Investment Management Program - aub.edu.lb · INVESTMENT MANAGEMENT PROGRAM REPORT l 2019 Suliman...

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Suliman S. Olayan School of BusinessAmerican University of BeirutP.O. Box 11-0236, Riad El-SolhBeirut, Lebanon 1107 2020

www.aub.edu.lb/osb

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Report, 2019

Investment Management

Program

Letter from the Dean 4

Letter from the Program Director 6

Class of 2019 CVs 9

Fund Managers Annual Report 2018/2019 23

Portfolio Holdings and their Performance 29

Advisory Members Bios 45

Report


Program

Investment Management Program 4

Letter from the Dean

STEVE HARVEY

DeanSuliman S. Olayan School of Business

Students graduating from our programs, with the additional training this espouses, are remarkably prepared for most challenges faced in the world of finance.

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Studying business at the Suliman S. Olayan School of Business (OSB), American University of Beirut, places students at the crossroads of possibilities anywhere they might go in the world. Our programs have a very clear purpose – to help students gain core business knowledge and competency, in addition to an array of leadership and citizenship skills. Students achieve this through traditional course work, and a full range of value-added learning opportunities that are purposefully built to have real experiential impact.

One such program is our signature Investment Management Program (IMP), which provides students with a unique learning opportunity that is 100% real-to-practice. The first of its kind in Lebanon and the MENA region, the IMP entrusts students and their advisors

with a one-million-dollar fund to conduct real investments, supported by ongoing technical analyses. Students graduating from our programs, with the additional training this espouses, are remarkably prepared for most challenges faced in the world of finance.

Led by Dr. Wassim Dbouk, with the help of an advisory board and some intensive internships, these students’ direct handling of real investments ultimately prepares them with a knowledge-base and skill-set that you might only find amongst the more seasoned veterans in the field. We are proud of the abilities and work ethic that they exhibit, and this report, prepared by Dr. Dbouk and the students, attests to their commitment. I encourage you to read and appreciate the learning that has gone on in reaching such levels of professionalism.


Letter from the Program Director

It is a pleasure to report on the past year’s activities of the Investment Management Program (IMP) and its Student Managed Investment Fund (SMIF) at the Suliman Olayan School of Business (OSB), American University of Beirut (AUB). The program’s reputation is growing steadily as a result of our students’ meticulous efforts.

Additionally, the program’s evolution would not be possible without the great support and motivation of the many professionals from the financial sector, who appreciate AUB and its indispensable contribution to the region.

The IMP is an elite extracurricular two-year program that admits four to six students annually. The primary purpose of the IMP program is to train a select number of undergraduate students at OSB in investment analysis and portfolio management. In the first year, our students serve as investment analysts. They are required to assist the program’s second-year students, who become portfolio managers with a discretionary mandate. Envisioned by Dean Steve Harvey, and made possible by our generous donors, the IMP gives its students the unique opportunity not only to learn about these varied and interdisciplinary topics from their professors within a classroom setting, but also from top-notch pioneers in the investment industry.

In the SMIF, students are responsible for all aspects of the money management process of a one-million-dollar fund.

Their role as portfolio managers relies heavily on their ability to research and evaluate financial market trends and conditions, select and assess the sector’s attractiveness, identify individual securities, rebalance their existing asset positions, and formulate regular performance reports and financial statements, whilst complying to binding rules of conduct.

As SMIF portfolio managers, students must also grow capital with careful thought, while attaining an annualized risk-adjusted rate of return, with net fees surpassing the fund’s benchmark by 30 basis points. The inception year has reaped success, and our portfolio managers beat their benchmark by 130 basis points, whilst dealing with an unstable and demanding market. This year, the program organized an educational trip to New York for our investment analysts. This experience has been instrumental to the program, since the current group of graduating students had already visited New York and Montreal in the academic year 2017-2018.

The IMP has been particularly grateful for the continued patronage of a considerable number of exemplary


WASSIM DBOUK

Director of the Investment Management Program

Associate Professor of Finance

investment professionals, who have provided their guidance in training our students.

The IMP students benefit significantly from meeting and discussing their process and experience with the Advisory Committee, and IMP Guest Speakers. We are indebted to these talented individuals, who have offered their valuable time, insight, and skill to enrich our students’ educational journey.

We extend our deepest appreciation to Ms. Hutham Olayan and Mr. Walid Chamaa, not only for their noteworthy gift to launch the SMIF, but also for serving as admirable leaders and role models to our students.

I want to thank Dean Harvey for giving unlimited and unconditional support, accommodating wisely and resourcefully to our IMP-related requests.

I would also like to thank my colleague Dr. Ibrahim Jamali for his active roleas co-founding director of the program during the first year.

Finally, yet importantly, we are very grateful to BlackRock, Julius Baer, Lazard, and Olayan Group for providing our students with internship opportunities that helped shape their knowledge in this field and beyond.

Class of 2019 CVs


Program


Education

DUAL DEGREE IN BUSINESS ADMINISTRATION AND APPLIED MATHEMATICS, AMERICAN UNIVERSITY OF BEIRUT CONCENTRATION: FINANCE; MINOR: ECONOMICS; CGPA: 89.77 EQUIVALENT TO A 3.98, Jan ‘16 - May ‘19

WALL STREET PREP - CERTIFICATION IN FINANCIAL AND VALUATION MODELLING, Feb ‘18

Excel Crash Course, Financial Statement Modeling, DCF Valuation, and TradingComps Valuation. Transaction Comps, M&A Modeling, and LBO Modeling.

CHARTERED FINANCIAL ANALYST INSTITUTE, Jun ‘18 Passed level 1.

Work Experience

INCOMING JUNIOR ASSOCIATE CONSULTANT - BCG DUBAI, Present Signed in September 2018 to start in September 2019.

