Introduction

• Requirements: QF/BT 321, BT 425 and BT 426
• Offered: Students may/must take the two semester sequence.
• Textbook: Investment Banking: Valuation, Leveraged Buyouts and Mergers and Acquisitions by Rosenbaum and Pearl
• Required Reading: WSJ daily.
• Other publicly available information as relevant - e.g. Edgar, Bloomberg, Reuters, CRISP ( available through Hanlon lab).

The investment practicum is a student managed investment fund (SMIF) staffed by enrolled students and advised by a faculty advisory committee. QF 427 and 428 both aim to provide an insight into how a real-world investment fund operates and provide a realistic experience for the analysts. The fund aims to give realistic valuation and presentation experience to the equity analysts in the fund. These valuation techniques include discounted cash flow models, comparable analysis, and valuation based on market multiples. For those on the QIS team, the fund aims to provide a realistic risk and quantitative experience. Those in senior management roles are tasked with learning how to operate the fund along with preparing realistic investor documents along learning portfolio management skills.

QF 427
Equity:
As part of QF 427, each student will enter the fund as a first-year analyst. Those on the equity research team will be responsible for researching and pitching 3 different stocks in their given sector. Each analyst will be assigned a sector and partner(s). Together, they will create an in-depth analysis of each company and describe why the fund should invest in the company. These pitches will involve economic analysis and indepth company research. Analysts will learn how to execute different forms of valuation for their respective companies in their given sectors. Sectors will be assigned based on economic sentiment and factor model allocations. Top sectors will be covered. These valuation techniques will include discounted cash flow and comparable valuation.
QIS:
As an analyst on the QIS team, you will be responsible for a variety of different roles within the fund. These roles include working with the equity or portfolio risk team and developing risk parameters for the fund, working with the team in charge of creating and implementing the Fund’s multifactor model, working with asset allocation, or working with compliance. Once in the fund, you will be working with one of these teams, assisting in and learning from the heads who are second-semester analysts in the fund.

QF 428
Equity:
As a second-semester analyst in the fund, equity analysts can apply to be part of senior management. Senior management facilitates the operations of the fund. Listed below are each of the positions in equity senior management.(Refer to Senior Management document for further details).
All enrolled students will have read only access to the account and positions. Students will be interviewed by the advisory committee and if selected will fill positions on teams similar to those in a real-world investment fund. Teams will include macro strategy, industry and company research, asset allocation and risk management and legal and compliance. Team assignments may be rotated. Basic concepts from accounting, tax, corporate finance, investment science and securities valuation will be reviewed in early classes. These reviewed topics will include the Modigliani Miller Theorem, Markowitz portfolio model, CAPM, alpha, beta, diversification, correlation, and Sharpe ratios. Practical topics will include P/E, PEG and Price to cash flow and Interest to EBITDA ratios. Other Stevens faculty with relevant expertise will be encouraged to participate in these reviews and classes. The students will also be encouraged to tap the considerable technological and Industry expertise of the Stevens Institute Faculty and Staff. By the end of the (two) semester (sequence), students will have a practical understanding if not a mastery of all the tools needed and functions required in running an investment fund.

Grading Policies

The final grade in the class will be determined in the following manner:

• Attendance - 15%
• Presentations x3 - 25%
• In class quiz - 10%
• Total Grade - 100%