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BLUE HEN INVESTMENT CLUBJANUARY — MARCH 2016Inside This Issue:page 1Member Spotlightpage 2Overviewpage 3Career Placementpage 4Member SpotlightHannah Crismon ‘18Hannah is currently a sophomore Finance and ManagementInformation systems double major who joined the Healthcaresector as a sophomore. Prior to attending the University ofDelaware, Hannah spent time in South Korea as an Englishlanguage instructor. Throughout her college career, Hannahas developed an interest in corporate litigation and researchwith the goal of attending law school. This summer, she willbe a joining Bloomberg’s Intelligence division in thePrinceton, NJ office.What’s New?Joseph Schwab ‘19Where Are They Now?Joseph is currently a freshman Finance major originally fromMullica Hill, NJ. In the fall, Joe was one of three freshmanselected to join the fund and currently serves as an analystin the Industrials & Materials sector. After two semesters inthe fund, he has developed an interest in the financialservices industry. Outside of the investment club, Josephenjoys reading and attending service trips and volunteeredover spring break in Tennessee.pages 5 & 6Strategist Commentary— Markets/Economy— Portfoliopage 7Portfolio Analysispages 8 & 9Sector HighlightsFeatured Stock Pick— Gentex Corp.Fan Yang ‘GradFan is currently a Masters in Finance student who joinedthe investment club’s consumer staples sector as anundergraduate Accounting and Finance major. Fancurrently leads the Consumer Staples sector. Originallyfrom China, last summer, Fan worked in Beijing on a fixedincome trading desk specializing in secondary markettransactions. Upon graduation, Fan hopes to pursue acareer within asset management or investment banking.1
BLUE HEN INVESTMENT CLUBJANUARY — MARCH 2016OverviewDescription & Application ProcedureThe Blue Hen Investment Club is the university’s 1.7 million student-managed investment fund. The club wasfounded in 1996 with 500,000 and currently holds 27 equity positions across multiple sectors. The goal is tooutperform the S&P 500 on a risk-adjusted basis through a value-oriented approach by identifying undervaluedsecurities and taking positions in them. For any enquiries, please contact bhic-eboard@udel.edu.Interested students are invited to apply at the beginning of the fall and spring semesters. Applicants are asked tosubmit their resumes for an initial screening and selected applicants will then go through an interview process thatevaluates their analytical abilities and previous experiences. The investment club also offers FINC-120 to prospectiveapplicants, which teaches them fundamental equity research methods and techniques and tasks them with creatingtheir own individual company presentations throughout the course of the semester.Executive BoardPhillip Flesch (Sr.) - PresidentJon Vicari (Sr.) - Vice PresidentJim Celia (Sr.) - EducationJosh Carruthers (Jr. ) - StrategySectorsConsumer DiscretionaryConsumer StaplesEnergy & UtilitiesFinancialsTaylor Gould (Sr.) & A.J Smiley (Jr.)Fan Yang (Grad.)Joe Sagsveen (Sr.)Anthony Zdrojewski (Sr.)AnalystsAnalystsAnalystsAnalystsSamantha Besold (So.)Krya Clark (So.)Carter Compello (Jr.)Ryan Fante (Jr.) (Hiatus)Alec Miller (Jr.)Kristen Rossi (Jr.)Will Visser (So.)Justin Ferrarie (Jr.)Matt Gordon (So.)Anthony Manno (So.)Hayley TenHoopen (So.)Gen Vicari (So.)Zachary Weisel (So.)Jack Benotti (So.)Fletcher Comrie (So.)Eli Encarnacion (So.)Alex Fish (So.)Frank Haendel (Jr.)Kyle Lojek (Sr.)Conor Peaks (Sr.)Andrew Tom (So.)Tim Friedman (So.)Tony Liu (Sr.)Ryan O'Donnell (Fr.)Josh Stern (Jr.)Ted Walker (Jr.)HealthcareIndustrials & MaterialsIT & TelecomJake Fertell (Jr.) & Jake Perrone (Jr.)Colin Miller (Jr.)S.J. Desai (So.)AnalystsAnalystsAnalystsHannah Crismon (So.)Frank DePinto (Sr.)Roy Geng (So.)Luke Malone (Jr.) (Hiatus)Mike Nittolo (Sr.)Matt Renzi (So.)Jimmy Baxter (Sr.)Mike McCormick (Jr.)Joe Schwab (Fr.)Rory Smith (Jr.)Jeff Sowden (Sr.)Brandon Zenick (Fr.)Colt Armstrong (Jr.)Jake Bertelson (So.)Ryan Bond (So.)Trey Brunson (So.)Rees Tillotson (So.)Tom Washington (Grad)2