INTERN - JULIUS BAER LEBANON - PRIVATE BANKING, July - Aug ‘18

INTERN - BANK AUDI - CORRESPONDENT BANKING AND GROUP FI,May – Jul ‘17

Gained an understanding of how the banking industry operates especially in the MENA region, through preparing basic information reports on banks affiliated with Bank Audi.

INTERN - CONSOLIDATED CONTRACTORS COMPANY - MAINTENANCE DEPARTMENT, July - Aug ‘16

Worked as part of a small team, where we managed daily operational tasks,prepared payment orders, coordinated with technicians for their material requirements, and presented data analysis to management.

Ali Ghassan Shana’a+961 76304137

[email protected]

Achievements: Graduated with Distinction; Certificate of OutstandingAchievement (Penrose Finalist); Certificate of Excellence (IMP); Deans Honors List (every semester); Fullbridge U Program completion; Red Cross Certificate of Excellence; and Beta Gamma Sigma Member (Business Honors society).

Gained an understanding of how a private banking team operates in the different job roles. Ended the internship by working in a team to create a virtual portfolio for a virtual client.


Extracurricular Activities and Interests

PORTFOLIO MANAGER AT THE INVESTMENT MANAGEMENT PROGRAM (IMP) AT THE OLAYAN SCHOOL OF BUSINESS

Selected as one of six by the Business School faculty to partake in the inauguralInvestment Management Program. We were trained as equity research analysts in the first year, progressing to portfolio managers in the second; managing a donor fund of one million dollars, beginning in September 2018.

Prepared equity research reports, with a focus on the technology sector for Nvidia, Alphabet, Activision Blizzard, and Facebook. The reports consist of a qualitative analysis of the businesses, as well as a quantitative valuation, which resulted in the issuance of a buy or sell recommendation.

Attended weekly public speaking training, through which I honed my ability to pitch to clients.

Developed a nuanced sense of market conditions through continuous discussions.

Held quarterly meetings with our Investment Advisory committee to pitch our portfolio.

Performance: Generated 1.8% alpha over 60/40 SPY/AGG benchmark, during a seven-month period.

VOLUNTEERING Red Cross: Organized a fundraising event (raised $1000), as well as an event to

raise awareness for breast cancer.

FoodBlessed: An organization that raises awareness in schools to prevent food waste, accepting volunteers of all ages, which we, as BGSvolunteered, helped the underprivileged.

SOS Village: An organization that provides campus for orphans, accepting volunteers to entertain children. Volunteered as part of Bank Audi’s CSR program, spending a day with underprivileged children.

COMPETITIONS First place at AUB GOES HULT “Road to Innovation”, a design-think workshop,

where teams had to brainstorm ideas for the 2018-2019 Hult Prize Challenge: Unemployment!

First place at the 2018 L’Oréal Digital Marketing Hackathon, where teams had to come up with a digital marketing campaign for one of their brands in Lebanon.

Second place in the INJAZ Lebanon Innovation Camp sponsored by Bank Audi, where we proposed modifications to the existing Bank Audi mobile application to better target youth.

COMPUTER Microsoft Word, Excel (Advanced), PowerPoint, Java (Beginner), and MATLAB (Beginner)

LANGUAGES Fluent in Arabic and English.


Education

DUAL DEGREE IN BUSINESS ADMINISTRATION AND ECONOMICS, AMERICAN UNIVERSITY OF BEIRUTCONCENTRATION: FINANCE; CGPA: 88.77 EQUIVALENT TO A 3.91 Sept - May ‘19

Achievements: Certificate of Outstanding Achievement (Penrose Finalist); Certificate of Excellence (IMP); Deans Honors List (every semester); and Beta Gamma Sigma Member (Business Honors society).

STUDY ABROAD AT UC BERKELEY, June - Aug ‘16 Scored A in Financial Economics and Game Theory.

WALL STREET PREP - CERTIFICATION IN FINANCIAL AND VALUATION MODELING, Feb ‘18

Excel Crash Course, Financial Statement Modeling, DCF Valuation, and TradingComps Valuation.

Transaction Comps, M&A Modeling, and LBO Modeling.

Work Experience

INTERN - STRATEGY AND CONSULTING (PART OF THE PWC NETWORK)June - Aug ‘18

Developed sophisticated excel models; worked on benchmarking tasks; conducted detailed research; and helped prepare PowerPoint decks and client deliverables.

Received and accepted a job offer from the firm.




Prepared equity research reports, with a focus on the consumer staples sector for Diageo, Monster Inc, and Archer Daniels Midland. The reports consist of a qualitative analysis of the businesses, as well as a quantitative valuation, which resulted in the issuance of a buy or sell recommendation.

Arman Khederlarian+961 70151491

[email protected]



Discussed financial market conditions regularly, developing a deep understanding of their nuances.

Performance: Generated 1.8% alpha over 60/40 SPY/AGG benchmark during a seven-month period.

CASE COMPETITION INITIATIVE AT THE AMERICAN UNIVERSITY OF BEIRUT (AUB) Selected by the Business School Faculty to compete in International Case

Competitions, solving cases pertaining to real issues that companies currently face.

Completed weekly training sessions, for more than 18 months, to prepare for competitions.

Competed in four international competitions: John Molson Undergraduate Case Competition at Concordia University (Finalist); Heavener International Case Competition at University of Florida; University of Münster Case Competition at University of Münster (2nd place); and Marshall International Case Competition at University of Southern California.

Developed enhanced public speaking, financial modeling, and PowerPoint presentation skills.

COMMENCEMENT SPEAKER FOR THE AUB CLASS OF 2019 Selected as commencement speaker to give a speech on behalf of the 1,649

undergraduate students.

