Real-World Investment Management

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In an attempt to integrate real-world investment management experience into the classroom, our class was assigned to make and manage a portfolio of different chosen securities. With teams of no larger than two individuals, we were given $1,000,000 in fantasy money to invest, track and write about our results.

At the project initiation time, we thought it was smart to first purchase some securities that we were already familiar with and have in our personal portfolio’s. This allowed us to purchase some securities immediately because the necessary due diligence had already been completed. Our investment style consisted of not just one individual type but a couple different styles. These included value, growth, small cap, mid cap and large cap as well as conservatively always keeping cash on hand.

The growth style seeks to find companies that are expected to increase by 15%-25%. While only a few of our securities increased by this much, we believe this was due to the short seven-week time period we were allotted for this project. In due time many of these securities will show their true growth potential. We also incorporated value investing during this simulation. Value investors look for bargains and cheap stocks that are often out of favor and may be cyclical and at the low end of their business cycle. Value investing allows one to implement an abundance of inexpensive shares of a company into a portfolio, which could turn into a fantastic return. In implementing both growth and value investment strategies into the same portfolio, this allowed for a diversification effect to occur. We found that returns on growth stocks and value stocks are not highly correlated and by diversifying between growth and value, this helped us to manage risk while still having high long-term return potential.

We also invested in small cap, mid cap and large cap securities. Companies are given these names relating to the size of the company or their market capitalization. Small cap companies have market capitalizations under $500 million while mid cap companies market capitalizations are between $500 million and $8 billion and large cap companies market capitalizations are above $8 billion.

We found that the large cap securities were relatively safe to invest in compared to the small cap securities. Small cap stocks have a higher price volatility, which translates to a higher risk. Investing in mid cap securities is like choosing the middle ground and seeks a tradeoff between volatility and risk. The potential return may not be as high as the small cap but the risk is not as high either.

Below, the different securities are listed which we incorporated into our portfolio as well as a small description about the securities, why we invested in them and the amount invested. Cel-Sci (CVM) is a biotechnology company formed in 1983 and is involved in the development of immunotherapy products for the treatment of cancer and infectious disease. The companies’ core capabilities include drug discovery, research, development and manufacturing of biological substances. Their flagship product, Multikine, is the first immunotherapeutic agent being developed as a first-line standard of care treatment for cancer. Multikine has been cleared in the U.S. and Canada for study in a global Phase III clinical trial in advanced primary head and neck cancer patients. 20,000 shares @ $1.48

20,000 shares @ $1.05
Average 40,000 shares @ $1.265
Closing Price 11/23 – $1.26
Market Cap – 192.92M (Small Cap)
Beta – 2.42
Return – (.40%)

This security was purchased as a small cap investment with serious growth potential. Being at a very inexpensive price, this allowed for the accumulation of multiple shares of this security. We do not believe this stock is undervalued or overvalued but correctly priced given the company’s current situation. This company is on the verge of starting their Phase III clinical trial and with solid...
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