Tag Archives: CFA

2020 Annual Dinner Recap

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Written by: Tharaniitharan Panchalingam, Junior studying Finance and MIS at the Carlson School of Management and Fixed Income Analyst at the Carlson Funds Enterprise

The 2020 CFA Society Minnesota Annual Dinner featured Rick Rieder at BlackRock, with questions moderated by Society volunteer Susanna Gibbons, CFA, Carlson School of Management. Rick Rieder is BlackRock’s Chief Investment Officer of Global Fixed Income, Head of the Global Allocation Investment Team in the Multi-Asset Strategies Group, a member of BlackRock’s Global Operating Committee and Chairman of the firm-wide BlackRock Investment Council. In addition to this, he is a member of the Borrowing Committee for the U.S. Treasury and is currently a member of the Federal Reserve Bank of New York’s Investment Advisory Committee on Financial Markets.

The presentation got off to a humorous start with Rick sharing how his multiple flight delays in New York had him running around the Downtown Minneapolis looking for our venue! After he gathered his breath, he went into what his day was like. In the morning, he presented to the New York Fed on his outlook of the global economy and the policies that ought to be implemented. After this Rick mentioned how he was on a call with Elon Musk to give his thoughts on Tesla’s expected share sale to raise capital. Rick concluded by saying that Elon Musk is probably the smartest person of our generation.

We then went into conversations about Fixed Income; Rick believes that debt is far too cheap and that we are in an environment where spreads are unbelievably tight but, there is still a massive demand for US based fixed income assets, which further puts pressure on the US and global economy. He also stressed that due to the nature of the market, Fixed Income managers must not “stretch in 2020” and that hitting five percent would be an accomplishment.

He also touched on technology and how companies that have significant investments in R&D are creating this “incredible growth paradigm,” while those that don’t invest aren’t experiencing much growth, if any.

This led to one question that caught my attention. Susanna asked Rick, “what do you think of Negative Interest Rates and what are commercial banks’ alternative?” Rick immediately responded with “I think that negative interest rates are the dumbest invention of all time.” He went into why and stressed that it breaks down the traditional investment paradigm and that in Europe, because of the way businesses operate, growth will be extremely hard to come by. Rick said that Europe needs to create “exogenous growth” by investing in innovation. Europe’s innovation is stifling and as a result, don’t benefit from the dramatic growth that it has the potential for. He also said that Japan is in the same predicament and that there may be a time in the future where Japan will default on significant portions of its debt.

We ended the night talking about equities being very cheap relative to credit and that we will see a turn or two in equity multiples over the next few quarters.

All in all, this was a tremendous night. Rick has such a wealth of knowledge and his ability to weave a coherent picture with the data he analyses is incredible. We had great food, great company and a very insightful hour-long conversation! We hope to have Rick back soon!

On the Road to Fargo

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Did you know that our name CFA Society Minnesota only tells 90% of the story? While the bulk of our membership indeed resides in the Twin Cities, we have healthy and thriving communities in Sioux Falls, South Dakota and Fargo, North Dakota. This broad footprint provides great opportunities to put investor’s first around the region.

Carol Schleif, CFA, Diane Senjem, Mark Salter and I took a trip up I-94 to the City of Far More, spending a day and a half in Fargo with Society members, local investment industry leaders, and students from North Dakota State University (NDSU). The centerpiece of the trip was the second annual rendition of “Navigating the Financial Markets,” a joint event between NDSU and the Society. About 200 current and future leaders watched as Jim Bianco, CMT tried to convince all that expansions get murdered instead of dying a natural death, Matthew Finn, CFA reflected on current versus future state of the industry, and Carol Schleif, CFA discussed having a long-term focus and gave ideas on hard vs. soft skills.

Prior to the keynote event we were invited to a meeting between the NDSU Bison Fund and their advisory board. Students in the Bison Fund manage a series of multi-asset investment portfolios, spending most of their time on in-depth bottom’s up equity research. Sitting through the meeting I came away impressed by the commitment of the faculty, advisory board and students, and I found myself reminiscing about my own experiences in a student run fund … twenty years ago in Fairbanks, Alaska. I must say that these students are much better prepared than I was at that stage of life, and I made myself a note to see how I might be able to give guidance to my old fund now that I’m on the other side.

To wrap up the first night we were joined for dinner by members of the Bison Fund, faculty at NDSU and leaders in the investment community. The good food brought people together, as is often the case. As we settled in, we shared our experiences, provided thoughts on the future of the industry, listened to struggles of taking path A or path B, and harkened back to the day when we faced those same crossroads.

On the second day we invited a smaller group, comprised of CFA Charterholder members and candidates, to breakfast to discuss global, regional and local CFA Charter Initiatives. The group also touched on ways to further the CFA Charter in Fargo and Sioux Falls including additional program opportunities and efforts to increase awareness and the candidate pipeline.