URL for the speech: https://www.youtube.com/watch?v=PE5iSGMT1Gs&t=3956s (1:01:42 – 1:08:25)

STUDENT BODY REPRESENTATIVE AT THE UNIVERSITY STUDENT FACULTY COMMITTEE (USFC) AT AUB

Elected as one of three representatives of the Olayan School of Business to thehighest level of student body representation at AUB: the USFC

Played a role in submitting proposals, voting on important decisions, and discussing and acting on how to improve university life on behalf of more than 10,000 AUB students.

MEMBER OF THE AUB FOOTBALL VARSITY TEAM, LEBANESE UNDER 19 PRELIMINARY NATIONAL TEAM, AND HMEM CLUB

Played with the AUB Football Varsity Team for two years, and won domestic andinternational tournaments.

Called up to the Lebanese Preliminary National Football Team (Under 19s) for two years running, 2015/16.

Aged 16, played with HMEM Club, and was called up to the first team in the Lebanese 2nd division.

COMPUTER Microsoft Word, Excel (Advanced), PowerPoint, Java (Beginner), and MATLAB (Beginner).

LANGUAGES English (Fluent), Arabic (Fluent), Armenian (Fluent), and French (Basic).

GMAT Scored 740 (97th percentile).


Kinda Ali Katanji

Education

DEGREE IN BUSINESS ADMINISTRATION, AMERICAN UNIVERSITY OF BEIRUTCONCENTRATION: FINANCE; CGPA: 88.45 EQUIVALENT TO A 3.9, Jan - May ‘19

Achievements: Certificate of Excellence (IMP); Deans Honors List (every semester); Beta Gamma Sigma Member (Business Honors society); and Star Award Nominee.

WALL STREET PREP - CERTIFICATION IN FINANCIAL AND VALUATION MODELING, Feb ‘18

Excel Crash Course, Financial Statement Modeling, DCF Valuation, and Trading Comps Valuation.

AL-BAYADERARAMOUN SCHOOL, Sep ’02 - Jun ’16 Graduated with distinction.

Work Experience

INTERN - JULIUS BAER LEBANON PRIVATE BANKING, Aug - Sep ‘18 Learned about asset and sector allocations, behavioral finance and alternative

investments, and more. Created a virtual portfolio tailored to the needs of the client.

INTERN - BANKMED RETAIL BANKING, Jun – Aug ‘18 Rotated around CSR, teller, operation, and bank assurance divisions. Nominated for Internship Star Award. Third-Place Winner.



Prepared equity research reports, with a focus on the discretionary sector for Amazon, Booking, Comcast, and Disney. The reports consist of a qualitative analysis of the businesses, as well as a quantitative valuation, which resulted in the issuance of a buy or sell recommendation.

+961 3959387

[email protected]


Prepared equity research reports, with a focus on the consumer staples sector for Diageo, Monster Inc, and Archer Daniels Midland. The reports consist of a qualitative analysis of the businesses, as well as a quantitative valuation, which resulted in the issuance of a buy or sell recommendation.



DELEGATE AT MUN, Lebanese American University (LAU) Selected by Bayader Aramoun School to partake in the annual MUN, taking place

at LAU.

Represented Gabon, and discussed its environmental situation.

Won the position paper award.

Developed enhanced public speaking, financial modeling, and PowerPoint presentation skills.

COMPUTER Microsoft Word, Excel (Advanced), and PowerPoint.

LANGUAGES Fluent in Arabic and English.

SOFT SKILLS Fast learner, highly dependable, attention to detail, motivated, and ambitious.


Yara Farhat+961 76020894

[email protected]

Education

BACHELOR DEGREE IN BUSINESS ADMINISTRATION, AMERICAN UNIVERSITY OF BEIRUTCONCENTRATION: FINANCE, CGPA: 89.7 EQUIVALENT TO A 3.98Jan ‘16 - May ‘19

Achievements: Certificate of Excellence (IMP); Deans Honors List (5 out of 6 semesters); Fullbridge U Program completion; and Beta Gamma Sigma Member (Business Honors society).

WALL STREET PREP - CERTIFICATION IN FINANCIAL AND VALUATION MODELLING, Feb ‘18

Excel Crash Course, Financial Statement Modeling, DCF Valuation, and Trading Comps Valuation. Transaction Comps, M&A Modeling, and LBO Modeling.

Work Experience

BAIN AND COMPANY - DUBAI OFFICEASSOCIATE CONSULTANT INTERN, July - Aug ‘18

Worked on a project in financial services to create new functional area strategies for a major institution in the UAE. Participated in market research and analysis to design a strategy for optimizing a marketing tool.

SOCIETEGENERALE DE BANQUE AU LIBAN - BEIRUTINTERN IN PRIVATE BANKING DEPARTMENT, May - Jul ‘17

Gained an understanding of how a private banking team operates in different job roles. The internship ended with working in a team to create a virtual portfolio for a virtual client.


PORTFOLIO MANAGER, THE INVESTMENT MANAGEMENT PROGRAM (IMP) AT THE OLAYAN SCHOOL OF BUSINESS

Selected as one of six by the Business School faculty to partake in the inaugural Investment Management Program. We were trained as equity research analysts in the first year, progressing to portfolio managers in the second; managing a donor fund of one million dollars, beginning in September 2018.


Prepared equity research reports, with a focus on the technology sector for Nvidia, Alphabet, Activision Blizzard, and Facebook. The reports consist of a qualitative analysis of these businesses, as well as a quantitative valuation, which resulted in the issuance of a buy or sell recommendation.



VOLUNTEERING Volunteering Club: Participated in an apple-picking trip to help farmers in the

northern Lebanon area.

Canneet Coeur: Participated in a trip to visit a senior citizens home, providing food and entertainment.

Competitions and workshops Awarded first place at USJ Concours des langues competition: Performed a

speech on the importance of language and arts in modern society.

Participated in the AT Kearney Management consulting competition and workshop.

