The CFA Institute Research Challenge
Germany 2011/2012
August 2011
CFA Institute Research Challenge Germany
The Challenge is an educational initiative in which leading industry professionals
teach and test business and finance students in research and report on a
publicly traded company. German CFA Society conducted the Investment
Research Challenge Germany for the first time in 2011.
Rules and Timeline
The Challenge starts in October 2011 and ends with a presentation in early
2012. It consists of the following components:
• Analysis of a Public Company: Teams research the same public company, selected by German CFA Society, including a question and answer
session with company management.
• Mentoring by a Professional Research Analyst: Each team is mentored by
a professional research analyst, who reviews and critiques the team's
report.
• Presentation of Research to a high-profile panel of CFA charterholders and
executives from the financial industry . The winning team will be selected
based on the combined scores for the written report and the presentation.
• If there are more than three teams competing in Germany the winner will
take part in the CFA Institute Global Challenge for the EMEA-region and in
case of success in the Global Challenge.
Contributors
• The CFA Institute Research Challenge Germany is sponsored by
CFA and CFA Institute Research Challenge 2
Participants
In 2011 these universities took part:
•Mannheim University
•European Business School
•Goethe Business School
•Hamburg University
•Frankfurt Business School
Only one team of 3-5 students per university is
admitted to take part. Participants should have
completed their bachelor already or complete it in
early 2012 latest.
Agenda
CFA and CFA Institute Research Challenge 3
The CFA Qualification
The CFA Charter Holders
CFA Institute and GCFAS
CFA Institute Research Challenge
The CFA Qualification
Key figures
• The CFA Program is the benchmark of the highest professional excellence and ethical standards in the investment industry on a global basis
• Candidates must pass three exams, have four years professional experience and abide by the Code of Ethics and Standards of Professional Conduct to be earn the designation.
• Topics include ethics and standards of professional conduct, investment analysis and valuation, economics and portfolio managment
CFA and CFA Institute Research Challenge 4
The CFA Qualification
How to obtain a CFA: There is no
easy way
Level I exam
Level II exam
Level III exam
CFA and CFA Institute Research Challenge 5
4 years of professional experience
Abiding by the Code of Ethics and Standards of
Professional Conduct with an annual signoff
The CFA qualification
Worldwide excellence and recognition
CFA and CFA Institute Research Challenge 6
“Whereas there are tens of thousands
of finance degrees available around
the world, ranging from the excellent
to the worthless, there is only one
CFA… explosive growth has made it,
in effect, global currency.”
-The Economist, 2005
“…the Chartered Financial Analyst
qualification, pursued part-time by
those already hired, has become the
industry’s benchmark.”
- Financial Times, 2009
Candidate Body of Knowledge
CFA and CFA Institute Research Challenge 7
The CFA Charter
The leading standard for investment
professionals worldwide
CFA and CFA
Institute
Research
Challenge
8
The CFA Charter in Germany
CFA and CFA Institute Research Challenge 9
Be a candidate
The case for students
• Earliest enrollment in final year of bachelor program
• Complete Level I or even Level II during your studies
• Benefit from University Partnership with
– European Business School (EBS)
– Mannheim University
– Goethe Business School
• Apply for scholarship (limited availability)
• Earn the charter after completing Level 3 and 4 years of
professional experience
• Total costs < 4000 USD including materials
CFA and CFA Institute Research Challenge 10
Agenda
CFA and CFA Institute Research Challenge 11
The CFA Qualification
The CFA Charter Holders
CFA Institute and GCFAS
CFA Institute Research Challenge
The Charter Holders
Occupational and Geographic Profile
CFA and CFA Institute Research Challenge 12
The Charter Holders
A young, experienced and sophisticated
community
CFA and CFA Institute Research Challenge 13
A Charterholder is…
• Credible: Adherence to a code of ethics that puts the
client's interest first and mastery of a comprehensive
body of investment knowledge.
• Committed: Demonstrated professional experience and
perseverance to undergo 18 hours of examination.
• Current: Exams updated with the latest and most
relevant knowledge and access to world-class lifelong
learning resources.
• Connected: Membership in a network of more than
100,000 investment professionals in over 130 countries.
CFA and CFA Institute Research Challenge 14
Agenda
CFA and CFA Institute Research Challenge 15
The CFA Qualification
The CFA Charter Holders
CFA Institute and GCFAS
CFA Institute Research Challenge
The CFA Institute Key figures
Overview
• CFA Institute is the global, not-for-profit member association of
investments professionals that awards the prestigious CFA® designation
• > 100,000 members globally of which 90.000 are charterholders
• 137 member societies worldwide
• CFA Institute works with over 30 educational establishments as CFA
Program Partners in the EMEA region e.g. EBS, Mannheim University,
Oxford University (business school), INSEAD (France) and London
Business School
• CFA Institute was founded in 1947 in Charlottesville, USA
CFA and CFA Institute Research Challenge 16
The CFA Qualification
Active bodies in Germany
CFA Institute
• Exams
• Content
• Standards
Stalla/Top-Finance
• CFA Exam Prep Courses
• Materials
German CFA Society e.V.
