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Monday, 13 February 2012 15:22

Students test their mettle in CFA Institute Research Challenge

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GRAND RAPIDS — Students from seven colleges came together on Saturday to answer the age-old investment question: “Buy, sell, or hold?”

The CFA Institute Research Challenge, a multinational event put on by the Certified Financial Analyst Institute and its member societies, pits teams of students from different universities against one another in an event that tests their abilities to analyze a particular company and present their recommendations to a panel of CFAs. Competitions are initially held on a local basis, then by region, and finally on a global level.

“This competition represents the most noble thing a professional association can do: bringing together students with professionals,” said CFA WM Society president Martin Axlerod.

The West Michigan local event, in its second year, was hosted by Grand Valley State University and involved teams from seven universities from Michigan and Ohio: GVSU, Western Michigan University, Eastern Michigan University, Central Michigan University, Ferris State University, University of Toledo and Bowling Green State University.

The challenge required students to meet with high level management from an actual publicly traded corporation—in this case Herman Miller, develop a financial model and valuation of the company, and rate the company with a target price. Finally, teams presented their valuation to a panel of three judges and defended their valuation against questioning and critique.

“This competition adds a level of real-world experience to an education,” said event co-chair Jeff Tryka, director at Lambert Edwards and Associates. “This gives students a chance to see (valuation) done in practice. It’s a question of analyzing a static company in a textbook versus a dynamic company in the real world.”

Ted Fuger, another co-chair, cited the importance of providing students with an environment where there was an element of risk and reward that was directly tied to the students’ performance.

“This challenge gives students the personal experience of being in front of an audience, using materials they’ve prepared,” said Fuger.

Tryka further pressed this point by emphasizing the importance of testing students’ ability to persuade an audience: “This gives students the experience of presenting to a group of potential investors who may or may not be friendly.”

The judges were anything but friendly. All three grilled the teams on every aspect of their presentations: from their methodology to their recommendations. In one exchange, a judge asked the University of Toledo team, which recommended a hold: “I don’t own any stock in Herman Miller. What’s your recommendation for me?”

Teams got the experience of fielding tough questions and volunteered further information. They used a variety of techniques employed by actual professionals to analyze companies, and they assessed the challenges and risks faced by Herman Miller in an ever-changing global market.

In the end, only one school could win, and although all seven teams scored tightly, GVSU was victorious. The Lakers advanced to the regional level where they will face teams from across the Americas in New York City. The winner of that round will face three other teams in the final, global challenge.

“The most exciting aspect of this experience was taking a company from the ground up and valuing it like a real analyst,” said Hunter Lewis from the winning GVSU team.

Read 2032 times Last modified on Sunday, 12 August 2012 18:09

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