Participated in Beta Gamma Sigma leadership conference and workshop in Chicago, Illinois.

COMPUTER Microsoft Word, Excel (Advanced), Microsoft Visio (Advanced), HTML (Beginner),

and Eikon certified.

LANGUAGES Arabic (Fluent), English (Fluent), French (Fluent), and Italian (Beginner).


Miriam Sayed Jreij

Professional Development

CHARTERED FINANCIAL ANALYST INSTITUTE Passed CFA Level 1.

WALL STREET PREP - CERTIFICATION IN FINANCIAL AND VALUATION MODELING

Excel Crash Course, Financial Statement Modeling, DCF Valuation, Trading Comps Valuation, Transaction Comps, M&A Modeling, and LBO Modeling.

ACADEMY OF FINANCIAL TRADING Diploma in Financial Trading and Investment.

THOMSON REUTERS Thomson Reuters Eikon Certification.

Education

MASTERS IN FINANCE, AMERICAN UNIVERSITY OF BEIRUTGPA: 90, Fall 2018

Achievements: Certificate of Excellence (IMP), and Beta Gamma Sigma Member (Business Honors society).

BBA BANKING AND FINANCE, NOTRE DAME UNIVERSITYGPA: 3.9, Spring 2017

Achievements: Highest Distinction, Dean’s list for every semester, and second prize winner in the inter-universities Finance Competition.

BACCALAUREATE II - SOCIO-ECONOMICS, NOTRE DAME DE LOUAIZE, July 2013

Achievements: Certificate of Excellence for graduating first in Socio-Economics.

Work Experience

INTERN - JULIUS BAER LEBANON, July - Aug ‘18 Gained understanding of how a private banking team operates in different job

roles. Internship ended with working in a team to create a virtual portfolio for a virtual client.

+961 71364088

[email protected]


GRADUATE ASSISTANT, AMERICAN UNIVERSITY OF BEIRUTAug ‘17 - Feb ‘19

Built an archive for case studies regarding fixed income topics. Prepared a new economics course. Prepared a test bank for the CFA level 1 Part: Alternative Investments.

INTERN, FINANCE DEPARTMENT - DESIGN PILLARS, June - Sep ‘16 Responsible for keeping count of all incoming and outgoing payments. Came up

with a plan to reduce waste, and save money. Managed a group of five employees during the Family Fun Festival for the first Middle East edition.


PORTFOLIO MANAGER, THE INVESTMENT MANAGEMENT PROGRAM (IMP) AT THE SULIMAN S. OLAYAN SCHOOL OF BUSINESS

Selected as one of six by the Business School faculty to partake in the inaugural Investment Management Program. We were trained as equity research analysts in the first year, progressing to portfolio managers in the second; managing a donor fund of one million dollars, beginning in September 2018.

Prepared equity research reports, with a focus on the financial sector for USBancorp, Citigroup, SunTrust banks, and the Toronto Dominion Bank. The reports consist of a qualitative analysis of the business, as well as a quantitative valuation, which resulted in the issuance of a buy or sell recommendation.


Processed market screening, stock picking, and valuation.

Prepared stock pitches, and presented to the advisory board.

Made decisions on asset allocation.

Prepared weekly, monthly, and quarterly reports on portfolio performance.

COMPUTER Microsoft Word, Bloomberg Finance Terminal, Reuters Terminal, and E-views.

LANGUAGES Arabic, English, and French.


Education

DEGREE IN BUSINESS ADMINISTRATION, AMERICAN UNIVERSITY OF BEIRUTCONCENTRATION: FINANCE; CGPA: 83.50 EQUIVALENT TO A 3.5Sept ‘16 - May ‘19

Achievements: Certificate of Excellence (IMP); Deans Honors List (5 out of 6 semesters); Fullbridge U Program completion; and Beta Gamma Sigma Member (Business honors society).

STUDY ABROAD AT THE UNIVERSITY OF NEW HAMPSHIRE, June ‘15 - May ‘16 Excel Crash Course, Financial Statement Modeling, DCF Valuation, and Trading

Comps Valuation. Transaction Comps, M&A Modeling, and LBO Modeling.

Roy Beyrouti+961 71364088

[email protected]

Work Experience

JULIUS BAER S.A.L (INTERN) BEIRUT, Aug ‘18 Program covering equities, fixed income, forex, and portfolio management

fundamentals.

CITIBANK N.A. - INSTITUTIONAL CLIENT GROUP (INTERN), BEIRUTJune - July ‘18

Internship in Corporate Banking, and Treasury and Trade Services departments.

BANK AUDI S.A.L. - PRIVATE INVESTMENTS (PORTFOLIO ANALYSIS INTERN), BEIRUT, June - July ‘17


CAMUSAT S.A.L. - ACCOUNTING DEPARTMENT (INTERN), BEIRUTJuly - Aug ‘14






Prepared equity research reports, with a focus on the consumer staples sector for companies such as Boeing and NextEra Energy. The reports consist of a qualitative analysis of the business, as well as a quantitative valuation, which resulted in the issuance of a buy or sell recommendation.



FULLTIME EMT WITH THE LEBANESE RED CROSS First place at USJ Concours des langues competitions: Performed a speech

about the importance of language and arts in modern society.

Participated in the AT Kearney Management consulting competition and workshop.

Participated in the Beta Gamma Sigma leadership conference and workshop inChicago, Illinois.

COMPUTER Microsoft Word, Excel (Advanced), and PowerPoint (Intermediate).

LANGUAGES Fluent in English, Arabic, and French.

