At the last regular CMC meeting, we reviewed the attached slides for identifying ideas. There are many approaches, but often the starting position reflects an investor’s philosophy about how opportunities are created and can be exploited. That philosophy can be related to investment style, i.e. some investors tend toward “value” ideas and others toward “growth” ideas. Academics define value and growth in precise terms, but it is better to think of them more conceptually and reasonable to associate them with behavioral biases. A value investor generally believes the market/investors overreacted to something causing the stocks’ price to deviate from its true intrinsic value. There is an opportunity to buy when research suggests the stock will revert to that intrinsic value as whatever caused the deviation recedes into the past or improves. A growth investor generally believes the market/investors are underreacting to a company’s favorable trends (growth). They believe there is an opportunity to buy and benefit when research suggests the growth will continue.

One way investors look for ideas is by screening for stocks with characteristics associated with growth or value. We briefly discussed the Factset Universal Screening tool. As with many of its applications, Factset includes short tutorials with its Online Assistant and eLearning resource describing how to use its Universal Screening application. You access these resources at the ? in the upper right corner of your menu if you are in the FAL or on the bottom of the left side menu on the web version of Factset. We also created the video Screening for Ideas with Factset to demonstrate how to access a CMC folder with the screens highlighted in the attached slides and to describe how Universal Screening works by walking an example. Let us know what you think.

We had good attendance at the 1st "advanced" training session last week where we focused on valuation and using multiples to develop a target price. The slides used have been added to the Training session folder accessible from the Resource Guide page of the website, but are also attached here. I've also attached the spreadsheet used to download historical fundamental and valuation data for comparable companies with Factset FDS codes. You need to use one of the computers in the FAL to use this sheet.

Many attendees had not particiapted in the 1st semester introductory training sessions. You can view the slides used in those sessions from the cmc-uwmadison.org For Members>Resource Guide page by selecting the LINK TO TRAINING SESSION SLIDES. There are also readings you may find helpful at the LINK TO RESEARCH READINGS. 

The club executive board will be sending a survey to better understand whether you found the training session of value. We have additioanl topics planned, but are prepard to pivot to whatever you collectively think will be most useful. If you participated, your response will be greatly appreciated. 

A recent Wall Street Journal article highlights the strong recent  performance of the real estate investment trust market (link). The article is timely for CMC as members will have the opportunity to learn more about REIT investing during the Spring semester.  

First a quick definition from a Barclay’s primer,  REITs 101: An Introduction (available in the Research Readings section of the website):

A Real Estate Investment Trust (REIT) is essentially a corporate entity that owns, operates, acquires, develops, and manages real estate assets. However, REITs are differentiated from other corporate forms by a tax election that eliminates taxes at the corporate level. Most of the company’s taxable income is passed along to investors in the form of dividends; shareholders subsequently pay taxes on those dividends. Conceptually, a REIT can be viewed much like a mutual fund in that it allows investors to pool capital and invest in a larger, more diversified real estate portfolio. Both REITs, and mutual funds, are essentially pass-through vehicles, passing the cash flow from that portfolio to investors. Like a mutual fund, the original REIT structure created in the 1960s was a passive investment vehicle; it prohibited the operation and management of properties by the REIT itself. Over the years, however, legislative and tax code changes have enabled REITs to become actively managed, fully integrated operating companies.

Given member interest, Tim Pire, the Director of UW AREIT program agreed to give a talk on REIT investing as one of our training sessions this semester and mentor students interested in pitching REIT ideas to the club. A graduate of UW’s highly regarded Real Estate Program, Mr. Pire has extensive experience as a REIT analyst and portfolio manager. Look for more information about this session and in the meantime, if you are interested in learning more about REITs, check out the REIT primer here.

Are you interested in investing but don't know where to start? Learn more about investment programs for undergraduates at an info session hosted by the Hawk Center for Investment Analysis.

When: Wednesday, December 11th 4:30-5:30

Where: 1295 Grainger Hall

Complimentary pizza and soda will be served.

RSVP to cara.scadden@wisc.edu