FIN 422: Student Managed Investment Fund Topic 1: Introduction Larry Schrenk, Instructor

Today’s Outline Some Syllabus Details Fund Management Introduction

1. Syllabus: The Boring Part

Introduction FIN 422: Student Managed Investment Fund Larry Schrenk, Instructor Course Page http://larryschrenk.com/FIN422/FIN422.htm Syllabus (Next Class)

Contact Information Office: Somsen 319F Telephone 507-457-2388 E-Mail lschrenk@winona.edu Webpage http://larryschrenk.com/

Office Hours Office Hours On Campus Policy 8:00-10:00 AM MWF 12:00-1:00 PM MWF Somsen 319F On Campus Policy

Textbook No Required Textbook Main Resources: Copies on reserve. Aswath Damodaran. Investment Philosophies: Successful Strategies and the Investors Who Made Them Work. 2nd ed. Wiley, 2012. Aswath Damodaran. Investment Valuation: Tools and Techniques for Determining the Value of any Asset. 3rd ed. Wiley, 2012. Copies on reserve.

Evaluation Exams (2 @ 30% each) 60% Report(s) 40%

Exams Two Exams (30% each) No Crib Sheets, Formulae Sheets, Etc. Due dates are on the Schedule Page

Exam Format Format Not Cumulative TBA But Later Material Builds on Earlier!

Assignments Firm Report Analyst’s Report Evaluating a Firm as Possible Investment Groups CFA Format

Schedule Introduction Investment Philosophies Financial Statement Analysis Estimating Input Factors Valuation Techniques

Schedule: Introduction

Schedule: Investment Philosophies

Schedule: Financial Statement Analysis

Schedule: Estimating Input Factors

Schedule: Valuation Techniques

Course Sequences Intro to Finance Investments Security Valuation Portfolio Theory SMIF Intro to Finance Investments Security Valuation + Portfolio Theory + SMIF

3 vs. 1 Credit 3 Credit All Classes Exams Report 1 Credit Friday Class Report(s)

Course Evolution Shift to Practical Applications Shift to ‘Nuts and Bolts’ versus Theory

3. Fund Management

Fund Management ‘Foundation’ Fund Consulting Role $200,000 Investment Policy Statement Individual Analysts’ Report Presentation Date: TBA

Fund Reports Reevaluation of Positions New Positions Portfolio Analysis

Tools CRSP/Compustat (CRSPSift) Mergent Financial Resources Page CRSP/Compustat Page Mergent Online Intellect Archives Financial Resources Page

Opportunities CFA Research Challenge SMIFC Conference

4. Introduction

Readings IV 1 (Aswath Damodaran. Investment Valuation: Tools and Techniques for Determining the Value of any Asset. 3rd ed. Wiley, 2012.) V 1 (Tim Koller, Marc Goedhart, and David Wessels. Valuation: Measuring and Managing the Value of Companies. 6th ed. Wiley, 2015.) 

Valuation Approaches Fundamental Analysis Technical Analysis Market Timing Efficient Markets

The Key Question What is the prime characteristic to look for in an investment? Growing Firm? Strong Firm? Growth Potential? Bad Firm?

The Key Question What is the prime characteristic to look for in an investment? A Mispriced Firm

What is Mispricing? Market Price ≠ Intrinsic/True Value

Sources of Mispricing Only Some Examples Miscalculation of Growth Product Firm Industry Market Imperfections Unpriced Subsidy Unpriced Tax Advantage Modelling Error

Criteria for Successful Investment Identify Mispricing Market must Correct Itself Active Passive NOTE: Time Horizon