Fund Managers Annual Report 2018/2019


Program


ASSET ALLOCATION

Our initial asset allocation consisted of 60% US equities, 5% EAFE equities, 30% US bonds, and 5% cash. When compared to the benchmark of 60-40 SPY and AGG respectively, it’s clear that our initial market view was bullish and optimistic. A 5% overweight equities position is justified by this positivity, with an emphasis on the US. This decision was taken prior to the news in the USA related to trade wars, and similar conflicts. Additionally, the Fed’s decision to raise interest rates in 2018, and coming to 2019, was met with uncertainty in the market, therefore pushing us away from fixed income. Finally, the cash was supposed to be used to invest in new opportunities that present themselves.

Despite the changes that presented themselves in the economy, the overall asset allocation was not changed. We believe despite overweighting equities, the portfolio is still diverse enough to mitigate a correction or slow down.

EQUITIES SECTOR ALLOCATION

Originally, we were focusing on cyclical sectors. We had a significantly overweight position in technology, communications, industrials, and financials. We remained neutral on healthcare, and underweighted utilities and consumer staples. Following the changes in the market, we decided to reduce risk from the portfolio due to the imminent threat of a recession that has been highlighted by the volatility in the market, and the corrections and shocks witnessed recently. We now hold overweight positions in defensive sectors, and are reducing our active positions by following the benchmark sector allocations at a closer rate.

Initial macro top-down economic view


Cash and cash equivalents Stocks Bonds

ASSET ALLOCATIONS ACROSS TIME

DURATION

We maintain our view on the need for a low duration. The market is still uncertain about interest rate hikes. The Fed has announced further hikes in 2019, despite expectations. Therefore, we decided to lower the duration of the fixed income investment as much as possible.

The IPS allows the bond portfolio a maximum deviation from the benchmark of 25%. We took advantage of all the room available for flexibility, and now hold a portfolio with an average duration of 4.5 (25% lower than the average duration of the AGG).

0%

Fiscal year start 31 Oct

Asset Allocation

31 Jan 30 Apr

10%

20%

30%

40%

50% 100%

41.68%

58.32%

59.65%

4.09%

36.26%

31.29%

4.32%

34.39%

60%

70%

80%

90%

100%


CORPORATE VS. GOVERNMENT

We decided to take advantage of the higher yields offered by corporate bonds in the current rising interest rate environment. Therefore, we over-weighted corporate bonds at the expense of treasuries.

In addition, the duration was not equally divided between government and corporate bonds. We invested in low duration government funds, and higher duration for corporate bonds. We justify this decision with the yield curves of each bond type. For government bonds, the yield curve is relatively flat. Higher duration in treasuries wouldn’t yield higher returns. However, for corporate bonds, the curve is less flat, therefore increasing the duration would yield higher returns.

RATINGS

The initial investment policy statement limited the fixed income investment to A-rated bonds or higher. Given the desire to take advantage of the rising interest rate environment, the rarity of fixed income funds with only AAA, AA, and A bonds, and the relatively low risk nature of the BBB bond, we requested a change in the IPS to allow all investment grade bonds. Our request was accepted, and we reallocated our weights to favor lower investment grade ratings.

Views on bonds and selection criteria

Portfolio Holdings and their Performance


Program


Ticker # of Stocks Intial Price Dividends Value now Return/Stock XLC 1032 47.6 0.217 50.287 5.64% XLY 530 109.49 0.751 120.821 10.35% XLP 544 53.24 0.762 58.472 9.83% XLE 510 72.53 1.044 67.154 -7.41% XLF 3467 27.02 0.28 28.3 4.74% XLB 284 54.09 0.558 58.008 7.24% XLV 737 92.86 0.721 89.981 -3.10% XLI 566 75.31 0.82 78.83 4.67% XLK 1336 71.86 0.498 79.208 10.23% XLU 167 53.68 0.889 59.599 11.03% MSFT 54 111.66 0.92 131.52 17.79% GOOG 12 1126.46 0 1188.48 5.51% BA 64 359.44 4.11 381.8 6.22% DEO 123 142.36 1.369 170.009 19.42% V 169 136.2 0.25 164.68 20.91% ZTS 207 83.51 0.164 102.004 22.15% BB 1048 9.36 0 9.29 -0.75% USB 200 49.955 0 53.00 6.% CMCSA 248 39.92 0.21 43.74 9.57% VCIT 1920 82.3 1.007 87.907 6.81% VGIT 1134 63.08 0.495 64.765 2.67% VGSH 2020 59.99 0.481 60.911 1.54%

Por�olio $1,000,000.00 $1,051,431.64 5.14% 8.98% Benchmark $1,000,000.00 $1,038,435.00 3.84% 6.68%

Alpha generated

1.30%

2.30%

Annualized Return7 Months Return4/30/20191/10/2018

Portfolio holdings and their performance


RELATIVE PERFORMANCE AGAINST INDUSTRY AND MARKET SINCE INITIAL INVESTMENT DATE

INITIAL INVESTMENT AMOUNT$13,500

INITIAL ALLOCATION IN EQUITIES PORTFOLIO2.25%

CURRENT INVESTMENT AMOUNT$13,680

CURRENT ALLOCATION IN EQUITIES PORTFOLIO 2.10%

HOLDING PERIOD TOTAL RETURN: RETURN SINCE INITIAL INVESTMENT FROM OCT 18, 2019 TO MAY 22, 20191.3%

COMPANY PROFILEGoogle was founded on the 4th of September in 1998. However, Alphabet Inc. was incorporated as a holding company on July 23, 2015, to restructure Google by moving subsidiaries from Google to Alphabet, narrowing Google’s scope, and, as of now, it is the second largest company in the world by market capitalization. Currently, the company’s businesses include Google Inc. and its internet products, such as Google Fiber, Calico, CapitalG, GV, Nest, Verily, Waymo, and X. Google’s segments includes its internet products, such as Search, Ads, Commerce, Maps, YouTube, Google Cloud, Android, Chrome, and Google Play, as well as its hardware initiatives.

