OIG General Board Meeting (04/23/2014)

Market update

  • Market rose consecutively for the past 5/6 days. S&P 500 is up 0.6% so far this week. New- home market isn’t doing well in March probably because of harsh winter
  • Federal Reserve policy makers are likely to hold policy steady by trimming their monthly bond purchases by another $10 billion to $45 billion and leaving their benchmark interest rate unchanged at near zero.
  • Facebook: Revenue climbed 72% to $2.5 billion, beating expectation. Active users continue to increase and this gives investors a better indication of user engagement. Advertisers increasingly use Facebook ads to boost sales.
  • Apple: a year-over-year decline in quarterly revenue. Apple started supplying iPhones to China Mobile in January. China Mobile is a potential catalyst for iPhone demand in the world’s largest smartphone market.
  • Weibo: Shares of Weibo Corp. jumped 19% in their trading debut last Thursday. Price right now is around 22. After the IPO, Alibaba is set to own about a third of Weibo. Part of the aim of the relationship is to allow Alibaba merchants to advertise to Weibo users

OIG General Board Meeting (04/16/2014)

Market Update:

  • China’s gross domestic product grew by 7.4% in the first quarter, which was the slowest rate in 18 months. However, this was more than the the forecast rate of 7.3% and was successful in calming the nerves of investors.
  • The fed released “Beige Book” report, which is a read on the U.S economy from anecdotes gathered by the central bank’s 12 districts. According to the report, the economy of the entire country bounced back after the growth was hampered by the unusually cold winter.
  • Stock prices went up for Down Jones .
  • Twitter, on the other hand, has been under performing . The reasons being slowing user growth, declining user engagement and premium valuation. There is some potential for its user growth and user engagement to increase in near future, and ad engagement remain healthy as well. The stock rallied at 11% on Tuesday, which is the highest since the day it went public.
  • Alibaba, which is a Chinese e-commerce behemoth , produces more sales and net income than ebay and amazon combined. It can raise up to $15 billion at the valuation of up to $200 billions.
  • Weibo, which is like twitter, is set to begin trading on Thursday in NASDAQ and JD.com, which is Alibaba’s rival filed for $1.5 billion listing in January.

Stock Pitch:
Under Armour
Under Armour is a leading developer, marketer and contributor of sports apparel and now is venturing into foot wear and women’s wear. Its main markets are North America, Eurpe, Middle East, Africa, Asia and Latin America.

  • Trailing P/E: 67.92
  • Forward P/E 43.35
  • Return on Equity:17.36% relative to cost of capital :9-10%
  • Debt:152.92 relative to cash earnings:347.49
  • Current ration:2.65x
  • Quarterly Earnings Growth-163.4%


1) There is potential of future growth.

  • International Expansion
  • Expanding into new apparels: women’s wear and youth wear.

2) It is venturing into new innovative products as well.

  • MagZip: Zipper which uses magnet to attract bottom rungs of the zipper (http://gearjunkie.com/)
  • Workout Monitor
  • Heart rate strap

It is also venturing into NBA market, which is a huge news in itself.

The last time we bought it before the Christmas season to capture the consumer spending right in the holiday season. We were able to do that and earned few gains.


Owl Investment Group had elections for new executive board. The new executive board for 2014/2015 is:

  • President: Dingwei Li
  • Portfolio Manager: Yaxuan Wen
  • Bank Treasurer: Yannan (Nancy) Li
  • Publicist: Tianyi (Claire) He
  • Secretary: Yiling Bai

Congratulation to the new e-board. We hope you have a wonderful time and continue the great legacy of OIG.

OIG General Board Meeting (04/09/2014)

Market Update:

  • Stocks were higher at midway as investors were waiting for the release of Federal Open Market Committee’s minute from March
  • The minutes reduced the concerns that the central bank would move to raise interest rates sooner than expected
  • Earning reports from Alcoa helped get first quarter earning season into positive start
  • IMF cut its 2014 outlook by 0.1% as it expects the economic expansion to be 3.6% for this year. It further reports that developed markets will have more strength than emerging markets.
  • Some historical data on earnings shows which stocks have more stability. Utilities and financial stocks tend to move the least while tech and consumer discretionary were the biggest movers.
  • Here is the link to the Fed minute:http://live.wsj.com/#!FA796F53-BB95-46BA-A152-4EE658472D75

Stock Pitch

A) Name of Stock: Aetna Inc. (AET)

  • Current Price: $72.86 (April 8th)
  • Sector:Healthcare

Aetna has provision of diverdified health care plans and provides health care management service to employers and individuals.

Aetna Value Proposition:

  • Improve Healthcare system transparency
  • Help people get healthy
  • Foster a more accountable Healthcare system
  • Add value to government program


There is growing demand for controlling healthcare expenditure. Additionally, it has experienced tremendous growth in 2013 and is most likely to continue doing so in future. Moreover the stock is at a modest price. Aetna has a diversified revenue and good profit base.

