Ursinus College Student-Managed Investment Fund Prospectus Spring

Ursinus College Student-Managed Investment Fund

Prospectus Spring 2019

INSIDE

1. Introduction 2. Performance Summary 3. History of the Student-Managed Investment Fund 4. Governing Principles 5. Portfolio Allocation 6. Endowment Fund 7. Stock Selection Fund 8. Supporters 9. Fund Managers 2

Introduction Spring 2019 is an exciting time to be involved in the Ursinus College Student-Managed Investment Fund. As it enters its fourth year of existence, the fund continues to grow through capital gains and contributions.

The Finance and Liberal Arts Initiative seeks to integrate the college’s developing programs in finance with its existing strengths in liberal arts education, and “We hope that we have a greater integration with other finance more students programs compare to fall 2018. The initiative’s advisory could be involved, group will provide support to faculty and students as so as to keep the the initiative develops, such as advanced knowledge competitive of and skills, more experiences, and provide more UCIMCO in the exclusive opportunities, so as students can have a better sense of the mindsets of young financial professionals. coming years.

We have more students participating this year than in Chenyu Yin ’19, fall 2018. The fund split into two segments again – and Endowment Team endowment style fund and a stock selection fund. In Member addition, Michael and Erich hosted the seminar at The Vanguard Group office in Malvern, PA for a day of presentations by Vanguard fund managers and alumni. Stock selection fund came up with a new sell strategy. They sell stocks when the stock price falls 10% below the purchase price, and review the stock if the price rises 20% above the purchase price. In this way, we can better control the market situation and respond in time. In addition, we have divided the international equity fund into two different parts this year, so as to make our analysis complete and make better predictions. In the future, the fund hopes to broaden the diversity of students, pay for most or all of its operating expenses – data, field trip, semi-annual presentation and dinners. 3

Performance Summary

Performance of Spring 2018 Investments: October 17, 2018 to March. 22, 2019 Daily Avg. Standard Sharpe Ticker Total Return Return Deviation Ratio ISHARES IBOXX INV CP ETF LQD 5.060% 0.046% 0.24% 0.099 ISHARES MSCI EAFE ETF EFA -0.171% -0.002% 0.97% -0.200 ISHARES RUSSELL 3000 ETF IWV -0.628% -0.006% 1.26% -0.516 ISHARES U.S. REAL ES ETF IYR 11.200% 0.099% 1.06% 10.582 ISHARES US TREAS BD ETF GOVT 4.141% 0.038% 0.22% 18.576 Portfolio -- 3.53% 0.03% 0.71% 0.014

History of the Student-Managed Investment Fund

The Ursinus College Investment Fund was founded in 2003 by Daniel Uba. From 2007 to 2015, the club was defunct for various reasons. In the Fall 2015, Anthony Chang ‘17 and Johnathan Myers ‘19 changed the image of the Investment Club. A small team of students dedicated their time and talent to creating a one-credit course called UCIMCO: the Ursinus College Investment Management Company. UCIMCO operates a $60,000 portfolio managed by students on behalf of the college. The Harold C. Smith Fund, which is organized and managed by the Ursinus College Investment Club, was named after the Rev. Dr. Harold C. Smith '55. Dr. Smith, who began investing as an Ursinus undergrad, believed that UCIMCO was a valuable way to apply principles learned in economics and finance classes. UCIMCO prides itself on full The late Rev. Dr. Harold participation of all members and a dedicated passion for learning. In line with Dr. Smith’s advice, education about stocks, the market, and C. Smith ’55, the Fund’s the economy as an entity remains the top priority of UCIMCO. founding donor and a trustee of the college. As a one-credit class, the fund is open to all Ursinus students, with the group divided into an ‘endowment team’ and a ‘stock-selection team.’ The endowment team is made up of students with significant coursework in finance and investments. The endowment team has closely studied Yale’s endowment fund as a guide to our own investment strategy. The team selects portfolio weights for five asset classes: U.S. Real Estate, U.S. Equities, International Equities, U.S. Treasury Bonds and U.S. Corporate Bonds, with a pair of students dedicated to studying each asset class.

The stock selection team is made of students interested in a future in finance, for careers or personal investing. The team is tasked with selecting undervalued stocks with low bankruptcy risk and prospects for rapid earnings growth. The team is led by Myers, who advises the group in following Edgar Wachenheim III’s value-investing strategy (page 13).

The group has established two buying periods, one in the fall semester and the other in the spring. Prior to asset purchases the whole group meets to pitch ideas on various stocks and asset classes, the group then votes individually on various assets and the endowment team individually recommends weights for each asset class.

