8% in the last year. The class decided to maintain its investment in Sasol,
agreeing with the view of the Fund’s student analysts who originally picked the stock based in part on
their conviction that the firm’s technologies for converting gas into liquid fuels have potential.
Energy Select Sector SPDR ETF (XLE)
Based upon its projections for growth of the Energy Sector, the class has decided to maintain its modest
investment in the Energy Select Sector SPDR ETF (XLE). The ETF’s objective is to offer investment results
that correspond to the Energy Select Index. The Fund believes that this ETF will help limit systematic risk
while still having the upside of the Energy markets.
24
Market Vectors Unconventional Oil & Gas ETF (FRAK)
In addition to the Fund’s investment in the Energy Select Sector SPDR ETF, the Fund also maintains an
investment in the Market Vectors Unconventional Oil & Gas ETF. This ETF seeks to obtain similar returns
to that of the Market Vectors Unconventional Oil & Gas Index. With many companies turning to
unconventional oil and gas due to depleting traditional oil resources, and in light of the dramatic
increase in natural gas and oil reserves now available in the US and the resultant implications for the
energy and petrochemical sectors, the class continues to believe that this is an excellent investment.
Based on the figure below it is clear that the ETF has outperformed both the S&P 500 and S&P Energy
Index, returning 24.7% in 2013-2014.
Price Return
35%
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
NextEra Energy
S&P500
S&P Utilities Index
TransCanada (TRP) - Divested
TransCanada Corporation is a North American midstream energy company whose business segments
include natural gas and oil pipelines and energy. The company is headquartered in Calgary, Alberta, and
operates primarily in Canada and the United States. It holds strategic pipeline assets between
increasingly productive Canadian oil sands regions and major American markets.
The class has decided to divest its shares of TransCanada due to the continued delay of the XL Pipeline.
Construction of the pipeline was the primary rationale when buying TRP, yet as a result of US President
Barrack Obama’s continuous delay of the pipeline, the class agreed to close out the position completely.
The energy sector will be very lucrative in the coming year and there is a plethora of better
opportunities for excess returns in other securities within the sector. Indeed, the new position in Union
Pacific is, in part, a play on this sector. The price return chart for TRP, show below, helps illustrate how
disappointing TRP’s return has been, supporting the decision to divest the Fund’s position.
25
Financials
The financial sector is divided into six categories; asset management, banking, institutional financial
services, insurance, real estate/REIT, and specialty finance. Asset management, banking, and specialty
finance are divided into investment management, banks, and credit & debit respectively. Institutional
financial services is divided into investment banking and security exchanges while insurance is subcategorized into life, property & casualty insurance, and property & casualty reinsurance. The sub sector
real estate/REIT is categorized into the five sub sections of apartment, health care, office, retail, and real
estate.
M&T Bank (MTB)
M & T Bank Corp. is a bank holding company that offers a variety of commercial banking, trust, and
investment services to its consumers. M&T has a conservative culture and the ability to produce high
returns on capital to its shareholders in the form of stock buybacks and dividends.
After this year’s settlement with Wilmington Trust Company, MTB has reported that the firm’s revised
EPS had increased from $1.56 to $1.74. MTB was upgraded by SunTrust from ‘neutral’ to ‘buy’ and has
sold $350 million in preferred stock. MTB’s pending 3.78 billion dollar acquisition of Hudson City Bank
Corp. with no further delays is likely to quickly increase its market capitalization and revenue. The class
has decided not only to maintain the Fund’s current position, but in addition to increase the portfolio
allocation for MTB from 3.96% to 4.53% due to the firm’s strong performance as of late relative to the
S&P 500 and to the struggling S&P Financials sector. During the period May 2013 – May 2014 MTB has
outperformed the financial index by just over 4%.
26
Capital One Financial (COF)
Capital One Financial Corporation is a diversified bank that offers a broad spectrum of financial products
and services to consumers, small businesses and commercial clients both domestically and
internationally. The firm has bank locations in Connecticut, Louisiana, New Jersey, New York, and Texas,
and garners most of its income through fees generated through credit cards and consumer banking.
Most of Capital One’s expansion will come from its banking segment, as its franchises in New York and
Louisiana have a dominant market share, with diverse operating tactics and a solid underwriting
business.
Price Return
35%
30%
25%
20%
15%
10%
5%
0%
-5%
-10%
NextEra Energy
S&P500
S&P Utilities Index
The class decided to maintain the Fund’s current position in COF because it has been consistently
outperforming the S&P 500 as well as the S&P Financial Index. Over the last twelve months it has
outperformed the S&P 500 index by 11.5% and the financial sector index by about 17%, which suggests
that COF has the potential to continue to outperform in a struggling industry where Basel III with the
new required leverage ratio will continue to hurt banks.