It has competitive advantage because of its flexible and consumer oriented products. It also has membership in MA geographic expansion and proper network strategy.

Furthermore, it has the right strategy and positioning to continue generating peer leading shareholder returns and is the 3rd largest National Managed Care Organizations.

 Valuation Ratios

  • P/E ratio: 13.93
  • Revenue Growth Rate: 34.3%
  • EPS Growth Rate%: 3.90%

Decision: Aetna would be a good buy for its solid past performance. The risk on profit margin and revenue comes from uncertainity about Obamacare.

 B) Name of Stock: Delta Airlines and Spirit Airlines (Complementary Stock)


Jet fuel is one of the major input cost which affects the profitability of Airlines sector. However, the sector has been growing because of passenger demands despite increase in fuel prices. Additonally, hydraulic fracturing in the U.S. can prevent the price of oil from getting high. No wonder, it has been top performing among 200 industries.


Delta (DAL): It is a major airline company and is the largest in the world by fleet numbers.

  • Market Cap:28.29B
  • P/E:2.73
  • Profit Margin:27.9%

Spirit (SAVE):It is a low fare airline company which has been possible due to reduced services. Additionally, it has low fuel per seat model.

  • Market Cap: 4.11B
  • P/E 23.4
  • Profit Margin 10.69%

Decision: By buying these stocks, we are trying to capture seasonality of Airlines sector. Delta is currently a cheap blue chip company while Spirit is low fare airlines company.


OIG General Board Meeting (04/02/2014)

Market Update: 
  • The U.S. stocks rose after the postive economic reports that gave investors more reasons for optimism about U.S. growth. This gain in stocks came after decrease in the Treasury bonds.
  • General Motors issued a recall for about 1.5 million vehicles because of a steering defect.
  • Apple increased by 0.1% as it was in talks to buy Japan’s Renesas SP Drivers, which makes power-saving smartphone chips, for around $1 billion.
  • Goldman Sachs edged up 0.7% as it is close to selling a trading business based in New York.
  • Google splits into GOOG and GOOGL. Shareholders will get two shares for every one they owned. One set of shares , called Class A, will trade under GOOGL while the other, Class C, will be listed under historic ticker GOOG. Votes of Class A will be counted as one vote while Class C will be worthless in terms of voting.
  • The first quarter of this year was busiest since 2000. 64 companies went public in the U.S. and raised $10.6 billion. Around 50% of the IPO’s were from healthcare sectors. Technology firms were active as well. Companies such as Box Inc., Go Pro are also expected to go public.

Stock Pitch: 

Name: TLT (Treasury Bond) 
TLT reflects the price of 20 years or older treasury bonds.It was priced around $109 and also has dividends of 2.9%.TMF is another similar stock which is leveraged three times more than TLT. 
Trends: TMF shot up in April through July and then declines until following year. 
Why? TLT is a safe stock because it is not a company, which means that it will not go bankrupt.However, it will also not hoot up like other stocks do. Our portfolio has many bull stocks, so TLT will counterbalance them. 
Prediction for the stock: Since Quantitative Easing (QE) has been reduced, which means that printing of money has been reduced in economy, less stocks are bought. As demand for stocks decrease, price of stocks are increasing. This means that people will look for safer haven, which is provided by bonds.

What can we do? We can buy 100% TLT bonds, which means fewer risks,less volatility and fewer gains. Also, we can buy 100% TMF bonds which entails nore risks. Thus, a balanced combination of TLT and TMF bonds is another option. 

Investment Terms: 

Bond Investment: It is a long term investment. In Bond investment investors loans money to either governmental or corporate entity that borrows funds for a defined period of time. Bonds are then utilized by the entity to finance various projects. (http://www.investopedia.com/terms/b/bond.asp)
Exchange Traded Funds (ETFs): It is a security which tracks index but trades like stock on an exchange. (http://www.investopedia.com/terms/e/etf.asp)
One we have in our portfolio mimicks S&P 500. 
Helpful fact: Bonds and index funds can be used along with stocks to diversify portfolio. 


OIG General Board Meeting (03/26/2014)

Market Update:
  • Treasury prices rose as concerns eased about Fed increasing interest rates sooner than expected
  • European Central Bank president Mario Draggi told that he sees economy recovering but necessary efforts are required to maintain price stability
  • Chinese manufacturing and trade data reports have been weaker. So many marekt watchers are anticipating stimulus of People’s Bank of China.
  • In Stock market: The Dow Jones Industrial average was down by 38.54 points. The S&P 500 was down by 17.48 points while The Nasdaq decreased by 125.56 points. The Nasdaq closed at its lowest level on Wednesday, March 26 in six weeks.  (Source: ABCNews)
  • Fed’s annual banking stress test was conducted. 29 of the 30 largest institutions were able to adequately capitalize and withstand severely adverse economic situations, except for Zions Bancorporation. This test is conducted to check if a bank has enough capital to handle adverse economic situations.
  • Fitch Ratings has affirmed the U.S credit ratings at the top-notch triple A-Level, with a stable outlook.
  • Apple (AAPL) shares went high after their discussion with Comcast about possible streaming deal. Facebook (FB) shares were down , after its announcement late Tuesday that it will acquire Oculus VR in a $2 billion cash and stock deal.