The program provides a strong foundation for the future of student investing at Ursinus College. In the future, the group expects to further establish the UC fund on campus as a destination for all students who wish to test their passion for investing, and hone their skills of financial presentation.

Governing Principles

The Ursinus Student-Managed Investment Fund’s mission is to provide any student at Ursinus College an opportunity to gain valuable experience in understanding the complexity of financial markets, securities, and institutions; to develop skills in conducting macroeconomic, industry and security analysis; and to effectively communicate our understanding of investing strategies and fundamentals to others. At the same time, the fund is giving back to the college by managing investments on the college’s behalf; the Student-Managed Investment Fund has roughly $60,000 in investments that belong to the Ursinus College endowment.

Two portfolios are managed within this fund. One is used to train students in security analysis and allows significant risk. The other trains students in endowment management and must 1) preserve its purchasing power and 2) provide income that can be transferred to the college’s operating budget. We hope to eventually use some of the income to pay for field trips, data, events, and other fund related expenses. Participating in the fund entails: conducting independent research on stocks and asset classes, evaluating market trends, presenting findings in a group setting, using online tools such as Yahoo! Finance, Mergent Online, the Wall Street Journal, ValueLine, SEC filings, and corporate investors’ pages, answering specific questions about findings and conducting follow-up research that answers questions raised during meetings, and working closely in a collaborative environment to make an informed decision about investing.

Overall, our goal is to develop a deep and thorough understanding of investment strategies, complete rigorous research on companies as well as asset classes, and make informed and thesis-driven decisions that will help grow the portfolio. While doing so, we hope to give our earned income back to the College.

Portfolio Allocations

Endowment Fund Equity Breakdown U.S. Equities (SCHB)

U.S. Treasuries (GOVT) 16.5% 28.6% U.S. Corporate Bonds (LQD) 14.3% U.S. Real Estate (IYR) 9.3% International Developed 24.7% Markets (IVEA) International Emerging 6.5% Markets (SPEM)

Endowment Fund - Strategy

Investment Objective Statement We have the following goals for the endowment fund: 1. Keep purchasing power. We want the value of the fund to at least keep pace with inflation. If we just put the money in the bank, the interest will not match the pace of inflation, and then the money will be less valuable in the future. 2. Increase capital for future investments. If we successfully invest in some projects this semester that means our money pool will be bigger. In this way, we will have more money to invest in the future, and our chances of getting a bigger return will increase. 3. Train more people. Through the communication between classmates, we can make the best decision by integrating various information. At the same time, all of us can personally experience the process of making decisions, laying a solid foundation for our future investment careers.

Investment strategy/Process for determining weights Throughout the semester, we have based our thesis on Yale’s approach in terms of endowment. Yale is a leader in endowment management, with its allocation to a broad range of asset classes and rigorous approach to screening investments and investment managers. By preserving endowment assets adjusted for inflation, Yale retains the ability to support the same set of activities that it is now supporting. By supplying a stable flow of resources for operations, the endowment provides continuity of support, avoiding disruptive interruptions in distributions to academic programs. Although the Yale endowment invests in the alternative asset classes, we will not adopt this strategy as these asset classes are more complex and are too risky for us to invest in considering our resources and knowledge of these particular classes. Because of which, we will maintain a diversified portfolio by focusing on the asset classes of US Equities, US Treasuries, US Corporate Bonds, International Equities, and US Real Estate. After assigning members to study each asset class, we presented our findings to the group and voted on how we will weight each asset class while maintaining portfolio optimization.

Weights are determined by extensive research through both computer-based forecasting and subjective judgement. Philip Tetlock, a University of Pennsylvania professor who has conducted a great deal of research on forecasting and forecaster success, writes in his book Superforecasting that forecasting is a skill that can be honed, practiced, and learned. We adopted Tetlock’s proposition that we need to blend computer-based forecasting and subjective judgement. We will continue to see human judgement being displaced, however it should occasionally override the computer. A successful result when forecasting is a combination that can beat both humans and machines. Adopting both Yale and Tetlock’s strategies puts out fund in great position to receive positive returns on our asset classes.

Endowment Fund – U.S. Treasuries

ETF: iShares US Treasury Bond ETF (GOVT) Portfolio Weight: 9.3%

The iShares U.S. Treasury Bond ETF (GOVT) seeks to track the investment results of an index composed of U.S. Treasury bonds. We chose to underweight U.S. Treasuries because of the high Consumer Confidence Index (CCI) and hot stock market. Based on our research, higher CCI will lead to a lower Treasury yields because people will be more willing to spend their money into a bullish stock market, instead of the Treasury bond market. Therefore, there is an inverse relationship between treasury yields and CCI. In addition, on the aspect of the stock market, we don’t expect the recession will come soon, and we believe the whole economy will continue to grow throughout the next six month. Also, there is an inverse relationship between Treasury yields and stock market as well. Hence, we believe underweight the U.S. Treasuries Bond will increase the returns of our portfolio.

