Newsletter -  March 2015
 Issue #7

Directors:

President - 
Greg Filbeck, CFA,FRM,CAIA

Vice President- 
Craig Gomulka, CFA

Treasurer - 
Joe Lantz, CFA,CAIA

Special Events- 
Ryan Bend, CFA

Secretary-
George Emanuele,CFA

Programs & Media Relations- 
Chris Wiles, CFA

Membership Outreach - 
Cale Grove, CFA

University Outreach -
Manoharlal Sukhwani, CFA

Financial Literacy -
David Zawadski, CFA

Executive Administrator -
Caryn Loehr


Presidents Message:

 

Welcome to the seventh issue of the CFA Society of Pittsburgh's Newsletter.

 

Another month of great programming for the CFA Society Pittsburgh!  In this newsletter, you will find a recap from our March 4th and 18th luncheons. Both programs were great offering insights into the fixed income and private equity (mezzanine debt) markets, respectively.  Also included is a description of our upcoming luncheons and two great programs coming in April.  You will note a variety of topics which generate interest across our membership.  We hope to see you at an upcoming event!

 

Congratulations to the University of Pittsburgh for winning the Investment Research Challenge (IRC) competition - and good luck as they compete in April in Atlanta.  We appreciate the team presenting their report during the lunch portion of our March 18th luncheon.  The quality of team presentations gets better and better each year - a big thanks to all programs that participated.  The preparation for the IRC is intense and time consuming.   A big thanks to Ryan Bend and his committee for all their hard work this year - and to Black Box as our valuation company.  

 

The Investment Planning Competition sponsored by the CFA Society Pittsburgh will wrap up later this month and a winner declared.  At the April 15th luncheon, during the lunch portion of our luncheon, we hope to have the winner of the competition present to the society.

 

Cale Grove, our Membership Chair, will be launching our Compensation Survey during April.  Please take the time to fill out the survey.  We will distribute the results to the membership upon completion.   

 

The primary goals of the newsletter are to keep members and supporters of the Pittsburgh Society informed about the society's activities and foster greater community involvement by all members.

 


 

- Dr. Greg Filbeck, CFA, FRM, CAIA 

President, CFA Society Pittsburgh


 

Upcoming Events

2014 Student Panel - "Money 101 - Taking Control"

On Friday, April 10, in conjunction with the CFA Institutes Financial Literacy Month there will be a student panel discussion on money.    

 

This is an excellent event for financial professionals to see and hear from students in our area on their thoughts and fears of money.

It is one of those rare opportunities to actually hear what teenagers are thinking regarding money, as they head into college.


 

This presentation is brought to us by The Missing Semester, The Vanguard Group, and the University of Pittsburgh. 


 

To see a bit of last years panel Click Here.
 

This is a free event. For reservations click here 2014 Student Panel - "Money 101 - Taking Control"


"Market Outlook 2015: How to Spot Bubbles, Avoid Market Crashes and Earn Big Returns"

On Wednesday, April 15, we will have the pleasure of hearing the insights of Mebane Faber. Meb is co-founder and Chief Investment Officer of Cambria Investment Management, a prolific researcher, writer, and blogger.  

 

Meb will cover a wide range of topics, including:

  • Why a traditional 60/40 allocation will not get you to 8%
  • How to value international stock markets
  • How to avoid market bubbles and buy when "blood is in the streets"
  • How to create a trading system to always invest in the cheapest markets. 
Mr. Faber is a co-founder and the Chief Investment Officer of Cambria Investment Management. Faber is a manager of Cambria's ETFs, separate accounts and private investment funds for accredited investors. Mr. Faber has authored numerous white papers and three books: Shareholder Yield, The Ivy Portfolio, and Global Value. He is a frequent speaker and writer on investment strategies and has been featured in Barron's, The New York Times, and The New Yorker. Mr. Faber graduated from the University of Virginia with a double major in Engineering Science and Biology.