27
Goldman Sachs Group (GS) - Divest
The Goldman Sachs Group is a global investment banking and securities firm specializing in investment
banking, trading and principal investments, asset management and securities services. The firm
provides services to corporations, financial institutions, governments, and high net worth individuals,
generating a majority of its revenue from institutional client service fees as well as investment banking.
Goldman’s potential closing of its dark pool, Sigma X, the world’s largest private stock trading venue, in
response to trading errors and misinformation about order execution, sheds light on the dangers of
algorithmic controlled exchanges and tarnishes the firm’s reputation in the field. Goldman continues to
lose key executives and other top talent to hedge funds, private equity, and tech firms. Another
ominous sign of retrenchment is the sale of their designated market making unit on the floor of the
NYSE for $30 million. Much of this turmoil can be attributed to new Basel III regulations and the
implementation of the Volcker Rule. Relative to the Fund’s other holdings within the financial sector, GS
has been affected quite adversely by these changes. Its share price has been declining and has
experienced a “death cross”, in which the 50 day moving average crossed below the 250 moving
average. This is a major technical indicator of a bearish outlook for the company’s stock price. As a
result of these negative factors, the class voted to liquidate the Fund’s position in Goldman Sachs and
reallocate the funds.
date
Health Care
The Health Care Sector is the largest industry in the United States, based upon employment, and the 3rd
largest based on market share. As of May 14, 2014 the sector made up 13.24% of the S&P 500 index.
The sector is highly fragmented, with the top 50 organizations generating about 15 percent of total
revenue. Health care is very much a reactive rather than a proactive sector of the economy, where the
profitability of companies depends on efficient operations and, in the case of many non-profit health
care providers, obtaining grants and Federal funds for research. The competitive landscape of the sector
is driven largely by demographics and by advances in medical care and technology. This sector
encompasses two main industry groups, consisting of companies that manufacture health care
equipment and supplies or provide health care related services, and firms involved primarily in the
research, development, production and marketing of pharmaceuticals and biotechnology products.
28
Companies in the sector are classified in six different industries: Biotechnology, Healthcare and
Equipment and Supplies, Healthcare Care Providers and Services, Health Care Technology, Life Sciences
Tools and Services, and Pharmaceuticals. Health Care, which has generally followed GDP growth closely,
has recently been able to significantly outpace economic expansion courtesy of rapid growth from the
Biotechnology industry. Major breakthroughs and advances in drugs aimed at treating highly un-met
medical needs have made Health Care one of the most promising and exciting sectors to watch.
Jazz Pharmaceuticals PLC (JAZZ) - Divest
Jazz Pharmaceuticals is a specialty bio-pharmaceutical company that focuses on identifying, developing
and commercializing innovative products that address un-met medical needs. The company’s diverse
portfolio range from treatments for narcolepsy and psychiatry to those for oncology and pain
management.
The stock saw a tremendous run up in price of 120% from June 2013 to the start of February 2014,
driven primarily by top-drug Xyrem sales and the acquisition of Gentium. However, as the Biotech
industry as a whole contracted through February and March, the class decided to liquidate our position
in JAZZ on April 11th in order to take profits as the equity retraced 50% of its prior advance.
Pfizer Inc. (PFE)
Pfizer Inc., founded in 1849 and headquartered in New York City, is one of the world’s largest
biopharmaceutical companies, researches, develops, discovers, manufactures, and sells various
healthcare products across the globe. The company’s vision and mission is to continuously innovate and
exploit therapies that significantly improve patients’ lives, and its therapeutic areas of research include
immunology and inflammation, CV and metabolic diseases, oncology, neuroscience, vaccines, and the
treatment of rare diseases. Its current product pipeline is comprised of over 80 innovative therapies that
includes new antibodies for lupus and high cholesterol and the next-generation of targeted therapies for
cancer. The firm is also actively building upon a heritage of developing safe and effective biologic
medicines to introduce high quality bio-similars that can broaden patient access with lower-cost
alternative therapies.
29
Despite weakened performance over the past twelve months, the class believes that Pfizer’s impressive
margins and large market share will help the firm to expand its already vast product pipeline and take
advantage of the growing need for novel pharmaceutical drugs worldwide. While not ultimately
successful, an example of potential developments that would drive shareholder value is Pfizer’s recent
attempts to acquire AstraZeneca and expand its biopharmaceutical presence. The deal would have
reduced Pfizer’s U.S. tax liability, and leveraged AstraZeneca’s products
Abbott Laboratories (ABT)
Abbott Laboratories, founded in 1888 and headquartered in Abbott Park, Illinois, is engaged in the
research, discovery, development, manufacturing and sale of health care products and services
worldwide. The company’s vision and promise is centered on the pursuit of healthier lives by translating
science into lasting medical breakthroughs. With treatments across the entire life cycle from newborn
infants to aging adults, caring for patients in need is the primary driving force for the firm.
