Is Wharton An Undervalued Stock?

by John A. Byrne on

Invited round one applicants to Wharton are facing a new and novel admissions test: a team-based discussion

Invited round one applicants to Wharton are facing a new and novel admissions test: a team-based discussion

What’s wrong with Wharton?

That was the highly provocative headline on a Wall Street Journal story published Friday (Sept. 27). The article suggested that the University of Pennsylvania’s business school has fallen behind rivals in recent years. The Journal cited a 12% drop in MBA applications over the past four years, a market shift away from Wharton’s strength in finance to technology and entrepreneurship, and a years-long decline in the rankings in concluding that “something at Wharton doesn’t add up.”

Several MBA admissions consultants reinforced the story line by telling the Journal that Wharton’s luster has recently faded. Eliot Ingram, a Wharton alum and CEO of Clear Admit, said that one of the firm’s clients turned down a $70,000 scholarship from Wharton this year to attend Harvard Business School because the applicant believed HBS had a stronger global brand. “We’re hearing (applicants say) Stanford, Harvard or nothing. It used to be Stanford, Harvard or Wharton,” the Journal quoted Jeremy Shinewald, founder of admissions consultant mbaMission.

Some Wharton insiders, understandably angry with the Journal’s conclusions, grumbled that the newspaper was looking for a deliberately provocative article on business schools in the wake of The New York Times’ story on gender inequality at Harvard Business Schools. Both media outlets furiously compete with each other in business coverage and clearly the NYT story fueled much discussion and debate.

THE GOOD NEWS MAY OFFSET THE BAD NEWS AT WHARTON

Did the Journal over reach? After all, MBA graduates from Wharton this year had one of the best placement records in the school’s history. Some 97.8% of the class had job offers three months after graduation, up from 95.5% a year earlier, and median base salaries rose to $125,000, up $5,000 from 2012.

This year’s entering class at Wharton, moreover, is arguably its best ever–at least as judged by average GMAT scores. The 725 average GMAT score for the Class of 2015 is a record and seven points higher than the previous year. Wharton’s average GMAT score is now the second highest of any school in the world, behind only Stanford University’s 729 average from last year.

And unlike many other business schools, Wharton has led the way by enrolling record percentages of women, higher than either Harvard or Stanford. This year, 42% of the entering class is made up of women.

‘A WHARTON MBA IS LIKE A BLUE-CHIP STOCK…THE LONG-TERM ROI IS SOLID’

Instead of floundering, Wharton is seen by some key observers as a true innovator. “Having met with the Wharton admissions staff and heads of several initiatives a few months ago, I’m impressed by how they’re changing the game,” insists Dan Bauer, founder of The MBA Exchange, a leading MBA admissions consultancy. “Wharton is implementing a more flexible curriculum, improving the overall experience with a new student center, and leveraging their San Francisco campus. The Lauder MA/MBA Program, the Healthcare Management Program, and the Zell-Lurie Real Estate Center are second to none. The concentration in retailing is a well-kept secret. And Wharton’s offer of a free exec ed class every seven years for MBA grads is amazing.”

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  • Dutch Ducre

    HBS case studies are pure garbage. I’d take Wharton any day over HBS.

  • loser

    You wouldn’t get into either in that case.

  • Obaji

    Wharton is a great school, no question about that. However, the program selectivity is away behind Harvard and Stanford and even MIT Sloan. Many think about the prestige factor, in fact, Dartmouth and MIT carry more prestigious weights than Wharton (generally speaking).

  • Louis

    According to who?

  • Radon

    I think the WSJ article raises some fair questions about Wharton’s position and reflect recent forum discussions among applicants. Some reasons are due to market trends such as declining demand from finance. Other B-Schools have caught up and added value to their MBA programs. Booth has improved its brand and financial aid, widened its applicant base and recruiters. Tuck has earned credits for its personal experience, high student satisfaction and strong employment data. The general perception is that H/S pull ahead of W and Booth,MIT,Columbia are closing in.

