GW INVESTMENT INSTITUTE INSIGHTS

Full Report: GWII Quarterly Report December 2021

Market commentary

Fourth quarter of 2021 recorded strong performance, closing the year with many indexes hitting all-time highs, despite widespread political and economic uncertainties combined with the emergence of a new variant of COVID-19, Omicron. In November, for the first time ever, the Dow Jones Industrial Average (DJIA) crossed 36,000 points. The DJIA still finished the year near an all-time high as concerns surrounding the Federal Reserve response to decades-high inflation metrics plus renewed fears of pandemic-related shutdowns mounted.

For the GW Investment Institute Student Investment Funds (GWII SIFs), returns were strong at 8.6% vs. 10.7% for the S&P 500 Index during the quarter. For the year, the GWII SIFs trailed the S&P 500 Index, returning 21.1% vs. 28.7%. After the first full calendar year of the pandemic, GWII SIFs continue to demonstrate strong performance and resilience, despite economic and political uncertainties impacting the broader market. The success of the GWII SIFs is a direct result of the continued hard work, dedication, and involvement of our students, faculty, staff, and alumni.

Ethan Baron, Teaching Assistant, GW Quant Student Investment Fund

It is my pleasure to share with you this guest blog post from Lexington Zografakis, a senior at George Washington University working towards her Bachelor’s in Business Administration with a concentration in Finance and a minor in Economics. She took the GW Investment Institute Venture Capital class and we are fortunate to have her as the teaching assistant for that class for two semesters. We were also pleased to nominate and support Lexington as she piloted a program for our venture capital students to intern with a start-up and learn more about the business. 

Rodney E. Lake

Director, GW Investment Institute 

Guest blog post by Lexington Zografakis

Last Spring, Vice Dean Lake asked me if I would like to pilot a fellowship program in affiliation with the GW Investment Institute and one of the portfolio companies for the Asper Group. Without hesitation, I said “yes.” At that time, however, I did not know that saying “yes” would transform into one of the most impactful and rewarding experiences I’ve had as a student at GW. 

As part of the fellowship, I interned with Obsess, a New York-based start-up that is reinventing the e-commerce interface to be more experiential and engaging through the development of 3D virtual stores for fashion and retail brands across the globe. Throughout the semester, I worked on various assignments, from creating a robust database of their virtual stores to researching different gaming platforms and their current applications in fashion and retail. I also attended meetings with the entire team each week, where I learned more about their strategic mission and emerging topics, like NFTs and the metaverse. Albeit over Zoom, I appreciated the glimpse I was able to get into life at a start-up: the excitement, challenge, and what I consider the most important, the fervent passion and support in both the highs and the lows. 

One of the most impactful parts of the experience, however, was the support and mentorship I received from Ms. Neha Singh, the founder and CEO of Obsess. Despite having a full schedule with back-to-back meetings and the various other responsibilities of being a founder, Ms. Singh met with me each week to respond to questions I had, discuss the deliverables I submitted, and provide feedback on them. In previous internships, I often struggled to understand the “why” behind the work I was doing, but the experience I had at Obsess was quite the opposite. Ms. Singh listened to me with intent, asked questions about the research I did, and ensured that I knew the value in the work I was doing. 

These past three months have been some of the most rewarding, leading to immeasurable growth as a student, professional, and person. While I gleaned invaluable insight into the life of a founder and the dynamic of working at a start-up, I was also immersed in an environment that challenged and inspired me to be more creative and inquisitive and to have far more confidence in the value I bring to spaces. And for one of the first times, I began envisioning myself as a founder where I too was capable of building a business from a place of passion and conviction. 

After having such a wonderful experience, I will be continuing working with Obsess this semester. Thank you to both the GW Investment Institute and Mr. David Asper for allowing me to be a part of this incredible experience and for providing students at GW with opportunities like this, and thank you to Ms. Singh and the rest of the team at Obsess for allowing me to be a part of the magic!

We had a beautiful snowstorm the week before welcoming students back to class. 

I really enjoy the start of each semester, particularly meeting the students in each of the GW Investment Institute classes and learning more about why they are taking the class and what they hope to learn. 

