It's a time when most college students are fast asleep, but at 4:45 on a Friday morning in October, five students in the Business School's Finance Honors Seminar found themselves at the Burlington International Airport preparing to leave for New York City and a major presentation.
Greg Blinn Jr, Katlin Spero, Alissa Sheftic, Michael Trimble and Glenn Varricchione all admitted they were nervous as they waited to board the plane to New York City.
"I just want it over," said Alissa Sheftic, a senior accounting major at the School of Business Administration.
Finance Honors Seminar is an invitation-only class that applies financial theory to stock and bond valuation. The students complete two major projects in which they are put on the "hot seat" defending their analyses and recommendations before a panel of seasoned investment professionals.
The honors seminar draws on the experience of UVM alumni who have found their way to the executive suites of some of the largest financial firms in the world. Stephen Penwell is one of those alums. Penwell is the North American Director of Equity Research at Morgan Stanley and a 1984 graduate of the School of Business Administration. He has been working for Morgan Stanley since 1989, holding a number of positions in Fixed Income Research and Sales.
In their 30 minute presentation, the students had to convince Penwell and two of his associates, Jackie Inglesby and Megan Davis, that the companies they were assigned are candidates either for a buy or sell. They had to cover everything from the company description and an industry overview to the covenants on the firm's ability to refinance maturing debt.
Sheftic, Spero and Blinn analyzed Smithfield Foods, a company that specializes in pork products and one this group found is suffering financially.
"The losses are going to carry through each segment because hog prices are low, we're going to end up having a negative return," Sheftic told the group at Morgan Stanley. "The only time we'll see a small profit is in July of 2010."
Trimble and Varricchione took on Tyson Foods, one of the largest producers of chicken products in the country. They, too, believe Tyson should be considered a financial risk, in large part, because of a weakness in chicken prices. The group told Penwell that despite steady production cuts since October 2008, prices have still not rallied.
"Breast prices in August dropped 8.5 percent," Trimble said.
Penwell and his teamed dug deep into the numbers and asked a series of hard-hitting questions to test the student's knowledge on their companies. He says there are some areas that could be improved upon, but overall, it was a job well done.
"I think they did a good job," Penwell said. "This is a good real world experience for them."
"Their hard work, initiative, and professionalism are on a par with the best of those in the training programs run by the major investment banks," said Professor James Gatti. "The honors students have done great work on very difficult assignments. I continue to be very impressed by the work of the teams, and my reaction has been reinforced each year by the very complimentary reaction of the professionals. Once they graduate, they will get to do more of the same, except then they will be getting paid to do it."
After the presentations were completed, Professor Gatti and his students visited with alumni at TMC (the Muni Center) and Arden Asset Management. TMC was founded by UVM Alum Tom Vales and is one of the first and largest electronic trading platform for municipal bonds and other fixed income products.
John Rogers is Managing Director of Arden Asset Management, a leading New York-based fund of funds that manages portfolios of hedge funds for institutional and high net worth clients.