INITIAL INVESTMENT DRIVERS- Data generating machine- Growing streams of ad revenue- Significant investments in new technologies

Alphabet (GOOG)

Pitched by Ali Shana’a

GOOG SPY XLK



INITIAL INVESTMENT AMOUNT$10,000



CURRENT ALLOCATION IN EQUI-TIES PORTFOLIO 1.66%

HOLDING PERIOD TOTAL RE-TURN: RETURN SINCE INITIAL INVESTMENT FROM MAR 17, 2019TO APRIL 30, 20199.04%

COMPANY PROFILEComcast is a global media and technology company with three primary businesses: Comcast Cable, NBC Universal, and Sky. Comcast acquired NBC Universal between 2011 and 2013, and acquired Sky in the fourth quarter of 2018. Comcast Cable and Sky are reported as one segment, while NBC Universal operates under four different segments, namely Cable Networks, Broadcast Television, Filmed Entertainment, and Theme Parks. It’s the second largest multichannel video service provider by number of customers.

INITIAL INVESTMENT DRIVERS- High demand on broadband internet services- Strong & efficient diversification- Sky acquisition fuels growth

VIEWSBased on the weighted valuation and qualitative analysis, Comcast still has room for growth up until its target price of $46.

Comcast Inc (CMCSA)

Pitched by Kinda Katanji

CMCSA XLC SPY



INITIAL INVESTMENT AMOUNT$6.000




HOLDING PERIOD TOTAL RETURN: RETURN SINCE INITIAL INVESTMENT FROM OCT 18, 2019 TO MAY 22, 201913.55%

COMPANY PROFILEMicrosoft is a tech giant. The company has been around since 1975, headquartered in Washington state. It’s the sixth largest IT company by revenue. The company has survived the darker periods of the industry (i.e. tech bubble in the 90s, and 2008 stock market crash). Microsoft develops, manufactures, licenses, sells, and supports software products. The products offered by the business include: operating system (OS) software, server application software, business and consumer applications software, software development tools, Internet and intranet software, mobile software, video game consoles, digital music entertainment devices, and Personal Computer (PC) input hardware.

INITIAL INVESTMENT DRIVERS- Brand equity & product necessity- Shift of focus towards profitable products- Higher margins with cloud services

Microsoft (MSFT)

Pitched by Arman Khederlarian

MSFT SPY XLK



INITIAL INVESTMENT AMOUNT$23,000 at 136.2

INITIAL ALLOCATION IN EQUITIES PORTFOLIO4%

CURRENT INVESTMENT AMOUNT$ 27,991 at 164.43


HOLDING PERIOD TOTAL RETURN: RETURN SINCE INITIAL INVESTMENT FROM JAN 28, 2019 TO APR 30, 201920.7%

COMPANY PROFILEVisa, Inc. engages in the provision of payment services. It also facilitates global commerce through the transfer of value and information amongst a global network of consumers, merchants, financial institutions, businesses, strategic partners, and government entities. It offers debit card, credit card, prepaid products, commercial payment solutions, and global ATM. The company was founded by Dee Hock in 1970, and is headquartered in San Francisco, CA.

INITIAL INVESTMENT DRIVERS- Positive outlook for e-commerce- Global growth opportunities- Conversion of cash

Visa (V)


V SPY XLK




INITIAL INVESTMENT AMOUNT$10,000 at 9.36

CURRENT INVESTMENT AMOUNT$ 9,735.92 at 9.29


HOLDING PERIOD TOTAL RETURN: RETURN SINCE INITIAL INVESTMENT FROM MAR 21, 2019 TO APR 30, 2019-0.75%

COMPANY PROFILEBlackBerry is an enterprise software and services company focused on securing and managing endpoints in the Internet of Things (IoT). Based in Waterloo, Ontario, the company was founded in 1984, and operates in North America, Europe, Asia, Australia, the Middle East, Latin America, and Africa. The company’s common shares trade under the ticker symbol “BB” on the Toronto Stock Exchange (TSX), and the New York Stock Exchange (NYSE).

INITIAL INVESTMENT DRIVERS- BlackBerry’s strong management- Cybersecurity market experiencing rapid

growth- Acquisition of cylance

RETURN SINCE POSITION TRIMMING FROM MARCH 13, 2018 TO APRIL 30, 2018 5.09%

BlackBerry (BB)


BB SPY XLK



INITIAL INVESTMENT AMOUNT$17,500 at $83.65


CURRENT INVESTMENT AMOUNT$10,896 at $101.84



COMPANY PROFILEZoetis Inc. is engaged in the discovery, development, manufacture, and commercialization of animal health medicines and vaccines, with a focus on both livestock and companion animals. The company’s segments include the United States and International. The company marketed its products to veterinarians and livestock producers located in approximately 45 countries.

INITIAL INVESTMENT DRIVERS- Expanding pet animal health market- Collaborations with industry giants- Innovation in niche market segments (i.e.

aquaculture)

Zoetis Inc (ZTS)

Pitched by Yara Farhat

ZTS XLV SPY





CURRENT INVESTMENT AMOUNT$20.743 at $168.64



COMPANY PROFILEDiageo is a British multinational alcoholic beverages company, and a global leader in its industry, with 150 manufacturing sites in 30 countries. It is the world’s second largest distiller, and operates in multiple categories, most notably spirits and beer. The company is headquartered in London, England, and has offices in almost 80 countries.

INITIAL INVESTMENT DRIVERS- Excellent positioning in a thriving industry- International growth potential- Operational efficiency and cost-cutting

Diageo (DEO)


DEO XLP SPY








COMPANY PROFILEBoeing is a multinational aerospace and defense company, and the largest globally, both in terms of revenue and planes sold. The company’s three major sectors include Commercial Airplanes, Defense, Space, and Security (DSS), and Global Services. The company has consistently been growing, while meeting shareholder expectations, and is projected to continue down that path.

