Thursday, February 28, 2013

Press Release - Wisconsin School of Business MBA Students Named Winner of Milwaukee CFA Institute Research Challenge

Madison, Wis. – The CFA Society of Milwaukee announced today the Wisconsin School of Business team from UW-Madison has won the local competition of the CFA Institute Research Challenge and now advances to the Americas Regional Challenge next month in Toronto.

Members of the team: Dan Sosnay, Ashley Ditmarsen, Ali Gardoi, Cairn Clark and Casey Karbowski – each of whom are currently participating in the Wisconsin MBA’s Applied Security Analysis Program. Drew Justman, CFA, an equity analyst at Madison Investment Advisors, served as Mentor to the team. Brian Hellmer, CFA, who is Director of the Hawk Center for Applied Security Analysis, served as the group’s faculty advisor. The panel of judges included Adam Sweet, CFA of Madison Investment Advisors, Mark Prusha, CFA of Musser Capital Advisors and Jean Wangard, CFA of Wangard Investment Consulting.

The CFA Society of Milwaukee competition was the first round of the CFA Institute Research Challenge. All of the student teams in this round of the competition presented a detailed analysis and investment recommendation on Harley-Davidson Corporation, a leading producer of motorcycles based in Milwaukee. The presentations at the Milwaukee finals were the result of three months of research, interviews with company management, discussions with competitors and dealers and presentation preparation.

The students from UW-Madison will now travel to the Americas Regional challenge to be held on March 20-21 in Toronto, Canada where they will compete with student teams from Canada, the United States, and South America. The winners of the four regional challenges (Americas, New York, Europe, and Asia Pacific) will advance to compete in the global finals on April 12, 2013 in London.

“I’m extremely proud of this talented group of students” said Brian Hellmer, who serves as Director of the Hawk Center after a long career of managing institutional equity portfolios. “In addition to the normal demands of their classes, they voluntarily devoted many hours researching this company and preparing both a written report and a slide presentation highlighting their conclusions. We are privileged to represent the CFA Society of Milwaukee at the next round of competition in Toronto, and thank the CFA Society of Milwaukee and all of their volunteers for putting on this event. I also want to recognize and thank all the teams from around Wisconsin that competed in the competition this year – it was a fantastic event and gets better every year”.

About the CFA Institute Research Challenge
The CFA Institute Research Challenge offers students the unique opportunity to learn from leading industry experts and their peers from the world’s top business schools. This annual educational initiative is designed to promote best practices in equity research among the next generation of analysts through hands-on mentoring and intensive training in company analysis and presentation skills. This year, more than 100 CFA Institute member societies will host local competitions with more than 3,000 students from more than 650 universities in 55 countries participating.

The CFA Institute Research Challenge consists of the following components:
• Analysis of a public company – Teams research a publicly traded company, and company management presents to the team and participants in a question-and-answer session.

• Mentoring by a professional research analyst – Each team works with an investment professional who mentors the team on the research process and reviews their report.

• Writing a research report – Students produce an initiation of coverage report on the chosen company. The report is reviewed and scored by a group of graders.

• Presentation of research to a high-profile panel of industry professionals – The team with the highest combined written report and presentation score is the winner.

The challenge gathers students, investment industry professionals, publicly traded companies and corporate sponsors together locally, regionally, and globally for a world competition. In order to promote best practices in equity research and company analysis, the students are asked to research, analyze, and report on a company as if they are practicing analysts working for an investment firm. Local CFA societies host and launch a Research Challenge in conjunction with the participating universities. The universities assemble teams of three to five business and finance students who work directly with a company in researching and preparing a company analysis. The team’s final presentations are locally evaluated by high-profile panels of heads of research, portfolio managers, and chief investment officers from the world’s top firms. The local champions advance to regional competitions in the Americas, Asia, and Europe and then to the global finals.

About CFA Institute

CFA Institute is the global association for investment professionals. It administers the CFA and CIPM curriculum and exam programs worldwide; publishes research; conducts professional development programs; and sets voluntary, ethics-based professional and performance-reporting standards for the investment industry. CFA Institute has more than 107,000 members, who include the world’s 97,890 CFA charterholders, as well as 135 affiliated professional societies in 58 countries and territories. More information may be found at

CONTACT: Brian Hellmer, (608) 262-9039,

Friday, February 8, 2013

Dr. Mark Palim - Economic and Housing Outlook, by Matt Alexander, CFA

Dr. Palim, an economist with the Economics and Strategic Research group with Fannie Mae, discussed the current state of the housing market on January 16th at the Milwaukee Athletic Club.

“A house is only worth the job you can commute to.”

There have been headline improvements in the labor market. However, job growth by sector has been uneven, driving regional differences in housing market strength. For example, booming growth in oil production is supporting energy producing regions. Manufacturing jobs are beginning to return. Health Care and Education employment have grown steadily through the recession and continue to grow. Against this backdrop, home prices are beginning to recover, even for distressed markets (though not everywhere). Furthermore, valuation metrics are more in line with fundamentals.

But weakness remains. Federal government employment has begun to contract, two years after local and state governments had borne the brunt of public sector layoffs. Broadly speaking, consumer confidence remains near historic lows. Household formation has improved, but the households that have formed tend to be rentals.

Are we becoming a renting society?

Palim cites survey data that reveal some of the attitudes that currently affect household formation. The aspiration to buy is strong, now more so for non-economic reasons than investment motivations. Most people who rent tend to do so mainly for financial reasons; they primarily have trouble with down payments because household financial assets have declined and traditional lender underwriting standards have stiffened. Intergenerational transfers have also declined (bank of grandma). So we may be turning into a renting society, though not necessarily by choice. Even so, overall improvements in housing are reflected in rental and home price expectations; rents are expected to increase 4.4% next year and home prices are expected to rise 2.6%.

The influence of the government is never far off. The Fed holds nearly $1 trillion in mortgages and is, in Palim’s view, the marginal buyer. The FHA has gone from 3% to 30% of the mortgage market and has been very important to first time buyers. Is FHA’s influence similar to subprime prior to the crash? Palim's answer is no – the difference is documentation. No more liar loans or ninjas (no income, no job, no assets) in this mortgage market.

Generally speaking, the mortgage market has become more fragmented. Non-traditional lenders have entered, such as Costco. Morover, the largest banks have seen their market shares decline in favor of smaller lenders. One exception is Wells Fargo, the largest bank in this segment that has seen its share expand*.

What’s the biggest risk to the housing recovery?

Palim names three: adverse international developments, a double dip recession (unemployment) and actions of the Fed. Housing prices will not be as tightly coupled to levels of interest rates as is traditional thought. However, he does note that sudden spikes in interest rates would have an adverse impact on housing prices.

*Author is employee of subsidiary of Wells Fargo & Co. Data and views expressed in this article are those of the presenter.