Abbott is comprised of four core businesses, which are Medical Devices, Diagnostics, Nutrition and
creating affordable Pharmaceuticals. The company’s current product pipeline also extends into vascular
treatment, diabetes care, vision technologies, cancer research and even animal health. Abbott stands as
a strong global presence, with product offerings in over 150 countries worldwide.
Although the firm has underperformed its benchmarks over the past year, the class has decided to
maintain the Fund’s holding in ABT. This decision was based on the class’s strong optimism for the
Health Care Sector through 2014, along with confidence in the diversity Abbott offers to the portfolio’s
current holdings of primarily pharmaceutical focused companies.
30
Gilead Sciences Inc. (GILD) - New Position
Gilead Sciences Inc. is a research-based biopharmaceutical company that discovers, develops, and
commercializes various medicines and therapeutic treatments for life-threatening diseases. Currently
the world’s largest biopharmaceutical company, with a market cap of over $111 billion, Gilead’s primary
areas of focus include HIV/AIDS, liver diseases, along with serious respiratory and cardiovascular
illnesses. It also has product candidates in oncology, fungal infections, and neo-vascular muscle
degeneration. Already a leader in HIV treatment and with the continued addition of new drugs to its
pipeline, the firm appears to be emerging as a leader in the biotechnology industry.
The decision to invest in Gilead was based primarily on the potential prospects of Solvadi, the firm’s
Hepatitis C drug intended to cure the disease. Phase III trials were exceptionally impressive, with Solvadi
achieving a success rate around 95-98% in all genotypes, and Gilead was the first firm to gain FDA
approval for this type of treatment in the U.S., giving the company a monopoly on the hepatitis C
market. With about 3.2 million people in the U.S. alone currently infected with hepatitis C, another 150
million infected worldwide, and no other competitors close to developing a product that can rival
Solvadi, Gilead is poised for significant growth over the next few years.
31
On April 22, 2014 Gilead released its 1st quarter earnings for the year, which far exceeded the firm’s
projected earnings. Solvadi sales came in around $2.3 billion, more than double its $1.1 billion
projection. This helped drive the firm’s product sales to increase by over 50% and, more impressively,
raise net income to $2.23 billion, compared to $722.2 million for the 1st quarter of 2013.
These numbers solidified our conviction that it was the perfect time to invest in Gilead. Valuation
analysis of the firm under conservative scenarios generated a 1 year target price of $95.96, close to a
20% gain from the current price.
Industrials
The Industrials sector is the fourth largest sector in the S&P 500, making up 10.8% of the index as of May
14, 2014. Industrial sector companies are defined by one of the following activities: the manufacture
and distribution of capital goods, the provision of commercial services and supplies, and transportation
services and infrastructure. The sector can be broken down into 15 different industries which include
Aerospace and Defense, Defense Primes, Air and Freight logistics, Airlines, Building products,
Commercial Services and Supplies, Construction and Engineering, Electrical Engineering, Industrial
Conglomerates, Machinery, Marine, Professional Services, Road and Rail, Trading Companies and
Distributers, and Transportation Infrastructure.
The Industrials sector continues to shift toward specialized and higher value-added services and
products. Green initiatives, globalization, innovation, cost containment and lean manufacturing are the
growth drivers for the sector and acquisitions remain a strategic priority moving forward. Performance
in the industrial goods sector is largely driven by supply and demand for building construction residential, commercial and industrial - as well as the demand for manufactured products.
Industrial Select Sector SPDR ETF (XLI)
Based upon our projections for growth of the Industrials Sector, the class has decided to maintain our
investment in the Industrial Select Sector SPDR ETF (XLI). The ETF’s objective is to offer investment
results that correspond to the Industrials Select Index. The class believes that this ETF will help limit
systematic risk while still providing exposure to the upside of the Industrial markets.
32
Cummins Inc. (CMI)
Cummins Inc., a member of the diversified machinery industry, designs, manufactures, distributes, and
services natural gas and diesel engines and related technology that includes fuel systems, air handling,
filtration, emission solutions and electrical power generation systems. Founded in 1919 and
headquartered in Columbus, Indiana, Cummins Inc. employs approximately 46,000 people worldwide
and serves customers in over 190 countries and territories through an expansive network of more than
600 company-owned and independent distributor locations and approximately 6,500 dealer locations.
Cummins operates in four main business segments, Engine, Components, Power Generation, and
Distribution. The company’s mission is “Making people’s lives better by unleashing the power of
Cummins”, and it takes pride in maintaining its position as an industry leader by stressing corporate
responsibility and placing an emphasis on building a cleaner, healthier, safer environment.