INITIAL INVESTMENT DRIVERS- Growing demand for commercial airplanes- Rising defense budgets- The Space race

Boeing (BA)

Pitched by Roy Beyrouti

BA ITA SPY







HOLDING PERIOD TOTAL RETURN: RETURN SINCE INITIAL INVESTMENT FROM APR 4, 2019TO APR 30, 20194.33%

COMPANY PROFILEU.S. Bancorp is a multi-state financial services holding company headquartered in Minneapolis, Minnesota. U.S. Bancorp was incorporated in Delaware in 1929, and operates as a financial holding company and a bank holding company under the Bank Holding Company Act of 1956. It has 3,106 branches, 74,000 employees, and $467 billion in assets.

INITIAL INVESTMENT DRIVERS- Boost in loan demand- Expansion and innovation in digital lending- Improved and strengthened control over

money laundering according to the Anti-Money Laundering and Bank Secrecy Act

USBancorp (USB)

Pitched by Miriam Jreij

USB XLF SPY


INITIATED BUY RECOMMENDATION ON END OF FISCAL YEAR



TARGET PRICE$213

EXPECTED UPSIDE10%

COMPANY PROFILENextEra Energy is the largest generator of renewable energy. It is the world’s largest generator of electricity from wind and sun, and has poised itself as one of the most valuable and attractive utilities companies on the market. NextEra Energy owns several subsidiaries around the United States, which serves millions of customers, and generates clean electricity from eight nuclear power plants around the country.

INITIAL INVESTMENT DRIVERS- The future of energy- Solar power growth- Global expansion

NextEra Energy (NEE)

Pitched by Roy Beyrouti

NEE GSPC XLE





TARGET PRICE$30.06

EXPECTED UPSIDE52%

COMPANY PROFILEExelixis Inc., incorporated on November 15, 1994, is a biopharmaceutical company. The company is focused on discovery, development, and commercialization of new medicines to manage care and outcomes for people with cancer.The company has established collaborations with other pharmaceutical and biotechnology companies for various compounds and programs in its portfolio.

INITIAL INVESTMENT DRIVERS- Product expansion in Japan- New drugs reaching trial phase 3- Strong balance sheet with no debt and high

cash position

Exelixis Inc (EXEL)

Pitched by Yara Farhat

EXEL GSPC XLV



COMPANY PROFILEArcher Daniels Midland (ADM) is one of the world’s leading food processing companies with more than 31,000 employees and delivering its products to over 170 countries. The company is focused on procuring, transporting, storing, processing, and merchandising agricultural products and commodities. The company is headquartered in Chicago, Illinois; and it trades on the NYSE under the ticker ADM.

INITIAL INVESTMENT DRIVERS- Increased efficiency and cost savings- Focusing on the right product mix and

acquisitions- Innovation and continued product

development

Archer Daniels Midland (ADM)




TARGET PRICE$49.4

EXPECTED UPSIDE12%

ADM GSPC SLP



COMPANY PROFILECitigroup Inc. is an American multinational investment bank and financial services corporation, headquartered in New York City.The company was formed by the merger of banking giant Citicorp and financialconglomerate Travelers Group in 1998; Travelers was subsequently spun off from the company in 2002. Citigroup owns Citicorp, the holding company for Citibank, as well as several international subsidiaries.

INITIAL INVESTMENT DRIVERS- Improved credit card momentum- Boost in loans, deposits and investment

sales- Higher payout, buybacks and cash

dividends- Expense management and investments for

LT growth

Citigroup (C)




TARGET PRICE$78.5

EXPECTED UPSIDE11%

C GSPC XLF



COMPANY PROFILESunTrust Banks, Inc. is an American bank holding company. The largest subsidiary is SunTrust Bank. It had $199 billion in assets as of March 31, 2018. SunTrust Bank’s most direct corporate parent was established in 1891 in Atlanta, where its headquarters remain. On February 7, 2019, it was announced that SunTrust Banks would be bought by BB&T for $28 billion in an all-stock deal, creating the sixth largest U.S. lender in the biggest bank deal since the 2007-2009 financial crisis.

INITIAL INVESTMENT DRIVERS- Improved efficiency in operations and

capital- Boost in loan demand- Merger with BB&T

SunTrust Banks (STI)




TARGET PRICE$71

EXPECTED UPSIDE12.24%

STI GSPC XLF



COMPANY PROFILEThe Toronto-Dominion Bank is a Canadian multinational banking and financial services corporation, headquartered in Toronto, Ontario. Commonly known as TD, and operating as TD Bank Group, the bank was created on February 1, 1955, through the merger of the Bank of Toronto and The Dominion Bank, which were founded in 1855 and 1869, respectively.

INITIAL INVESTMENT DRIVERS- Boost in loan demand- Growth in digital platform- Increasing cashflows and earnings

Toronto Dominion Bank (TD)




TARGET PRICE$64

EXPECTED UPSIDE14%

TD GSPC XLF

Advisory Members’ Bios


Program


Farah Fostok

Farah Foustok is the Chief Executive Officer at Lazard Gulf Ltd., based in Dubai. She began working in the investment field in 1994. Prior to joining Lazard in 2014,she was Chief Executive Officer and Chief Investment Officer of ING Investment Management Middle East from 2008.Previously, she was the Head of Asset Management at NBD Investment Bank. Farah was senior fund manager at EFG-Hermes prior to NBD IB, responsible for managing GCC and MENA funds and portfolios. Farah spent five years at Deutsche Bank in London, in Equity Strategy.

She has also worked at Morgan Stanley within Equity Sales, followed by three years of commercial real estate advisory in Europe. Farah also has Private Equity exposure through a private venture in Argentina, and an internet start-up in the UK.

