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June 2012 Spring Semester Status Report
June 2012
Spring Semester Status Report
Table of Contents Project Mission ....................................................................................... 2 A Progress Report from the President ..................................................... 3 Investment Report .................................................................................. 4 Communications Director Report .......................................................... 7 A Virtu Partner Joins Timmy in Guatemala ........................................... 8 Investment Curriculum Reflection ......................................................... 9 Senior Reflections ................................................................................. 10 June 2012
The Virtu Project
Indiana University
Wylie Hall 247
Bloomington, IN 47405
A conduit for learning.
A mechanism for change.
Status Report - 2
Project Mission The Virtu Project generates funds for Timmy Global Health through mock investing in the stock market. Rather than assuming the inherent risks of investing large sums of money, Virtu asks donors to pledge investments in a mock portfolio. After a one-year peri-od, donors match the returns made on the mock portfolio by making a direct contribution to Timmy Global Health. For ex-ample, if a donor were to pledge $10,000 and the fund yielded a 10% return in one year, the do-nor would write a check for $1,000. This method eliminates the risk of losing “real” money and still rewards performance.
In addition to fundraising, The Virtu Project uniquely blends philanthropy and education. The project facilitates opportu-nities for students within the Liberal Arts and Management Program (LAMP) to develop an array of real-world business skills using a hands-on ap-proach. Students working on The Virtu Project gain experi-ence in the areas of finance, marketing, accounting, business law, networking, and creative problem solving. The Virtu Pro-ject enables students to generate proficiency in these areas through a student-led Invest-
ment Curriculum and ongoing workshops facilitated by LAMP faculty, IU administration, and industry experts.
www.indiana.edu/~virtu
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Status Report - 3
A Progress Report Derek Sprunger, President Allow me to thank you again for your support. I am pleased to say that Virtu has many great things to report at the half-way point of our investment window. Virtu has been building momentum the past few years, and we can cer-tainly see it after this spring semester. Just three months into this year’s invest-ment window, we had already surpassed last year’s pledge contribution total. At the half-way mark, our total stands at $80,983. This is more than the past two years combined. We are spreading the word about Virtu in new, exciting directions, and thus far it is working. Virtu has also been busy elsewhere. In January, we hosted an event at Upland Brewery for our supporters to meet our entire group, face to face. The event was a huge success, and we look forward to seeing you next time. In April, we expanded our educational goals by hosting a discus-sion panel on economic conditions since 2008. We look forward to continuing to educate our fel-low IU students in the future. On the next few pages, you will hear from our members about some other semester accom-plishments. You will hear about our fund’s performance (page 4), our third annual Investment Curriculum, and much more. On behalf of our organization, I thank you for allowing us to learn and grow in ways we cannot accomplish in the classroom. Virtu is an incredible developmental tool for aspiring profes-sionals. I leave a more eloquent explanation of this to two of our outstanding graduating seniors. As you read their stories starting on page 10, I ask you to remember that your support changes the lives and outlooks of many college students, in addition to those reached by Timmy Global Health. To remain updated, find us on Facebook (www.facebook.com/thevirtuproject), Twitter (@thevirtuproject), and our website (www.indiana.edu/~virtu). As always, I would be thrilled to speak with you individually. My personal email address is [email protected]. Please do not hesitate to contact me for any reason. Thanks again and I look forward to hearing from you.
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Status Report - 4
Investment Report Tim McCall, Investment Director I am proud to announce, as of May 21st, that the value of our portfolio has increased 6.81% from the beginning of our investment window on Decem-ber 12th. The portfolio has outperformed the S&P 500 benchmark, which is up 6.48% over the same time period.
Virtu has had another great semester due to the diligence of its mem-bers. This year marks the third year of the Virtu Project investment curriculum, a ten week program in which our new Associate members are educated in equi-ty analysis and practice key presentation skills. During this curriculum, our Associates are paired together, perform analyses on a stock of their choice, and present this analysis to Virtu Partners. Our Partners reviewed the presentations and decided to add one of the stocks to our portfolio. We purchased 25 shares of the diesel engine and related parts company Cummins (CMI) at $115.87 per share. This year, the market has been very volatile. This volatility led to our portfolio reaching an increase of a little more than 15% by April 2, which is the highest amount we ask our donors to match. In an effort to hedge ourselves against future volatility and to maintain our 15% return, we changed our investment strategy mid-year. To accomplish this, our managers performed an in-depth stock analysis on our entire portfolio and 11 stocks were sold. In order to determine which stocks to sell, a sector analysis was performed and compared to an ideal sector analysis of a more conservative, value-based portfolio. In addition, 20% of our portfolio was also invested into a mu-tual fund (VFSTX) that we determined would be most effective. 15% of our portfolio was held in cash and further stocks were purchased to more closely adhere to a conservative value-based portfo-lio. While this strategy has not been as successful as we had hoped for so far, analysis shows that during the difficult months of April and May, our losses would have been at least 50% more se-vere.
