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Babson College FundBabson College FundRick Spillane, CFARick Spillane, CFANovember 5, 2014November 5, 2014
Presentation OutlinePresentation Outline
1. My Background1. My Background
2. BCF 2014/20152. BCF 2014/2015
3. Investment Philosophy3. Investment Philosophy
4. Recruiting Strategy4. Recruiting Strategy
5. Q+A5. Q+A
My backgroundMy background
RPI, Chemical Engineer; Harvard MBARPI, Chemical Engineer; Harvard MBA
Eaton Vance Management, 1977-1987Eaton Vance Management, 1977-1987 Analyst and Portfolio ManagerAnalyst and Portfolio Manager
Fidelity Investments, 1988-2007Fidelity Investments, 1988-2007 Analyst and Portfolio ManagerAnalyst and Portfolio Manager Director of ResearchDirector of Research Chief Investment Officer (US and Europe)Chief Investment Officer (US and Europe) Head of Strategic Advisers (FidelityHead of Strategic Advisers (Fidelity’’s RIA)s RIA)
BABSON FACULTY 2007-PRESENTBABSON FACULTY 2007-PRESENT
What is BCF?What is BCF?
BCF runs a portion of the Babson EndowmentBCF runs a portion of the Babson Endowment
23 Students (undergrads and MBA23 Students (undergrads and MBA’’s)s)
The objective is to beat the S+P500The objective is to beat the S+P500 Long/ short portfolio of EquitiesLong/ short portfolio of Equities Fully invested (market timing not allowed)Fully invested (market timing not allowed) Heavy Focus on investment analysis (stock picking)Heavy Focus on investment analysis (stock picking)
MEETINGS ARE MONDAY NIGHTS 6:30 TO 9:00 PM MEETINGS ARE MONDAY NIGHTS 6:30 TO 9:00 PM 6:30-7:30 Coaching session with Exec in Residence6:30-7:30 Coaching session with Exec in Residence 7:30-9:00 Portfolio overview and Stock Pitches7:30-9:00 Portfolio overview and Stock Pitches
One Friday seminar per semesterOne Friday seminar per semester
Executives in ResidenceExecutives in Residence
Warren Johnson, CFAWarren Johnson, CFA
Hugh CrowtherHugh Crowther
Jim Spencer, CFAJim Spencer, CFA
Rick Mace Rick Mace
Charles Mangum Charles Mangum
Chris StixChris Stix
Mike DunnMike Dunn
Pratima AbichandaniPratima Abichandani
Steve Petersen Steve Petersen
Bill EbsworthBill Ebsworth
HighHigh
LowLow
LowLowProbability Of SuccessProbability Of Success
Impa
ct O
n R
etur
nIm
pact
On
Ret
urn
HighHigh
Investment PhilosphyInvestment Philosphy
Stock SelectionStock Selection
Market TimingMarket Timing
Style TimingStyle Timing
Size Timing Size Timing
Sector SelectionSector Selection
Page 7
1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
Europe ($)
Japan ($)
Japan ($)
Emg Mkts
Emg Mkts
Commo-dities
Emg Mkts
Small Value
Emg Mkts
Japan ($)
Large Value
Real Estate
Large Value
Large Growth
Emg Mkts
Commo-dities
Real Estate
Commo-dities
Emg Mkts
Real Estate
Emg Mkts
Europe ($)
Emg Mkts
Bonds
+79.8 +100.3 +43.0 +40.4 +65.0 +29.1 +59.9 +29.1 +74.8 +21.8 +38.3 +35.7 +35.2 +38.7 +66.4 +49.7 +15.5 +32.1 +56.3 +31.6 +34.5 +34.4 +39.8 +5.2
Emg Mkts
EAFE EAFE Japan
($) Commo-
dities Bonds
Small Growth
Small Caps
EAFE EAFE S&P 500 Commo-
dities S&P 500
Europe ($)
Japan ($)
Real Estate
Small Value