• Member Relations
• Post CFA EducationalPrograms
• Events
• Candidate Support
CFA and CFA Institute Research Challenge 17
German CFA Society e.V.
Who we are
The organisation• Organised as non-profit association,
managed by professionals and
volunteers, founded in 2000
• Based in Frankfurt, with members
from all over Germany
• Promoting the highest professional
and ethical standards in the
investment industry
• Providing a networking platform for
the investment community as well as
other stakeholders
• www.gcfas.de
The members• The 3rd largest society in the EMEA
region with almost 1.700 members
• Annual member growth ca. 15%
• Members include CFA
Charterholders, candidates registered
with CFA Institute, German
Investment Professionals
• Germany had the second largest CFA
Exam candidate enrolment in the
EMEA region in 2009 and 2010
CFA and CFA Institute Research Challenge 18
German CFA Society members
Profile
CFA and CFA Institute Research Challenge 19
Agenda
CFA and CFA Institute Research Challenge 20
The CFA Qualification
The CFA Charter Holders
CFA Institute and GCFAS
CFA Institute Research Challenge
The Global CFA Institute Research
Challenge
• Student teams from Asia, Canada,
Europe, and the US are mentored by
industry professionals in writing an equity
research report on a publicly traded
company
• Reports are graded by investment
professionals
• Top teams are chosen to present to a
panel of experts
• Winning team competes at Regional
Final
21CFA and CFA Institute Research Challenge
CFA Institute Research Challenge
2011 Global Champions: Politecnico di Milano
22CFA and CFA Institute Research Challenge
CFA Institute Research Challenge
Global IRC Network
2011 participation:
2500+ students
1200+ industry volunteers
546 universities
102 CFA Hosts
79 CFA local level challenges
23CFA and CFA Institute Research Challenge
Investment Research Challenge
2011 IRC Germany Champions: Goethe University
24CFA and CFA Institute Research Challenge
The winning team from Goethe Business School: Sven Lindner, Dominik Jochem, Benjamin Goy, Natalia Nesterenko and their
mentors Christian Roth und Dr. Michael Thomas, CFA. The team was coordinated by Prof. Dr. Andreas Hackethal, Dean and Chair
of Finance, Goethe Business School.
The purpose
Teach best and ethical practices
in equity research through a real-
world experience to the next
generation of investment
professionals
25CFA and CFA Institute Research Challenge
CFA Institute Research
Challenge
The Student Experience
– “Candid feedback from mentors, graders,
and judges helped me to understand the
industry”
– “It was a thrill to open the NYSE!”
– “It was an honor to win US$10,000 for my
university”
– Understanding : “opportunity favors the
prepared mind”
– “My sell-side research report opened doors
to a fantastic internship”
– “I was offered a job in the investment
industry where jobs are difficult to find.”
– And the best part was…
26CFA and CFA Institute Research Challenge
CFA Institute Research Challenge Germany
The Process
Form team
of 3 – 5
students
Mentoring by
an industry
professional
(CFA
charterholder)
Interview
company
management
Write an
equity report
Present to a
panel of
industry
experts
Compete
against the
world’s top
teams
27CFA and CFA Institute Research Challenge
CFA Institute Research Challenge Germany
Participating Universities 2011
• Mannheim University
• European Business School
• Goethe Business School
• Hamburg University
• Frankfurt School of Finance
CFA and CFA Institute Research Challenge 28
CFA Institute Research Challenge Germany
• All teams have to submit an company research report
• These reports are presented to a panel of experts to
choose the overall winner of the German Research
Challenge
• The winning team will compete against the other
winning teams in the EMEA region at the EMEA
regional final (2011: Madrid, 2012 tba)
29CFA and CFA Institute Research Challenge
CFA Institute Research Challenge Germany
The Timeline
• Mid October 2011 • Universities submit team applications to Society
• Mid November 2011• Teams submit up to 3 questions for the subject company to Society
• End of November 2011• Teams to attend Company presentation in Frankfurt if possible
• Travel expenses will reimbursed
• End of January 2012• Teams submit final reports to Society by 5pm
CFA and CFA Institute Research Challenge 30
Exact schedule will
be available in mid
September 2011
CFA Institute Research Challenge Germany
The Timeline
• Beg. of February 2012• Local Final held in Frankfurt
• Overall winner announced at Final
• Beg. of March 2012• EMEA Regional Final (2011: Madrid / 2012 tba)
• Beg. of April 2012• Global Final (2011: Omaha, Nebraska, USA / 2012 tba)
CFA and CFA Institute Research Challenge 31
Exact schedule will
be available in mid
September 2011
CFA Institute Research Challenge Germany
The Rules