BLUE HEN INVESTMENT CLUBJANUARY — MARCH 20162016 Career Placement UpdateMessage from the Executive BoardAn important idea that we would like to address as the E-Board is our commitment to the progress of our careerplacement, especially in terms of quality. Over the past few years, we have helped place our members in investmentbanking, private equity, consulting, and valuation, and recruiting and networking remains a key theme that we wouldlike to drive going forward. The investment club is a premiere opportunity within the university for students to establisha foundation in the financial industry, and what we have pushed that idea over the course of the fall and springsemester by introducing alumni databases, holding workshops on different careers, creating an interview/companyresources guide, and inviting guest speakers to meet our members. As an internal initiative, we have also begunpairing different members together to serve as mentors for both the job search as well as school. For us, cultivatingour external brand and improving our placement will be a chief priority for the club in the future.Full-TimFull Tim e Placem entPositionNam ePlacem entDivisionLocationsPresidentPhillip FleschHamilton LanePrivate EquityPhiladelphia, PADirector of EducationJim CeliaEYAssurancePhiladelphia, PAConsumer DiscretionaryJeremy PlamondonPw CAssurancePhiladelphia, PAEnergy & UtilitiesKyle LojekGuggenheimInvestment ManagementSanta Monica, CAEnergy & UtilitiesJoe SagsveenEYAssuranceNew York, NYIndustrials & MaterialsJimmy BaxterJ.P Morgan ChaseInternal AuditNew York, NYHealthcareFrank DepintoJ.P Morgan ChaseFinance Development Program New ark, DEIndustrials & MaterialsJeff Sow denHamilton LanePrivate EquityPhiladelphia, PAInternship Placem entPositionNam ePlacem entDivisionLocationsDirector of StrategyJosh CarruthersMizuhoInvestment BankingNew York, NYIndustrials & MaterialsColin MillerMizuhoInvestment BankingNew York, NYInformation TechnologySJ DesaiDeloitteConsultingPhiladelphia, PAConsumer DiscretionaryRyan FanteKPMGAssurancePhiladelphia, PAConsumer StaplesJustin FerrarieCow en GroupSales & TradingNew York, NYEnergy & UtilitiesFrank HaendelBloombergGlobal DataPrinceton, NJFinancialsJosh SternEYAssuranceNew York, NYConsumer DiscretionaryA.J SmileyAffinity Wealth ManagementWealth ManagementWilmington, DEFinancialsTheodore WalkerBloombergGlobal DataPrinceton, NJConsumer DiscretionarySamantha BesoldJ.P Morgan ChaseTreasury ServicesNew York, NYHealthcareJacob FertellJefferson University Hospital Neurosurgery ResearchPhiladelphia, PAConsumer StaplesMatthew GordonDot FoodsSupply ChainHagerstow n, MDHealthcareLuke MalonePw CAssuranceNew York, NYHealthcareHannah CrismonBloombergIntelligencePrinceton, NJIndustrials & MaterialsRory SmithHamilton LaneClient ServicesPhiladelphia, PA3
BLUE HEN INVESTMENT CLUBJANUARY — MARCH 2016What’s New?Equity OptionsThe Blue Hen Investment Club branched outside ofthe equities world, with the first options trade evermade in the club’s history successfully executed. Aninitiative first pioneered by Portfolio Strategist JoshCarruthers, the club hopes to carry forward the use ofoptions in the portfolio to generate additional returns.The only strategy executed thus far is writing coveredcalls on our position in Symantec Corporation.CME Trading CompetitionTwo members of the Blue Hen Investment Clubparticipated in the Chicago Mercantile Exchange’sInternational Case Competition. Unlike BHIC’s longterm view on capital management, the CME challengewas based around actively trading index andcommodity derivatives. The University of Delawareteam managed to actively trade its way into the finalround, finishing 20th out of over 450 teams worldwide.CFA Challenge Regional Runner-UpThe Blue Hen Investment Club participated in theannual CFA Institute Research Challenge for the thirdconsecutive year. Following up on last year’s success,a team comprised of BHIC members advanced to theregional competition in Philadelphia and placed secondout of fourteen teams.Where Are They Now?Nate Taylor graduated fro m theUniversity of Delaware in 2014 witha double major in Finance andEconomics. Nate previously ledFinancials and served as Presidentduring his senior year. Aftergraduation, Nate worked in PwC’sValuation division in Philadelphiabefore transitioning to aninvestment banking role at HoulihanLokey. Nate currently works intheir healthcare M&A coveragegroup out of Chicago.Will Cobb graduated from theUniversity of Delaware in 2015 witha double major in Finance andEconomics. During his time in theinvestment club, he served as the IT& Telecom sector head. Will wasalso involved within studentgovernment within the businessschool, serving two years asPresident of the Lerner CollegeStudent Advisory Board. After Will’sjunior year, he interned withinPwC’s M&A Advisory practicewhere he is currently working fulltime in New York City.4