Gold Small Growth
Emg Mkts
Commo-dities
Emg Mkts
Gold Cash
+77.2 +69.4 +24.6 +35.2 +38.3 +8.9 +51.2 +18.4 +32.6 +7.8 +37.4 +33.9 +33.4 +28.9 +63.1 +25.9 +14.0 +26.1 +48.5 +26.0 +21.4 +32.6 +27.7 +1.8
EAFE Europe
($) Gold
Small Value
Large Growth
Cash High Yield
High Yield
Europe ($)
Commo-dities
Large Growth
Large Growth
Small Value
S&P 500 Small Growth
Small Value
Bonds Bonds Small Caps
Small Value
Japan ($)
Real Estate
Commo-dities
Gold
+56.2 +44.5 +23.8 +29.5 +35.9 +7.8 +46.2 +15.8 +29.8 +5.3 +37.2 +23.1 +31.8 +28.6 +43.1 +22.8 +8.4 +10.3 +47.3 +22.2 +25.6 +34.7 +21.2 +1.8
Japan ($)
Emg Mkts
Commo-dities
EAFE S&P 500 Large Growth
Small Caps
Large Value
Japan ($)
Cash Small Growth
S&P 500 Large Growth
EAFE Commo-
dities Bonds
High Yield
Real Estate
Small Value
Small Caps
Gold EAFE Europe
($) Commo-
dities
+43.5 +28.6 +23.8 +28.3 +31.5 -0.3 +46.1 +13.8 +25.7 +3.9 +31.0 +23.1 +30.5 +20.0 +40.9 +11.6 +5.3 +5.2 +46.0 +18.3 +17.8 +26.9 +14.4 -30.5
Large Growth
Large Value
Emg Mkts
Commo-dities
Europe ($)
Gold Small Value
Real Estate
Small Value
Europe ($)
Small Caps
Large Value
Europe ($)
Large Value
Convert Large Value
Cash Cash High Yield
Europe ($)
EAFE Gold Large Growth
High Yield
+32.9 +20.0 +14.8 +27.9 +29.1 -1.9 +41.7 +12.2 +23.8 +2.7 +28.4 +21.6 +24.2 +15.6 +36.4 +7.0 +3.8 +1.6 +35.6 +21.4 +14.0 +23.9 +11.8 -26.2
S&P 500 Gold Cash Small Caps
Large Value
Convert Large Growth
Convert Small Caps
Large Growth
Small Value
Europe ($)
Small Caps
Convert Large Growth
Cash Small Caps
High Yield
EAFE EAFE Europe
($) Small Value
EAFE Small Value
+32.2 +19.6 +5.5 +24.9 +25.2 -2.5 +41.2 +12.0 +18.9 +2.7 +25.8 +21.6 +22.4 +11.7 +33.2 +5.9 +2.5 -1.4 +35.3 +20.2 +9.9 +23.5 +11.6 -28.9
Large Value
Real Estate
Large Growth
Large Value
Small Growth
S&P 500 Real Estate
Emg Mkts
Real Estate
S&P 500 Convert Small Value
Real Estate
Bonds EAFE Small Caps
Gold Emg Mkts
Europe ($)
Commo-dities
Real Estate
Large Value
Small Growth
Japan ($)
+31.5 +19.2 +5.3 +23.2 +20.2 -3.2 +35.7 +11.4 +18.5 +1.3 +23.0 +21.4 +18.9 +8.7 +27.0 -3.0 +0.7 -6.0 +34.8 +9.1 +12.2 +22.2 +7.0 -29.1
Small Caps
S&P 500 S&P 500 Small Growth
Small Caps
Europe ($)
S&P 500 Small Growth
Large Value
Real Estate
Europe ($)
Small Caps
Convert Japan
($) Small Caps
Gold Emg Mkts
Convert Japan
($) Large Value
Large Value
Small Caps
Bonds Convert
+31.1 +18.5 +5.2 +20.4 +16.2 -3.4 +30.5 +7.8 +18.1 +0.8 +22.1 +16.5 +14.4 +5.1 +21.3 -5.4 -2.4 -6.2 +34.6 +16.5 +7.1 +18.4 +7.0 -34.6
Small Value
Convert High Yield
S&P 500 Bonds Large Value
Convert S&P 500 Gold High Yield
Commo-dities
Convert Small Growth
Cash S&P 500 High Yield
Large Value
Japan ($)
Real Estate
Japan ($)
Large Growth
S&P 500 Convert Small Caps
+31.0 +17.7 +5.0 +16.8 +14.5 -8.1 +26.9 +7.7 +17.7 -1.0 +20.3 +11.6 +12.9 +4.9 +21.0 -5.9 -5.6 -9.8 +32.5 +16.2 +5.3 +15.8 +5.6 -33.8
Small Growth
High Yield
Europe ($)
Europe ($)
Convert High Yield
Large Value
Bonds High Yield
Small Value
High Yield
High Yield
High Yield
High Yield
Europe ($)
Convert Convert Small Value
Large Value
Small Growth
S&P 500 Commo-
dities S&P 500
Large Value