This semester the GWII is teaching the following classes:

Phillips Student Investment Fund: Undergraduate students serve as analysts and manage approximately $3 million of the university endowment. The students focus on a particular sector (Consumer Discretionary and Staples, Energy and Utilities, Financial Services, Healthcare, Industrials and Materials, Technology and Telecom) and use fundamental analysis and the GWII Investment Framework to ultimately pitch to sell a current holding to fund the purchase of something else that the student believes will be a better long-term investment. This fund was started in 2008 and named in honor of former GWSB Dean Susan Phillips. This semester, the class is being taught by Professor Matthew Miller, an Adjunct Professor of Finance and Senior Financial Associate at the Ross Group or RBC Wealth Management. 

Quant Student Investment Fund: The finance industry has experienced large changes due to technological innovations, for example the increase in quantitative strategies. This course, for undergraduate and graduate students, provides an overview of some common quant investing strategies and focuses on data-driven models, which is different from the fundamental analysis and subjective assessments which are the focus of the other GWII student funds. Students will learn how to analyze time-series data and work in groups to find and analyze real data and build and test a predictive model. This is the newest student fund of the GWII, established in 2021. The class is taught by Rodney Lake, and our portfolio advisor is Aron Kershner, Senior Portfolio Manager in the Customized Beta Strategies (CBS) business within Goldman Sachs Asset Management Quantitative Investment Strategies.

Venture Capital Class: This course exposes undergraduate and graduate students to the venture capital investment industry, primarily through guest lectures and group assignments. The course will be taught by Rodney Lake with Bill Collier, Director of Investment Business Development with TEDCO. 

Additionally, I will be teaching a class on Business Career Strategy. 

The next Live with Rodney Lake will take place online on Thursday, January 20 at 6:30 pm. This show is an opportunity for me to discuss market news while connecting with students, alumni, and other friends of the Institute. I hope that you can join me.

Best regards, 
Rodney E. Lake
Director, GW Investment Institute

CyrusOne (NASDAQ:CONE) announced on November 15, 2021 that it is being bought by KKR & Co and Global Infrastructure Partners LLC for $15 billion and shareholders will receive $90.50 in cash per share. The deal is expected to close sometime in the second quarter of 2022. This price is a 25% increase from the closing price on September 27, 2021, after which there was public speculation about a possible sale. 

CyrusOne is a Real Estate Investment Trust (REIT) based in Dallas that designs, constructs, and operates data centers. This is a small position in the  portfolio (just under 1%) as it was approved at the end of the Spring 2021 semester when a student analyst was able to convince a majority of her peers with her pitch that we sell 50% of Store Capital Corp (NYSE: STOR), a single tenant net-lease REIT to buy CyrusOne. 

The student analyst argued that the portfolio should increase our investments in tech through data center REITs and in particular invest in CONE, which provides mission-critical data center facilities that protect and ensure the continued operation of information technology (“IT”) infrastructure for approximately 1,000 customers. The analyst felt that the company was undervalued and projected large growth (noting that it would grow 20% by 2022 just from the completion of projects). 

I will continue to share updates on companies in our portfolios that might be of interest to you. 

Rodney E. Lake
Director, GW Investment Institute 

An important part of our program are the stock pitch days at the end of each semester. For this culminating project, each student uses the collective knowledge that they have gained throughout the semester to develop an investment pitch. Our student analysts propose to sell a current holding in the portfolio which will fund the purchase of a different company that the student believes is a better long-term investment. After the student gives their pitch, their peers, i.e., the other students in class vote on their recommendation. They must convince at least eighty percent of their peers for the recommendation to be accepted for the portfolio. 

“The Phillips Student Investment Fund is a great class that brings together all the learning from previous finance classes and applies it to the real world. Students become portfolio analysts and need to treat it like a real job, having the responsibility of managing real funds. 

This class was so useful during my summer internship at Goldman Sachs where they asked that I put together a stock pitch. I had a framework to follow in analyzing a business, its management, financial statements, and estimate a valuation.” 

