Category: Uncategorized

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

 Why?

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)

Sector:Airlines

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.

 Why?

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.

Each year, Owl Investment Group donates money to student clubs and fund events at Bryn Mawr as a way of giving back to our community using the money we’ve earn from our investment. We hope to create a positive impact on our community through our donation.  This year, after careful consideration, OIG has decided to donate $200 to Sisterhood and $256 to a student initiated Microfinance interest group respectively.

Sisterhood is hosting a series of events regarding sexual assault awareness and protection on campus this semester. Through helping Sisterhood to fund the month long events, OIG sincerely hope that Sisterhood can successfully raise awareness about sexual assault, aid in the healing process for sexual assault survivors, and promote discussion on how to empower the community to stand up for themselves in adverse situations.

The student initiated Microfinance interest group will enter the Lend for Philly competition. In this competition, teams will find business owners who lack access to standard banking services and provide them with the necessary funds to start their own small business. The practice of Microfinance is a tangible way to promote economic development through helping business practices. As a college-based microfinance group, they would be capable of provide business consulting to local small businesses and deliver small loans. This interest group would be an incubator for Mawrters who have an entrepreneurial spirit.

Congratulations to both Sisterhood and Microfinance interest group. Hope OIG donation will help them with their events/project and have a positive impact on our community.

Samantha O’Neil , (’90 Sociology) Senior Vice President, Integrated Marketing, Fidelity Investment Group, will be visiting campus on Apr.15th. Samantha has 20+ years of experience in marketing. She is also part of company-wide initiative to engage more women in planning for their financial futures.  Please join us for this rare opportunity.

Registration link : https://brynmawr.qualtrics.com/SE/?SID=SV_9YMOWDvGUV1D6Cx

If you still would like to register for this Friday’s Barclays visit, p lease email info@bicofinance.org. The deadline for signing up is midnight today.

Trip Information

Date: Friday March 28th

Event Start Time: 2:00 pm

Duration: 3-4 hours

Location: New York City (near Times Square)

Barclays Mandatory Meeting and Travel Information

Please note that if you sign up for this trip, you must  attend the following MANDATORY MEETING

Date: Tuesday, March 25th

Duration: 6:30 – 7:30 pm

Location: Haverford, Stokes 010

For Friday’s trip please make sure that you have an adequate supply of cash for food purchases and transportation. You must buy your Megabus ticket ASAP (see transportation information section below for more information).

Transportation Information:

Event Location/Address: Barclays Capital, 745 Seventh Avenue, New York, NY 10019

Everyone has the freedom to arrange their own travel plans for arriving to the event. Make sure you arrive in NYC by no later than 1:00 pm! We will all meet at 1:30 pm at the Barclays Capital building in order to go through security as a group. If you would like to travel with the board, you are more than welcome to join us! The board’s travel plans are as follows:

Meet at the Septa Haverford R5 station

(To: 30th Street)

Departs: 8:12 am

Arrives: 8:33 am

Price for ticket: ~$5.00

**Meet at 8:00 am**

You will need to purchase a ticket at the station or on the train.

(You can also hop onto the same train at the Ardmore station if that station is closer. Departs: 8:14 am)

Megabus

(To: NY, 7th Ave & 28th St.)

Departs: 9:00 am

Arrives: 11:30 am

Price for ticket: $13.50

1) Buy your ticket ASAP . If you do not reserve your spot early, you might have to take a later bus.

2) We will reimburse you for your Megabus ticket to New York only.

**You must send your e-ticket to info@bicofinance.org as soon as you purchase your ticket in order to be reimbursed**

NY Metro

(To: Barclays)

Time: TBA

Price for ticket ~$2.25

We will take the 1 train uptown from the Megabus stop in NYC to Barclays. Board Contact Info:

(925) 899-9473 Matt Corbin

(818) 515-0072 Alex Villalta

(610) 509-5697 Cecilia Li

(678) 761-3047 Tom Yi

(626) 807-6604 Leslie Tjing

(646) 330-1895 Ethan Pan

1. Everyone is responsible for arranging their own transportation after the site visit. The club will not be covering these transportation costs

2. Due to budget constraints, the club will be covering only the Megabus cost on the way to New York, and will reimburse you up to a total of $15.00. The Septa tickets to 30th Street and the 1 train tickets to Barclays will not be covered (the price should be about $5.00 and $2.25 respectively).

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?

As of today, Bryn Mawr College is in the FIRST PLACE. St.Lawrence University has been the first for quite some time, and as of today, we surpassed them. The competition is near to its end, so keep it up Owls! *The Adirondack Cup Competition requires participating teams to hypothetically invest 1 million in small cap stocks, the team with the highest return wins.

Our next General Meeting is postponed till the week after Spring Break, on 19th March, 9pm @Taylor G. Beside market update and portfolio update, we’ll have an presentation on Business Competition and Michael Porter’s “Five Forces” Model as well as its applications. This will be a great opportunity to get some insights on how business models apply in the real world. We look forward to seeing you all after Spring Break. And meanwhile, we wish everyone good luck on their midterms and enjoy Spring Break.

Nvigor, a student run origanization that seeks to promote entrepreneurship at the collegiate level for students in the greater Philadelphia region (www.nvigor.org), is hosting the 3 Day Startup Summit in Philadelphia this year (philadelphia.3daystartup.org). This is a three day event from March 28 – March 30 where students can immerse themselves in the entrepreneurship environment and develop critical skills. Students will be connected with a powerful network of mentors together with 50 other students that share similar passions in entrepreneurship. Over the course of 3 days, students will create a business model, be in contact with potential customers and develop lasting professional/personal relationships.

The 3 Day Startup Summit are looking for students who can fulfill the following roles:

Software Engineer

Business (Finance, Marketing, Biz Dev)