GW INVESTMENT INSTITUTE INSIGHTS

In Episode 20 of “Market News with Rodney Lake,” Rodney Lake, Director of the GW Investment Institute, assesses Google’s current standing amidst the fast-evolving AI landscape. Analyzing the company’s management under a non-founder CEO, Sundar Pichai, Lake discusses Google’s overreliance on its core platforms—Search and YouTube—and questions its ability to compete in the AI race with tools like Gemini. While acknowledging Google’s solid balance sheet and steady presence in the market, Lake scores the tech giant at a 7.5, citing a need for greater urgency and innovation to stay competitive. Tune in to hear Lake’s take on how Google can sustain its growth.

Introduction

During the September 30, 2024 quarter, the GW Investment Institute (GWII) ran two sections of the Applied Financial Securities Analysis class, enrolling 33 students. This quarter marked the debut of the GW Stock Pitch Competition, awarding financial prizes to four outstanding participants. GWII continues supporting student competitions; we sent a team to Cornell’s Women in Investing Conference and another to the McGill International Portfolio Challenge. GWII published its annual report, and Professor Lake began hosting the weekly podcast, “Market News with Rodney Lake,” delivering insights on timely market topics. GWII also co-hosted the Summer in the City event in New York City and participated in the GW Alumni at the Colorado Rockies event. Ojas Chitnis, a GWSB senior majoring in International Business & Finance, writes this quarter’s market commentary. After graduation, Ojas will join Deutsche Bank as a sales & trading analyst.

Market Commentary 

The S&P 500 index added 5.89% on the quarter, despite a cooler-than-expected nonfarm payrolls print that pushed the VIX to (34.49%) a level unseen since the onset of COVID-19.

The quarter saw the realization of the long-awaited Fed easing cycle, with the central bank delivering a 50-basis point “double cut” to the policy rate at its September meeting – the first adjustment in 15 months. With robust progress towards the Fed’s dual mandate, increased GDP growth expectations, and earnings beats across sectors, the third quarter saw an “everything rally” across asset classes.

Of S&P 500 sectors, only Energy (-2.32%), on account of commodity price pressures, ended the quarter in the negative. Notable sector outperformances included Utilities (19.37%), Real Estate (17.03%), Industrials (11.55%), and Materials (9.70%). After leading markets in the front half of the year, Communication Services (1.68%) and Information Technology (1.61%) notched a much more modest quarter. Small-cap stocks had their second-best quarter since 2021, with the Russell 2000 returning 9.27%, while the Magnificent Seven (5.43%) underperformed.

GWII Student Investment Funds underperformed the equity benchmark by 2.2% in the quarter. Year-to-date, the four GW SIFs have returned 8.4% more than the S&P 500 index.

We invite you to review the full report below:

Sophia Volvovsky, a sophomore majoring in Business, writes this guest blog post. Thank you to Strategic Investment Group for sponsoring our WIN Conference participation again this year.

Last month, Laura Null, Victoria Irizarry, Madison Bachmayer, and I, suitcases in tow, set off to Roosevelt Island, New York, to take the stage at Cornell’s Undergraduate Women in Investing (WIN) conference. We embraced the opportunity to make our mark on the future of the investment industry.  

The cornerstone of this conference was the opportunity to pitch a stock of our choosing to a panel of judges, competing against other well-known universities around the country. The competitive nature of the conference added a layer of excitement and intensity; it pushed us to truly collaborate—to understand each of our strengths, what stumped us, and how we thrived. This emphasis on collaboration was not just a strategy but a powerful tool that we wielded to navigate the challenges and emerge as a stronger team. 

We settled on pitching Zoetis (ZTS), a leader in the animal pharmaceutical industry that focuses on producing vaccines, veterinary hardware, and medications for companion animals and livestock. Driven by its firm hold on the global market and its R&D innovations, it is well-positioned for exponential growth. We spent weeks together honing our presentation, nitpicking our slides and scripts. This wasn’t just about presenting data but rather convincing the judges to believe in us – believe in our thesis. Seeing our work culminate at the front of the pitch room was incredibly rewarding; our efforts paid off – but not only in the way we were expecting. 

