UCLA Anderson’s Justin Phillips (’18) (left) and Jarrid Johnston (FEMBA ’19) of team J^2 Capital won the 2017 Fink Stock Pitch Competition, with teams from UVA Darden School of Business and Stanford Graduate School of Business placing second and third, respectively. Phillips, an equity research analyst, described the rush of competing — and prevailing — in the seventh annual stock pitch.
By Justin Phillips (’18)
After answering the Fink Center’s annual call for resumes and statements of purpose, I was proud to learn that I had been selected to represent UCLA in the 2017 Fink Center Stock Pitch Competition. I soon learned that I would be partnered with Jarrid Johnston, a first-year FEMBA student, whom I’d never even met. And after a few brief calls, I could tell that Jarrid really knew his stuff. He is an investment professional with expertise in financial modeling and experience in public and private equities analysis. We called our team J^2 Capital because both our names start with the 10th letter of the alphabet.
We would have a week to prepare our first-round pitch options. On a Friday morning, we received our investment universe, scrutinizing the securities list of popular equities like Tesla, NVIDIA and Amazon. Given the one-year investment horizon, we decided to pitch Health Equity (HQY) as a long because of its sustainable, scalable business model and an accommodative regulatory environment. We each conducted our own investigations on the name by vetting the recent quarterly and annual reports, conference calls, investor days and sell-side research. After a few days, we came together and built out our investment thesis and valuation. Balancing the stock pitch with the rigors of first-year MBA coursework proved to be a challenging but rewarding experience.
Soon after submitting our first-round pitch, we received the common equity assigned to the second round — U.S. Steel. My immediate reaction was: This is going to be tough! The embattled vertically integrated steel producer had lost money six out of the last 10 years and recently teetered on bankruptcy; but the stock doubled after the November election, based on protectionist trade policies and improving supply/demand dynamics. Clearly, the company had operational issues, but would macro factors make it a good investment in the next 12 months?
After kicking around our ideas, Jarrid and I decided to short U.S. steel, with a price target of down 30 percent — a bold call given the recent run-up. We submitted our pitch near the midnight deadline.
I met Jarrid for the first time on the morning of the competition in Rosenfeld Library, where we briefly discussed strategy and the sequence of our presentation. Despite never meeting face-to-face prior to the competition, Jarrid and I worked well together on game day, which we attribute in part to our compatible fundamental investment analysis processes and athletic backgrounds.
Following an introduction by Jose Plehn-Dujowich, the Fink Center’s faculty and executive director, we found ourselves facing three judges from prestigious Los Angeles firms. Tempering our apprehension, we knew it was game time. From working at a hedge fund for the past few years, I can attest that the Fink Stock Pitch Competition is closely simulates pitching to a portfolio manager at a real-world investment firm. The judges asked insightful, tough questions regarding potential vulnerabilities in our thesis.
At lunch, all the teams crowded in the presentation room to hear the keynote speaker, Ray Kennedy of Hotchis & Wiley. Our “down” time coming to a close, we eagerly listened for the announcement of the three finalist teams. The first two finalists were announced: no J^2 Capital. However, the final team announced was ours!
The final round classroom was packed with all the other teams, volunteers and UCLA staff. We calmly walked to our podium and began our pitch on U.S. steel. But, testing our confidence, the judges definitely turned up the heat in the second round, asking very technical, nuanced questions about steel pricing and volume, based on increased capacity coming from international steel producers and putting downward pressure on pricing. After a rigorous Q&A, we exited the stage and repaired to the awards reception.
The Fink Center did a great job of providing a fine dining reception that was well attended despite the rare L.A. rain storm. After meeting and networking with the other teams and the finalists from Stanford and UVA Darden, we were elated to learn the results. Jarrid and I agreed that the feeling of hearing our team pronounced the winner was akin to the rush of joy you feel winning an important sporting event!
I strongly encourage all prospective investment analysts to participate in stock pitch competitions. It is a fantastic simulation that closely mimics the stock pitching process in the professional world. It is also a great way to meet other students from top programs, network with judges and have a lot of fun!
Read more about the this year's Fink Stock Pitch Competition