In 2010, Farah was selected to participate on an advisory panel for the Dubai Financial Services Authority. In 2012, she was elected as the chairperson of the board for the UAE Financial Services Association. In December 2013, Farah was one of four founding members of the first non-profit female mentoring program in the DIFC, Reach. In April 2014, Farah completed her accreditation with Mudara, Instituteof Directors, to become the fourth female certified board director in the UAE. In 2015, Farah co-founded and chairs the Steering Committee for the GCC chapter of the 30% club to develop and promote female leadership in the region. In January 2018, Farah completed a Fintech course with the Said Business School.

Farah holds an MBA from Imperial College London, and a BSc Hons in Mathematics from King’s College London.

Chief Executive Officer, Lazard Gulf Ltd.


Nadim Tabbara

Nadim is the Chief Financial Officer (CFO) at The Olayan Group (TOG), since 2008. In this role, he has overall responsibility for the financing, accounting, tax, treasury, risk assessment, internal controls, and the Management Information Systems of TOG. Over a 30-year tenure with TOG, Nadim has held a variety of positions in finance, foreign exchange, credit, risk, and banking. He started his career reporting to the CFO, focusing on the management of TOG’s FX exposure, and Fixed Income portfolio. He also worked closely with the CFO in managing and growing TOG’s banking relationships with global financial institutions.

He was later promoted Co-Head of FX and Interest Rates, and was responsible for the Group’s liability structure. He co-headed a ten-member team, which dealt with derivatives across those asset classes. Nadim retained the responsibility of managing TOG’s banking relationships, ensuring liquidity for the Group is available through medium to long-dated, unsecured, and committed credit facilities. Nadim is also a board member of Chipita, and TEMES; two companies in which TOG is a shareholder.

In 1996, as part of his extra-curricular activities with friends, Nadim founded Child of Lebanon, a UK Registered Charity, whose mission is to assist, through funding specific projects, select child-focused NGOs across Lebanon in their efforts to relieve poverty and suffering, to promote health, and the advancement of education for children in need. To date, over 150 diverse projects have been funded.

Nadim is also a member of the Advisory Board of the Olayan School of Business at the American University of Beirut.Born in Beirut, Nadim received a BA from the American University of Beirut. He also earned an MBA from McGill University in Montreal, and a DESS in Computer Science from Université Dauphine in Paris. He also attended the Program for Management Development (PMD) at Harvard University.

Nadim currently resides in Athens with his wife and two children, who live in the United Kingdom. He holds both Lebanese and French citizenships.

Chief Financial Officer, The Olayan Group (TOG)


John Dagher

Mr. Dagher has been Head and Chief Executive Officer for the Lebanon Branch at Julius Baer Group Ltd. since January 1, 2014. Mr. Dagher also served Julius Baer’s office as Managing Director, and Senior Advisor. He is responsible for further developing and extending Julius Baer’s franchise in Lebanon, and the Levant region. He has industry expertise in the private banking sector.

Previously, he was the Advisor to the Chairman of BLC Bank, Beirut. Prior to that, Mr. Dagher was also the Managing Director and Vice President at Merrill Lynch, Pierce, Fenner & Smith, where he was responsible for managing offices in Dubai and the Levant region; managing assets for Ultra High Net Worth Individuals, Banks, Sovereign Funds, and Financial Institutions out of the Merrill Lynch offices in New York, London, Kuwait, Dubai, and Beirut for 22 years until 2002.

In addition, Mr. Dagher has been part of other professional projects as consultant for several offshore banks in Lebanon; a member of the committee for the Lebanese Central Bank, regulating the mutual fund industry in Lebanon; and as a member of the committee introducing options into the Lebanese financial market. Apart from his professional experience, Mr. Dagher has been involved in teaching from 1994 to 2009 at the American University of Beirut, Lebanese American University, NDU, the Lebanese Central Bank, and other academic and professional institutions.

Furthermore, Mr. Dagher has been a member of several committees associated with the American University of Beirut, and, since 2017, is currently the head of the Banking Committee at the Swiss Lebanese Business Council.

Head and Chief Executive Officer for the Lebanon Branch,Julius Baer Group Ltd.


Fadi Osseiran

Dr. Fadi T. Osseiran is General Manager of Blominvest Bank S.A.L., a subsidiary of Blom Bank Sal., since 1994, where he also served as Advisor to the Chairman and General Manager of BLOM Bank S.A.L. He started his banking career at BLOM BANK as Assistant Dealer from 1981 to 1982. From 1990 to 1993, he served as Manager of Corporate Planning and Human Resources Development at Méditerranée Group Services. From 1985 to 1987, he was an Instructor at the Economics Department at the American University of Beirut (AUB), and then Assistant Professor at the Institute of Money and Banking of AUB from 1988 to 1993. Dr. Osseiran has been an Executive Director at Blom Bank S.A.L. since 2008.

Dr. Osseiran has been a member of the Board of Blom Bank Egypt since 2005, and since 2008 has served as Director of Blominvest Bank Saudi Arabia. He served as Director of the Bank of Syria and Overseas S.A. Since 2004, Dr. Osseiran held the position of President of the “Association of Stock Brokers in Beirut”, and has been a Member of the “Lebanese Economic Association”. He was also Member of the “Research Committee” from 1992 to 2006, and a Member of the “Training Committee” from 1994 to 1996 of the Association of Banks in Lebanon. He was Board Member of the Lebanese Management Association from 1992 to 1996, and has many publications in the fields of banking and economics. Dr. Osseiran holds a PhD in Economics from New York University (NYU).

General Manager, Blominvest Bank S.A.L.

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Suliman S. Olayan School of BusinessAmerican University of BeirutP.O. Box 11-0236, Riad El-SolhBeirut, Lebanon 1107 2020

www.aub.edu.lb/osb

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Investment Management Program - aub.edu.lb · INVESTMENT MANAGEMENT PROGRAM REPORT l 2019 Suliman...

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