In this year’s portfolio, we have also decided to add a commission charge of $8 per trade to make the investment process more realistic. The trading commission fee has had a slight effect on our portfolio, costing about 0.52% in profits.
On the next two pages, you will find a chart showing our performance against the S&P 500 as well as our current holdings.
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Status Report - 5
2012 Virtu Portfolio against S&P 500 Benchmark
*Note that a 7.55% increase indicates stock performance only, and does not include the $8 trade fee.
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Status Report - 6
Current Holdings
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Name Symbol Shares Initial Cost Market value Gain Gain %
Apple Inc. AAPL 22 8,650.70 12,298.22 3,647.52 42.16
China Mobile Ltd. (ADR) CHL 120 5,782.40 6,288.00 505.60 8.74
CVS Caremark Corporation CVS 54 2,071.34 2,403.00 331.66 16.01
DeVry Inc. DV 58 2,009.00 1,610.66 398.34 19.83
Goldcorp Inc. (USA) GG 111 5,359.31 4,048.17 1,311.14 24.46
Noble Energy, Inc. NBL 46 4,278.18 3,810.64 467.54 10.93
Northrop Grumman Corporation NOC 71 3,990.39 4,100.25 109.86 2.75
Oracle Corporation ORCL 210 6,660.80 5,546.10 1,114.70 16.74
Simon Property Group, Inc SPG 51 6,258.05 7,443.45 1,185.40 18.94
Tempur-Pedic International Inc. TPX 63 3,369.05 2,975.49 393.56 11.68
Teva Pharmaceutical Industries Ltd TEVA 91 4,115.74 3,498.95 616.79 14.99
Cummins Inc. CMI 25 2,904.75 2,474.75 430.00 14.80
Waste Management, Inc. WM 83 2,994.34 2,727.38 266.96 8.92
Wal-Mart Stores, Inc. WMT 52 3,012.04 3,338.40 326.36 10.84
American Electric Power Company AEP 79 3,028.17 2,983.04 45.13 1.49
Chevron Corporation CVX 29 2,995.87 2,829.53 166.34 5.55
Omega Healthcare Investors Inc OHI 140 3,004.00 2,889.60 114.40 3.81
Vanguard Shrt-Tm Invstmnt-Grde VFSTX 1860 20,003.00 19,957.80 45.20 0.23
Cash 16,031.89
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Status Report - 7
Communications Director Report Daniel Violi, Communications Director
The current state of The Virtu Project is a unique and exciting one. It is no longer a brand new organization, yet it has not been around long enough to be considered fully established. Thus, both our membership and pledge to-tals continue to grow, and as a result there are more responsibilities across our leadership. Put generally, we are still in the process of honing in on where we stand as an organization and what we want to look like in the long term. My position as Communications Director was born directly from this growth. Given the vague nature of this title, I will explain its meaning and, in doing so, provide an update on some of the goings on of our evolving organization.
My job description can be divided into two parts: administrative tasks and public relations. The former can be seen as the reason a new position was critical to Virtu. With more members to manage, the executive board needed to be expanded before the responsibilities became unmanagea-ble for four people. This side of the position acts as a reliever of growing pains while the other half of the job description can be categorized as more of an agent for further growth. PR was a field where Virtu lacked presence. As it stands now, Virtu has a completely redesigned website (www.indiana.edu/~virtu), a Facebook page (facebook.com/thevirtuproject) and a Twitter account (@thevirtuproject), all of which are managed by the Communications Director along with dealings with the press and Timmy. All five of these elements of media are potentially massive sources of untapped growth, and I am confident that the next few years will be successful.
