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2017 CFA Institute Research Challenge

Deakin finance students put in a strong performance at the local-round competition.

In an outstanding presentation, Deakin finance students recently made it through to the final round of the 2017 CFA Institute (Melbourne Society) Research Challenge.

Each year, the CFA Institute sponsors a global research competition where undergraduate students present their research skills to a panel of professionals in the financial sector.

The competition consists of three levels – local, regional and global – and the task is to write a research report on a listed company and then issue a buy/hold/sell recommendation.

This year’s local-round competition also included teams from the University of Melbourne, Monash University, RMIT, Swinburne, Victoria University and University of Adelaide.

Led by DBS academics Dr May Hu and Dr John Guo, the Deakin team comprised final-year Bachelor of Commerce students Nils Hamilton, Beatrice Dahl, Oscar De Lorenzo and Pete Fernandez.

Dr Guo says one of the team’s first preparations was to meet Melbourne IT, the company at the centre of the challenge.

‘The CEO and CFO provided a presentation about their business model, merge and acquisition, earnings forecast and medium/long term target. A week after this meeting, a conference call was held and each team had 20 minutes to ask CFO/CEO some additional questions. An industry mentor was also assigned by CFA Institute who helped guide the teams to complete their report,’ he explains.

Each member of the Deakin team took on an allocated research job before draft reports were submitted and their place confirmed in the finals.

‘Nils was in charge of financial statement analysis, Oscar focused corporate governance and peer comparison, Beatrice looked into competitive advantage and relative valuation and Pete worked on the the projected financial statements and discounted cash flow valuation,’ explains Dr Guo.

Developing a comprehensive report that included a top-down analysis (industry to firm-level), competitive advantage analysis and peers comparison, financial statement analysis, firm valuation and investment risk analysis, the team presented their report to a judging panel of industry specialists which was then followed by a Q&A.

‘The panel were three professionals from investment industry. They read through the reports from eights team, raised questions about the report and presentation before deciding on the finalists,’ says Dr Guo.

Commerce student Nils Hamilton, who is currently undertaking a CFA Level 1 exam, learned of the challenge through the Melbourne CFA Society.

‘I thought it would be an awesome thing to do. The first round was the submission of a written research report, where only the top three teams (one of which was Deakin) would progress to present their research report to a panel of industry experts who also asked questions,’ he explains.

Nils says most of the skills he needed to complete the research report were developed during the preparation and the experience was incredibly rewarding.

‘The highlight for me was the presentation where we really came together as team and put our best foot forward. It’s not every day that you are able to present a real equity research report to real fund managers and CEOs.’

He adds that preparing for the challenge provided him with valuable, real-world experience.

‘This was preparing a  real equity research report of a quality where you are so confident in your research that you would put your own money behind your recommendation or would gladly present your findings to real investors, because that’s exactly what you have to do.’

Oscar De Lorenzo says the taking part in the competition helped him improve his critical analysis, communication and presentation skills.

‘In business, you need to present your points concisely. Given the limits of our report space and presentation time, we had to be succinct with all points we needed to get across.’

He agrees that the highlight of the challenge was presenting the report.

‘For me, this was when the significance of this competition was on display. It was a great opportunity to undertake this challenge by working with like-minded students and presenting together as a team.’

Beatrice Dahl says taking part in the challenge provided a boost to both her financial and teamwork skills.

‘I learnt a lot about team work, how to construct a report for this specific purpose and financial modelling. It also improved my ability to read financial statements and annual reports.’

Pete Fernandez, who was delegated to research the company’s financial statements, says he opted for this area as his strength was in mathematical concepts.

‘It involved a lot of reading of company annual reports, monitoring news reports and tracking the company’s performance. As I was only just learning my third year finance units, I had to start preparing months before the semester began and began teaching myself through YouTube videos and other resources.’

Because the research styles of finance academia and practitioners can differ, Dr Guo says it’s important that Deakin finance students are exposed to the high-end finance and investment industry.

‘Not only did the team members apply the knowledge learned from their coursework, but they also realised the areas they should improve their skills. It gave them the opportunity to understand the intensive workload and fierce competition that exists in the investment sector. The team showed great competence and performed admirably – Dr Hu and I are very of proud of them.’

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