CFA INSTITUTE RESEARCH CHALLENGE CFA SOCIETY OF PHILADELPHIA KICKOFF LUNCHEON Tuesday, November 6, 2012 3:00 PM
TODAY’S PRESENTERS Kenn Lamson, CFA Portfolio Analytics Consultant, Vanguard “Research Challenge Overview” Peter Maher, CFA Analyst, Investments, The Board of Pensions of the Presbyterian Church U.S.A. “Ethics and Code of Standards” Timothy Hoyle, CFA Vice President, Research, The Haverford Trust Company “How to Write a Research Paper” Tom Kelly Senior Vice President, Crown Holdings (Subject Company) “Company Overview” 2
Research Challenge Overview Kenn Lamson, CFA Portfolio Analytics Consultant Vanguard
CFA SOCIETY OF PHILADELPHIA: A FOUNDING MEMBER OF THE CFA INSTITUTE Highlights: • Started in 1943 • 2,000 Members • 7 th Largest North American Society • Provides a Variety of Social and Educational Events • CFA Prep Provider Membership comprised of: CFA Charter Holders Adjunct Professionals Students 4
THANK YOU TO OUR SPONSORS OF THE RESEARCH CHALLENGE: Contact: Wayne Pasternack Phone: (212) 617 3606 E-mail: wpasternack@bloomberg.net 5
2012 GLOBAL CHAMPIONS Thammasat University, Bangkok, Thailand Representing the CFA Society Thailand 6
2012 CFAP RESEARCH CHALLENGE WINNER: THE UNIVERSITY OF PENNSYLVANIA 7
WHAT IS THE CFA INSTITUTE RESEARCH CHALLENGE? • How is it organized? - Worldwide intercollegiate competition between teams of students - Organized through CFA member societies - At least 4 teams of 3-5 students participate • What does it involve? - Analysis of a publicly-traded company - Interviews with company management - Mentoring by a CFA charter holder - Research report writing - Presentation of research 8
2012 RESEARCH CHALLENGE NETWORK 9
2013 TOURNAMENT DIAGRAM Global Final New York AP EMEA Americas Regional Regional Regional Regional 24 Teams 19 Teams 25 Teams 48 Teams 90+ LOCAL LEVEL CHALLENGES 10
2012 TOURNAMENT RESULTS 11
BENEFITS FOR STUDENTS • Best practices in research and report writing • Real-life learning experience as an Equity Analyst • Access and exposure to leading industry professionals • Professional report and experience to use on resume/CV and job interviews • Experience presenting to top financial professionals • Individual and team prizes • Opportunity for travel • Potential for media exposure • Network of over 10,000 students and 2,500 volunteers worldwide 12
THERE ARE NINE PARTICIPATING TEAMS FROM THE PHILADELPHIA REGION IN THIS YEAR’S RESEARCH CHALLENGE: University: Industry Mentor Delaware State University Charlie DyReyes Drexel University Michael Martorelli Rider University Cynthia Jones Scranton University Todd Sclanger St. Joseph’s University Andre D’Amico Villanova University Lee Grout Temple University Edward Hickey University of Pennsylvania Kelley McKee Widener University Sorin Roibu Thank you to our volunteer Industry Mentors for their involvement. 13
COMPETITION TIMELINE Today Kick-Off Next 10 days Preliminary Research Register with CFA Institute 1 st Draft Due to Mentor 12/14/2012 1/11/2013 Final Report Due Interim Report Grading 2/21/2013 Local Final Presentations 3/21/2013 Regional Final 4/12/2013 Global Final 14
RULES OVERVIEW • Each team consists of 3-5 students • Mentors and faculty may NOT contact (undergraduate or graduate) the company • Only one team may represent each • Mentors, faculty, and subject company university may NOT provide material non-public • Students must be enrolled in the information university they represent and • Written reports must conform to the registered for at least a part-time guidelines set forth by CFA Institute course load at the time of the kickoff and include the cover and back pages meeting provided by CFA Institute • Reports and presentations must be the students’ original work • Teams may not use props in their oral presentations • Students may not have contact with the subject company outside of • Students, mentors, and faculty must all organized events agree to abide by the CFA Institute • Students may not enlist the help of any Code of Ethics and Standards of professionals other than the mentor or Professional Conduct faculty advisor 15
ADVISOR AND MENTOR INVOLVEMENT Faculty Advisor Industry Mentor • Insight and guidance on research • Insight and guidance on industry methods and tools as taught in practice academia • 6 hours maximum of productive time • 10 hours maximum of productive • Face to face or virtual time • Company management question • Access to faculty for other projects development unrelated to the Research Challenge • Review first draft of research report is permitted • Presentation development • All work must be the original work of assistance the students 16