10-Year Consumer Confidence Index Trend, 2009-2019 120 100 80 60 40 1966:Q1=100) 20 Number of CCI (Index (Index CCI of Number 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 Year Sources: FRED

Historical S&P 500 Trend, 2009-2019 3500 3000 2500 2000 1500 1000 500 Index of S&P 500 (index) 500S&P of Index 0 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Year Sources: FRED 9

Endowment Fund – U.S. Equities

ETF: SCHB Portfolio Weight: 28.6% Due to the apparent overvalued state of the market and overall economy, we decided to pursue an approach that is both cautious and optimistic. This cautiousness results from the likelihood of an impending recession, based on to historical inverted yield curves, which typically foreshadow major economic collapses. Furthermore, short-term investor outlook is positive. This positive outlook in tandem with stagnant interest rates support our optimistic short-term outlook on U.S. equities, thus we have placed a heavier weight on U.S. equities as we seek to reap the final fruits of the market before the impending recession. 10-year to 3-Month Treasury Yield Spread: 1982-2018 5.50

4.50

3.50

2.50

Percentage 1.50

0.50

-0.50

Source: FRED Data -1.50 1982 1985 1988 1991 1994 1997 2000 2003 2006 2009 2012 2015 2018

Endowment Fund – Corporate Bonds

ETF: LQD (iShares iBoxx $ Investment Grade Corporate Bond ETF) Portfolio Weight: 6.5%

United States Corporate Bonds have served as a stable and consistent growth vehicle in the past for our endowment portfolio. Our decision now, to underweight this asset class, comes from the convergence of a multitude of macro-economic factors. Principle of these factors are: the plateauing of corporate profits, the increasing of real wages in the United States, and the leveling off of corporate debt. It is our conclusion that the underlying economic and financial theories indicate that the confluence of indicators present a problematic outlook for the continued growth in value that we have seen thus far from the Corporate Bond asset class.

Corporate Debt Corporate Debt 8000000 6000000 4000000 2000000 0 Millions of Dollars of Millions

2000-… 2001-… 2002-… 2003-… 2004-… 2005-… 2007-… 2008-… 2009-… 2010-… 2011-… 2012-… 2014-… 2015-… 2016-… 2017-… 2018-…

High corporate debt often leads to a high lending growth, however it seems as if corporate debt is beginning to level off. JPMorgan Chase & Co stated in early March that its lending growth should slow as a recession grows more likely.

Real Wages Real Wages 360 340 320 300 Dollars 280 1982-84 CPI Adjusted CPI 1982-84 1979-… 1981-… 1983-… 1985-… 1988-… 1990-… 1992-… 1994-… 1997-… 1999-… 2001-… 2003-… 2006-… 2008-… 2010-… 2012-… 2015-… 2017-… Real Wages are continuously rising over the past year. This could potentially cause the Fed to hike interest rates in order to head off inflation. 11

Endowment Fund – U.S. Real Estate

ETF: IYR Portfolio Weight: 24.7%: Overweight

IYR has outperformed the S&P 500 on a return and risk-adjusted return basis across market conditions. IYR holds favorable real estate companies that optimize flexible office space, retirement homes, data centers, and other non-traditional real estate. We expect IYR to remain steady during a hot job market as well as favorable employment statistics, as well as tight vacancies in optimal markets, and an increase in multi-use real estate.

Estimated Flexible Office Stock by Region (SQ FT, Mil) 45 1.8% 40 1.6% 35 1.4% 30 1.2% 25 1.0% 20 0.8% 15 0.6% 10 0.4% 5 0.2% - 0.0% '10 '11 '12 '13 '14 '15 '16 '17 '18

US Europe Asia Pacific Total (RHS)

Annualized Total Return by Cycle Phase, 1991-2018 30% 22.8 20% 15.6 11.3 10.6 11.1 9.8 10% 7.1

0% -0.2 -10% -9.6 -20% -17.7 Early Cycle Mid Cycle Late Cycle Recession All Periods

US Reits S&P 500

Endowment Fund – International Equities

ETF: IVEA (Developed) 14.3%; SPEM (Emerging) 16.5% Total Portfolio Weight: 30.8%

Foreign equities are being overweighed to provide an opportunity for increased returns within emerging and developing markets, essential for diversification within the portfolio. The fund is now investing in both emerging and developing markets exploring the options for more active management to respond to the ever-changing relations within the geo-political and economic sphere. Geo-political tensions increased risk in many foreign markets over the last six months. The United Kingdom’s exit from the European Union has caused the FTSE 100 to stagnate. Developed markets are represented by IVEA offers exposure to many stocks of developed markets abroad, stocks from Europe and Japan account for 76% of IVEA.

