BUS 438, Student-Managed Endowment Fund Course

http://www.uwosh.edu/cob/future-students/undergraduate/academics/majors/smef


Spring 2011

 

Professor:

Email:

Phone

Stephen Huffman, Ph.D., CFA

huffman@uwosh.edu

424-7202

 

Common Finance Course Assessment Objectives for 28-438:
Students will be able to:

  • Obtain financial data from a variety of sources (print, web-based and other electronic data sources),
  • Organize, analyze and interpret financial data,
  • Present financial analysis of data,
  • Apply financial decision making models to solve problems and identify opportunities in global financial markets.

Course Goals and Learning Objectives:

The goal of this course is for each student to use their finance background to make decisions related to managing an investment portfolio.  The requirements for this course provide the students with the opportunity to analyze securities and manage investment portfolios.

 Each student should be able to:

·         Obtain, compile, and evaluate data relevant to the current investment environment (domestic and international);

·         Analyze and value equity and fixed income securities;

·         Apply each fund’s investment policy statement

·         Review and revise the fund’s target allocation mix, e.g. sector analysis

·         Review and develop fund trading policies

·         Plan for cash inflows and outflows

·         Implement investment strategy, e.g. reviewing and revising portfolio holdings;

·         Calculate and evaluate returns for the portfolios and their associated benchmarks;

·         Perform attribution analysis of fund returns; and

·         Prepare reports and present to students, faculty, past and potential donors, the COB Advisory Board, and finance professionals. 

 Required Materials:

There is no required text for this course.  Course materials will be provided in class and on D2L.   

 

COURSE EXPECTATIONS

 

This course will emphasize the application of analytical methods to actual securities.  Students who undertake this course will be expected to have a fundamental background in basic finance.  A basic background in accounting and statistics is also expected.  Course work will include projects and assignments which will require familiarity with the use of spreadsheets.  In addition, class members will need to acquire skills in using data bases to gather needed information for course presentations and assignments. 

Course Methodology:   Seminar format

Grading Criteria:

  • 25% Review of current holdings in assigned sector(s) and responses to analysts, manager, and faculty comments.
  • 25% At least one New Proposal for Portfolio and responses to analysts, manager, and faculty comments.
  • 25% Quality of comments made on other student proposals and evidence of having read all of the reviews of existing holdings.  
  • 25% Professional judgment by faculty of contribution to the course (includes voting participation and unexpected situations that arise).  The contribution grade is the professors' subjective evaluation of how well a student knows course material and how the student used that knowledge to improve the learning environment of all students. 

Allocation of Letter Grades:

 

A

93% and above

B-

80-82%

D+

67-69%

 

 

A-

90-92%

C+

77-79%

D

63-66%

 

 

B+

87-89%

C

73-76%

D-

60-62%

 

 

B

83-86%

C-

70-72%

F

Below 60%

 

 


Grading Policy

If you do not agree with a grade that you receive, you have two weeks from the end of the semester to contest it. 

The 438 course requirements for Spring 2011 include: 

1.      At least one new proposal presentation for each student

2.      Making and Posting quality comments on every student proposal

3.      Responding (by proposer) to comments on new proposal(s)

4.      Voting on all instructor-approved proposals

5.      Submitting at least one review of each current holdings in assigned sector(s) including BUY or SELL or HOLD or HOLD-WATCHrecommendation and Two metrics that would require an additional review if recommend to HOLD or HOLD-WATCH and assign a review value of between [1] needs to be reviewed and [5] can be reviewed later. 

6.      Responding to each reviewed holding by including:   (+) one advantage of holding/buying security, (−) one disadvantage of holding/buying the security, (=) recommendation (i.e., BUY or SELL or HOLD or HOLD-WATCH) and/or (?) relevant question (if have one).

7.      Reviewing each individual stock holdings that is greater than 7% of the portfolio value (must be reviewed each week in discussion area of D2L if no proposal is issued or in the new proposal area if a voting proposal is submitted)

8.      Submitting a proposal for each individual stock holding that is greater than 10% (requires a discussion, final proposal and vote).  If the review process is not timely (as determined by the instructor), the instructor will reduce the holding to 5% (or lower) of the total portfolio value.

9.      Reading all other students’ comments on holdings

10.  Submitting “additional proposals” comments/response/voting (includes unassigned proposals, stop-loss and/or sell order proposals)

11.  Helping with the marketing of the SMEF Program, which includes:  presentation to other classes or to potential clients (e.g., WFBF) or donors (e.g., Hillenbrand family)

12.  Providing an university photo and biography for SMEF Program marketing materials for web and print publications

13.  Making contributions to program reports and presentations (fall is online, spring is printed with a presentation) including: updating assigned sector analysis, reviewing IPSs, and interviews by university marketing staff.

14.  Managers are responsible for asset allocation and return spreadsheets

15.  Managers will be asked to update investment policy statements and asset allocation targets and analysts will be required to comment on IPS drafts.