Over the past year Cummins has healthily outperformed both the S&P 500 and S&P Industrials Index.
With a positive outlook for manufacturing in the U.S over recent months the class fully expects Cummins
to continue its strong performance through 2014, and capitalize on growth opportunities.
Union Pacific Corporation (UNP) – New Position
Union Pacific Corporation, through its subsidiary, Union Pacific Railroad Company, provides rail
transportation services in the United States, offering freight transportation services for agricultural
products, including grains, commodities produced from grains, food, and beverage products;
automotive products, such as imported and exported shipments, finished vehicles, and automotive
parts; and chemicals consisting of industrial chemicals, plastics, crude oil, liquid petroleum gases,
fertilizers, soda ash, sodium products, and phosphorus rock and sulfur products. The firm also provides
transportation services for coal and petroleum coke; industrial products comprising construction
products, metals, minerals, consumer goods, lumber, paper, and other miscellaneous products, as well
as steel, aggregate, cement, and wood products; and intermodal import and export containers and
trailers.
Railroad growth has significantly outpaced the overall market over the past 5 years, as perfect
conditions for rail companies have allowed them to capitalize on higher margins and realize significant
increases in profits. Currently the largest US rail company by market capitalization, Union Pacific’s strong
33
free cash flow has facilitated aggressive stock buybacks and expansion of its railways, helping boost EPS
by almost 200% since 2009. The company’s dividend per share also has seen considerable growth since
2009, which is likely to continue as management has maintained its commitment to rewarding
shareholders.
Union Pacific’s outlook for the next three years looks very promising, considering factors that include
increased demand for the environmentally friendly (low sulfur) coal that makes up a large portion of the
company’s carloads, and high transport volumes of oil and natural gas. The class’s one-year target price,
calculated using of its P/E, DDM and PV FCF price forecasts, is $227, roughly a 20% upside.
Information Technology
The drivers within the IT industry are fairly universal for most of the subsectors within the industry. With
the exception of the semi-conductor subsector, which is driven by memory usage and revenues as well
as analogue revenue, the majority of the sector is driven by computer, phone and server sales. Outside
of semi-conductors and IT support, which are fairly independent of the other IT sectors, design
manufacturing and distribution, hardware, and software are all interconnected. The current trend in the
technology sector seems to be directed towards the future of cloud computing. Financially healthy firms
with strong competitive positions in the market should present interesting investment opportunities.
Mergers and acquisitions may also present attractive investment opportunities. Another trend is the
advancement of smart phones, such as iPhones and Android devices, which are likely to be the future of
cellular devices and will probably become the only available cell phone option for US consumers in the
near future.
Technology Select Sector SPDR ETF (XLK)
Based upon the class’s growth projections for the Information Technology Sector, the Fund will maintain
its investment in the Technology Select Sector SPDR ETF (XLK). The ETF’s objective is to offer investment
results that correspond to the Technology Select Index. The Fund believes that this ETF will help limit
systematic risk while still participating in the upside of the Technology markets.
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Corning Inc. (GLW)
Corning Inc. is an American materials company that manufactures glass, ceramics and other materials
for industrial and scientific applications. Corning has five major business sectors, including Display
Technologies, Environmental Technologies, Life Sciences, Telecommunications and Specialty Markets.
Originally the Bay State Glass Co., Corning was founded in 1851 by Amory Houghton in Massachusetts.
Throughout its history the firm has used glass to make innovations that drastically improved other
products.
The company’s history and strong relationship with smart phone manufacturers indicates potential
growth in the upcoming years. With advanced technology and Samsung’s plans for an upcoming flexible
phone, Corning’s Willow, Gorilla, and Lotus Glass are the most advanced products that would be the
clear favorite to dominate a large part of the market in the smart phone manufacturing industry. This
stock has been a long time Fund holding, and has recently started to demonstrate the stock price growth
that successive classes have believed in.
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Micron Technologies (MU)
Micron manufactures and markets semi-conductor solutions, making products that are used in various
electronic devices such as computers, tablets, mobile phones, and servers. Micron is essentially an
investment play on the tablet and smartphone industry, since Micron is a large supplier of chips for
technology companies such as Apple. Micron, purchased by the Fund in December 2013, has a rolling
twelve month return of 145% as of May 2014.
Fair Isaac Corporation (FICO) - Divested
The Fair Isaac Corporation (FICO) provides business software, credit account management products and
services to banks, credit reporting agencies and insurers to name a few. While FICO seems like a strong
company for long-term success, the class is less confident in its short-term prospects. Recent performance
has been disappointing, with a year to date return from FICO of -6.2% as of May 31, 2014.