SPEM & VEA Growth ($1,000 Portfolio) SPEM $1K VEA $1K $1,750 $1,550 $1,350 $1,150 $950 $750 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 ------10 01 04 07 10 01 04 07 10 01 04 07 10 01 04 07 10 01 04 07 10 01 04 07 10 01 ------2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018 2019

SPEM represents the emerging market of this portfolio, investing in Financial services and Technology in countries such as Brazil, Indonesia, India, and Thailand. These countries are likely to show GDP growth that outpace that of the US. Also, the weakening of the US dollar has strengthened the emerging markets currency value. Historically this inverse relationship has been used as a way to forecast emerging markets potential. Currently, the most poignant threat to foreign equities is the current trade war between the U.S. and China—which as of now has slowly impacted the world economy, but its uncertainties could mean potential fallouts across all economies.

Emerging Markets vs USD 45 1.5 40 1.4 35 1.3 1.2

30 USD SPEM 1.1 25 1 20 0.9 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 01 ------10 01 04 07 10 01 04 07 10 01 04 07 10 01 04 07 10 01 04 07 10 01 04 07 10 ------2012 2013 2013 2013 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 2018 2018 2018 2018

SPEM USD/EU

Stock Selection Fund – Strategy Stock-selection Fund Investment Strategy The investment fund uses several strategies to find stocks with rapid growth potential. First, the stock selection fund uses the value investment strategy described in Edgar Wachenheim III’s Common Stocks, Common Sense. The student manages identify securities with low price to earnings ratios issued by firms with robust balance sheet fundamentals as evidence of potential rapid earnings growth. Securities with low price to earnings ratios hold a higher probability of being undervalued by the market and strong balance sheet fundamentals provide safety against loss due to bankruptcy protections. In addition, the stock selection team members who took the class for a second semester tried a different selection process outline by Michael Moe in his book “Finding the Next Starbucks”. Moe’s strategy focuses on identifying small-cap growth stocks, because these stocks will likely grow fast and be undervalued. Moe says the four Ps, people, product, potential, and predictability, are the first step in identifying potential companies to invest in. These companies we found using various sources like the Wall Street Journal and Investor’s Business Daily by using some of their various lists of fast-growing companies in their sector and overall. Once we found a few potential candidates we used Yahoo Finance and other sources to conduct more in-depth research into the economic health of the company and if we could identify any megatrends that the company was a part of that could spark rapid growth. During the first six weeks of the semester student managers learn the fundamentals of strategy and conduct research to find ideal candidates. During this time, student manager teams find stocks they view as ideal for the fund and they create data-driven presentations to present the strengths, weaknesses, and of their stock and macroeconomic trends effecting their stock. In addition to identifying the ratios associated with Wachenheim and Moe’s investing strategies, students use SWOT ((identification of Strengths, Weaknesses, Opportunities and Threats) to identify what stocks are likely to experience rapid growth. In the pages that follow, we present the stocks selected this semester, giving each team’s investment thesis, background information on firms, relevant financial statement data and SWOT analyses.

Student investment fund managers visited Edgar Wachenheim in October 2017 for a presentation on the fund’s investments and to receive advice from the inspiration for the fund’s common stock investment strategy. 14

Stock Selection Fund – Emergent BioSolutions

Emergent BioSolutions Industry: Pharmaceutical Ticker: EBS Market Cap: $2.71 Billion Employees: 1,705 Headquarters: Gaithersburg, MD

Thesis: Emergent Biosolutions is a financially sound and stable company with the potential to show small, but continuous growth. The need for vaccination development is not likely to go out of style and biodefense development is becoming more important as world peace is an elusive reality. Government contracts provides stable and secure income for the foreseeable future which is a short term safe plan.

Company Background: EBS was founded in 1998 in a small town in Michigan selling anthrax vaccinations to members of the military and their families. They began to invest in BioThrax improvements to use as their main source of income in the long term. It took ten years for BioThrax to be approved by the FDA and began to hit the market. Short after, EBS went public and began trading on the New York Stock Exchange. For the next ten years after, they began to spread their approvals in the global markets.

Financials: Some important financial ratios are the P/E ratio of 15.44, debt to equity of 78.60, and a current ratio of 6.1. Gross Profit has increased from 270 Million to 460 Million from Q4 2017 to Q4 2018 which shows substantial growth in a relatively short period of time.