Portfolio Update:
We purchased more airline companies because revenue growth is expected. We chose Delta and Spirit Airlines to purchase. Delta has high earnings per share and low P/E ratio, while Spirit specializes in cheap airfare. Also Spirit has high earnings per share. However, we are planning to get rid of Alaska Air as we do not to overflow our portfolio with just one type of industry. We also purchased Disney Walt, which is a major leader in media industry. We decided to hold Michael Kors because there is expectation of more growth. Also retail industry, which includes Michael Kors and Under Armour, has had fast growth.
Focus on NetEase:
NetEase is one of our companies in our portfolio. It went public around 2000 and have 7600 employees. It is involved in online games, e-commerce, mobile games and other services. It has massive marketing platform. It has high profit margin and has high potential of revenue growth because of its innovative games and applications.
In order to learn more about NetEase, you can access their official website: http://ir.netease.com/phoenix.zhtml?c=122303&p=irol-irhome
Stock Pitch: 
A short video of “How to Stock Pitch in 13 slides?” was shown. The link to the video is:

OIG General Board Meeting (03/19/2014)

Market Update this week includes:

  • Fed announced that tapering is most likely to end in October or November. After six months, which is as early as April of next year, interest rates will be raised. After Janet Yellen, new leader of Fed, announced this possibility of increase in interest rates, stock and bond prices tumbled down.
  • In bond market, shorter dated bonds suffered the most in Wednesday’s sell off.
  • US $, however, increased against both euro and yen after the announcement of Fed
  • China’s economy weakened sharply during the first two months of the year. The slowdown was across the board , including retail, manufacturing, housing and investment
  • Alibaba announced last Sunday that it has begun the process of Initial Public Offering in the U.S. Yahoo has around 24% stake in Alibaba. Due to this announcement, Yahoo was 3.6% up pre-market.

A short presentation on Michael Porter’s Five Forces Model:

Michael Porter is is the Bishop William Lawrence University Professor at Harvard University, based at Harvard Business School in Boston (hbd.org). The Five Forces Model is a simple tool to understand where power lies in business situation.The five forces are:

1)Threat of New Entrants

Business Power is affected by new entrants as they can enter a profitable market and take away the profits. So industries make use of certain barriers to entry such as:

-Economies of scale                    -Brand identity

-Proprietary product differences  -Being early to market

-Capital requirements                  -Benefit driven vs image driven products

2)Bargaining Power of Suppliers

This talks about the relative power suppliers have to increase prices. Higher differentiation in input characteristics leads to higher bargaining power ,while presence of substitutes lead to lower bargaining power. Supplier concentration, which is the ratio of total output of products to total number of firms supplying the product, is also an important concept. Higher supplier concentration means the bargaining power of supplier increases.

3)Threat of Substitutes

If substitutes are available then buyers will have more bargaining power. Factors which affect threat of substitutes are: Cost of switching, price of substitutes and buyer’s likelihood to substitute.

4)Bargaining Power of Buyers

This talks about how easy it is for buyers to influence prices. This depends upon the number of buyers and the importance of buyer to the supplier. Often, the powerful buyers have enough power to dictate prices.

5)Rivalry Determinants

If there are many rivals in the industry producing equally attractive goods, then the bargaining power of suppliers decreases and vice versa.

Also, it is very important to compare the revenue of individual firm with its industry. Even if it has enough revenue it might still be underperforming when compared to industry’s performance.

Question related to Five Forces model: A telecommunication company is not earning enough profits. How can Michael Porter’s Five Forces Model be applied here to increase its profits?

OIG General Board Meeting (02/26/2014)

Market update this week includes: US stocks have been on rise due to strong housing data. However labour market is still weak as job market condition is still uncertain. Also, Tesla Motors has been doing very well and has gone up 18% over past two sessions to an all-time high. Facebook acquired What’sapp , which is an instant messaging service for smartphone, for $19 billion. Currently, facebook dominates global market. Line, which is similar to Whatsapp, is preparing its IPO as well and is currently evaluated around 27 billion. T-mobile’s revenue increases but was not as much as expected.

Portfolio update: New changes have been made in our portfolio since our last meeting. In order to diversify our portfolio management team bought stocks such as Alaska Air group, Simon Property group and JP Morgan. Our portfolio has been performing modestly and has currently increased by 17%. Also, Bryn Mawr is participating in Adirondack Competition and is currently second in position.

