Posted on April 21, 2016 by Joanna Carver

CFA research challenge

CFA research challenge

CFA research challenge A team of UTSA finance majors advanced to the national CFA Research Challenge in Chicago this month by beating out 26 competitors from schools such as Rice, Texas Tech and UT-Dallas. This was the second time that a UTSA team had advanced to the third round.

Team members were seniors Matthew Chavana and Kenneth Foote , graduate student Andrew Alvarez and Juan Pablo Castrellon , ’15, who graduated in December.

The CFA Institute Research Challenge is an annual competition that promotes best practices in equity research among the next generation of analysts. Students work in teams to research and value a publicly-traded company. Each team writes a 10-page research report on their assigned company with a buy, sell or hold recommendation and then presents and defends their analysis to a panel of industry professionals.

The first competition was held in 2002 with five teams, and it has since grown to involve more than 800 universities in more than 55 countries.

“I was a CFA Level I candidate, and I wanted more equity research exposure as an undergraduate. So, I decided to put together a team,” said Foote.

Joined by fellow Investment Society members Alvarez and Castrellon, they began preparations. When Southwest Airlines was announced as the company, they turned to Chavana, an avid aviation expert who had recently completed an internship at JetBlue to round out the team.

The team began working in December and throughout the break on the report, which was submitted in February. Eight finalists were chosen to make final presentations, and the top two teams advanced to the national competition.

“We met daily over the span of the five-month competition and worked tirelessly to perfect our pitch,” said Alvarez. “Airlines have very intricate financial statements that require a very thorough analysis.”

“I didn’t realize how massive Southwest Airlines was or how much power they yielded in the industry until undertaking this process,” said Chavana. “They are the second largest carrier in the world.”

Based on their thorough analysis, the team approached the challenge somewhat differently than their peers. “First, we forecasted the fuel expenses using historical data,” said Foote. “Most schools stayed away from that vital aspect of the company.

“Then, the majority of our presentation focused on salaries and wages. Eighty-three percent of their workforce is unionized. We priced it into our model,” Foote continued.

“Their report was one of the strongest submitted by a UTSA team,” said Ron Sweet , finance faculty member and Investment Society advisor. “They were extremely well prepared and did some very advanced analysis.”

Heading into the final presentation the team was confident. “We knew what questions they were going to ask because of the revelations that we made,” said Castrellon. “We used it to our advantage.”

“Advancing to nationals was our goal,” said Foote. “We went from learning it in the textbooks to applying the knowledge to real life problems. This has been an incredible experience.”

Wendy Frost—

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— Joanna Carver