SWOT Analysis: The strengths of Emergent begin with their suppliers who are very reliable and consistent which allows them to keep their prices relatively stable and avoid pricing wars. They have a successful track record of product innovation and useful products. Weaknesses include limited product diversity and sub-par business strategies when looking to invest in other business segments. Opportunities include a potential grand upside to future production styles with increases in technologies and tax breaks with different presidential offices. Threats include lack of new and innovating products that can send their profitability through the roof. Changes in consumer buying behavior or changes in liability changes for the worse could open them up to law suits.

Stock Selection Fund – Skyworks Solutions Skyworks Solutions Industry: Semiconductors Ticker: SWKS Market Cap: $15.41 Billion Employees: 9,400 Share Price at Purchase: $87.21 Headquarters: Woburn, MA

Thesis: Skyworks Solutions is an undervalued company that has contracts with some of the biggest companies in the world, including, but not limited to, Apple, Samsung, Google, Huawei, and Facebook, and is also on the forefront of 5G implementation. Investment in this company will lead to long-term benefit and growth.

Details: Skyworks Solutions has contracts with some of the biggest names in the tech industry. These names (some mentioned above) find themselves in many aspects of social interaction with the world (such as wearable tech, smart-homes, and communications). Skyworks Solutions also shows promising financials for a growth company when compared to its top three competitors (Texas Instruments, NXP, and Maxim).

Company Background: Skyworks Solutions produces semiconductors that are used I many facets of the world, primarily focusing on communications, smart-home technology, and wearable technology while also expanding into other applications including, military, medical, and aerospace. Skyworks Solutions looks to facilitate the interaction between society and the technological and digital revolution.

Details: Since August, Comtech has received a total of at least $120 million in contracts and awards; they received $1.2 million for enhanced 9-1-1 technologies; $11.3 million plus an additional $2.3 million in funding to support the Maryland Department of Human Services with IT services; and $32.5 million for tactical equipment by the U.S. Army. When Comtech acquired TeleCommunication Systems in 2016, Comtech entered complementary markets and expanded its domestic and international commercial offerings, in addition to strengthening its relationship with the U.S. government due to TCS’s prior involvement with government contracts.

Financials: Debt-to-Equity: 0.179; P/E: 17.927; Quick: 4.55

SWOT Analysis: Strengths: The strengths of SWKS consist of boasting a notable clientele list and approaching rollout of 5G technology. A weakness is that an over-reliance on Apple could affect Skyworks negatively. Opportunities include a social trend toward smart technology and 5G in homes, cities, and mobile phones. Potential threats include the looming trade war with China could affect relationships with international clients and products.

Stock Selection Fund – Analog Devices Inc.

Analog Devices Inc. Industry: Software/Semiconductor Ticker: ADI Market Cap: $42.07 Billion Employees: 15,800 Share Price at Purchase: $112.82 Headquarters: Norwood, MA

Thesis: We believe that investing in Analog Devices Inc. will yield significant returns as earnings per share as well as the company’s income have increased each year. Investing in the semiconductor industry is ideal as the demand has increased for semiconductors and data conversion.

Details: As 5G electronic technology becomes more popular, worldwide use in different industries that specialize using any form of communication will grow. ADI shows positive signs of growth with a price equity ratio of 21.687, which projects high yields in earnings. ADI has a debt to equity ratio of 0.861, which means it can pay off debt and still be financially stable. The quick ratio is 1.08 and the interest coverage is 8.74. With this company’s strong financial performance and health, there are positive signs for growth.

Company Background: Founded in 1967, Analog Devices is a semiconductor company that specializes in power management technology, signal processing, and data conversion. ADI has over 100,000 customers and clients in several different industries such as computers, military, communications, aerospace, and automotive. The company manufactures mixed signal and digital signal processing integrated circuits used in various electronic devices.

Financials: ADI doubled net income in 2018 to $1.49 Billion; sales revenue increased to $6.2 billion, EPS practically doubled in 2019 jumping to $4.02.

SWOT Analysis: The strengths of this company are obvious: great financials signs and great performance in markets with new products and customer satisfaction. There are weaknesses of investing in ADI as there is limited product range, competition, and limited success outside core business. Opportunities for ADI are increase of the new taxation policy can significantly impact the way of doing business and can open new opportunity for established figures such as Analog Devices to increase its profitability. There is also signs for massive growth with new technology (5G). Threats are intense competition, rising raw material prices, and risk from lawsuits.

Stock Selection Fund – Raytheon

Raytheon Industry: Aerospace and Defense Ticker: RTN Market Cap: $52 Billion Employees: 67,000 Share Price at Purchase: $180.13 Headquarters: Waltham, MA

Thesis: Raytheon is poised to see continued growth in the future as they continue expand their product lines and continue strong military ties with the US and their allies.

Details: Raytheon, as a company, is a specialist in technology and innovation regarding defense and other government markets and receives roughly 90% of its revenue from government contracts and is a leading producer of guided missiles.