    Wharton’s blue chip comparison works only to a certain extend as the competition continues to excel. It can’t live on its past laurels for too long. The article correctly points to Wharton’s leadership and its iffy track record. Dean Robertson’s tenure is lackluster and recent ‘knowledge’ branding isn’t great innovation. The adcom office has caused mild surprises with poor customer service and initiatives.

  • ta

    This is such bullshit man….you guys take the ranking prestige thing way too seriously……wharton is a top 3 (top 5 at worst) B school worldwide..period!!!! the slump may have to do with the slump in the financial services industry which was a huge feeder to wharton…..that apart its all the same…individual mentality is way more important that school prestige and brand….

  • Jimmy

    I agree with Ta, there is no discussion that, in term of reputation and ranking, Wharton is the historical number 3. I do not know how you can compare Wharton to MIT or Dartmouth. Wharton was ranked 1st MBA in the world in the FT for 5 years, a rank Sloan or Tuck was far away to reach at any time. But I think this article gets a point: Wharton is loosing distance between the Top 2 schools that are Harvard and Stanford. Any very “good in the paper” applicant (Gmat:730, GPA: 3.8, top tier company) with a good interview will be granted an admission. This is not true for Harvard and Stanford. Their applicant pool is so incredible that, to get an admission, good grades and famous company is not sufficient, you need to demonstrate some kind of leadership, something original that makes you stand out from the line. I really have the feeling that in this matter there are Harvard and Stanford (maybe also Insead) and the rest of the world.

  • Crew

    Q: Is Wharton an undervalued stock?
    A: Wharton has been an underperforming stock in recent years relative to its top peers.

  • Shaniqua James

    I’m still perplexed about the rationale for measuring the excellence of a school by the number of people it turns away. There may be other reasons to disparage Wharton, e.g., their relatively disfavored position in PE and VC, but a slightly reduced number of applicants as a MULTIPLE of the number of admits is meaningless.

  • MikeOO

    When finance tanked in the wake of 2008, it was clear that the traditional finance schools would take a hit. Harvard and Stanford were never thought of as finance-heavy schools, where Columbia, Booth, and Wharton were (regardless of the reality). Wharton was just caught with its pants down, and the result with be – unless Wall Street sees boom years again – HS, not HWS. No, neither Booth nor Columbia will take Wharton’s place. I suspect what we are seeing with sustained interest in these program is that both Booth and Columbia have geographic protective factors (the former having the corner on the midwest and the latter being in NYC). Perhaps MIT, but even that’s a bit of a stretch. Hell, I’m going long on MIT and Berkeley, with their tech and entrepreneurship focus. Finance is gone for now.

  • Trio

    HYP
    HSW
    MBB
    GS/MS/JPM
    Etc. Etc. Etc.

    If you’re fortunate enough to go to, or work for, any of these places (frankly, if you even know what all these acronyms mean without further explanation…) you’re probably doing just fine in life. Seems overboard to worry about minimal drops in applications when the jobs and caliber of the class and faculty have held up remarkably well.

  • AkTv2

    ‘Some believe the latest decline at Wharton can be attributed to a new team-based discussion requirement which scared away candidates who speak English as a second language. ‘

    This argument is utter rubbish. Ross introduced team-based discussion this year and didn’t experience application decline. With all its much trumpeted outreach events to women, Wharton should register record applications.

  • whartonalum76

    As a Wharton alum it angers me to have to agree with the WSJ. I was admitted under Thomas Caleel, a Wharton grad with a background in investing and it seemed that he knew what he was doing with that office. I heard JJ Cutler was good, another Wharton MBA. But after he left there’s been a lack of a vision and hiring the right team. This year I had to sit through a dizzy blond admissions officer presenting in New York. No surprise that people no longer take Wharton seriously, with reps like that. We need to go back to basics: finance, focus on mastery of big data. I hope the new dean takes up this charge. And hires the right head of admissions who can take Wharton in the right direction.

