2019 - 2021 FMA Magazine

PERFORMANCE SUMMARY
ABOUT THE AUBURN STUDENT
INVESTMENT FUND
The Auburn Student Investment Fund (“ASIF”)
was founded in the fall of 2017 with the
purpose of providing ambitious, intellectually
curious undergraduate students with a
deeper understanding of financial markets
through real world security analysis and
portfolio management. The Fund focuses on
delivering hands-on, practical experience in
valuation techniques, equity research, and risk
management.
The Fund’s portfolio consists of single equities,
ETFs, and fixed income investments selected
by students with advisor oversight. Members
develop investment theses by conducting
research and constructing financial models,
resulting in the formulation of investment
recommendations.
INVESTMENT PHILOSOPHY
Beyond our primary goal of student education,
the Fund secondarily aims for satisfactory
returns against the benchmark of the S&P 500
Value Index, in order to ensure the continued life
of the Fund.
This year marked the beginning of the Fund’s
transition away from our historical core-satellite
investment strategy, utilizing a sophisticated
allocation model developed by Fund executives
and advisors. This will allow future generations
of the Fund to transition to an all-single equity
allocation, achieve superior returns, and manage
risk, thereby maximizing the Sharpe ratio.
The Fund is also guided by other investment
criteria including a 90-10 domestic-international
split, mid-to-large cap equities only, and a
minimum of three years post-IPO. The Fund
is value-oriented, seeking to buy undervalued
securities and hold them for a 3-5 year
investment horizon.
FUND STRUCTURE
Each sector consists of a director and 2-3 analysts in each sector.
The Fund is comprised of seven sectors:
Consumer Discretionary (CD)
Consumer Staples (CS)
Financials (F)
Healthcare (HC)
Industrials & Energy (I&E)
Real Estate & Alternatives (R&A)
Telecom, Media, and Technology (TMT)
OUR INVESTMENT PROCESS
Our Investment Process
Equity Selection:
Sector discusses
potential investments
and selects a single
equity to propose to
Exec team
Monitoring:
Exec continues to
monitor investment
while sector updates
model and Fund until
position exit
PITCH EXPECTATIONS
Pitch Approval:
Sector requests to
pitch with brief
explanation of thesis.
Exec approves or
denies
Voting:
Fund discusses and
votes on investment. If
approved, Exec and
advisor executes
transaction
2020 Investment Highlights
Each A clear sector winner is of responsible the pandemic era for due two to comprehensive
deployment of
pitches
dry powder
per
in an
semester,
already
increased online transaction volumes and
including an investment thesis and valuation flourishing via industry
virtual payments
discounted cash flow
Increased AUM by over 10% and had a
or Beat dividend Q2 2020 discount earnings estimates model by in 21.6% addition to
record-setting
public comparables.
year of fundraising
Due
diligence for pitches includes but is not limited to:
75.0% Return 59.6% Return
• Analysis of the firm’s business and its industry, including its strategy
Delivered
and the
strong
competitive
year-over-year
landscape
growth
due to technology differentiation and lowcost
production capabilities
• Analysis of the firm’s financial condition including profitability,
Multiple product launches in 2020 boosted
top balance line growth sheet, and cash flow generation
• Note: A Returns forecast are from of the 2020 firm’s holding performance period to December structured 31, 2020 as pro forma
financial statements with well-articulated assumptions about key
Annual value Financial drivers Report Sensitivity / Page analysis 16 and scenario analysis
• Analysis of the firm’s risk management and ESG
Due Diligence:
Sector completes
macroeconomic,
industry, company,
thesis, and valuation
analysis
Pitching:
Sector presents thesis
to entire Fund with
PowerPoint
presentation (valuation
embedded) and Q&A
105.7% Return 55.7% Return
KKR had a stellar year due to adept
Another obvious pandemic winner due to a
worldwide adoption of e-commerce
during 2020
Experienced increase of net sales and free
cash flow by 44% and 20% year-over-year,
respectively
62 FMA 2019-2021 MAGAZINE