+31.0 +17.4 +4.1 +16.4 +13.8 -9.6 +24.6 +7.4 +17.1 -1.5 +19.2 +11.3 +12.8 +1.9 +16.2 -6.2 -5.9 -11.4 +30.0 +14.3 +4.9 +14.5 +6.2 -36.8
High Yield
Large Growth
Bonds Convert Small Value
Emg Mkts
Bonds Large Growth
Convert Small Caps
Bonds Small Growth
Bonds Small Growth
Large Value
Europe ($)
Small Growth
Large Value
Large Growth
High Yield
Small Value
Small Growth
Cash S&P 500
+28.7 +15.4 +2.7 +14.2 +12.4 -10.6 +16.0 +5.0 +14.8 -1.8 +18.5 +11.3 +9.7 +1.2 +7.3 -8.1 -9.2 -15.5 +29.7 +11.1 +4.7 +13.3 +5.2 -36.5
Convert Bonds Large Value
High Yield
EAFE Real Estate
Europe ($)
Commo-dities
Small Growth
Large Value
Real Estate
Emg Mkts
Cash Gold Cash S&P 500 S&P 500 EAFE S&P 500 S&P 500 Small Caps
Convert High Yield
Large Growth
+27.3 +15.3 +0.5 +12.5 +10.5 -17.3 +13.7 +4.4 +13.4 -2.0 +18.3 +6.0 +5.3 -0.5 +4.7 -9.1 -11.9 -15.9 +28.7 +10.9 +4.6 +13.3 +1.9 -38.4
Bonds Small Value
Convert Real Estate
Cash Small Growth
EAFE Cash S&P 500 Gold EAFE EAFE EAFE Small Caps
High Yield
EAFE Europe
($) Europe
($) Convert Convert
Small Growth
High Yield
Large Value
Small Growth
+22.1 +7.4 -2.4 +11.4 +8.4 -17.4 +12.1 +3.5 +10.0 -2.2 +11.2 +6.0 +1.8 -2.5 +2.4 -14.2 -19.6 -18.1 +27.9 +7.5 +4.2 +11.9 -0.2 -38.5
Commo-dities
Cash Small Value
Large Growth
Japan ($)
Small Caps
Japan ($)
Europe ($)
Bonds Convert Cash Cash Emg Mkts
Small Value
Gold Large Growth
Large Growth
Small Caps
Gold Gold Cash Large Growth
Small Caps
EAFE
+10.0 +6.2 -7.1 +11.3 +1.8 -19.5 +9.1 -4.2 +9.8 -2.2 +5.6 +5.2 -11.6 -6.5 +0.9 -22.4 -20.4 -20.5 +22.1 +4.6 +3.0 +9.1 -1.6 -43.1
Cash Small Caps
Small Caps
Bonds High Yield
Small Value
Cash Gold Large Growth
Small Growth
Gold Bonds Commo-
dities Real Estate
Bonds Small Growth
EAFE S&P 500 Commo-
dities Large Growth
High Yield
Japan ($)
Japan ($)
Real Estate
+7.7 +5.7 -8.8 +7.9 +0.8 -21.8 +5.6 -5.1 +2.9 -2.4 +1.0 +3.6 -14.1 -18.8 -0.8 -22.4 -21.4 -22.1 +20.7 +6.3 +2.7 +6.3 -4.1 -40.8
Real Estate
Small Growth
Small Growth
Cash Real Estate
EAFE Commo-
dities EAFE Cash Bonds
Japan ($)
Gold Gold Emg Mkts
Small Value
Japan ($)
Japan ($)
Large Growth
Bonds Bonds Bonds Cash Small Value
Europe ($)
+5.9 +3.6 -10.5 +6.3 -1.8 -23.4 -6.1 -12.2 +2.9 -2.9 +0.4 -4.6 -21.7 -25.3 -1.5 -28.3 -29.5 -27.9 +4.1 +4.3 +2.4 +4.8 -9.8 -46.1
Gold Commo-
dities Real Estate
Gold Gold Japan
($) Gold
Japan ($)
Commo-dities
Emg Mkts
Emg Mkts
Japan ($)
Japan ($)
Commo-dities
Real Estate
Emg Mkts
Commo-dities
Small Growth
Cash Cash Convert Bonds Real Estate
Emg Mkts
+5.8 +2.0 -10.7 -15.3 -2.8 -36.0 -10.3 -21.4 -12.3 -7.3 -5.2 -15.0 -24.0 -35.7 -6.5 -30.6 -31.9 -30.3 +1.0 +1.2 +2.0 +4.3 -18.1 -53.21985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008
The Periodic Table of Investment Returns
Annual data from 1986 through 2008
SectorsSectors
Executive Portfolio ManagersExecutive Portfolio Managers
ConsumerConsumer
Basic Materials/EnergyBasic Materials/Energy
IndustrialsIndustrials
Healthcare Healthcare
Utilities/TelecomUtilities/Telecom
TechnologyTechnology
FinancialsFinancials
Quantitative/Risk Management Quantitative/Risk Management
What do you do?What do you do?