Finally, seeing as I will spend the fall of 2012 in Copenhagen, we have recently appointed a new Communications Director. Adrian Hepfer will be assuming all of the aforementioned respon-sibilities as well as any others she can dream up. Having someone so able and ambitious in a fledg-ling position such as this is very exciting for us, and I look forward to seeing her progress from abroad. Lastly, I would like to acknowledge Ross Larson, who worked so hard championing the beautiful new Virtu website.
www.indiana.edu/~virtu
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Status Report - 8
A Virtu Partner Joins Timmy in Guatemala Sukriti Bansal, Partner
Friday. The last day of the brigade. The first day I was not sick in any way whatsoever. No altitude sickness, no stomach issues, no headaches, noth-ing. Well, aside from the exhausted high that comes from a trip like this. For the last week we had been working in Guatemala, part of a travelling medical brigade. We were setting up in a new location each day, and sometimes travel-ling in between locations in a single day. Today was the end, and we wanted to make it a good one.
I was shadowing Lisa, our nurse practitioner today. I had requested to be placed with her the night before, hearing from my fellow students that one learns a lot when working with Lisa. So of course I was excited, nerd that I am. I love to learn new things, especially when it is something like medicine, which I care about so much.
The day started out like all the previous had: setting up the pharmacy area, the triage sta-tion, and private areas for the doctors to see patients. In this location – an empty warehouse – we made do with two tables for the pharmacy, another for triage, and then a series of sheets strung up on the rafters to create patient exam areas for the doctors. Privacy was minimal, but if there is one thing I have learned – from this trip and life in general – you make the best out of what you have. Once we were set up, the patients started coming in.
Volunteering for the trip was rejuvenating. All of us who go on the trip get so much more than we give, and every trip goer becomes a dedicated Timmy for life. We just cannot make the trip often enough, no matter how much we wish we could.
I hope that as Timmy grows, helping its international partners grow, there will be more native physicians treating the patients year round. Maybe then, we will be able to help everyone get the health care they need, and eventually organizations like Timmy will no longer be needed.
To everyone supporting Virtu, know that all you give helps Timmy, in turn helping the people Timmy serves, locally and abroad. I thank you for your support. Know that we helped hun-dreds in the week I was there. Your support means more than you can imagine. I hope that one day, like me, you will be able to see the impact yourself.
www.indiana.edu/~virtu
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Status Report - 9
A Reflection on the Investment Curriculum Eric Bohn, Manager I have always had an interest in equity investing, but have never both-ered to take my knowledge beyond the most rudimentary of investing tech-niques. When I first learned of Virtu in the fall it seemed like an ideal fit. I would be able to expand my knowledge of the stock market while supporting Timmy Global Health, a fantastic non-profit with which I had prior experi-ence. The Virtu Investment Curriculum (IC) quickly expanded my knowledge of markets and equity investing. Each week the new Associates gathered and tackled a new aspect of investing, from financial ratios to how to diversify a portfolio in order to avoid risk. The IC was more in depth and holistic in its approach than I had ever imagined. This was made evidently clear in the final stock recommendations which the Associates made to the Partners. With these sound fundamentals in equity investing, I feel confident in the continued suc-cess of the Virtu portfolio. I cannot wait until the start of the fall semester to continue working and learning with such a unique and driven group of individuals.
www.indiana.edu/~virtu
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Investment
Curriculum
2012
Virtu Associates visit Timmy’s Indianapolis office
Associate Ivana Huang suggests a new investment
Status Report - 10
Senior Reflections Andrew Morrow, Graduating Partner & Former President Simplicity is the ultimate sophistication. Steve Jobs, founder of Apple What originally attracted me to The Virtu Project in 2009 was its mis-sion. It seemed so simple. I could learn about the stock market while simulta-neously raising money for Timmy Global Health. As I graduate this May, I’m still certain about this—Virtu keeps it simple. Much of my three years as a Virtu member was spent learning. Starting as an Associate member, I was tasked with the responsibility of familiarizing myself with the stock market, and it quickly became obvious that the “investing world” is extreme-ly complex. To a rookie investor ratios, income sheets, ETFs, and an overabundance of news and analyses were intimidating. Virtu’s upperclassmen, however, guided me through the numbers and investing noise with a simple Virtu mantra: do your homework and invest in what you know. The learning continued. I enjoyed spending my extracurricular time with fellow Virtu members reading and discussing news articles about Wall Street. I even got into the habit of check-ing stock market news between classes. An important thing I will take away from my Virtu experi-ence is the knowledge of where to seek reliable information, and I now can follow financial news with interest and understanding. As I move into the real world and consider to start investing, I feel fortunate to have been a part of Virtu, an experience that taught me how to be a practical in-vestor. Looking back, I appreciate the patience Virtu leadership before me displayed while I was learning and asking questions. I also feel fortunate to have been surrounded by so many naturally curious, intelligent, friendly and motivated classmates who stimulated my thinking and expanded my knowledge of the investing world. The Virtu Project, and LAMP in general, attract incredible people, and they are both special programs.