The class decided to underweight the information technology sector, and to sell FICO. Fair Isaac has
significant exposure to the financial sector, which we believe will underperform this year. Selling FICO
reduced the Fund allocation to the information technology sector from 18.63% to about 13.5%.
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Materials
The materials sector is the third smallest S&P 500 sector, accounting for just 3.5% of the index with a
market cap as of May 31, 2014 of $623 billion. Despite its small size, the materials sectors plays an
important role in the market as a whole by supplying a foundation for other sectors to operate. To be
considered in the Materials sector a company must be involved with the discovery, development and/or
processing of raw materials. The Materials sector contains 31 members and divided into five main
industries; Chemicals, Construction Materials, Containers & Packaging, Metals & Mining, and Paper &
Forest Products. The price of commodities directly impacts this sector’s growth as they are sensitive to
global demand.
Freeport-McMoRan Copper & Gold Inc. (FCX)
Headquartered in Phoenix, Arizona, Freeport-McMoRan Copper & Gold Inc. is one of the world’s largest
gold, copper, and molybdenum mining companies. Originally founded as Freeport in 1912, the company
merged with McMoRan Oil & Gas in 1981 and is currently run by CEO Jim Moffett. Its market cap of
$35.4B is larger than the other members of the metals & mining industry. It has approximately 36,100
employees and posted revenues of $20.9B in 2013.
A diversified metals & mining company, the firm seeks to manage the risk of raw material price volatility
through its diversified operations, and foreign exchange and commodity hedges. Primarily exposed to
copper, which accounted for 50% of 2013 revenues, the rebound in commodity prices after March’s selloff bodes well for Freeport’s future earnings.
We consider FCX to be somewhat of a hedge against the equity markets. If the broad market declines,
investors may look to hold their money in less risky assets such as bonds and store-of-value metals,
which would present a potential opportunity for Freeport’s gold division.
Freeport McMoran’s current capital expenditures focuses on the development of their oil and gas
position in the Gulf of Mexico, further diversifying their business operations and mitigating their risk in
terms of economic uncertainty and commodity metal prices. We believe that Freeport-McMoRan’s
portfolio is positioned to endure economic uncertainty, while being able to see impressive returns
during periods of economic growth.
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Ternium S.A. (TX) - Divested
Ternium S.A. is a world leader in the manufacturing of steel products used across multiple industries.
The company is broken down into a Steel segment and a Mining segment and has 16,800 employees.
CEO Daniel Novegil manages the company which saw a revenue of $8.530M in 2013. Ternium was
founded in 1961, is based in Luxembourg, and trades on the NYSE as an ADR.
The company is a vertically integrated steel and mining company, one whose margins face pressure
from related commodities. With uncertain economic conditions in the U.S. and China, demand for steel
products may continue to wane resulting in depressed prices. Due to a 50% revenue exposure to steel,
the class decided that it would be wise to exit our position in Ternium S.A. (TX), realize our gain.
LyondellBasell Industries N.V. (LYB) – New Position
LyondellBasell Industries N.V. (LYB) is a world leader in plastics, chemicals, and refining. Headquartered
in Houston, Texas, as well as Rotterdam in Holland, and Kong Kong, LYB Industries was formed in
December 2007 when Basell Polyolefins acquired Lyondell Chemical Company, the third largest chemical
manufacturer in the United States at the time. The company produces numerous types of petrochemicals
and gasoline blending components through its Olefins and Polyolefins, Intermediates and Derivatives, and
Refining segments. It also features a Technology segment that licenses chemical processing technologies.
LYB Industries operates in Europe, Asia, the Americas, and internationally.
The firm operates primarily in Texas, home to its largest manufacturing facilities, which allow LYB to fully
exploit the North American shale play by utilizing the crude and natural gas resources from Bakken and
Eagle Ford Formations as well as the Gulf of Mexico. Coupling price-competitive feedstock with cutting
edge technology allows petrochemical companies in the United States to produce the cheapest plastics
in the world. This solidifies Lyondell’s competitive position within the industry with promising growth.
We chose LyondellBasell over other chemical companies such as Dow Chemical or DuPont because LYB
is purely a petrochemical player, whereas their competitors have more diversified product offerings. The
macro environment of the U.S. petrochemical industry indicates a bullish trend, leading our analysts to
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believe that LyondellBasell is the best positioned company to fully exploit this specific opportunity. At a
current price of $96.57, our target is $158.
Telecommunication Services
Telecommunications provide the products and services that allow for communication through fixedlines, cellular, wireless, high bandwidth or fiber optic cable networks. The sector represents 2.3% of the
S&P500. The main industries in the sector are Wireless Voice and Data providers, Fixed Line Voice,
Wireline High Speed Data, Video, Basic Cable, Digital Cable, High Speed Data, and Telephony Providers.