ETHICS RESOURCES • Ethical Standards for Investment Professionals: An Interactive Case- Based Course • Ethics Course Module 2: Standard II — Integrity of Capital Markets • Ethics Course Module 3: Standard III — Duties to Clients • Ethics Course Module 6: Standard VI — Conflicts of Interest • Ethics Course Module 7: Standard VII — Responsibilities as a CFA Institute Member or CFA Candidate 17
SAMPLE REPORT 18
REPORT SCORING Maximum Points Section Comments Business Description 5 Lack of sufficient information to support recommendation. Not a comprehensive understanding of the company's positioning and/or competitors. No Industry Overview & understanding of company's economic advantage, Overstated company's advantage - not Competitive Positioning 15 grounded in facts. Investment Summary 20 Not logical. No or insufficient summary of salient points. Strategy is not grounded in financials. Valuation 20 Method is flawed. Not substantiated with industry information. Flawed assumptions. Too many errors in financial analysis. Financial analysis does not support Financial Analysis 20 conclusion. Investment Risks 15 Missed too many important risk items. Risk and conclusion are not logical. Other Headings 5 Missed important information available. Total 100 19
PRESENTATION SCORING 20
OUR SUBJECT COMPANY: “Crown Holdings, Inc., through its subsidiaries, is a leading supplier of packaging products to consumer marketing companies around the world. World headquarters are located in Philadelphia, PA.” www.crowncork.com Thank you to Crown Holdings for its participation in the Research Challenge! 21
INTERACTING WITH CROWN HOLDINGS • Designated officers ONLY • Organized communications ONLY • Industry mentor or faculty advisor must be present for all student- subject company interactions • Students may contact and survey company suppliers, customers, vendors, etc. 22
WHERE TO BEGIN • Visit the CFA Institute Research Challenge website: www.researchchallenge.org - Register for the competition - Peruse educational materials selected specifically for participants - Watch videos of past presentations - View past reports from winning teams • Communicate with your assigned mentor • Check the CFA Institute website for a timeline of the competition 23
Ethics & Code of Standards Peter Maher, CFA Analyst, Investments The Board of Pensions of the Presbyterian Church U.S.A.
CODE OF ETHICS • Act with integrity, competence, diligence, respect, and in an ethical manner — public, clients, prospects, employers, employees, colleagues. • Integrity of investment profession and client interests above personal interests.
CODE OF ETHICS • Reasonable care, independent professional judgment when conducting analysis, making recommendations, taking investment actions, and in other professional activities. •Practice, encourage others…in a professional, ethical manner…reflect credit on themselves and profession.
CODE OF ETHICS • Promote integrity; uphold rules governing capital markets. • Maintain, improve professional competence, and strive to do the same for other investment professionals.
STANDARDS OF PROFESSIONAL CONDUCT I. Professionalism II. Integrity of Capital Markets III. Duties to Clients IV. Duties to Employers V. Investment Analysis, Recommendations, and Actions VI. Conflicts of Interest VII. Responsibilities as a CFA Institute Member or CFA Candidate
ETHICS • Professionalism: - Knowledge of the law - Independence and Objectivity - Misrepresentation - Misconduct
ETHICS • Integrity of Capital Markets: - Material Nonpublic information - Market Manipulation
ETHICS • Duties to Clients: - Loyalty, Prudence and Care - Fair Dealing - Suitability - Performance Presentation - Preservation of Confidentiality
ETHICS • Duties to Employers: -Loyalty -Additional Compensation Arrangements -Responsibilities of Supervisors
ETHICS • Investment Analysis, Recommendations, Actions: - Diligence and Reasonable Basis - Communication with Clients - Record Retention
ETHICS - Conflicts of Interest: - Disclosure of Conflicts - Priority of Transactions - Referral Fees
ETHICS • Responsibilities of CFA Members and Candidates: - Conduct of Members and Candidates - Reference to the designation
How to Write an Equity Research Report Timothy Hoyle, CFA Vice President, Research The Haverford Trust Company
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