BLUE HEN INVESTMENT CLUBJANUARY — MARCH 2016Strategist CommentaryMarket and Economic AnalysisResurgence in Financial Markets: Q1 of 2016 marked another tumultuous period for markets, as continuedmacroeconomic uncertainties have made it difficult for investors to ascertain a clear picture for global assets. TheS&P 500 got off to its worst start in January since 2009, falling over 5% before rebounding sharply to end the quarterup 1.5%. Much of the recent appreciation in equities has been attributed to a climb in oil, which has now risen over45% since its February 11th low to end the quarter up 3.5%. The continued lack for risk assets and dovish commentsfrom chairwomen Janet Yellen have weakened yields, with the 10 year down from about 2.3 to 1.77% on the quarter.Waning Corporate Profits: Following a miserable Q4 2015 earnings season which saw a 15% decline in corporateprofits from Q4 2014, investors have shifted a much greater focus to the health of U.S corporations. A large percentageof the reduced corporate profits can be pinpointed on massive losses stemming from companies in the energy andindustrial space combined with a much stronger dollar. Looking at earnings from S&P 500 companies outside of theenergy sphere, earnings actually increased around 5%.An Improving U.S Jobs Picture: Q1 2016 marked a period of surprisingly robust job growth, indicating economicresilience despite anemic global growth and turbulence in capital markets. In March and February alone, the U.Sadded almost 500,000 jobs, far beating the street’s expectations.5
BLUE HEN INVESTMENT CLUBJANUARY — MARCH 2016Strategist CommentaryPortfolio AnalysisThe portfolio lost a total of .28% in Q1 2016, underperforming the S&P 500 by approximately 1.0%. After lagging thebenchmark by about 2% in January, BHIC outperformed the S&P 500 in February in March by 10 and 20 basis pointsrespectively. Excess losses for the year are primarily attributable to underperforming securities within Financials,Health Care, and Industrials & Materials. The five worst-performing holdings include Bank of America, Pfizer, GileadSciences, United Rentals, and Computer Task Group, which have together wiped off 2.97% of the portfolio’s value onthe year. Despite heavy losses from these names, the portfolio has seen impressive price appreciation from stockswithin the Consumer Staples, Consumer Discretionary, and Information Technology sectors.As of March 31st, the portfolio’s trailing 12 month alpha stands at -0.57. The portfolio’s returns are more volatile, with astandard deviation of 14.44 versus the benchmark’s standard deviation of 13.59. As a value fund, the BHIC looks moreattractive on a P/E, P/B and P/S basis than the S&P.6
BLUE HEN INVESTMENT CLUBJANUARY — MARCH 2016Portfolio AnalysisOverviewCurrent HoldingsPerformanceKey StatisticsSector Analysis7
BLUE HEN INVESTMENT CLUBJANUARY — MARCH 2016Sector Highlights – Q1Consumer Discretionary appreciated 5.4% in Q1of 2016 compared to the benchmarks 3.0% return.The relative outperformance was generated by amassive turnaround from Dick’s Sporting Goods(DKS). Comprising 3.38% of the overall portfolio andabout 20% of the Consumer Discretionary Sector,Dick’s added 33% to its market value and over 1% tothe portfolio in the 1st quarter as Sports Authority, oneof its main competitors, declared bankruptcy. Largegains from Dick’s Sporting Goods was partially offsetby losses in Walt Disney. Despite a 32% jump in Q12016 profits attributable to the success of Star Wars,investors sold shares in Disney, fearing the continueddemise of its large stake in ESPN. The stock lost 5.5%in the quarter but maintains a positive outlook.Consumer Staples returned 8.7% in Q1 of 2016,outperforming the benchmark by 