Wireless Voice and Data account for the biggest revenue sources in the sector, with the leaders being
AT&T and Verizon, with Sprint and T-Mobile having smaller but significant market shares. Last year
Telecom did not perform well and was down 4.77%.
American Tower Corporation (AMT)
American Tower Corporation is a real estate investment trust (REIT) that owns, operates and develops
wireless communications and broadcast towers in the United States. The company leases antennae sites
on multi-tenant towers for a diverse range of wireless communications industries, including personal
communications services, paging, and cellular.
While the company now operates as a real-estate investment trust (REIT), and as such is often consider
to be a financial company, when the Fund made its investment AMT was a telecommunications
company, and we continue to consider it as such.
American Tower has produced consistent gains and provides investors with reliable returns due to their
healthy fundamentals with low debt and steady cash flows. American Tower’s expansion into emerging
markets provides investors with growth potential by leveraging a proven business model. Although
AMT’s 15% trailing twelve month return has underperformed the S&P 500 it has significantly
outperformed the Telecom sector’s 3.4% and possesses the potential to generate impressive returns in
the year to come based on its strong fundamentals.
39
T-Mobile US, Inc. (TMUS) - Divested
T-Mobile US, Inc. is one of four national wireless carriers in the U.S., the result of the combination of TMobile USA and MetroPCS. The firm has excellent exposure in the pre-paid wireless market but is fourth
in post-paid wireless services behind Verizon, AT&T and Sprint.
The Fund’s investment was made shortly after the company’s IPO, in part to gain exposure to the
prepaid wireless market and to hedge against the U.S. postpaid market. The stock has produced very
strong returns for the Fund. However, its size restricts the firm’s ability to successfully compete against
the larger Verizon and AT&T. The firm considered merging with Sprint, to make the company more
competitive against the larger rivals, but the FCC denied the request claiming it would reduce
competition and harm consumers. The two companies could still merge, although Sprint and T-Mobile
would need to shed assets such as certain wireless spectrum to make the deal feasible. While this would
allow for future T-Mobile growth, the class decided, given uncertainty over the deal, that it would be
prudent to divest TMUS and to recognize Fund profits now.
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Utilities
The Utilities Sector is comprised primarily of companies that are responsible for generating, transmitting
and distributing power through various forms of energy to customers. Such companies use energy
sources such as electric, gas and water to generate power. Companies within the industry typically have
significant investments in infrastructure to produce and distribute power. A noteworthy feature of the
sector is that it is highly regulated.
NextEra Energy (NEE) – New Position
NextEra Energy, Inc. was incorporated in 1984 and today is one of the largest North American Power
companies. Through its subsidiaries, the firm’s operations primarily focus on the generation,
transmission, distribution and sales of electric energy. It distributes electric services to over 5 million
retail and wholesale customers. In addition, the company also offers energy consulting and risk
management services, and purchases renewable energy from customers for resale.
The firm is the largest generator of renewable energy (wind and solar) in North America, owning and
operating 17% of the nation’s wind production capacity and 14% of the nation’s solar capacity. NextEra
also owns and operates 8 nuclear facilities, at five sites and accounts for 6% of total nuclear production
in the United States. The company operates in 26 states within the U.S. and 4 provinces in Canada.
In the Fall of 2013 the Fund held no positions in individual stocks in the Utility space, due to the sector’s
regular under-performance relative to the broad market. However, in May 2014 the class voted to invest
in NextEra Energy, as the firm has demonstrated exponential growth over the past several years. In
addition to its impressive stock price performance the firm has continued to expand through investment
in various renewable energy projects and business segments.
As the Federal Government, and the Environmental Protection Agency, continue to tighten regulations
and operating standards, companies such as NextEra will be able to prosper due to their use of clean
technologies in the generation of electricity. The current price is $96.27 and our one-year target is $105.
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Guest Speakers
We would like to sincerely thank the guest speakers who took time out of their busy schedules to travel
to Marist to address the students, sharing their perspectives on the market and offering career advice.
•
Mr. Peter Aman, Partner, Bain & Company
•
Mr. Ari Anastasi, Bloomberg
•
Mr. Bryan Christian, Head of Sales, Direct Edge Electronic Trading
•
Mr. Jim Daly, Vice President, Stifel Nicolaus & Company
•
Mr. Brian Dobson, Vice President Equity Research, Nomura Securities
•
Mr. Harvey Felman, Head of Emerging Markets Fixed Income Sales, JP Morgan
•
Mr. Nick Gent, Commercial Banking Officer, M&T Bank
•
Mr. Bruce Kamich, President, Market Technicians Association Educational Foundation
•
Mr. Michael Keegan, Regional President, M&T Bank
•
Mr. Frank Liantonio, Executive Vice President, Cushman & Wakefield
•
Mr. George Smith, Managing Director, SouthWest Securities
•
Mr. Stuart Varney, Fox Business Network
ARI ANASTASI DEMONSTRATES THE ANALYSIS OF OPTIONS USING BLOOMBERG
42
Guest Speakers
A highlight of our
Investment fund
program is the series of
invited guest speakers
that come to campus.