Company Background: Raytheon made a name for itself in WW2 when they aided the United States and remains a vital company regarding US defense.

Financials: Price to Earnings Ratio: 29.56. Current Ratio: 1.46. Quick Ratio: 0.63. Interest Coverage Ratio: 29.66. Debt-to-equity Ratio: 0.44.

SWOT Analysis: One of Raytheon’s strengths is that the company maintains low debt compared to competitors and can safely generate revenue through government contracts. As for weaknesses, Raytheon is a company that thrives in times of global conflict and without it may see decreased revenue. Raytheon’s greatest opportunities lie in defending countries across the world and extinguishing global conflicts. If conflicts arise, Raytheon will see serious benefits as they can begin to sell their inventory that consist of products such as guided missiles, magnetrons, and text-to-speech translators. Raytheon sees competition from various companies like Lockheed Martin and may suffer data breaches of sensitive data.

Stock Selection Fund – Ulta

Ulta Industry: Cosmetics Ticker: ULTA Market Cap: $20.28 Billion Employees: 34,000 Share Price at Purchase: $354.46 Headquarters: Bolingbrook, Illinois

Thesis: The global cosmetics industry is expected to grow by 7% between 2018 and 2024. It was valued at around 532 billion USD in 2017 and is expected to be valued at around 863 billion USD in 2024. Ulta has no reported debt which is always good to see especially with the fact that they have been opening up 100 stores a year since 2012. Ulta is a strong buy with good foundations, strong ratios, and a big future ahead of them.

Details: Ulta is described as a one stop shop for all beauty products. They carry high end beauty products along with cheap products. They also have a strong retail division along with gaining more traction on their online site. They also have Ulta rewards and a loyalty program that gives customers rewards for every dollar they spend. With these rewards they can then take a percentage off of all products in the store on online. While they opened up 100 new stores every year since 2012 they plan to cut back for the future. They say this is because of the current stores already doing so well. They now plan to open only 80 stores in 2019, 75 in 2020, and 70 in 2021. In their last quarter q3 the company's net sales increased by 16% to 1.56 million. There 4th quarter report comes out 3/14/19.

Company Background: Founded in 1990 in the US by Mary Dillon. Ulta’s headquarters are based in Bolingbrook, Illinois. They also have a strong online presence. 20.277 Billion dollar market cap.

Financials: Trailing P/E ratio- 28.48; Forward P/E- 24.05; Current Ratio- 2.06; Debt to equity- N/A; EBITDA- 1.1 B

SWOT Analysis: Ulta caters to the rich along with the middle class/poor and Continues to make deals with new cosmetic companies. As for weaknesses, Ulta’s profitability ratio of 9% is below industry average.

Stock Selection Fund – Sell Strategy

The UCIMCO stock-selection team has struggled in previous semesters to find a responsible, quantitative approach in selling our U.S. equities. In the past, our sell strategy simply consisted of monitoring our selected stocks through different news outlets and reports that might illustrate negative surprises for our respective investments. If our team felt like current events could negatively impact the corporation’s stock price, a sell voting process would occur.

Our challenge this semester was to change this strategy and make it more quantifiable. Ultimately we have decided that within six months of the stock’s purchase date, we will sell the stock if it falls 10% or re-evaluate our thesis if it rises more than 20%. Our team will place stop loss orders at a price 10% lower than the purchase price to avoid permanent loss. If the stock rises above 20% within six months, the respective stock analysts will re-evaluate the equity’s valuation and assess whether their thesis met its full potential. In order to create this new strategy, we analyzed our fund’s returns since inception using percentage parameters.

We tested several thresholds, as we computed what our returns would have been if we sold the stock the first day its closing price was 20% more or 20 % less than the purchase price. We also considered percentage targets of 15% more or 20% less than the purchase price and 10% more or 20% less. Additionally, we researched what our returns would have been if we sold the stock 126 trading days and 252 trading days after the purchase date. We evaluated our previous sell strategy’s actual returns compared to what our hypothetical sell strategy’s returns would be, using these tested thresholds. We found several results that stood out in making our conclusion. As a team, we decided that within six months of the equity’s purchase date is a strong timeline to reduce permanent losses and re-evaluate strong profits.

The implementation of this sell strategy fares well with the UCIMCO semester schedule. We make our stock selections in April and purchase them in the following weeks. October is six months following the purchase date, which aligns well with our fall semester schedule. In October the stock-selection team will select new stocks for our fund. After this selection, the team can evaluate our stocks bought in April and re-evaluate the original thesis that was presented. This gives educational exposure to students who want to learn more about the sell-side in equity research and investments, in general. Providing students the opportunity to evaluate whether or not their respective theses came to fruition will make the process a learning tool for future selected stocks.

