Author: GW Investment Institute

In Episode 7 of “Market News with Rodney Lake,” Rodney Lake, Director of the GW Investment Institute, discusses the critical alignment of management incentives with shareholder interests. He uses Tesla’s unique performance-based pay package as an example to highlight the importance of evaluating compensation packages through proxy statements. Professor Lake advocates for a mix of metrics like market cap, revenue, and profit margins to assess true company value, cautioning against sole reliance on earnings per share metrics due to potential manipulation. He underscores the significance of operational efficiency, a key factor that demands the audience’s attention and focus. He also stresses the importance of employee satisfaction and long-term growth strategies, drawing on successful examples like Apple and Visa. Tune in to learn more!

In Episode 6 of “Market News with Rodney Lake,” Rodney Lake, the Director of the GW Investment Institute (GWII), explains the business aspect of GWII’s BMPB framework (Business, Management, Price/Valuation, and Balance Sheet). He explores the practical applications of the DuPont formula in evaluating business quality, underscores the importance of understanding the utility of products and services, and delves into key financial metrics like Return on Equity. Using examples like Apple (NASDAQ: AAPL), he demonstrates how high profit margins and customer loyalty contribute to business value.

In Episode 5 of “Market News with Rodney Lake,” Rodney Lake, the Director of the GW Investment Institute, delves into the significance of Nvidia in the AI era. He explains how Nvidia’s graphics processing units are central to AI applications, contributing to the company’s substantial market cap of approximately $3 trillion. He highlights Nvidia’s impressive financial metrics, including gross margins of 75% and net margins of 53%, alongside its dramatic free cash flow growth from $4.7 billion in 2021 to nearly $40 billion recently. Using the Investment Institute’s framework, he assesses Nvidia’s business management, price valuation, and balance sheet, pointing to its strong market position and long-term growth potential despite high valuations. Tune in to learn more!

In Episode 4 of “Market News with Rodney Lake,” Rodney Lake, the Director of the GW Investment Institute, discusses the pervasive impact of artificial intelligence (AI) on businesses. The episode explores how AI technologies, such as ChatGPT and other machine learning applications, are revolutionizing industries by enhancing efficiency and profitability. Professor Lake emphasizes the importance of evaluating companies based on their ability to integrate AI into business operations, from customer service to logistics, and how these integrations can drive cost savings and revenue growth. He highlights that while AI can reduce labor needs and optimize processes, the ultimate goal for investors is to identify firms that effectively leverage AI for significant profitability gains, thus affecting their market valuation positively. Professor Lake encourages listeners to thoroughly investigate AI’s influence on their respective fields, as it will continue to shape business operations. The episode sets the stage for a deeper dive into Nvidia, a major AI player, in the next episode.

Thanks to the generous contribution of GW Investment Institute (GWII) Advisory Board Member Greg Wong, GWII proudly acknowledges students who have made a material contribution to the institute and have significantly impacted our community with the GW Investment Institute Leadership Award.

Three outstanding students are awarded a $2,000 financial award each this year. Meet our esteemed 2024 Leadership Award Recipients:

• Will Ahrens, B.S. Accountancy & Finance      
• Rhys Chambers, B.S. Computer Science & International Business            
• Yaseen Shah, B.S. Finance

Will Ahrens’ academic journey includes courses in both Applied Financial Securities Analysis and Foundations of Venture Capital with GWII. Will’s commitment to assisting the institute as a teaching assistant for the Applied Financial Securities Analysis class for two semesters reflects his ongoing dedication to the institute. Outside of class, he was an intern in the GWII Venture Capital Internship Program, a GWII student project assistant, and competed in the 2022 McGill International Portfolio Challenge.

Rhys Chambers was the first GW student to attend Cornell’s Women in Investing Conference in 2022. She returned with a team in 2023 to compete against Columbia, Claremont McKenna, and Cornell. She also participated in the 2022 McGill International Portfolio Challenge with Will Ahrens and Ameen Iraqi, securing a position in the top 25 internationally.

Yaseen Shah took the Applied Financial Securities Analysis class and earned recognition for his exceptional final buy/sell stock pitch with a GWII Stock Pitch Award brought to you by the Charles Schwab Foundation. Additionally, he has pursued studies in GWII’s Foundations of Venture Capital class and was the teaching assistant for the course this past semester. Yaseen competed in the McGill International Portfolio Challenge in 2023.

The GW Investment Institute Leadership Awards started in 2019; to date, $22,000 has been awarded to students.

Thanks to a grant from the Charles Schwab Foundation, the GW Investment Institute proudly announces the GW Stock Pitch Awards recipients for the second semester. This grant supports our mission of providing experiential investment education by enabling us to recognize and reward excellence in financial research.

We are overjoyed to present financial rewards to the top three pitches: Laura Null, whose pitch was a testament to her meticulous research and analytical skills, receiving $600; Pavan Patel, whose innovative approach and strategic thinking earned him $400; and Andrew Hasson, whose comprehensive understanding and clear presentation style merited him $250. We congratulate Laura, Pavan, and Andrew for their outstanding achievements! Their pitches, among 17 presentations during our Spring 2024 Stock Pitch Day, not only demonstrated our students’ exceptional talent but also their unwavering commitment to our Applied Financial Securities Analysis class. We are immensely proud of their accomplishments and deeply grateful to the Charles Schwab Foundation for their continuous support in fostering excellence within our institute.