  • guest

    Top 2: H/S

    Next 7: Booth/Wharton/Kellogg/MIT/CBS/Tuck/Haas

  • wa344

    well, here is what I think when mention hear wharton: great Finance school (it used to be called wharton school of finance”, large class, older applicants, lower selectivity (20 to 25%), lower yield rate (60 to 70%), not that selective to be honest compared to Harvard, Stanford, MIT and Columbia. The soundness of the name: Wharton sounds like school for analytic people, professionals preparing institute. BUT not for the game changers and NOT for the exceptionals. Prestige wise: it is away behind Harvard and Stanford and to some extent lacks the special flavor of Dartmouth and MIT brand.. It is huge factory for finance and accounting labors..NOT for real leader..It , however, remains good school among the top..but not so special. you will certainly hear Harvard and Stanford at Wharton but not likely the vice versa..

  • Peter

    I love how this site always zooms in on HBS, GSB and Wharton. It’s baffling to me that people are stuck in the past and holding on to the status quo. In short: people will want to go to non-Ivy schools, because they prepare students for the future better. It’s a simple shift from the old to the new: GSB or MIT, and HBS as a solid third option just ahead of Berkeley. That’s where we’re headed. Let me know in 10 years if I was wrong ;)

  • HBSfan300

    after 130 years, mercedes still the best car in the world, similar applied to Harvard. keep dreaming :)

  • avivalasvegas

    I believe that Wharton is on its way down. Compare the school’s alumni to the those of its upcoming peer schools like Kellogg and MIT and you see why very quickly. The days of tolerating MBA arrogance are long gone and Wharton has yet to catch on. Add the reduction in differentiation between Wharton and Booth (Both Finance schools, both create anti social graduates) and you begin to see why. My prediction for the top 5 ranked schools:

    1) HBS
    2) Stanford
    3) Kellogg
    4) Booth/ Wharton
    5) MIT

    While the competition between schools will continue to be fierce, lets not make the mistake of confusing a top 5 school education with the lesser programs. I’ve worked with MBAs from all across the top 30 spectrum and, as a general rule, the moment you go lower than Columbia/ Tuck, there is a marked difference in candidate capability.

  • RealBOB

    and why that moment did not appear when Bob McDonald (an MBA from Utah) appointed to be CEO of P&G??!! Do not generalize please..in every good school, there will be a good and CAPABLE people..it is all about the person NOT about the stamp..I know some HBS grad who still works as manager with 5 digit salary in a factory of plastic 10 years after graduation..

  • avivalasvegas

    “as a general rule” generally means there are exceptions. But, like or not, they are rarer the higher up the rankings you go.

  • Mashable

    have you ever considered a career in comedy?

  • Vince Ricci

    I hear the same from my MBA applicants clients here in Asia. One recently told me that the Columbia MBA road show (single school event) in Seoul had more than twice as many folks at the Wharton session. She said the Wharton was poorly attended, alumni panel members rambled on, and that the messaging was boring and lame. She left early and lost motivation to apply in R1.

    Personally, I like Wharton. They did a nice job hosting our organization The Association of International Graduate Admissions Consultants (AIGAC) in June. And yes, I remember both Thomas and JJ.

    Seems they just need to find an adcom director who can stick around for a bit longer and establish traction. Someone young but stable, like Bruce at Yale SOM.

  • HeadHunter

    No Please. Not Bruce, he has only two eyes: GPA and GMAT. I highly recommend Lisa Piguet of IMD, that women is terrific :)

  • http://www.vinceprep.com/ Vince Ricci

    Wow. No THAT is out of the box thinking. Yes, Lisa is wonderful. Or maybe Caroline recently of INSEAD, now working for Matt S’s “dream team” adcon outfit…

  • avivalasvegas

    Imitation is the highest form of flattery :)

  • Simone

    Caroline is expert in “mass production” of INSEAD. while Lisa is the master of quality and tough selectivity. IMD policy with its employees is very sharp and hard “up or out”, only exceptional people survive, I see Lisa stayed for long time there which good sign.