Overall, we believe that this sell strategy can provide a students a well-rounded learning experience, effectively make decisions for the fund and create a stronger structure for the course.

Student-Managed Investment Fund Supporters

The Ursinus College Student-Managed Investment Fund would not exist without the generous contributions it has received in in time, expertise and money from a variety of Ursinus faculty, alumni, administrators, and parents. The fund wishes to think thank the following supporters: Ursinus College Business and Economics Department Briana Anderson (’14) Andrea Bohn Michael Fleming (’97) Christopher Guy Daniel Myers (P ’19) Annette Parker Nina Petry (’16) Erich Pingel (’11) Joseph Pursley (’03) Eleisha Smith (’99) The Rev. Dr. Harold C. Smith (’55) Daniel Urban (’07) Chris Valerio (Hirtle Callaghan & Co.) Matthew Yuros (’12)

Endowment/ Fund Team

Johnny Myers (’19) Hometown: Menlo Park, CA Majors: Applied Economics and English Bio: In addition to my work for UCIMCO, I have swam for the past four years, I write and copyedit for the Ursinus Grizzly, and I am taking CFA Level 1 in June. After graduation, I am pursuing a Masters' Degree at Drexel University. Isaac Abrams (’19) Hometown: Guilford, CT Major: Psychology Bio: As well as being a founding member of the UCIMCO, I also play Cello in the Ursinus String Ensemble and conduct research through the Psychology Department. Last year I spent spring semester studying international business and Japanese at Akita International University in Akita, Japan. After graduation I plan on getting a job within the finance/business field and intend on focusing in operations and management. Paul Cottam (’19) Hometown: Bristol, United Kingdom Majors: Applied Economics & Politics, International Relations minor Bio: I am an international student from the United Kingdom. As well as the investment fund I am involved in Residence Life, the Economic Ambassadors program and Model UN. Post- graduation I plan to work in Business Management Consulting or International Development in Washington D.C. Chenyu Yin (’19) Hometown: Nanjing, China Major: Applied Economics, Math minor Bio: I am the secretary of the Southeast Asian Student Association (SASA). I did my summer fellows research with Dr. Deacle, investigating the stock market. After graduation I plan on attending graduate school. My dream school is Georgia Tech. Tim Carroll (’19) Hometown: Marlton, NJ Major(s): Applied Economics, Management minor Bio: Outside of the Student Managed Investment fund, I am a member of the Ursinus Men’s Lacrosse team. Some of my jobs on campus consist of a Resident Adviser on campus, an Intramural Sports league coordinator, and the Payroll Administrator for Intramural Sports. The past two summers I have interned at the Republic Bank headquarters in Philadelphia, PA and I plan to work full-time with the company post-graduation. I chose to get involved in the Student Managed Investment Fund to broaden my knowledge of how to evaluate stocks and endowment asset classes. Susie Zelaya Rivera (‘19) Hometown: Washington, DC Majors: Culture and Health Studies & Spanish, Latin American Studies minor Bio: I am a Melrose Fellow, Parlee CSCG Fellow, Teaching and Learning Institute student consultant, and research assistant for the HEAL Lab at Ursinus. After Ursinus I plan on expanding my vocation on health policy and healthcare administration by getting my master’s degree. I also plan on working in a governmental agency position focusing on community engagement, policy, and research.

Endowment Fund Team

Kayin Chambers (’19) Hometown: Baltimore, MD Major: Applied Economics Bio: Aside from working with the endowment team, I am involved in various activities on campus. I am currently a Perspective coordinator, America Reads mentor, and am the current activities coordinator for S.U.N. I am extremely interested in the economic health and urban development of our inner cities. This is something I plan to become more involved in post-graduation. Elvi Sopiqoti (’21) Hometown: Havertown, PA Majors: Applied Economics, Applied Mathematics Bio: Originally born in Italy, I moved to the United States when I was eight years old. Outside of the investment fund, I am part of the Ursinus College Financial Scholars program and a Delegate for the National Model United Nations. My post-college career goals include gaining my CFA certification and working on Wall Street.

