FIN4380: Domestic Fund Management - Accounting and Finance Assignment Help

Assignment Task

The objective of this project is for you to gain practical experience in analyzing securities and deciding whether not any given security should be held in a portfolio.

The project will be executed in a team environment with teams organized much like a research department for an investment management firm. You will be assigned to a team of four (plus or minus one) people and each team will be assigned to a specific industry sector.

You will assume the role of a securities analyst, and, in consultation with your team, will follow a group of firms in your industry. Each team member will produce a research report with a buy/hold/sell recommendation for one company in your sector.

The hypothetical portfolio will be a portfolio constructed in a previous semester. The portfolio is a core, long-only, all cap equity portfolio, and your sector will be allocated capital based on your sector’s percentage of the overall market as of a recent date. The investment policy governing the portfolio states that the fund will hold exposure to each sector with a minimum value of 50% of the sector weighting and a maximum value of 150% of the sector weighting. The maximum exposure to any one security is 5% of the total portfolio.

Then, jointly with your team, each team member will select a firm in your sector. You will value your firm and make a recommendation on whether to buy, sell, or hold the security. While building toward your target sector allocation, you may also recommend under- or overweighting your sector. Your team report will be a series of recommendations for the securities in your sector including a rationale for the recommendations.

Selection of Industry and Firm

Each team will be given one of eleven sectors defined by the Global Industrial Classification Standards (GICS) produced by MSCI. Each team member will select at least one firm from the existing list of firms within the team’s industry. Data on industries and firms can be found in the S&P Capital IQ database.

Your selections are due February 7, 2023, and each team should designate one person from their team to submit their selections through the Assignment that will be set up in eLearning.

Three-Step Analysis

To complete this project, you will complete, individually, a Stock Selection workbook. The workbook will contain three tabs that correspond to each step, and each step will be posted as an individual assignment in eLearning. Each of the workbook tabs covers one of the following topics:

• Free Cash Flow to the Firm (FCFF) and Free Cash Flow to Equity (FCFE): gathering data and making projections.
• Valuations: using several approaches for estimating value.
• Buy/Hold/Sell Decision: bringing data and analysis to a decision based on a stated rationale.

Although these three steps of the project are based on individual submissions of work, you will want to meet with your group prior to completing your assignments to agree upon common data sources you will use and assumptions for your industry.

Each of these three items will contribute to your course grade as shown in the Syllabus.

Final Report: Format

The final report should be five pages maximum (excluding cover page and appendices, if any), typed, double-spaced, with 1-inch margins all around, and standard sized type (for example, 12-point Times New Roman). The report should include an industry update, list of securities considered categorized as buys, sells, and holds, and, for buys or sells, the number of shares recommended, price per share, and total value per holding. In addition, the report should conclude with a listing of securities and their relative weightings relative to the overall sector, all as of March 31, 2023, v. the target sector portfolio balance. If any additional material is needed for complementing your recommendations, it can be added as appendices and structured in a readable format and font. The five pages, however, should stand on their own. In addition:

• The names of team participants and the team number should be on the first page.
• Pages should be numbered.
• Charts and exhibits should be numbered and appropriately referenced in the body of the document.

The entire report should be self-contained in one file, and it will be due on April 25, 2023.

Final Report: Presentation

At the end of the semester, each team will present their recommendations to the class along with their rationale for securities selection and weightings in the final report.

The presentation material will also be due on April 25, 2023, and each team will make a presentation in class starting that day and continuing in the following classes until all groups have presented their reports. A schedule for presentations will be posted in eLearning. You will have approximately 20 minutes to make your presentation, and it should include all team members and appropriate presentation material.

Conclusion

While this project is designed to reflect practices in the investment business and possibly help prepare you for the CFA exam, it should also be a fun and engaging experience!

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