On May 2, 2024, the GW Investment Institute awarded $5,000 each to our top 10 performing students, selected from the 101 students across our five finance classes from this past academic year. These exceptional individuals are now distinguished as GW Ramsey Scholars and have joined 50 other GW alumni with this designation. Including this year’s cohort, GWII has awarded $300,000 to 60 GW Ramsey Scholars in total.

Thanks to the generous contribution of $1 million from Russ and Norma Ramsey in 2005, the GW Ramsey Student Investment Fund (GW RSIF) came to fruition. Managed by GW graduate students, this fund supports the GW Ramsey Scholars program through a portion of its endowment payout. Russ and Norma’s unwavering commitment ensures our scholars’ continued success and growth, guiding them toward promising careers in finance.

2024 GW Ramsey Scholars:

• Arian Agadi, B.S. Finance
• Charlotte Bell, B.S. Finance
• Richelle Charisse, B.S. Business
• Serena Colyer, B.S. Finance & International Affairs
• Elizabeth Ellis, B.S. Applied Mathematics & Finance
• Gabriela Giraldo, B.S. Business
• Nathan Nguyen, B.S. Business
• Laura Null, B.S. Finance
• Kai Pourzanjani, B.S. Finance & Business Analytics
• Yaseen Shah, B.S. Finance  

Check out the video (created by Willow Newcomb) for more info:

Last weekend, students in Prof. Song’s Applied Financial Securities Analysis (FINA 4101) class pitched their buy and sell stock recommendations for the GW Phillips Student Investment Fund. The fund was launched in 2008 and currently has over $2.9 million in assets under management (as of 4/29/2024). Check out the most recent GWII Quarterly Report for details on the fund’s performance. 

Stock Pitch Day, a significant event in Prof. Song’s Applied Financial Securities Analysis (FINA 4101) class, saw each student applying the collective knowledge they gained throughout the semester to develop an investment pitch. They utilized the GW Investment Institute Framework of BMPB: Business, Management, Price/Valuation, and Balance Sheet. After each student presented their pitch, the investment committee (the other students in the class) voted on their recommendation. To have their recommendation accepted to the portfolio, students needed to convince at least 80% of the investment committee members. 

Here is a summary from the GW Phillips Stock Pitch Days:

• 17 student pitches
• 5 student pitches accepted for investment or 4.3% 
• 3 existing positions were increased
• 2 new positions have been added to the fund

Number of pitches by sector:

• 5 in Industrials & Materials
• 4 in Consumer, Discretionary, and Staples
• 4 in Tech & Telecom
• 3 in Healthcare
• 1 in Financial Services

Number of trades by sector:

• 2 in Industrials & Materials
• 1 in Consumer, Discretionary, and Staples
• 1 in Tech & Telecom
• 1 in Healthcare

Thank you to all of the students for their hard work and dedication. A special thank you to our teaching assistant, Will Ahrens, and the three alumni speakers who spoke to our class. 

Professors Song and Lake look forward to each teaching a section of the FINA 4101 class in the Fall semester of 2024.

Introduction

During the quarter that ended on March 31, 2024, the GW Investment Institute (GWII) hosted ten industry professionals across two finance classes. GWII launched the Quantitative Investing Project, with 13 students working to create a Python model that applied the GWII Framework. At the GWII 2024 Annual Conference, we connected over 60 students, faculty, and alumni with industry professionals to discuss the intersection of finance and artificial intelligence (AI). The following commentary was written by Laura Null, a GWSB junior graduating in 2025 with a major in Finance.

Market Commentary

Prepared by Laura Null, GW ’25

The first quarter of 2024 was marked by heightened anticipation of a recessionary downturn and interest rate cuts from the Federal Reserve. However, a stronger-than-anticipated economic performance, a steady 1.6% GDP growth rate, and persistent inflation have delayed rate cuts until an anticipated hawkish pivot in June at the earliest. Further, weakened bond market yields propelled the bullish trajectory of the U.S. Equities despite diminished global economic activity. 

The first quarter of 2024 demonstrated solid economic growth, with notable performances from Energy (13.6%) and Technology (8.5%), primarily driven by optimism around the AI revolution. Additionally, a drastic increase in demand for data centers drove demand for electricity and NVIDIA’s spotlight 19.0% Q1 revenue growth. The anticipated lower interest rate environment provided significant tailwinds for Financial Services (12.5%), which is expected to continue throughout the year. Other notable performances include Communication Services (12.8%), Industrials (11.0%), Materials (9.1%), Health Care (8.9%), Consumer Staples (6.9%), and Utilities (4.6%). Real Estate was the only sector in the red, undermined by the weakened bond market and the aforementioned outlook for rate cuts.

The performance of the GWII Student Investment Funds in Q1 2024 was 15.0%, outperforming the benchmark by 4.4%. This growth was led primarily by the GW Ramsey Fund, which delivered 18.2%, outperforming the S&P 500 Index by 7.6%. The GW Phillips Fund and GW Quant Fund delivered 10.3% and 9.7%, respectively, modestly underperforming the S&P 500 Index return of 10.6% for Q1. The GW Real Estate Fund was down -2.6%, which is in line with macroeconomic trends for that sector.

We invite you to review the full report below:

During the spring semester, the GW Investment Institute launched the Quantitative Investment Project, which challenged students to quantify GWII’s Business, Management, Price/Valuation, and Balance Sheet (BMPB) framework.

For this project, 13 students worked in four teams to develop a Python-based quantitative investment model and derive insight into the GW Quant Investment Fund’s current and potential holdings. 

On April 25, 2024, teams presented their findings and shared feedback and recommendations for the project’s next version.

Here is what students said about the project:

Thank you to our students for their hard work and dedication. We look forward to continuing the project in the fall semester.