  • Pat

    The best is subjective, the fastest is not. GSB, Sloan and Haas are the ‘fastest’ schools in this new age. HBS will definitely lose ground, just like Harvard as a whole did in the QS university rankings. Most of the people I know who went to GSB and MIT did not even apply to HBS – let alone Wharton – and no, they are not lying.

  • HarvardWINDnotfan

    If they certain about the admission they would had applied. Harvard is the best and the golden university in all human history. It impossible to fail in life if you attended Harvard. anyone at Harvard is smart, successful and extremely exceptional by default. other universities are far behind with exception of the university of Liberia (can you imagine their selectivity this fall is exactly 0%, what a tough university to get in!!!))

  • mba20122013

    @20ebc14e33142317750dae3ba2bd6bd2:disqus, I’m a current student at Wharton. Attitudes like yours do more of a disservice to our institution than any article published in the WSJ or NYTimes. You and I debating Wharton’s reputation is a futile exercise due to the inherent bias we both have as students and alumni. What I can tell you is this: right now at Wharton the culture, caliber of student, and mutual respect is such that no one would ever, EVER get away with citing a “dizzy blond admissions officer” as evidence of “a lack of vision and hiring the right team.” This attitude is ignorant, callow, and unworthy of the Wharton brand. It matters little what one editor writes in the paper. It matters a great deal what virtues our alumni export to the outside world. Tread carefully.

  • Steven

    “the moment you go lower than Columbia/Tuck, there is a marked difference in candidate capability”
    wow, what exactly do you do? where did you study and what did you learn there?
    Let me ask two questions. You can use Google, textbooks, your HBS lecture notes. If you can come up with the correct answer here within one week, include your email and I will PayPal you $200.
    1. Write down the boundary and terminal conditions corresponding to the value of an American option.
    2. Write down the explicit finite difference algorithm to numerically compute the value of the option.

  • Hmm

    Tech is about actual skills and creativity. Can an MBA design and build some great piece of software that thousands or millions of people will use?
    what is the value add of an MBA in that environment? is an MBA going to do meaningful work on Google’s next search engine? I mean code, not “project manage”

  • avivalasvegas

    I work in media. Let’s leave it at that. I’d invest your $200 into checking with the recruiting folks who hire cross industry. My statement above comes from cataloged observations, mine and theirs. If you find evidence to the contrary, I’d be happy to correct myself.

  • oliver

    he is right. your judgment is baseless.

  • John Doe

    In this case, an engineer with an MBA, for sure. Absolutely they can do meaningful work; they can help forecast how a new feature is going to sell. I understand your possible point of view…as a former engineer myself I remember how I thought you did all of the work. And yes, I did execute all the work, but who set the course of the ship? Guess who has the time to do market research and make sure X and Z internal division is on board and will be able to execute in a particular time frame in order to beat your competitor to the market? In other words, if you had millions of dollars and an army of workers, how do you decide what to make and how to make it? This is where the suits come into play…just saying there’s more value then you may perceive..

  • John Doe

    Wharton has the rep of being one of the best finance schools in the world. The financial services industry has taken a huge hit since 2008, and the seemingly continual stream headline news speaking of layoffs has made things worse. That’s it. IF/WHEN the financial services industry kicks into full swing again, so will Wharton, IMHO.

  • FStratford

    Come on. Noobie mistake to send a ditzy admissions gal to NYC. That alone should get the hiring manager of that ditzy person fired

  • Chris

    One day someone will figure out how to weigh in emotional intelligence, collaboration skills, and leadership, not academic excellence, a standardized test, and a company brand (and not the role). In general, MBA students are well spoken, character individuals, but every so often I come across a quant individual who will never fully realize the potential of the education, network, and support structure that a top tier MBA attracts and maintains. These short-sighted rankings just fuel to these follow-the-crowd types. :(

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