2.5%. Wal-Mart wasthe leading performer on the quarter, appreciating12% and contributing 94bps to the portfolio. Systemicpressures helped Wal-Mart as investors fled to lowerbeta, consistent cash flow names amongst a surge inmarket volatility and uncertainty. Concerns regardingwage growth are consistently a fear for investorswatching Wal-Marts bottom line, but the companyseems to be successfully implementing higherminimum wages for employees without a major dentin profits. A large position in a Consumer Staple ETFalso helped out the sector, adding 30bps theportfolio’s return.Financials underperformed its benchmark by 80bpson the quarter. Almost all excess losses wereattributable to a massive selloff in Bank of America,with the stock falling about 19% on the quarter. Despiteimprovement in BAC’s profitability, fears ofconsiderable energy loan write-downs have spookedthe street. BAC estimates 700 million in loan lossesfrom soured loans to energy companies. Only 2% ofBAC’s balance sheet is tied up in energy loans. Sincethe company derives almost 45% from net interestmargin revenue, Q1’s sharp reversal in rates to thedownside did not help investor confidence.Healthcare was the largest underperforming sectorthis quarter, lagging the benchmark by 250bps.Myriad Genetics, Pfizer, and Gilead Sciences werethe biggest decliners on the quarter falling 13.28,7.25, and 8.79% respectively. Much of the downwardpressure felt in the healthcare sector is related to systemicfactors with investors revaluing biotech companies thatonce traded for high multiples.Industrials & Materials severely underperformedthe benchmark in Q1 by approximately 12%. Thelargest loss on the sector stemmed from aposition in United Rentals which was liquidatedin late February to avoid additional losses.Despite liquidation of the position, UnitedRentals still cost the portfolio 90bps on thequarter.Energy & Utilities returned 2.8% in Q1,underperforming the benchmark by about 50bps. Whilethe sector essentially matched the benchmark, some ofthe underperformance can be attributed to losses inHollyFrontier, a company in the E&P space.HollyFrontier sold off 11% in Q1 as investorsquestioned management’s ability to maintain margins.8
BLUE HEN INVESTMENT CLUBJANUARY — MARCH 2016Sector Highlights – Q1Featured Stock PickIT & Telecom performed poorly in Q1, trailing the S&P500 benchmark by about 1.7%. Symantec Corporationwas the biggest contributor to IT & Telecom’sappreciation on the quarter, returning a total of 9.41%.After spinning off storage management subsidiaryVeritas for 500 million to a private equity firm,Symantec’s board decided to pay shareholders aspecial 4 dividend per share. Following the dividendpayment, shares of Symantec fell by about 18%,however the stock’s total return on the quarter stillstood at 9.5%. Computer Task Group, a small capplay added to the portfolio in the fall of 2014 continuedits precipitous drop, falling 21.87% on the quarter.Gentex Corp (GNTX) – Consumer Disc.New AdditionsA.J Smiley, Taylor Gould, and the ConsumerDiscretionary team purchased Gentex Corp (GNTX)on February 25 th for around 14. Gentex was boughtin order to give the portfolio exposure to the rapidlyexpanding and evolving automotive sector. Gentex isthe world’s largest manufacturer of auto-dimmingrearview mirrors, with over a 90% market share inthe space. Gentex’s profitability is largely tied tovehicle sales, with over 40% of its revenue derivedfrom Volkswagen, Toyota, Ford, and Chrysler. Asauto sales in the United States spiked to over 17.4million in 2015, up from 16.4 million in 2014, GNTX’sbottom line jumped over 10%. Despite showingconsiderable improvement in sales and profits, thestreet sold off GNTX over 10% amongst fears ofcontinued growth in the automotive space. Evenafter appreciating over 10% since February 25th, theanalysts in consumer discretionary still believe thatthe stock has considerable room to the upside.9
BLUE HEN INVESTMENT CLUB JANUARY — MARCH 2016 2 Overview Description & Application Procedure The Blue Hen Investment Club is the university's 1.7 million student-managed investment fund. The club was founded in 1996 with 500,000 and currently holds 27 equity positions across multiple sectors. The goal is to
