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Ross Investment Club Debuts Intercollegiate Stock Competition for Undergrads

4/1/2009 --

BBAs converge on Ross to pitch investment opportunities and meet industry professionals.

ANN ARBOR, Mich.—The Ross School's Michigan Interactive Investments (MII) Club recently hosted undergraduate teams from 17 schools to pitch stocks, meet leading market experts, and engage in a trading simulation. The Intercollegiate Undergraduate Stock Pitch Competition is the first to be tailored to undergraduate business students. BBA teams came from as far as the University of California-Berkeley, University of North Carolina, and University of Pennsylvania.

The two-day competition kicked off March 20, 2009, with a keynote by Michael Gelband, MBA '83. Gelband was head of capital markets at Lehman Brothers until 2007 before being recruited by New York-based alternative investment manager Millennium Management to head its global fixed-income division.

He offered an insiderís look at the evolution of modern-day finance, its current fight for survival, and predictions for the future. The early '80s, when he began at Lehman, could be described as the end of the pre-modern era on Wall Street, Gelband said. And as technology advanced, the so-called modern era of finance began. Suddenly, the potential existed for substantial change in terms of processing capabilities, financial engineering, and securitization opportunities.

"It sounds prehistoric now, but it actually is the case that when this technology was created, our business changed completely," he said. "I had one of the first PCs on the Lehman Brothers trading floor and all of a sudden, I was able to do transactions and calculations so much more quickly than the rest of my colleagues and competitors."

It was the perfect case study, Gelband later explained. Massive and complex risk-taking firms became unwieldy because they were run by people who had no understanding or experience with the products they were trading. These big banks were pressured to post aggressive quarterly profits to compete with smaller hedge funds and private equity firms.

"Our model for financial institutions is fatally flawed," Gelband said. "What we will evolve into over the next decade will look like a newer version of the pre-modern era financial system. If a firm is too big to fail, they're going to be so heavily regulated they they're going to be forced to operate as a utility."

But Gelband also made clear that a slew of new startups will be born from the collapse of the old system. He spoke with hope of startups like investment bank boutiques, dealer brokers, electronic marketplaces, and aggregators.

"That's what's going to drive our financial system back to health and create job opportunities in the future," he said. "The marketplace and the regulators will demand better alignment of incentives, better risk management, and a more rational cost structure and size."

That's a good thing since the approximately 50 students who pitched stocks over the course of MII's competition are serious about finance. They're serious enough that they're ready and willing to go into alternative jobs to pursue their passion.

"There are a lot more options than the typical big names out there," says Josh Cipkala-Gaffin, BBA '09, director of the stock pitch competition and VP of operations at MII. "That was reflected in Gelband's speech and echoed by a lot of the panelists and alumni. If finance is something you're interested in, there are definitely many opportunities."

Judging from their stock pitches, the competing students won't have a hard time finding a place in the finance world. The final-round judges, Hugh "Beau" Cummins III, MBA '89, co-head of corporate and investment banking at SunTrust; Thomas Kong, BBA '08, a financials equities trader at Barclays Capital; and Mohammed Yehia, BBA '04, currently working for Optiver, were impressed by the finalist teams.

The competition was stiff from the first round. BBA teams represented Carnegie Mellon, the College of William & Mary, Georgetown University, Indiana University, Michigan State University, New York University, Pennsylvania State University, Syracuse University, University of California-Berkeley, University of Chicago, University of Illinois, Miami University, University of Michigan, University of North Carolina, University of Pennsylvania, Villanova University, and Yale University.

"After the first round of competition, I was really proud," says Weijia Tong, BBA '10, VP of investments at MII. "I was proud not only for putting up the event, but because we actually participated in it and put up a good team."

The four teams that made the finals were Pennsylvania State University, Michigan State University, Villanova University, and University of Michigan's own Ross School (pictured at right). In the final round of competition, teams had 15 minutes to present followed by 10 minutes of Q&A with the judges. Participants in the competition were restricted to pitching stocks from companies with market capitalizations above $200 million and share prices above $2 (as a three-month moving average).

Michigan State eventually took home the $3,000 prize with their pitch of DHT Maritime Inc., an independent tanker company with a fleet of more than 100 crude tankers and petroleum product carriers. Though Ross put up a strong fight and rightfully secured a place in the final four, representatives from MII are happy to concede the win to MSU if it means the competition was judged on the quality of the investment opportunity presented.

"The final-round judges were a really knowledgeable group of people," says Eric Medina, BBA '09, outgoing president of MII. "I think they analyzed the sector and the soundness of the investment that was being pitched instead of just judging the presentation."

Other components of the competition included a panel discussion on capital markets, featuring Professor of Business Administration and Public Policy Marina Whitman as moderator and Robert Van Order, professor of finance, as a panelist. Another panel on corporate social responsibility featured James Walsh, Gerald and Esther Carey Professor of Business Administration at Ross, and Rick Bunch, managing director of the Frederick A. and Barbara M. Erb Institute for Global Sustainable Enterprise.

Dan Rowe, commercial learning manager for Global Oil Americas at BP, led the BP trading simulation during the competition. Sponsored by BP Integrated Supply and Trading, the simulation taught participants about the concepts and applications of energy trading and made use of live computer-generated markets.

In addition to engaging in a variety of learning formats during the course of the competition, participants also had the opportunity to take advantage of the full range of the Ross School facilities.

"The participants said they were very impressed with the school because we really utilized every aspect of it," says Cipkala-Gaffin. "We went to the Tozzi Electronic Business and Finance Center for the trading simulation, we utilized the classrooms and colloquium in the new building for the first round of the stock pitch, and we took advantage of Blau Auditorium for some of the speakers and panels."

All MII members hope the intercollegiate competition will continue on an annual basis.

"I don't think the event could've gone any better," says Medina. "From the reviews we've gotten, I think it far exceeded the sponsors' expectations as well as the other schools participating."

—Leah Sipher-Mann



For more information, contact:
Bernie DeGroat, (734) 936-1015 or 647-1847, bernied@umich.edu