Stock Selection Team

Shelby Boyle (’22) Hometown: Reading, PA Major: Applied Economics Bio: For my Applied Economics major I am taking the Economics track so I can focus more on Micro and Macro factors of the economy. This summer I will be studying abroad in four European countries that were previously communistic to study economies in transition. I also have a minor in East Asian studies. Michael Buck (’22) Hometown: Philadelphia, PA Major(s): Applied Economics Bio: I play varsity men’s soccer at Ursinus. Post-graduation I would like to go to graduate school or get a job in investment banking. Liam Close (’21) Hometown: Downingtown, PA Major: Politics Bio: Aside from working for UCIMCO, I am a member of Phi Kappa Sigma International Fraternity where I serve as the chapter treasurer and recruitment chair. I am also a member of the Ursinus Club Volleyball Team where I also serve as the treasurer. I also work for the Escape Velocity Dance Troupe, where I work as an event technician/deck crew, and the Ursinus College Dance Company, where I work as part of the deck crew. Samantha Crossan (’19) Hometown: Ardmore, PA Major(s): Applied Economics Bio: Outside of the classroom, I currently intern at CBC Settlement Funding in Conshohocken, PA. After graduation, I plan to continue working at CBC full time. Tyler Lelii (’19) Hometown: Royersford, PA Major: Applied Economics Bio: Besides UCIMCO, I work for the USPS and I plan to pursue a computer science degree after graduation. Zach Crebbin (’22) Hometown: Newtown, CT Major: Applied Economics, Finance and Accounting Concentration Bio: In addition to being apart of the Investment management company, I am also an Event technician on campus. I am continuing my 7th year of track and field as a high jumper. After graduation I do not know what I want to do but I know that Stock management and selection will open up opportunities.

Stock Selection Team

Kevin Devlin (’22) Hometown: Dresher, PA Major: Applied Economics Bio: In addition to my work for UCIMCO, I play men’s soccer for Ursinus College where I am in the leadership group for the team. I plan on volunteering more in the spring of next year as well as partaking in clubs offered by Ursinus in the fall. After graduation I hope to find a job in my field of study and hope to work in Philadelphia. Zachary Dole (’22) Hometown: Andover, NJ Major: Finance Bio: While working alongside my father in his career in financial advising and talking with him, I have gained an interest in the investment field. “Allowing money to work for itself” has captured my interest in every way and I intend to learn as much as I can about the investing in order to find what I am passionate about. Along with my interest in finance, I would like to be able to speak a second language, so I will be either majoring or minoring in Spanish. Gary Nagle (’22) Hometown: Cape May Court House, NJ Major: Undeclared Bio: In addition to my work for the UCIMCO, I am on the wrestling and track and field teams here at Ursinus. Lucas Olshevski (’21) Hometown: Robbinsville, NJ Major: Applied Economics Bio: As a sophomore at Ursinus College, I am a member of UCIMCO and the men’s basketball team. I am focusing on both accounting and finance as I work towards my 4-year degree. This summer I will be working my first internship at Freedom Mortgage, and plan to accumulate as much work experience as possible during my last 2 years at Ursinus. Outside of school, I enjoy playing different instruments and traveling to new places. George Psaradakis (’21) Hometown: Toms River, NJ Major: Applied Economics, Finance & Accounting Concentration Bio: In addition to my work for UCIMCO, I am also a member of the UC Men’s Track and Field Team, a Finance Scholar, and work for the Ursinus College Bookstore. I got into finance because I am the son of a single mother, and being able to manage finances has been at the core of my family and I want to be able to help people find a way to manage theirs. Daan Slaats (’19) Hometown: Waalre, Netherlands Major: Applied Economics, minor in Politics Bio: On campus I am involved as a member of Finance Scholars and the Men’s Soccer Team. I am also a Resident Advisor and a Model UN Delegate. Upon graduating in May, I look forward to starting as a Strategy & Integration intern with AGCO in Atlanta, GA. I also plan on taking CFA Level I Exam this June.

Stock Selection Team

Matt Williams (’19) Hometown: Lewes, DE Major: Applied Economics Bio: In addition to my work on the stock selection group of the Student Managed Investment Fund, I was also a two time captain of the Ursinus Men’s Basketball team my junior and senior year. I participated in the Finance Scholars and helped with the production of “12 Angry Jurors” in the Theater department. After graduation I plan to move to Chicago and work on the conversion team of Northern Trust’s Hedge Fund Services.

Parker Wolf (‘20) Hometown: Lititz, PA Major: Applied Economics, Management minor Bio: I participate of the Varsity Men’s Lacrosse team and the Finance Scholars Program, on campus. I also work on-campus at the U-Imagine Center as a Student Ambassador. I am an original member of the Investment Club before it turned to a class. I have always enjoyed working with members of our team on our investment strategy and how we decide to manage our assets.

Tim Yarosh (’19) Hometown: West Chester, PA Major: Computer Science Bio: In addition to my work for UCIMCO, I participated as a member in Students Today, Alumni Tomorrow (STAT). I was also a member of the men’s varsity soccer team during my four years at UC. After graduation, I plan on starting work as a software developer within the Enterprise Document Management team in the Chief Technology Office of Vanguard in Malvern, Pa.