To close our time out west, Carol met with a group of young women who started a Women in Business Club at NDSU hoping to get to 10 attendees. They blew away that initial goal and have 80 members; the future is bright!

Our mission – advance professional excellence while promoting ethical behavior and fellowship through development and engagement opportunities for our members – is critical no matter where CFA Charterholders reside. While it is challenging to connect across the vast landscape, we are always up for a challenge!

If any of the above commentary sparks an interest in you to connect with our friends in the Dakotas, or if you reside in any of these areas and would like to learn how you can help out, please send our Executive Director, Mark Salter a note at executivedirector@cfamn.org

-Tom

Day in the Life of a Director of Research Event Recap

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By Steven Rohrich, CFA, Associate Director, Performance Analytics, Pavilion Advisory Group Inc.

On November 16, a group of students and their professor, along with other business professionals had a chance to learn from  Josh Howard, CFA and Scott Opsal, CFA. Over the course of lunch, our speakers shared with us their backgrounds as Directors of Research, daily tasks, and important tips to become investment professionals.

Background

Josh Howard, CFA, Director of Investment Risk and Performance at RBC Global Asset Management, and past President of the CFA Society of MN, taught high school math before breaking into the investment field. Josh was always interested in AP Statistics and began his career as a quantitative analyst building models for risk and returns. Scott Opsal, CFA, Director of Research at The Leuthold Group, LLC, began his career working on the management side of funds typically held in pensions and 401(K)s. He also taught Security Analysis at UW Whitewater. Both are now working closely with quantitative funds. Scott focuses on tactical allocation, and Josh’s concentration is on factor investing and managing risk. Like their roles, the firms they work for are quite different as well. The Leuthold Group, LLC is an RIA with 25 employees, over 1 billion AUM focusing on sell side, and buy side mutual funds and SMAs. RBC GAM, headquartered in Toronto with the operations based in Minneapolis, employs 180+ in the US and has about CAD $370 billion AUM. When asked the question about finding a firm that is a good fit, Scott provided the insight of “find a firm that shares similar values and philosophy you have as it will be the best fit.”

Director of Research Tasks

There are many responsibilities that a Director of Research has, but our speakers were able to provide some of their main tasks and favorite aspects of each day.

  • Investment Process
    • Including, but not limited to, managing investment tools and resources, generating and screening for new investment ideas, and assisting with portfolio construction and allocation.
    • Facilitating information between analysts and Portfolio Managers and running attribution to determine where returns in the portfolio are coming from.
  • Team Management
    • Managing the relationship between Portfolio Managers and analysts.
    • Hiring the people that fit with the team and firms philosophy and training new staff.
    • Performing Human Resource functions.

As a Director of Research, there are numerous opportunities to improve processes, develop the next generation of professionals, and have an impact on investment performance and client results. However, this career also has its challenges and pressures for returns, time management, and determining what is a fad and what is a true innovation.

Things to Consider

Our speakers provided some guidance not only on how to become a Director of Research but to start a career in investments. A good candidate will have:

  • High ethical standards, intellectual curiosity, expertise in investment process and theory, and strong writing and communication skills.
  • Ability to teach oneself to use the tools used in the investment process.
  • Desire to read investment books.
  • Passion to find a firm that shares their same philosophy.

Day in the Life of An Equity Analyst Event Recap

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By John C. Bird, Operations Analyst at Nuveen Asset Management and CFA Level II Candidate

Day in the Life: Equity Analyst, featuring Andrew Rem, CFA and Paul Dwyer, CFA

Day in the Life featuring Andrew Rem, CFA and Paul Dwyer, CFA

Interested in pursuing one of the investment world’s most exciting careers? On September 21st, a group of professionals and students listened to Andrew Rem, CFA and Paul Dwyer, CFA talk about their experience as Equity Analysts. Over the course of lunch, our speakers shared with us their backgrounds, what they do on a daily basis, important lessons they’ve learned, and even some tips on breaking into this extremely sought-after career.

Background

Our speakers: Andrew Rem, CFA and Portfolio Manager of Small Cap Value Fund at Nuveen Asset Management, and Paul Dwyer, CFA and Senior Research Analyst at Punch & Associates, did not start out life knowing they wanted to be Equity Analysts. Andrew spent some time in Retail management, while Paul did a stint in Investment Banking before finding their passion in Equity research and analysis. Both men have found they are value-oriented in their investment approach, and that they prefer small and (in Paul’s case) microcap companies when looking for investment opportunities. With Nuveen being part of TIAA, a multi-billion dollar financial services company, and Punch being a 15-person, employee-owned, RIA, with ~$1 billion under management, you could say Andrew and Paul work in opposite ends of the spectrum when it comes to firm size and organizational structure. However, Andrew and Paul cautioned their young listeners not to be picky when trying to break into the industry. “Just get a job with a firm, large or small, and develop your craft first. Once you are in the ecosystem, then you can worry about firm size, investment style, and the like.”