Special Luncheon - Colonel Mateo Martemucci, U.S. Air Force, U.S. Cyber Security & Economic Threats

On Wednesday, April 29, we will have the honor of hearing from Colonel Matteo "Mooch" Martemucci, the Commander of the 318th Cyberspace Operations Group at the Joint Base San Antonio - Lackland, Texas. In his presentation, Colonel Martemucci will describe the threat landscape in cyberspace, distinguishing between cyber attacks, cyber exploits, and cyber espionage.  He will identify key vulnerabilities, vectors, and threat actors, along with their impact on US national security. He will further argue that the greatest threat to US national security in cyberspace is an economic one, and
his talk raises difficult questions about the role of the 
US Government and Department of Defense in the defense of key cyber terrain. 


 

His talk will offer unique historical context, drawing parallels between advancements in cyberspace to other revolutions in military technologies like naval power and the advent of the airplane. His unique historic approach to understanding cyberspace issues will challenge the audience to consider the lessons of history - from piracy, privateering and the Barbary wars to early airpower theory & the Monroe Doctrine - for what they may offer policy makers and strategists in this modern and still uncharted domain.

 

Colonel Martemucci is a career intelligence officer and cyberspace operator whose career highlights include command of the Air Force's premier Computer Network Attack squadron and contributions to the creation of U.S. Cyberspace Command's 6,000-person Cyber Mission Force construct. 


 

His twenty-year career has included assignments in Joint Special Operations, intelligence and cyberspace commands. In addition to his many stateside assignments, he has completed assignments or deployments to Korea, the Czech Republic, France, Saudi Arabia, Iraq, Qatar and Afghanistan. His numerous decorations include the Defense Meritorious Service Medal and the Bronze Star Medal.


 

He holds a BA in International Politics from Penn State University, an MS in International Relations from Troy University, an MS in Joint Campaign Planning & Strategy from the National Defense University, a Graduate Certificate in Organizational Management from George Washington University and a National Security Affairs Fellowship at the Hoover Institution on War, Revolution and Peace at Stanford University.  He is also a graduate of the Air Command and Staff College, the Air War College, and the Joint Advanced Warfighting School, Joint Forces Staff College.

 

He is a published author, with work on Strategic Communications appearing in the IOSphere - the professional journal of Joint Information Operations, and he has forthcoming work on cyber defense being published in the Case Western Reserve Law Review.

 

This will be a presentation you won't want to miss!

Employment Trends in Finance - A Pannel Discussion

There have been many changes in the local employment situation over the last several years. We've experienced the global financial crisis, a shrinking job market, a questioning of integrity, and a plethora of new information outlets and reporting requirements. Many of our members are questioning their career path, how they manage it, and how they should evolve along with the industry. 

We believe that a panel made up of employment experts in the financial field would help our members better manage their careers. On Wednesday May 6 we will discuss the following, and have our experts respond to members questions.

Discussion Points:

  • How familiar are HR representatives with the breadth of material covered in the CFA program?
  • How well does a CFA designation transfer to other non-investment careers, such as accounting or corporate finance? Are there other employment opportunities for CFA's?
  • Has the Chartered Financial Analyst program become a victim of its own success, awarding so many charters that its market value is diluted?
  • Compare and contrast the value of a CFA designation versus an MBA designation. Has your view of either designation changed over the last several years?
  • The financial crisis has displaced more experienced investment professionals, some with CFAs, some with level 1 or 2, and some without; how do you weigh experience versus education and designations? 
  • How do you judge and weigh more qualitative characteristics like ethics and integrity in your hiring searches?
  • How have advancements in technology changed the skill sets you are looking for?

As of now, our list of panelists consists of:
  • Karen Gigliotti - Vice President & Director of Employment - Federated Investors
  • Tom O'Connor - President - O'Connor, O'Connor, Lordi, Ltd
  • Rob Barr - Vice President - Challenger, Gray & Christmas, Inc


3rd Annual Endowments & Foundations Conference

The CFA Society of Pittsburgh is pleased to host its 3rd Annual Endowments and Foundations Investments and Governance Conference on Thursday, May 21

 

Join leaders from Endowments and Foundations, investment consultants, money managers, and subject experts for this full-day educational conference covering today's critical investment and governance issues.