– Giulia Genovese, B.S. in Finance and Economics, May 2020. 

A key component of the GW Investment Institute is hosting industry guest lecturers so that our students hear different market perspectives and connect with individuals in various aspects of the finance and business world.

Students often tell us that the guest lectures are one of their favorite aspects of the class and some of our students have even secured internships from a guest lecturer.

The last couple of weeks we have had a great line-up of guest lecturers, below are a few examples:

GW Phillips & Ramsey Student Investment Funds – Guest Lecturers

Mark Anfang, BBA ’02, Portfolio Manager at Scopus Asset Management

Prior to Mr. Anfang’s guest lecture he had students analyze a company he had already reviewed. This included examining the company’s business model, financial statements, and management. The students then each developed a valuation model and ultimately whether they would be interested in buying the company. In class, the students and Mr. Anfang discussed their findings and Mr. Anfang shared with students how he constructs valuation models and answered their questions.

Ave Tucker, BBA ’77, CEO and Cofounder of TM Financial Forensics, LLC; GW Board of Trustees member

The students in both our Phillips and Ramsey Student Investment Funds were fortunate to hear from Mr. Tucker about forensic accounting, financial statement frauds, and red flags when analyzing financial statements. He shared with our students key aspects of some important corporate litigation cases that he worked on and showed them the practical applications of what they are learning in class.

GW Real Estate Student Investment Fund – Guest Lecturers

Steve Yalof, BBA ’85, President and Chief Executive Officer, Tanger Factory Outlet Centers (SKT)

This was a unique opportunity for students to speak with the CEO of a publicly traded company. Prior to class, the students listened to Tanger’s most recent earnings call and reviewed the quarterly materials. As student analysts, they came prepared with questions for the CEO about the company’s earnings and future opportunities. Many students had personal experience shopping at a Tanger Outlet, and we learned that Mr. Yalof was familiar with the shopping centers in each student’s hometown.

Keven Lindemann, Senior Director of Global Real Estate at S&P Global Market Intelligence

Mr. Lindemann provided an overview of REITs, spoke about the specifics of different sectors, shared an analysis of market cycles, and reviewed current market conditions. We also discussed how ESG impacts real estate investing. Mr. Lindemann was generous with his time in answering students’ questions as they work to determine how to make good decisions for the GW Real Estate Student Investment Fund.

We hope everyone has a nice Thanksgiving. We are grateful for the hard work that students have put in throughout the semester, and everyone who takes the time to speak to one of our classes, mentor a student, and/or donate to GWII (give now).

Thank you all. The success of our program depends on everyone’s help.

Rodney E. Lake
Director, GW Investment Institute

Full report: GW Investment Institute Quarterly Report September 2021

Third quarter of 2021 recorded mixed returns for equities and increased market volatility towards the end of the quarter tied to a range of economic and political concerns. For the GW Investment Institute Student Investment Funds (GWII SIFs), returns were relatively flat at -0.8% vs. 0.06% for the S&P 500 Index during the quarter. Year to date, the GWII SIFs trailed the S&P 500 Index returning 11.7% vs. 15.9% for the S&P 500 Index. GWII SIFs continue to demonstrate resilience through the challenges of the pandemic and related economic impacts reflecting the hard work, diligence, and dedication of our students, faculty, staff, and alumni.

The GWII SIF has given students like me the unique opportunity to manage and grow a real investment portfolio. I served as an analyst/portfolio manager (along with other students enrolled in class) in two finance classes associated with SIFs – GW Real Estate SIF during fall of 2019 and GW Philips SIF during spring 2021. Although the circumstances of the past year limited the typical interactions that have made the SIFs so great, we in turn gained valuable experience from navigating the markets amid the many uncertainties during this challenging period. Much like the real-world, the class’s fast pace and at times demanding environment have undoubtedly expanded my skills and knowledge in the span of just a semester. I look forward to utilizing skills gained in GWII classes and GWSB post-graduation as investment banking analyst for a DC based investment firm.

Commentary by Hien (Julia) Nguyen, Student Research Assistant, GW Investment Institute