www.indiana.edu/~virtu
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Status Report - 11
For three years—since I joined—Virtu has invested in Apple. Like Apple during that peri-od, Virtu has flourished and grown tremendously, raising over $30,000 for Timmy Global Health and further developing Virtu’s education component. Moving forward, I am excited to see Derek, Tim, Daniel and the new Virtu leadership team continue to build this project. Virtu members will keep it simple though, continuing to learn while doing good. Thank you for supporting The Virtu Project. Alexandra Moxley, Graduating Partner “Reflecting on the Past, Looking Toward the Future”
Over the past three years The Virtu Project has grown and developed with the support and vision of each unique member. Seeing the evolution of such a dynamic organization has been a fantastic learning experience, and it has constantly pushed me to ask the question “Where can we go from here?” I have learned that not all ideas are good ones, but they can lead to something much bigger (if one takes the time to listen and contemplate). Initially, The Virtu Project had a brilliant starting point, so it has been an honor to work off of and improve that foundation. Striving to connect with IU students and faculty, last year we decided to host an education-al event. The result was a seminar called “Financing Your Future,” and featured IU Treasurer MaryFrances McCourt. She spoke on how to deal with student loans and manage debt, and it pro-vided a dynamic, honest look at how to evaluate one’s personal financial future. We continued the successful trend this April by organizing an event called “Bouncing Back: A Panel Discussion on the Impact of the 2008 Economic Crisis and Beyond". The panel included professors, a business owner, an attorney and an IU undergraduate senior. This range of perspectives provided excellent insight into the evolution of the economic situation from 2008 to the present, as well as what the future might hold. The panel discussion involved collaboration with another student group on campus, the Hutton Honors Council Student Association (HHCA) Off-Campus Council, which led to a very diverse audience. We were able to reach out to students with a variety of different ma-jors and interests, and further spread the word about Virtu. This joint effort was a testament to the power of working with other campus groups and could potentially become a model for the future.
www.indiana.edu/~virtu
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Status Report - 12
The foundation we have been able to build upon over the past few years is solid, and I know that The Virtu Project will continue to thrive and make a difference in Indiana and abroad. The experiences I have helped create have impacted me just as much as they have impacted others. I look forward to returning to IU in the future to see where these legacies have spread and how they have grown. Academics would be less meaningful without having a strong base of co-curricular activities in which to apply learned knowledge, and Virtu has been one of the most intel-lectually stimulating groups of which I have been a part. Virtu is the perfect combination of knowledge, analysis, insight, learning and collaboration. The formal and informal elements of what we do model a small business, and the student-run aspect is truly empowering and inspiring. I wish to express my sincere gratitude to all of the past and present Virtu members for giving me the op-portunity to pursue my diverse set of interests and to make an impact alongside other influential student leaders. Special thanks to our graduating seniors: Gus Boeglin Neil Doshi Sam Johns Joseph Maginot Chris Merchun Andrew Morrow Alexandra Moxley Erik Stegemiller Brynne Underwood Andrea Wolf
www.indiana.edu/~virtu
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Legal Advisor Professor Tim Lemper
Academic Publications Advisor Professor Jamie Prenkert
Faculty Advisor Jane Rogan
Status Report - 13
www.indiana.edu/~virtu
If you would like to make a direct, tax-deductible contribution to The Virtu Project to help us pro-vide educational workshops for students and to defray our operating expenses, you can do so by making a direct payment to the IU Foundation at www.iufoundation.org; reference The Virtu Pro-ject, account number 38-AS00-214.
Timmy Global Health (formerly Timmy Foundation) is an Indianapolis-based non-profit that expands access to healthcare and education while empowering students and volunteers to engage directly in global development. Timmy Global Health works alongside partners in Guatemala, Ecuador, Columbia and Nigeria to expand its reach and deepen its impact. For more information about our beneficiary please explore Timmy Global Health’s website at www.timmyglobalhealth.org.
A conduit for learning.
A mechanism for change.
Status Report - 14
www.indiana.edu/~virtu
Thank you for your continued support.
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A mechanism for change.