Our growth was not limited to our roles as presenters and financial analysts but extended to our roles as students, professionals, and individuals. The time we spent together, late nights in the lobby of Duques Hall or our various hotel rooms running our presentation, forged us into a stronger team. It taught us the value of true collaboration, extending beyond our scripts and the figures we were presenting. It showed us how to conduct thorough research for a pitch – to delve into investor relations and financial statements and draw conclusions based on the most convincing facts and data.

This conference was my first real-life exposure to the investment industry. As a second-year student, most of my knowledge came from what I had learned in my classes and my internship experiences in unrelated industries. Thus, to me, the value of the conference was in the learning experience. I was pushed out of my comfort zone into the unfamiliar, genuinely preparing me for the harsh world of financial markets. With great challenge came significant growth, and throughout our preparation, I learned to think quicker, to see from other perspectives, and to see first-hand how the economic theories I had learned about in class interacted with a real, publicly traded company. 

Perhaps, most importantly, this reinforced my passion for finance. It made it clear how much I enjoyed the challenges and opportunities that come with work like this: the chance to learn about other companies, understand and analyze what makes them healthy and strong, and influence others’ financial decisions. To persuade – convince a judge, an audience, a client. 

Though I can’t speak for the entirety of the conference attendees, I can confidently say the George Washington University Investment Institute Team emerged from this journey feeling empowered, supported, and ready to make a significant impact – in our finance classes, in our business school community, and, by extension, in our industries, as a part of the new generation of female leaders in the investing world. 

In Episode 19 of “Market News with Rodney Lake,” Rodney Lake, Director of the GW Investment Institute, dives into Berkshire Hathaway’s current standing, exploring its extensive collection of businesses, financial strength, and unique decentralized management model. Lake evaluates Berkshire’s strategic capital allocation under Warren Buffett, discussing the challenges and opportunities of maintaining growth at such scale. Rating key aspects like the business portfolio, management, valuation, and balance sheet, Lake gives Berkshire an overall score of 8, raising important questions about succession and the company’s future. Don’t miss this look at one of America’s most iconic companies!

The GW Investment Institute (GWII) recently hosted its Second Annual GW Ramsey Scholars Investment Summit. This gathering showcased the achievements of 16 Ramsey Scholars from the inaugural cohort to our most recent award recipients. We were honored to host Mr. Oscar Pulido, Managing Director at BlackRock, the host of the The Bid podcast, and a GW alumnus, as well as Mr. Russ Ramsey, Chairman of GWII and CEO of Ramsey Asset Management, whose commitment and vision continue to propel the institute forward.

The Ramsey Scholars program, a testament to the impact of experiential investment education, was established in 2019 to recognize the top ten students from each academic year with a $5,000 financial award funded through the GW Ramsey Student Investment Fund endowment, which has over $6 million in assets today. This fund was launched in 2005 with a $1 million seed donation from Mr. Russ and Norma Ramsey, and to date, it has awarded over $300,000 back to students. The program reflects the Ramseys’ dedication to cultivating the next generation of finance leaders at GW.

The day began with opening remarks from Vanessa Perry, Interim Dean of the George Washington School of Business (GWSB), who emphasized the program’s impact on student achievement and the broader university community. Mr. Ramsey then took the stage to reflect on the program’s growth and the importance of long-term investing. This message resonated throughout the summit as Ramsey Scholars introduced themselves and shared their academic and professional journeys, from investment banking and consulting to asset management and analytics.

The day’s highlight was Mr. Oscar Pulido’s keynote speech. Mr. Pulido shared valuable perspectives on the evolving investment landscape. He closed his remarks with insights on how to get ahead in your career, emphasizing that we all need to hustle to get things done. He inspired attendees by his career trajectory, which began with a BBA from GW and later an MBA from NYU Stern.

A fireside chat featured Mr. Ramsey and Rodney Lake, Director of GWII. Their discussion, titled “Outperforming Wall Street by Embracing Long-term Compounding,” highlighted the success of GWII’s experiential learning model as students continue to outperform the market. Following this, attendees had the opportunity to network over a reception.

The GW Ramsey Scholars Investment Summit celebrates past achievements and is a platform to look toward the future. As we reflect on our performance over the last year, we are filled with hope and optimism for the continued success of our Ramsey Scholars. We look forward to witnessing their strides in the field and their embodiment of the enduring legacy of GW’s Ramsey Scholars Program. We invite you to review the recap video above to hear reflections directly from the scholars.