STUART VARNEY DISCUSSES CURRENT AFFAIRS
BRYAN CHRISTIAN ON ELECTRONIC TRADING
These professionals, who
work in diverse areas
such as hedge funds,
investment banks, asset
management firms,
foreign exchange trading
firms and rating
agencies, offer their
unique perspectives on
the market to Marist
students.
We are exceedingly
grateful to all of our
guest speakers who have
taken time to come
speak to us, and we look
forward to welcoming
them back in the future.
ARI ANASTASI TALKS TO MADELINE KACHOU ABOUT BLOOMBERG
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Student Analysts
Spring 2014 Class
Jonathan Brown is a Senior at Marist College studying Business Administration with a concentration in
Finance. John was a Fund Energy and Info Tech analyst, and was also one of the Fund’s Economists.
During this past summer John interned at Advanced Finance Group. After school John looks to pursue
the CFA designation as well as become an Equities Analyst.
Nicholas Cianciaruso is a Senior at Marist College studying Business Administration with a concentration
in Finance. His primary roles within the Fund were working the Healthcare and Telecom Sectors. In
addition he was also one of the Fund’s accountants. Prior to this school year Nicholas Interned at
Marshall & Sterling Wealth Advisors. After school Nicholas looks to enter the field of Equity Research.
Christopher Connolly is a Senior at Marist College and is studying Business Administration with a
concentration in Finance. Christopher was responsible for analyzing the Energy and Info Tech Sectors
and was also one of the Fund’s economists. Christopher has interned at RONETCO and intends to take
the CFA examinations after school.
Morgan Faller is a Senior at Marist College studying Business Administration with a concentration in
Finance. His primary roles within the Fund were to analyze the Energy and Utilities Sectors. In addition,
Morgan was editor of the Annual Report. Prior to his experience in the Greystone Fund Morgan interned
at RBS Citizens in the Summer of 2013 where he worked under the VP of marketing to help the credit
card portion of their business. Upon graduation Morgan will be moving to New York City where he will
be working as a Business Analyst at GP Renewables and Trading, a renewable energy consulting and
trading firm.
Madeline Kachou is a Junior at Marist College studying Business Administration with a concentration in
Finance. Madeline was responsible for analyzing both the Consumer Discretionary and Staples Sectors.
Additionally Madeline was one of the Fund’s Bloomberg and Excel consultants. Madeline has prior
experience in the financial field through an internship with AXA Advisors and will continue to garner
experience through an internship at Bloomberg this summer.
Michael Kryger is a Senior at Marist College studying Business Administration with a concentration in
International Business. Michael was responsible for the Financials and Healthcare Sectors as well as
being one of the Fund’s accountants. This summer Michael will be interning at the NYSE Floor
Operations where he hopes to obtain a full-time position.
Michael Lacasse is a Senior at Marist College studying Business Administration with a concentration in
Finance. Michael served as the Fund’s President and was also an analyst for the Financials and
Industrials sectors. This summer Michael will be a Finance Management Trainee in a Management
Training Program at Broadridge Financial Solutions. After school Michael looks to obtain his Series 7
licence as well as his MBA.
Nicholas Panagakos is a Senior at Marist College studying Business Administration with a concentration
in Finance. Nicholas was one of the Fund’s accountants and was an analyst for the Fund’s Industrials and
Utilities Sectors.
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Taber Reuter is a Junior at Marist College studying Business Administration with a concentration in
Finance. Taber was the Fund’s Portfolio Manager and was also responsible for working with the
Healthcare and Industrial Sectors. After school Taber hopes to become an Equity Analyst.
Connor Sciacca is a Junior at Marist College studying Business Administration with a concentration in
Finance. Connor was one of the Fund’s Bloomberg and Excel consultants. In addition Connor was also
responsible for the Consumer Discretionary and Materials Sectors. This Summer Connor will be working
at Marshall & Sterling Wealth Management Inc. as an intern. After school Connor looks to enter the
world of Corporate Finance.
Dan Sheldon is a Junior at Marist College studying Business Administration with a concentration in
Finance and International Business as well as Economics and a minor in Accounting. Within the Fund
Daniel was the lead economist, providing economic insight to all members of the fund. Additionally,
Daniel was responsible for the Consumer Staples and Materials sectors. Daniel has interned for P.E.G.G.