Tasks of an Equity Analyst

It presents a unique challenge when summarizing a “typical day” in the life of an Equity Analyst, because no two days are the same. However, our speakers were able to broadly summarize an analyst’s duties in the following categories:

  • Research at the Office
    • Includes reading, financial modelling, making / talking to industry contacts, Peer / Competitor reviews, Management calls
  • Travelling
    • Includes Industry / Investment conferences, field trips to companies, and Investor days
  • Activities around Earnings Season
    • Includes listening to Quarterly/Annual calls, updating models / forecasts, reporting on company given updated information

While all this might sound fun, it is important to remember that being an Equity Analyst is not a “9-5” job, and with little oversight from supervisors, one must be a self-starter, highly motivated, and interested in the work to succeed. The best Equity Analysts have a process.

Investment Process

Our speakers stressed the importance of having a repeatable Investment Process. “Focus on creating and then improving your process,” Paul encouraged the audience. “A good process will yield good results over time, while no process is no better than gambling.”

The speakers went on to describe the typical process in researching investments will often have the following steps:

Source -> Research -> Pitch -> Decide -> Monitor -> Close

Andrew recommended having an independent view and being skeptical of the “consensus” when analyzing and forming an opinion on an investment. “It’s only by doing something different, and zigging when the market zags, that one can expect to outperform over the long term.”

Food for Thought

Not surprisingly, given the exciting, intellectually stimulating, and often financially rewarding nature of the work, it is very competitive to break into and analyst positions don’t open up very frequently. Our speakers shared some of their recommendations on breaking in. These included:

  • Study for and obtain your CFA Charter
  • Be active in the stock market. Manage your own portfolio of investments and have a reason for why you own what you own.
  • Get to know your local investment community. Be active in the CFA Society of MN and in your Investment Club on campus (if applicable)
  • Demonstrate an interest and a passion for investing. This is a tough business and only a genuine love for the trade will get you through the tough stretches.
  • Attach an Investment write-up to your resume and cover letter when you go to apply for an open role. Even if you are wrong about the investment, this will demonstrate you are thinking about your investment decisions and will help you stand out in an interview.
  • Follow professional investors, read books and articles on investing, ask to shadow professional investors, and be persistent! The journey is part of the fun!

A special thanks to Andrew, Paul, and all the members of the CFA Society of Minnesota that make events like this one possible. Now it’s time to get out there and invest! Cheers! Be sure to check out upcoming Day in the Life events on our events calendar.

2018 Annual Dinner Recap

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By Elliot Smallidge, a student at the University of Minnesota Carlson School of Management, Class of 2019

I was ecstatic when I heard about the opportunity to see Professor Jeremy Siegel speak. As the highly acclaimed author of Stocks for the Long Run, I knew that Dr. Siegel’s lecture would complement everything I had learned in school. His take on investing would corroborate the conclusions of class after countless class: buy and hold stocks because you can’t beat the market. I arrived at the Minnesota CFA Society Annual Dinner eagerly awaiting his remarks.

Dr. Siegel contracted the flu and was forced to withdraw on short notice. Replacing him would be Doug Ramsey, CIO at Leuthold Weeden Capital. This change of speaker didn’t just shake up my night, but rather my entire perspective on investing.

Every undergraduate portfolio management class teaches that markets are efficient. No amount of fundamental analysis, and especially not technical analysis, could give an investor a sustainable edge. Enter Doug Ramsey, CFA, CMT, and master of market technicals.

His remarks upended everything I had learned in class about investing. Never had I seen anyone seriously attempt to understand markets by examining patterns in the relationships between various economic data in the way that Mr. Ramsey did. His opening comments centered on what he called the eight “Bellweather” indices. Displaying a chart of the S&P 500, Dow Jones Industrial Average, and several sub-sectors, Mr. Ramsey pointed out that every sector (except utilities) had trended upward in unison through January 26; the market was rising broadly across all industries. In a further analysis, we broke the S&P into deciles based on market capitalization and found a similar result: strong stock performance across the board. This pattern, Ramsey explained, has historically indicated not the peak of a bull market, but rather an average of 59 more prosperous weeks.

All my life I learned that there was no science to historical trends, yet here it was so clear before me. I will admit, some of Mr. Ramsey’s further analysis went a bit over my head, but his message has stuck with me. I now know that, however unpredictable the markets are, I cannot discount the value of patterns in historical data.

I was fortunate enough to meet Mr. Ramsey the next week at his office. In a phrase, the theme of our conversation was trust yourself. News outlets and publications are important, but at the end of the day, he cautioned me, your own analysis and critical thinking are the most valuable assets.

Although I did not have the chance to hear Dr. Siegel speak, my experience at the Annual Dinner altered my perspective on investing and opened my eyes to a brand new skill set in a way that I never could have imagined.

Thank you, Doug Ramsey and CFA Society Minnesota, for this wonderful opportunity.