• Teams:
– 3 – 5 undergraduate or graduate students
– One team per university
• Participating students:
– Students cannot be CFA charterholders
– Students that had been or are currently employed in a role
whose primary duty involves fundamental company
analysis are not allowed to participate
– Students have to be actively enrolled at the participating
university
32CFA and CFA Institute Research Challenge
CFA Institute Research Challenge Germany
The Rules
• Research Process:
– Only publicly available information can be used
– Reports must be the original work of the students; faculty
members and mentors may not write any part of the report
– When conducting primary research, students must identify
themselves as students and disclose their involvement in
the CFA Institute Investment Research Challenge
– Teams may contact the subject company’s customers,
competitors and suppliers, but must confine their
conversations to corporate officers who normally interact
with investors, such IR officers, CEO’s or CFO’s
33CFA and CFA Institute Research Challenge
CFA Institute Research Challenge Germany
The Rules
• Mentors:– The teams will be introduced to their allocated mentor via
email by the German CFA Society in November
– A maximum of 6 hours of contact prior to submitting the written report, including phone calls, face-to-face meetings, and reviewing report will be allowed
– Mentors will be allowed to review students’ written work and provide comments only. Mentors will not be allowed to perform any research or write any portion of the report
– The teams may spend an additional 2 hours with their mentors for each regional or global final in which the team participates
34CFA and CFA Institute Research Challenge
CFA Institute Research Challenge Germany
The Rules
• Research report:– The teams must use the report template
– Reports may be 8-10 pages, including an investment summary
– Any additional charts and/or graphs will be included in the appendix. There is no limit to the length of the appendix
– The report must be the original work of the student teams, and may not be copied from another source
– The final report will be submitted to the Society in electronic format
– The reports will be submitted under an anonymous team name, e.g. Team A, Team B which is allocated by the Society
35CFA and CFA Institute Research Challenge
CFA Institute Research Challenge Germany
The Rules
• Grading:
– The reports will be graded by a
group of investment professionals
– Grading will consist of a blind
process in which the identity of
the university is not known to the
graders
– If more than 7 universities
participate the 4 teams that
receive the top scores will be
selected as finalists
– The graders will provide short
comments to give feedback for
the students
36CFA and CFA Institute Research Challenge
The 2010/2011 jury of the Investment
Research Challenge Germany consisted of:
• Dr. Matthias Meitner, CFA
• Harald Bareit, CFA
• Sebastian Kordt, CFA
• Helge Axel Müller, CFA
• Falko Hörnicke, CFA
CFA Institute Research Challenge Germany
The Rules
• Grading criteria• Section Maximum Score
• Investment Summary 20
• Valuation 20
• Business Description 5
• Other Headings 5
• Industry Overview & Competitive Positioning 15
• Financial Analysis 20
• Investment Risks 15
• Total 100
37CFA and CFA Institute Research Challenge
CFA Institute Research Challenge Germany
The Rules
• Presentation:
– The finalist teams will make a presentation
in front of the panel of experts selected by
the Society
– Each presentation will last 10 minutes,
with 10 additional minutes of panelist Q&A
– Panelists will be provided with copies of
the written reports, but will base their
scores on the oral presentation only
– Team scores will be weighted 50% for the
written report and 50% for the oral
presentation
– The overall winner will be selected on the
day of the panel presentations
38CFA and CFA Institute Research Challenge
CFA Institute Research Challenge Germany
The Rules
• Presentation judging criteria
– Materials (quality of slides and other materials)
– Argument (using data to support recommendations)
– Poise (being confident and convincing)
– Questions (ability to answer questions effectively)
– Use of resources (team involvement in presentation and
Q&A)
39CFA and CFA Institute Research Challenge
CFA Institute Research Challenge Germany
The Company
• The company will be the same for all teams
• It has to be a small to mid-cap company listed in the
local market
• In 2011 it was Pfeiffer Vacuum, a global market
leader for vacuum pumps
• 2012 will a global leader in sportsware.
40CFA and CFA Institute Research Challenge
Contact
German CFA Society e.V.
Susan Spinner, CFA
Managing Director
Kaiserstraße 23
60311 Frankfurt
Phone +49 69 2424 89-50
www.gcfas.de
CFA and CFA Institute Research Challenge 41