Specifically the requirements are:

·         Students are required to present at least one new proposals for the term. Assigned proposals are to be posted by Monday at noon in the discussion area of D2L in the forum entitled “New Proposals for week of . . .” (see summer 2010 discussion forums entitled “new proposals” for examples and the Presentation Guidelines found in the contents area of D2L).

·         All students must make at least one posted comment on each proposal, which is to be posted by noon on each Tuesday (instructor will assess the quality of the comments).  Each comment should include:  (+) one advantage of holding/buying security, (−) one disadvantage of holding/buying the security and/or (?) a relevant question.

·         Quality of the comment is not dependent on length

·         Instructor prefers concise comments or questions related to the proposal

·         Links to articles related to the company or its industry/product are encouraged, but not required.  The most relevant point of the article must also be included in the comment.

·         Example of bad comment:  "What was the EPS in 2007?"

·         Example of potentially relevant comment "Did you find any discussion about why EPS was down in 2007 from 2006?"

·         Each presenter is required to respond to each relevant comment (including instructor’s comments) in the discussion area by noon on Wednesday.

·         Students can add additional follow-up questions or comments by midnight on Wednesday if not satisfied with presenters response or if a new issue arises.

·         Presenter makes final statements including recommendations in the form of a motion by 6 pm on Thursday.  For example, "I move that we buy X shares of XXXX for the Z fund by selling Y shares of YYYY (or by reducing our cash position)."

·         If the faculty member determines that there are no apparent constraint violations and if due diligence has been adequately performed, the the faculty members will approve the motion and place it in the Survey area of D2L on Thursday afternoon.

·         All students must vote by Friday at 12:00pm noon (unless specified otherwise) in the survey area unless postponed for extenuating circumstances (managers, will have extra voting weight, but not absolute decision-making authority).

·         The instructor will submit the order for proposals that are approved (with a two-thirds vote) to Smith Barney via e-mail or phone (usually on Friday afternoons).

·         Students can submit extra proposals at anytime during the term and all other students are required to comment and vote within a week of the proposal’s posting in the discussion area of D2L.  The student submitting the extra proposal must notify all other students (and the instructors) via e-mail when proposal is submitted.

·         Students are required to post an analysis of each of the holdings in their assigned sector in the discussion area of D2L.   For each of the holdings in their assigned sector(s) students must make a BUY or SELL or HOLD or HOLD-WATCH recommendation and assigned a review value of between [1] needs to be reviewed and [5] can be reviewed later.  The analysis is posted in the discussion forum area of D2L entitled Sectors. The postings should follow the general guidelines for a proposal and are required to include: 

·         A recommendation to HOLD or HOLD-WATCH (may also include a recommendation for a stop-loss order price).

§  For HOLD and HOLD WATCH recommendations no vote is required; however, each student is required to read all the information posted (D2L allows instructors to monitor your activity).

§  For a STOP-LOSS order or a SELL order, (or BUY additional shares) a vote must be taken after:

§  Each student is required to make comments in the discussion area

§  Presenter is required to respond to each relevant comment

§  Presenter makes a recommendation in the form of a motion; e.g., "I move that we sell Y shares of YYYY for the Y fund and place the proceeds in fund’s cash account."

·         Update of key financial and market data (recent price, EPS, P/E, P/B, dividends, etc.) 

·         A 3 or 6 month price history chart

·         Performance while in fund (in most cases, Smith Barney’s unrealized gains detail is the most accurate)

·         A statement indicating why the security continues to meet the objectives of the specific fund (size, style, sector)

·         Two metrics (not holding return) base that would require that the security holding be reviewed and potentially sold. 

Weekly Schedule

 

Monday           New Proposals posted on D2L by noon

Tuesday           Questions/Comments on proposals posted by noon

Wednesday      Responses to questions up by noon; follow-up questions/comments submitted by midnight

Thursday         Presenters final statement and recommendation in form of a motion by 6pm

Friday              Vote on D2L Survey by noon. 

 

Quick Facts: 

·         New purchases are limited to 5% of the portfolio

·         It is OK to use Stop and Limit orders, but we cannot sell short

·         A holding is evaluated if it becomes worth more than 7% of the portfolio.  We are obligated to trim the holding if it is >10% of the portfolio

·         Proposals are approved if they received at least two-thirds of the votes.  Analysts have one vote each, the Manager has 5.5 votes, given our current enrollment. 

 

 

ACADEMIC INTEGRITY

The University of Wisconsin Oshkosh is committed to a standard of academic integrity for all students.  The system guidelines state: “Students are responsible for the honest completion and representation of their work, for the appropriate citation of sources, and for the respect of others’ academic endeavors.”  Guidelines and procedures may be found on the Dean of Students website, www.uwosh.edu/dean/conduct.htm.