(Professional Economic Growth Group) and will be the Greystone Fund Advisor this summer working
under Professor Haughey. After school Daniel looks to pursue the CFA and CMT designations and to
work as an Equity Analyst.
Christian Teixeria is a Senior at Marist College studying Accounting. Within the Fund Christian was one of
the Fund’s accountants and also served as an analyst for both the Consumer Discretionary and
Consumer Staples Sectors. After school Christian will be moving into New York City where he will be
working at KPMG. In addition Christian looks to take his CPA exam prior to starting his new job.
Bryce Trinka is a senior at Marist College studying Business Administration with a concentration in
Finance. Bryce acted as the one of the fund’s newsletter editors and was an analyst for the Materials
and Telecommunication Services sectors.
Christopher Zipf is a Junior at Marist College studying accounting. Christopher was one of the Fund’s
Bloomberg and Excel consultants as well as being responsible for the Financial and Info Tech sectors.
This summer Christopher will be working at Gateway Investments as a summer intern. After school
Christopher looks to enter the field of Private Equity.
Fall 2013 Class
Daniel Conroy is currently a senior at Marist College, with a major in Finance
and minor in Accounting. In the Greystone Fund, he was responsible for
Consumer Staples and Healthcare, and was Fund accountant. He initiated
coverage of ConAgra Foods and Jazz Pharmaceuticals, and his outlook for the
market is bullish with expectations for continued economic improvement. Dan
interned at Merrill Lynch and IBM the past two summers, and hopes upon
graduation to pursue a career in asset management or equity research.
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Bradley Dillon is a senior at Marist College. He is currently studying Business
Administration with an emphasis in Finance, and served as the Fund’s
Portfolio Manager, managing and overseeing the portfolio weights based on
the consensus of the class. Bradley also analyzed the Energy and Consumer
Staples sectors. In Bradley’s free time he enjoys manual labor, putting
wrench time into cars, playing soccer, traveling, and being active outdoors.
Upon graduation Bradley aspires to work in the financial industry and
ultimately to own his own business.
Alexis Farfaro is a senior Finance major at Marist. She is also the analyst for
the Energy and Telecomunications sectors and served as the Marketing
Specialist for the Greystone Equity Fund. Alexis currently works as a Financial
Service Representative at a local credit union and enjoys hiking, traveling, and
being with family and friends. She hopes to own her own business one day,
after gaining experience in investment banking or a related field.
Evan Finley is a senior at Marist College studying Finance. He served as the
Fund’s Excel and Bloomberg expert. Evan analyzed Consumer Discretionary
and Information Technology sectors, for which he reported on Thor Industries
and Micron Technology. He believes the Consumer Discretionary sector will
outperform in 2014, and is very optimistic for the future of The Greystone
Equity fund.
Christopher McMahon is from Westchester, New York, and is currently a
senior Finance major with a minor in Economics. As President of the
Greystone Fund he oversaw the day-to-day operations of the Fund.
Christopher analyzed the information technology and industrials sectors,
where he initiated coverage of Cummins, Inc. and Micron Technologies, Inc.
Christopher hopes to pursue a career as a financial analyst.
Nicholas Vasco is a senior Finance major with a double minor in Accounting
and Economics. He served as a Fund analyst for the Financial and Healthcare
sectors, in addition to being the Fund’s Economist. Upon graduation, Nicholas
hopes to pursue a career in Finance. His interests include playing basketball
and trading stocks.
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Disclaimer
All information contained in this document is the opinion of, and the result of analysis by, one or more
Marist College students seeking academic credit. It is not intended, and should not be construed, as
offering investment advice. The analysis is not the work of professionals, is not a recommendation of
any particular security, strategy or investment product, and should in no way be used to make financial
decisions or investments. The opinions of the author(s) are subject to change without notice.
Information contained herein has been obtained from sources believed to be reliable, but is not
guaranteed to be accurate or complete.
This document has been prepared for The Greystone Fund’s internal educational purposes. Please
consult your financial and tax advisors before engaging in any transactions.
MARIST COLLEGE, MARIST COLLEGE SCHOOL OF MANAGEMENT, AND MARIST COLLEGE’S TRUSTEES,
FACULTY, STAFF, AND STUDENTS MAKE NO REPRESENTATIONS OR WARRANTIES, EXPRESS OR
IMPLIED, ABOUT THE ACCURACY OR SUITABILITY FOR ANY USE OF THIS REPORT, AND EXPRESSLY
DISCLAIM RESPONSIBILITY FOR ANY LOSS OR DAMAGE, DIRECT OR INDIRECT, CAUSED BY USE OF OR
RELIANCE ON THIS REPORT, OR FURTHER COMMUNICATION PROVIDED IN RELATION TO THIS
DOCUMENT.
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