Follow your sector closelyFollow your sector closely
Buy and sell stocks in your sectorBuy and sell stocks in your sector
Work in a team of 1-3 other managersWork in a team of 1-3 other managers
Write 3 research reports per semesterWrite 3 research reports per semester
Write a Semester Report/Sector OverviewWrite a Semester Report/Sector Overview
Visits/ Guest SpeakersVisits/ Guest Speakers
Teams met with a counterpart at Fidelity this Teams met with a counterpart at Fidelity this fallfall
Guest speakers at the meetings. In the last Guest speakers at the meetings. In the last year the following have been guest speakersyear the following have been guest speakers Fidelity CIO and Director of ResearchFidelity CIO and Director of Research Hedge Fund managers (3)Hedge Fund managers (3) President of NorthfieldPresident of Northfield Fed official, former BCF studentFed official, former BCF student Strategist from BNY MellonStrategist from BNY Mellon
Why you should do thisWhy you should do this
You will learn a lot about fund management and stock You will learn a lot about fund management and stock analysisanalysis
You are investing REAL MONEYYou are investing REAL MONEY
You will work hard, but learn a lotYou will work hard, but learn a lot
This is as close to real world investment management This is as close to real world investment management as possibleas possible
You earn class credits for two semestersYou earn class credits for two semesters
Enhanced Job Prospects in the Investment Enhanced Job Prospects in the Investment Management IndustryManagement Industry
Recruiting ApproachRecruiting Approach
Designed to even out the number of students Designed to even out the number of students on the fund during the year so everyone does on the fund during the year so everyone does not stop and start at the same timenot stop and start at the same time
Fall:Fall: recruit 2 year MBA’s, Junior Undergrads recruit 2 year MBA’s, Junior Undergrads with a with a DecemberDecember graduation date, Evening graduation date, Evening MBA’sMBA’s
SpringSpring: Junior Undergrads with a : Junior Undergrads with a MayMay graduation date and Evening MBA’sgraduation date and Evening MBA’s
SummerSummer: One Year MBA’s: One Year MBA’s
Key datesKey dates
Fall/WinterFall/Winter Info session November 5thInfo session November 5th Applications NOON November 21stApplications NOON November 21st Interviews December 3, 2014Interviews December 3, 2014
Application ProcessApplication Process
Application on BCF WebsiteApplication on BCF Website http://cutler.babson.edu/babsoncollegefund/http://cutler.babson.edu/babsoncollegefund/
BCFApply.aspxBCFApply.aspx
Send to Karl Honerlaw by Friday November 21 at Send to Karl Honerlaw by Friday November 21 at noon.noon.
Interviews on Wednesday, December 3Interviews on Wednesday, December 3rdrd
You start immediatelyYou start immediately
NOTE: You must take or have taken FIN 7503 NOTE: You must take or have taken FIN 7503 (Equities) if you are an MBA student!! (Equities) if you are an MBA student!!
Questions???Questions???