GW INVESTMENT INSTITUTE INSIGHTS

In Episode 10 of “Market News with Rodney Lake,” Rodney Lake, the Director of the GW Investment Institute, examines Apple’s current performance and prospects. He discusses the company’s innovation in chip design and its AI challenges, commends Tim Cook’s management while noting succession planning concerns, and evaluates Apple’s strong balance sheet and high valuation. Professor Lake emphasizes the need to reassess Apple’s investment potential and future growth, offering insights into its strategic position and financial health. Tune in for a concise analysis of Apple’s strengths and areas to watch.

In Episode 9 of “Market News with Rodney Lake,” Rodney Lake, the Director of the GW Investment Institute, delves into the intricacies of assessing a company’s balance sheet as part of the GWII BMPB Investment Framework. Focusing on companies like Apple and Procter & Gamble, Professor Lake illustrates the impact of financial health on investment decisions, emphasizing the importance of asset and liability matching. He explains how Apple’s strong position with nearly $60 billion in net cash allows it to navigate challenging market conditions, contrasting this with Procter & Gamble’s steady cash flow from its consistent product demand. This contrast provides valuable insight into the different financial strategies adopted by these companies. Tune in to learn more!

Dear Friends and Supporters of the GW Investment Institute,

I am pleased to present the GW Investment Institute’s fiscal year 2024 annual report, which highlights an extraordinary year of academic achievements. The GW Investment Institute team is as strong as ever. Our team members are Christine Song and Bill Collier, adjunct faculty; Bojana Jankovic, Associate Program Director; Kathleen Hinman, Program Associate; Willow Newcomb, Communications Associate; and our student interns were Will Ahrens, Yaseen Shah, Elizabeth Ellis, Clement Banwell, Roman Salygin, Paige Graves, and Victoria Matthews. With this fantastic team, we taught five finance classes associated with the GW Investment Institute (GWII) curriculum, hosted 31 industry professionals, and organized industry visits to Sands Capital and Cushman and Wakefield. Additionally, we launched the Quantitative Investment Project to quantify GWII’s Business, Management, Price/Valuation, and Balance Sheet (BMPB) investment framework.

I am proud to announce that we awarded $50,000 in financial accolades to our top 10 performing students, this year’s Ramsey Scholars, for their outstanding dedication and hard work. We also presented the GWII Stock Pitch Awards, funded by the Charles Schwab Foundation, to the six students with the top three stock pitch presentations per semester, totaling $2,500. Moreover, we honored three exceptional students with the GWII Leadership Award, each receiving $2,000.

We continued integrating FactSet into our classes and collaborated closely with BlackRock, allowing our students to gain valuable insights into risk management using their Aladdin technology.

Last fall, we hosted the inaugural Ramsey Scholars Investment Summit, welcoming five cohorts of accomplished Ramsey Scholars who have driven exceptional growth in the GW Ramsey Student Investment Fund over the past five years. This spring, we held an alumni reception in New York City, reconnecting with former students. Furthermore, our Annual Conference on AI & Finance brought together over 60 students, faculty, and alumni, fostering thoughtful discussions on the latest advancements in artificial intelligence within the finance sector.

We continued participating in the McGill International Portfolio Challenge for the sixth consecutive year. Additionally, we were excited to send a GW team to compete in Cornell’s Women in Investing Conference for the first time, marking a new milestone in our commitment to fostering diverse talent in the finance industry.

While our primary goal is to educate students on investment strategies, capital preservation, and growth, I’m pleased to highlight that our Student Investment Funds have again outperformed the S&P 500 Index. This achievement underscores the effectiveness of our educational approach and the exceptional capabilities of our students.

I extend my heartfelt gratitude to our dedicated students, professors, staff, teaching assistants, advisory and governing board members, portfolio advisors, and guest speakers, whose unwavering commitment advances our mission of excellence in experiential investment education. Your collective efforts have led to our remarkable success. A special welcome to our advisory board members, Greg Wong, GW MBA ‘96, and Aron Kershner, BBA ‘05, who joined this past year.

Our achievements and the outstanding performance of GWII’s Student Investment Funds are a testament to the support of our extensive network of over 1,400 alumni, faculty, and staff. On behalf of GWII, I extend my most profound appreciation for your ongoing support and active participation. With immense enthusiasm, I look forward to the future of GWII, confident in our ability to continue advancing the field of investment education and significantly impacting our students’ professional journeys.

Sincerely, 

Rodney E. Lake
Director, GW Investment Institute

We invite you to review the full report below:

In Episode 8 of “Market News with Rodney Lake,” Rodney Lake, the Director of the GW Investment Institute, provides a comprehensive exploration of Apple’s price vs. valuation a component of the GWII BMPB Investment Framework, with a focus on using price-to-earnings (PE) ratio. Comparing Apple’s PE of 35.5 with the S&P 500’s 23, he explains that its strong brand and financial performance may justify Apple’s premium. Lake advises that the PE ratio has limitations and should be considered alongside other factors for example earnings growth. He underscores the importance of understanding a company’s valuation in investment decisions, enlightening the audience about its significance and keeping them well-informed. Tune in to learn more and enhance your understanding of investment due diligence!

Introduction

During the June 30, 2024 quarter, the GW Investment Institute (GWII) hosted five industry professionals across two finance classes. The semester culminated in 17 stock pitches, five startup idea presentations, and the conclusion of the first semester of the Quantitative investment project. Ten students were awarded GW Ramsey Scholars awards, three received the GWII Stock Pitch Awards brought to by the Charles Schwab Foundation, and three were recognized with GWII Leadership Awards for a total of $57,250 awarded. A quarter highlight was the NYC Alumni Reception, which successfully brought together over 30 alumni. Haya Adnan, a GWSB senior graduating in December 2024 with a major in Business, wrote the following commentary.

Market Commentary

Prepared by Haya Adnan, GW ‘24

The S&P 500 Index wrapped up strong in the second quarter of 2024, hitting record highs signaling a robust equity market. This was followed by slowing growth in non-farm payrolls and unemployment reaching a 2 ½ year peak at 4.1%, leading to heightened expectations for interest rate cuts in the third quarter. Despite inflation cooling faster than expected to 3%, moving closer to the Fed’s 2% target, the second quarter of 2024 saw none of the previously anticipated rate cuts.

Significant performance could be observed in sectors like Communication Services (9.4%), driven by Meta and Alphabet investing aggressively to build out their AI infrastructure, and Information Technology (13.8%) as Microsoft and Apple recover from a slower first quarter, and Nvidia continues its tech dominance, continuing the trend of a few exceptional stocks driving up the market. Comparatively, the Healthcare industry declined (-1.0%) in Q2, followed by Real Estate with (-1.9%) as borrowing costs remain elevated across the sector with interest rate headwinds, and the Materials industry with the most significant downturn (-4.5%), likely due to lower prices in the commodity and chemical markets.

The GWII Student Investment Fund performance for Q2 2024 was 9.7%, outperforming the S&P 500 Index by 5.4%. Individually, the GW Ramsey Fund outperformed the S&P 500 Index by 6.5% at 10.8%, the GW Phillips Fund outperformed by 3.7% at 8.0%, and The GW Quant Fund outperformed by 5.0% at 9.3%. The GW Real Estate Fund underperformed the S&P 500 Index at 0.3%; however, outperformed the FNERTR Index by 1.2%.

We invite you to review the full report below:

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. Tune in to learn more!

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!