It's an Olympics of sorts for financial analysts in training, and five business students from the University of Baltimore will compete.
They are traveling to Denver for the regional round of a global challenge to create the best equity research report about a public company. On Wednesday, they'll face student teams from across North America and South America.
The annual international contest, in its eighth year, is sponsored by the CFA Institute, an investment professionals trade group that offers the Chartered Financial Analysts designation. The competition is designed to train the next generation of equity research analysts, with students working in teams to analyze a stock, produce an initiation of coverage report and present their findings to a panel of judges — industry veterans acting the role of investors. Each team makes a buy, sell or hold recommendation.
The UB team members, including three graduate students and two undergraduates, have spent hundreds of hours since October researching U.S. Silica, a more than century-old silica sand mining and processing company based in Frederick.
"It confirmed this is the type of work I want to be doing, and it confirmed my passion for doing this kind of work," said team leader Douglas "D.J." Palmer, a 28-year old MBA student and Columbia resident who works full time at PricewaterhouseCoopers. "It gives you real practical experience researching a publicly traded firm and performing a complete analysis end to end."
Palmer likened the experience to a lawyer preparing to present evidence at trial. Research led the team to delve into the oil and gas industry, one of the industries U.S. Silica supplies, and look into "fracking," the technique of extracting oil and gas from shale rock. They researched ways in which oil and gas prices could affect the company's valuation, the cost of shipping sand via railroad, barriers to entry, corporate governance and investment risks, among other things.
This is the first time UB's Merrick School of Business entered a team in the competition, known as the Investment Research Challenge. UB had formidable competition from six other area schools in the "local" first tier, which took place Feb. 21 and included teams from the Johns Hopkins University, Loyola University, Towson University, the University of Maryland, Georgetown University and American University. All researched U.S. Silica.
As interest has grown in the contest, competition has intensified, said Frank Navratil, interim dean of the Merrick School. The challenge helps impress upon business students the importance of written and oral communication skills, he said.
"You could be the best numbers person," he said, but "businesses are angling for those employees who can communicate well in the real world."
Since the August start of the 2013-2014 challenge, more than 3,700 students from more than 825 universities have competed in 95 local competitions, said Sarah-Jane Purvis, spokeswoman for the CFA Institure. Forty-nine universities, including UB, will compete in the "regional" round Tuesday and Wednesday in Denver. The winners of each of three regional competitions — in the Americas, the Asia Pacific and the Europe, Middle East and Africa regions — will advance to the global final in April in Singapore.
Michael Lawson, director of investor relations for U.S. Silica, said he was approached by a Towson University professor about volunteering to be the local area's subject company. He said he jumped at the chance, which he saw as extension of his job informing investors and the public about the $546 million company.
UB put its team together in October at the suggestion of business graduate student Duy Ngo, who had entered the contest in his native Vietnam. Ngo helped screen members to be part of the team, which is coached by UB finance professor Steven Isberg.
Team members said they spent hours combing company filings, researching Silica's end markets and conferring with their industry mentor, Stifel Nicolaus & Co. analyst Daniel Bernstein.
"I wanted some practical experience, and this looked like a good opportunity to work on a team," said team member Andrew Buryak, a 27-year-old finance major in the business honors program from Michigan, who hopes to become a financial analystor a trader. "This has given me more confidence."
Mihaela Ciulianu, 31, a senior finance major and team member from Charles Village, said she joined the team to gain practical experience for a career in finance or accounting.
"People think accounting and finance is boring, but I have to disagree," she said. "Understanding the numbers is something I always liked. … It's something I've always been good with."
Other team members include Rob Carter, who is in the school's master's program in accounting and business advisory services, and Charles Atwood, who is in the MBAprogram.
In November, the seven local teams gathered at the World Trade Center in Baltimore to hear a presentation from Lawson about U.S. Silica. In a presentation similar to those at investor conferences, he covered the type of business, its advantages, goals and strategy.
"It simulates a situation where investment analysts would hear from the company," Isberg said. "It sets them up in a similar environment where they act like analysts."
Each team was allowed a 30-minute follow-up conference call with Lawson to ask more questions.
"These are really smart students," Lawson said. "They asked questions that were just as tough and probing as what the professionals ask every day."
Lawson never saw the final presentations but said he was happy to hear the winning team recommended a buy on Silica's stock.
"These are the analysts of tomorrow, if you will," he said.
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