By Steven Krolak
(NEW ALBANY, Ind.)—IU Southeast MBA students Erica Gansbauer, George Hazelbaker and Kelly Nichols have won the 2019 CFA Research Challenge regionals at the fabled Pendennis Club in Louisville, Ky.
This marks the fourth time IU Southeast has won the event, which brought together teams from Bellarmine University, the University of Louisville, Western Kentucky University, Centre College, and the University of Kentucky, last year’s winner.
The CFA Research Challenge is an annual event organized by the CFA Institute, a global association of investment professionals that sets the standard for excellence in the industry for chartered financial analysts (CFAs).
The Challenge gathers students, investment industry professionals, publicly traded companies, and corporate sponsors together locally, regionally, and globally for a real-world competition, according to the Institute website.
Over the course of four months, student teams dissect a corporation and deliver an investment recommendation based on exhaustive research into corporate structure and performance, a site visit and face-to-face interview with corporate representatives, and best valuation practices.
In the real world, these recommendations help investors decide whether or not to purchase stock in a company, a decision that can make or lose fortunes for both parties.
This year’s focus was United Parcel Service (UPS), the international logistics giant that employs more than 450,000 people in some 220 countries and posts an annual revenue of nearly $72 billion and a net income of $4.8 billion.
After its comprehensive examination, the IU Southeast team recommended that investors buy stock in UPS.
“UPS had lagged the Standard & Poors 500 for the last couple of years, and we believe this was due to an over-reaction to Amazon coming into the delivery market, as well as UPS’s inability to perform during busy peak season,” Hazelbaker said. “UPS had taken the time and resources to fix their peak capacity issues, and we believe Amazon will not take away from the UPS core consumer base.”
The IU Southeast team was advised by Elizabeth Reisz, lecturer in finance and mentored by industry veteran James Kapfhammer, CFA, equity research analyst at River Road Asset Management in Louisville, Ky.
While Reisz helped the students sharpen their focus and pointed them to supporting research for their recommendation, Kapfhammer provided expert feedback on their arguments.
“This team’s strength was how well they worked together as a team,” Reisz said. “They had different strengths that complemented each other and they took advantage of those strengths.”
Those strengths included Hazelbaker’s passion for stock trading, Nichols’s determination to master the art of forecasting financials and developing valuation models, and Gansbauer’s clear and persuasive writing and editing. On the strength of their accomplished written report, the team entered the final presentation round in first place.
They held on to that lead during the presentation and defense before the panel of experts from the CFA Society of Louisville.
“What set this team apart from the competition was their preparation for the Q & A,” Reisz said. “They were thoroughly prepared for every question the judges asked with thoughtful answers backed by data and had additional slides ready to support their arguments.”
That preparation was the result of determination, mutual support and some very hard work.
“The process was grueling, and at times made me question my own abilities,” Nichols said. “The upside was that I developed fortitude that I didn’t know I had within me.”
Like their predecessors, the team met nights and weekends, and kept in constant contact when they could not be together. None of them had a background in valuation, so they worked hard to become experts, and devised a useful “divide-and-conquer” strategy to manage the volume of work and to capitalize on one another’s areas of special interest and competence.
“Winning the CFA Research Challenge was fantastic, but going through the experience was the most rewarding part,” Nichols said. “I gained leadership and team building skills, increased my knowledge of finance, and developed friendship and bonds with three amazing individuals.”
Homepage photo: IU Southeast CFA team members (l-r)O George Hazelbaker, Erica Gansbauer, Elizabeth Reisz (faculty coach) and Kelly Nichols at the Pendennis Club in Louisville, Ky. Photo courtesy of Erica Gansbauer.