 

This year's conference will again include a mix of regional and national speakers from investment organizations and the Endowments and Foundations community, a keynote address by Michael Psaros, Co-founder and Managing Partner of KPS Capital Partners, and our CIO Roundtable will return by popular demand with a new cast of CIOs.



Highlights from Recent Events

Financial Literacy Campaign Secures Its First Sponsorships!

The Pittsburgh society has secured our first sponsorships to benefit our Financial Literacy Campaign initiatives. 

We'd like to thank the University of Pittsburgh's Katz School of Business, and the Penn State Erie Behrend College for their gold and silver sponsorships, respectively.  These sponsorships in conjunction with a Growth Funding award received from the CFA Institute will be utilized to support a variety of programs including a collegiate personal financial plan competition, educating high school students through a partnership with Junior Achievement, and eventually an initiative to involve inner city schools and students.  

The collegiate competition is currently in progress and members are welcome to attend a student panel presentation on Friday, April 10.  

Additionally, our society was recently represented by board member, Joe Lantz, to share highlights of our program at the Americas Regional Meeting in February.  If your organization would like to become a supporter of this worthy initiative or any of our special events, please contact the society at [email protected]

"Private Equity: A Local SBIC Fund's Perspective"

On Wednesday, March 18, we heard from one of our own members, Stephen Gurgovits, of F.N.B. Capital Partners. Stephen gave a very interesting presentation on mezzanine financing in the small-cap space. 

Stephen's firm helps small business owners finance restructuring's and changes in ownership. Since the financial crisis, the number of opportunities for financing outside of the normal bank channels has grown dramatically. In our ti-state area there are almost always about 200 businesses for sale at any time.

Surprisingly, the providers of mezzanine debt are still generating returns in the 12% - 14% range. This in an age when high-yield bonds yield less than 6%. Of course these types of returns are attracting more competition for deals as family offices and foundations enter the space. Stephen wouldn't characterize the market as frothy, but he is clearly seeing areas where pricing is very competitive, especially for the larger deals.

 Click here to view Stephen's slides


 

Prior to Stephen's presentation we started the luncheon with a brief presentation on Black Box, from the winners of the CFA Collegiate Investment Research Challenge. This year's winner was the University of Pittsburgh. We wish them luck as the head to Atlanta for the Americas Regional competition.


High Yield Market: Credit Cycle Crossroads?

On Wednesday, March 4, we had the pleasure of hearing high-yield veteran and founder of CreditSights, Glenn Reynolds, talk about the credit cycle and where we might be headed. 

 

Glenn gave a real insiders view of the High Yield market. He believes we are entering a critical stage in the credit cycle where an ever larger range of investors are entering the high-yield market in their search for yield.

Glenn is a real student of cycles, since he's lived through a few, and believes that eventually this very bullish high-yield cycle will end, like they all do - with a bang.


 

While High-Yield has corrected some in the last several months, almost all of that can be attributed to the decline in the price of oil. Historically bear markets in High-Yield have coincided with flat yield curves. 


 

Whats really troubling about this market environment is the total lack of liquidity. The Volker Rule has made markets much thinner, while ETF's and mutual funds have propagated the illusion of liquidity. 


 

The current environment in High-Yield can be summarized as "Picking up nickels in front of a steam roller" - The risk just isn't worth the reward.


Annual Partner Sponsors

CFA Society Pittsburgh would like to thank its partnership sponsors for their support of the Society.


 

Gold

 


Stock Pickers Contest

 Update  - 2/18/15 - 3/20/15

ContestantAvg.STK 1STK 2STK 3
S&P 5000.50%


Malcolm
Polley
-2.90%NSR
-15.80%
GME
8.67%
TTEK
-1.56%
Kim
Forrest
4.51%XLNX
0.89%
NTCT
11.60%
VOXX
1.04%
Frank
Aloi
-13.47%DAL
3.78%
GILD
-1.68%
RESN
-42.50%
Mauricio
Viaud
-10.61%PBR
-20.11%
MT
-10.04%
GILD
-1.68%
Bob
McGee
7.89%SYNA
5.00%
GTLS
7.22%
CEA
11.45%