After the portfolio update, Bryce presented about “Bull and Bear Market”. Bull Market is associated with market which is trending upward with ¾  of all stocks rising. Generally, it has high consumer confidence and low unemployment level. Also it is considered to be spending market. On the other hand Bear Market is trending downwards with ¾ of all stocks decreasing. Generally, it is a selling market with low consumer confidence. US market right now is a dying bull market. Although stocks have been increasing, it is mostly because of the money fed by the Fed into the economy. For more information you can go to : http://www.investopedia.com/university/stocks/stocks7.asp

After the presentation, Dingwei asked a market sizing brain teaser. Everyone got into pairs and tried to solve the problem. The question was “How many trains are there on the London Underground?” The link for the answer is: http://www.oliverwyman.com/careers/join-us/interview-preparation/brain-teasers.html

OIG General Board Meeting (11/20/2013)

The meeting started at 9:10 pm.

Kathy did a quick market update. Consumer Price Index(CPI), a measure of Inflation, fell in October largely due to drop in energy prices. Inflation still remains low, below the target of 2%.Lower CPI could provide Fed officials with more reasons to continue the bond buying program in upcoming months. Also, JP Morgan announced an additional $13 billion settlement with US department of justice. On the other hand, Asian Markets started the week higher with Chinese stocks among the top gainers. Beijing released a more detailed reform plan outlining more foreign investment in the financial sector and a revamp of initial public offerings.

 After that Bryce did quick portfolio update. Quantitative easing was tapered on Tuesday due to which our stocks were affected. Quantitative easing, according to Investopedia, is an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the money supply.

Then, Dingwei did a presentation on Interview skills. Interviews focus on three different skills: technical, behavioral and personal. She presented on behavioral and personal skills. Few points were:

  • Research your employer and know what they are trying to look for you
  • Use powerful words
  • Be concise
  • Reflect yourself in the interviews

Then she showed us two different ways of tackling behavioral skill section of interview:

-STAR:Setup,Task Action,Result

-PARADE:Problem, Anticipate, Role, Action, Decision Making rationale, End result

After the quick presentation on behavioral interview skill, the meeting ended.

Happy Thanksgiving to everyone! We will meet you in Taylor G at 9pm on December 4. Have a nice holiday!


OIG General Board Meeting (11/17/2013)

The meeting started at 9:10 pm.

Kathy did a quick market update. Snap Chat turned down offer of acquisition by Facebook. In international arena, Japan posted a higher than average trade surplus for September, which led to the appreciation of Yen. China concluded its political meeting-Third Plenum- on Tuesday. It decided to cut down the growth rate to 7% to focus more on sustainable outcome. There was a good news on the domestic side as the jobs in US increased by 204,000 in October.

After the market update, Laura, one of the members of Portfolio Management Team, presented a stock pitch about Constellation Brands. Constellation Brands lies in consumer goods sector and falls under Beverages industry. It produces and distributes branded wines and spirits and is the marketer of imported beers. It had the P/E ratio of 7-9 and Earnings per Share was $8-9. The final decision about its purchase will be taken by the Portfolio Management team.

Then, we watched Shark Tank video, which gave us insights about stock pitches.

The meeting ended at 9:45 pm. See you all again next Wednesday at Taylor G!

OIG General Board Meeting (11/06/2013)

The meeting started at 9:10 p.m

Kathy did a quick market update. Twitter finally set its IPO price at $26 with 70 million of its shares sold. On the other hand Blackberry’s plan to sell its business to Fairfax has failed. Instead the firm will receive $1 billion convertible-bond investment from Fairfax. Tesla also had bad news as its shares dropped by 16%. Dell, on the other hand, became private.

Then, Bryce did a quick market update. We sold McDonalds and Proto labs from our portfolio. Mcdonalds, although a solid blue chip company, was not showing growth for three years while Proto labs took a dip.

After the market update Yaxuan, one of the members of Portfolio Management team, presented a stock pitch about Valeant Pharmaceuticals in health sector. It is a publicly traded multinational pharmaceuticals company which falls in defensive sector. It has diversified product portfolio which presents it with a diverse revenue system. There is potential of growth because of their innovations in their field. Moreover, because they have low beta score their stocks are stable. The entire portfolio management team will look further into the stock pitch and make a decision.

Following the stock pitch, Dingwei provided everyone with a brain teaser, with the question being “how many golf balls were manufactured in USA per year?” Since such questions are actually used in job interviews, this was a fun yet rewarding activity for OIG members to do. The answer to this question, along with its methodology can be found in this website: http://brainteaserbible.com/interview-brainteaser-market-sizing-golf-balls-sold

The meeting ended at 10:00 pm. See you all next Wednesday at 9:00 pm in Taylor G.