Jenkins MBA students test finance skills at CFA Challenge

Submitted by Anna Rzewnicki on Tuesday Mar 11, 2014.

A team of four NC State graduate students participated in a local run-off competition for the CFA Institute Research Challenge, held at Greensboro, N.C. in late February 2014. This is the third time that NC State has entered a team into the competition and the third time that the team has made the finals, Warr said.

This year’s team members were Dale Ambrosini and Penelope Tipiana, full-time Jenkins MBA students; Josiah Drewry, Professional Jenkins MBA student who graduated in December 2013; and Quan Gu, a financial mathematics graduate student. Their advisor was Dr. Richard Warr, professor of finance and head of the Department of Business Management. He was assisted Ron Elmer, CFA, who served as industry advisor.

This challenge officially began May 15, 2013 when Warr requested applicants for the competition and then selected the team members. Since then the teams had been working on research, interviews with company management teams, competitors and clients, and presentation training. They presented their analysis and buy, sell or hold recommendations on Krispy Kreme Doughnuts to a panel of judges in a bracket-style competition that began with the local competitions.

Competing locally were teams from Appalachian State University, Elon University, NC State, and the University of North Carolina-Wilmington. The team from Appalachian State University is advancing to the regional competition to be held March 18 and 19 in Colorado.

Ambrosini said that he chose to participate because he is interested in doing similar research after he graduates. “I'm planning on taking the CFA Level I exam this year and felt this was a great way to gain some experience and get a bit better exposure to what I want to be doing long-term,” he said.

For the competition, the team worked on developing a target stock price for Krispy Kreme donuts. A conference call and site visit to the company last fall provided background information and a chance to ask questions that helped the team develop valuation models and write their research paper.

“I feel that my work in all of my advanced finance classes came into play,” Ambrosini said. “While we were developing a target stock price for the company, we had to look at a lot of other qualitative aspects that we've discussed in finance classes. We utilized a five-forces analysis, industry comparison analysis, multiples analysis and more. We also analyzed how effective we believed the company's management is doing, which brought us all the way back to microeconomic principles at times.”

The team submitted its final written presentation in January and was selected as one of the top four entries from among those submitted statewide. “Two weeks later, we presented to a panel of CFA charter holders in Greensboro to determine the final winner,” he said.

“One interesting piece (about the local competition) was the influence salesmanship has in the industry,” Ambrosini said. “While I'm not surprised too much by it, I found it very interesting that one of the best takeaways one of the judges had of our presentation was the appreciation of how we told the history of the company we were presenting instead of just discussing financials, valuation and numbers. They were looking for a fully rounded sales pitch rather than just a valuation number.”

Winners of the three Americas regional competitions, for universities from the United States, Canada and Latin America, will advance to the Global Final to be held in Singapore on April 2014.

The local challenge was hosted by the CFA Society North Carolina and sponsored by Kaplan/Schweser.

Read more about the competition.
 

 

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