In Episode 18 of “Market News with Rodney Lake,” Rodney Lake, Director of the GW Investment Institute, welcomes Russ Ramsey, the CEO of Ramsey Asset Management, for a wide-ranging discussion. The conversation spans from Russ’ time as a student-athlete at George Washington University (GW) to the founding of the investment bank Friedman, Billings, Ramsey (FBR) and the inception of the GW Investment Institute. The discussion then takes a deep dive into the evolving landscape of artificial intelligence (AI) and its implications for investment. Russ draws fascinating parallels between the early days of the internet and the rapid advancements in AI, mainly through platforms like ChatGPT, enlightening the audience about the evolution of technology. He emphasizes the potential of AI in various sectors, from medical research to corporate infrastructure, and discusses the pivotal role of tech giants like Amazon and Microsoft in shaping this future with an eye on power supply challenges and the burgeoning utility sector. Tune in to discover how AI is reshaping the market!

We are excited to share that our team at the GW Investment Institute has been selected as one of the Top 25 Semi-Finalists for the 2024 McGill International Portfolio Challenge (MIPC)! We are proud of this achievement by Esha Peer, Grady McGean, Judy Abdo, and Mateo Moya Chavez.

The MIPC is one of the most prestigious student-led investment competitions in the world, with this year’s edition being the most competitive yet. Our team competed alongside 99 teams from 17 countries and 6 continents. Being named a Top 25 Semi-Finalist is a significant achievement, reflecting the hard work and innovation of our team.

We would also like to extend our gratitude to Interim Dean Vanessa Perry and the GWSB Office of the Dean for their generous support of our team.

As our team moves forward to the next stage of the competition, we are excited about the journey ahead and look forward to representing GW and the GW Investment Institute at this global event. Stay tuned for updates!

In Episode 17 of “Market News with Rodney Lake,” Rodney Lake talks with Dr. Gergana Jostova, Chair of the Finance Department, about the future of finance education. Professor Jostova shares her vision for expanding the department with new programs focused on AI and sustainable finance. They also discuss the importance of an undergraduate degree in finance, as it equips students for various roles, from portfolio management to corporate finance. Professor Jostova explains how businesses and investors are interconnected, highlighting the essential decisions finance professionals make regarding capital allocation and investment strategies. Professor Jostova also provides tips for personal finance management and valuable insights for aspiring finance professionals. Tune in for an engaging discussion on the future of finance education!

The inaugural GW Stock Pitch Competition, hosted by the GW Investment Institute, was a tremendous success, providing students with a platform to sharpen their financial analysis skills and demonstrate their investment acumen in a competitive setting.

The competition allowed students to craft compelling investment theses, dive into the GWII Investment Framework, and receive valuable feedback from industry judges. Participants also achieved FactSet certification and conducted in-depth financial research, culminating in their pitches of a publicly traded U.S. company with a market cap of at least $250 million as a strong long-term investment.

The final round, held on October 4th at the GW School of Business, showcased the incredible talent and dedication of our students. Congratulations to the winners who gave outstanding pitches:

🥇 First Place: Alvin Wright – Novo Nordisk (NVO)
🥈 Second Place: Reva Dalmia – Oshkosh (OSK)
🥉 Third Place: Ella Younger – Applied Materials (AMAT)
🏅 Honorable Mention: Tristan Smith – MercadoLibre (MELI)

Thank you to all the talented GW students who participated, showcasing their impressive financial analysis and investment skills. We were blown away by the creativity and dedication that each finalist demonstrated. You can see what each finalist pitched below:

• Yahia Ghannoum – DSV (DSDVY)
• Ethan Kerr – General Dynamics (GD)
• Vaishnavi Vangani – Nike (NKE)

In Episode 16 of “Market News with Rodney Lake,” Rodney Lake, Director of the GW Investment Institute, delves into Costco’s current valuation and growth strategy. He shines a spotlight on Costco’s forward PE ratio of 48 times and a 30% return on equity. He ponders whether the company’s international expansion, particularly its success in China, justifies its high valuation. Lake underlines the unique culture management fosters, prioritizing members, employees, and shareholders. Despite the high price tag, Lake gives Costco an overall score between 8 and 9, noting its continued dominance in the retail space. Tune in to discover why this business model is thriving worldwide!