When MBA Stock Picking Prowess Is Put To The Test

Elise Radolf (left), Devon Pennington and Anthony (Peiheng) Xu won last year’s Alpha Challenge

‘THE HARDEST PART AND THE MOST FUN PART IS THAT IT LASTS FOR NEARLY THREE WEEKS’

The competition begins before anyone shows up on campus. PowerPoint presentations are sent in five days before the live contest at Kenan-Flagler. Then, on the morning of Nov. 18, morning rounds begin at 7:45 a.m. in six different competition rooms at the Carolina Inn. The teams change rooms for each pitch, though they compete against the same teams in each room. The judges score each pitch based on their perceptions of the quality of the investment idea, the communication of it and the risk/reward, and whether they would likely allocate capital for it.

“The hardest part and the most fun part of the Alpha Challenge is that it lasts for nearly three weeks, with two weeks of analysis and one week of presentation and interview preparation,” says Pennington. “Most case competitions last one to two days and you get the benefit of sustaining a sprint over a marathon distance. This experience really helps prepare you for the intensity and level of rigorous analysis needed to succeed in a summer investment management internship.”

Indeed, in 2013, one of the Alpha Challenge’s sponsors wanted to use the event to formally interview some of the competing students. Seven firms did interviews that year, sitting down with five to six students each. Last year, 25 firms participated in a separate interview day, conducting 268 interviews for summer internships.

‘GROUND ZERO FOR INVESTMENT MANAGEMENT RECRUITING’

“The stock pitch competition has now become a major recruiting event for internships,” says Snively. “Students are not only prepping for a competition; they’re also pitching for a job. It’s ground zero for investment management recruiting.”

Most stock picking students have between five and 12 interviews each. Radolf racked up 14 interviews, ultimately landing a summer internship with William Blair. Each interview is a pitch marathon in itself because students are expected to attach a one-page investment idea to their resumes, all seen in advance by the interviewing firms. “The firms use it to help screen the students in another way,” says Snively. “They want to see them when the lights are on and they have to back up a stock report.”

Pennington, in fact, says he came to UNC because of both the Alpha Challenge and the school’s student-run AIM Fund, a $1.8 million investment fund that is a full-year course on the basics of investment management at Kenan-Flagler. The “We walk them through everything you need to analyze a stock,” explains Snively. “Students then identify investment ideas and pitch them in front of a class of 20 to 30 people.”

STUDENT-MANAGED FUNDS OFTEN A MAINSTAY OF SCHOOLS WITH STOCK PICKING CONTESTS

The class is divied up into analysts for each of the ten Standard & Poor’s sectors, along with a portfolio manager and a market manager. During the year, each student pitches three deeply-researched investment opportunities to the class and an unlimited number of other quick pitches. The AIM Fund is one of three at Kenan-Flagler, including the Reynolds Fund, which has grown from an initial investment of $50,000 to $400,000 and is one of the oldest student-managed funds at any business school.

“The AIM fund course prepares you to recognize traits of good investment ideas as well asides to avoid,” says Pennington. “Evaluating dozens of pitches provides much needed ‘reps’ to build muscle memory for making quality investment decisions.”

And how is this year’s Alpha Challenge coming together? Pennington insists it’s on track to be Kenan-Flagler’s best ever. “Every year we strive to strengthen the event and find the quality of the competitors similarly increases,” he says. “The top business schools in the country send their best talent and the interview day prior to the competition has helped many firms connect with students for summer internships and full-time roles.”

DON’T MISS: MEET THE MBA CLASS OF 2018 AT KENAN-FLAGLER