Private Equity Industry Night (5/3/2010)

Vice President Brian Hersman and Associate Dane Skillrud of JMI Equity gave an excellent presentation on the private equity industry. UCSD students who came were treated to a valuable insider's perspective on the industry as well as a clear explanation of the concept of private equity.

The Undergraduate Investment Society would like to thank Mr Hersman and Mr. Skillrud for sharing their knowledge and making our joint event with Alpha Kappa Psi a huge success.

Here are some highlights of the night:

What is Private Equity?
Associate Dane Skillrud of JMI Equity explains what exactly Private Equity is.



Creating a Private Market
Vice President Brian Hersman of JMI Equity explains why Private Equity exists



Daily Operations
Vice President Brian Hersman and Associate Dane Skillrud of JMI Equity explain what their job entails.



Advice for Students
Vice President Brian Hersman and Associate Dane Skillrud of JMI Equity give advice for students wanting to enter the finance industry



In addition here are two slides that job seekers will find helpful and unfortunately were not covered due to time constraints.
(Click to Enlarge)

Research and Education: Asset Management Brief (5/2/10)

UIS VP of Research and Education, Kamron Farman-Farmaian, gives a quick introduction to the world of private equity, to prepare us for the Private Equity Night hosted by UIS and AKPsi on Monday.

Asset Management with Emphasis on Private Equity


Mutual Funds- actively managed, liquid

• Open Ended - Shares in fund are bought from the fund itself (Fidelity, Vanguard, T. Rowe)
• Close Ended - Limited number of shares, ownership tradable amongst fund investors, but no new shares are distributed
• Close Ended are generally better than Open ended funds
• Open ended funds forced to sell if investors pull out
• Close Ended funds hard to get into

Exchange Traded Funds (ETFs)- passively managed, liquid

• ETFs are cheap, have very low management fees, easy diversified and function like index funds for a particular sector/area
• It allows for options, short selling, limit orders - like normal equity
• Popular ETF’s (iShares, ProShares, SPDRs)

Private Equity Funds - Actively Managed, illiquid (2&20 fees)- definition of Private Equity

Venture Capital

• Typically less mature companies, start-up stage
• Ideas that require substantial capital

Buyout

• Leveraged Buyout- investor commits leveraged (borrowed) capital- historically debt portion of LBO 60-90% of purchase price
• Management Buyout
• Goal to sell back later at higher price or at IPO

Mezzanine Capital

• Subordinated debt or preferred equity
• Higher risk and higher reward for financing
• Reduces amount of equity capital needed

Hedge Funds- Actively Managed, illiquid (2&20 fees)

• Global Macro- macroeconomic events
• Directional- Equity with Hedge
• Event Driven- Arbitrage price inefficiencies due to specific events (ie Greece or Goldman)
• Relative Value- market neutral but arbitrage price inefficiencies in market

JMI Equity - Coming to Private Equity Night

• Focused on software, internet, health care and IT
• Typically $10-$60 million and sometimes leverages base for larger transactions
• Takes seats on board and works with management to restructure companies

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Private Equity Night

-- Presented by Alpha Kappa Psi and the Undergraduate Investment Society --

Join us to learn about the multi-billion dollar Private Equity industry from executives at JMI Equity, the #1 Private Equity firm in San Diego. Brian Hersman and Dane Skillrud will be presenting an overview of the current private equity industry as well as a specific case study based on the strategic analysis and day-to-day operations that private equity firms use to evaluate portfolio companies. This is an excellent opportunity to network as well as learn about the thriving industry from two seasoned professionals. Food and refreshments will also be provided.


-- About the Speakers --

Brian Hersman
Mr. Hersman is currently the Vice President of JMI Equity. Prior to joining the Firm in 2008, Mr. Hersman was a Senior Associate at Vista Equity Partners and a Business Analyst at McKinsey & Company. Mr. Hersman graduated from Case Western Reserve University and the Harvard Business School.

Dane Skillrud
Mr. Skillrud is an associate at JMI Equity. Prior to joining the Firm, Mr. Skillrud was an Analyst in the Corporate Strategy, Business Development and Technology Group at The Walt Disney Company.

Portfolio Management by Robert Marren (4/21/10)

We were very pleased to have Robert Marren come and speak at our general body meeting. He has been a long time supporter of UIS and his presentations have always been engaging and informative.

Background Information:
Robert Marren graduated from UCSD in 1986 and received his MBA in finance from Duke University. He is currently the managing director and portfolio manager at Allianz (formerly Nicholas-Applegate), as well as the adviser of Student Foundation Investment Committee (SFIC).


Highlights from his presentation:

Endowments and Efficient Frontiers
Robert Marren talks about the efficient frontier and how it helps him run the UCSD endowment.


Investing in Small Cap Stocks
Marren explains his preference for small cap stocks.


Robert Marren's Research Process
A description of the research process that Marren uses to beat the market.


Mortgage Crisis Explained
Robert Marren explains the loose lending standards that contributed to the mortgage crisis


Goldman Sachs Controversy
Marren gives his take on the Goldman Sachs controversy.

Intro to Stock Picking (4/14 GBM)

In our first general body meeting of Spring quarter 2010, Kamron our very own VP of Research and education gave a short 30 minute introduction to stock picking.

Kamron went over 3 strategies:
1) Fundamental Analysis
2) Technical Analysis
3) Growth/value/GARP

In Fundamental Analysis the act of “valuing” a company is to put a number on it. This is done by finding the intrinsic value, relative valuation, contingency pricing. Basically, through your valuation tools you come up with value of a company and then compare it to market price and either buy, sell, or hold.

Technical Analysis is done by analyzing statistics generated by past market activities, where you can find trends, patterns and then act on them. By looking at different charts to find indicators that predict future market activity. Generally this is viewed as a shorter term strategy.

Value Investing is accomplished by finding discounts or inefficiencies in the market. Value investors are usually Contrarians, meaning that they go against public opinion. Through valuation techniques, the value investor can spot an undervalued stock and capitalize on it.



Growth Investing looks for stocks with POTENTIAL and places much less emphasis on present price. This is the opposite of value investing. Growth investors buy companies trading higher than current value because of promise of future growth. Technology and pharmaceutical stocks are the usual suspects. Basically growth investing is betting on the idea rather than the present.

Kamron's parting advice:
1) Think for yourself, do not just follow fads
2) Do your own research
3) Understand what you are investing in
4) Forge your own path

About UIS

"The Undergraduate Investment Society is the largest student leadership organization on the UC San Diego campus. Ann Ko founded the organization in 2003 because she wanted to help undergraduates understand how to start careers in finance. In just seven years, it has surpassed Ms. Ko’s expectations. Today, it is a diverse organization committed to empowering our alumni with financial literacy. We provide career-oriented education through financial seminars, networking events, and luncheons with financial executives from local companies. UIS facilitates internships and promotes long-term relationships with potential employers by bringing professionals to UC San Diego as mentors and advisors. UIS meetings are held on alternate Wednesday evenings and are announced on the organization’s Web page.

In addition to providing services for students, UIS also gives students an opportunity to gain leadership skills. UIS officers plan, organize, and manage UIS meetings and events, especially the annual conference. There is no substitute for hands-on experience, and UIS is managed exclusively by students who make all UIS decisions and who are responsible and accountable for UIS activities."

Dr. Michael Willoughby
UIS Faculty Advisor

Source: Economics in Action