You can’t build an effective investment strategy without first knowing your client. Meet Sachin Rekhi!
CASE STUDY: You just graduated college and now work at an up-and-coming asset management company, Knowledge@Wharton Asset Management (“KWAM”). KWAM specializes in managing investments for young adults. The firm currently manages a $100,000,000 portfolio that is invested across nine sectors, representing a broad range of industries and companies. You are an analyst, but you hope to one day become a portfolio manager who makes the final investment decisions for KWAM’s portfolio.
KWAM’s current portfolio manager (your teacher/advisor) recently met with a potential client Sachin Rekhi, a successful entrepreneur who sold his startup Connected to LinkedIn. He’s now founder & CEO of Notejoy, his third startup, and lives in Menlo Park, California with his wife, Ada Chen Rekhi, and their puppy, Dexter. Sachin prefers spending his time building new ventures as opposed to investing, so is looking for an investment partner to help him manage his wealth. He has been skeptical of asset management firms in the past, but is now open to the idea of hiring a team with the most compelling investment strategy to build and manage his wealth.
Although Sachin is primarily focused on long-term investing, he would also like to make some short-term investments to generate profits that he and Ada plan to donate annually to the ASPCA, an organization whose mission is close to their hearts. So, while your focus should be on building a portfolio with a clear goal of long-term wealth creation, it is recommended that a small portion of your portfolio should be allocated to short-term liquidity to support that annual contribution. Sachin told the portfolio manager that KWAM has 10 weeks to put together a detailed portfolio analysis proposal.
Your portfolio manager recognizes that it will not be easy to land Sachin as a client because he is also talking to other talented asset management firms (other classes and teams). As it is critical to make the most convincing case to Sachin, everyone on the team must contribute to ensure that KWAM creates the best proposal. Your portfolio manager tells you that this is your chance to shine!
Over the next 10 weeks, your team will develop and test an investment strategy using the industries and companies from the competition’s approved stock list. Your team will conduct a thorough analysis of industries and companies, with the goal of ensuring both long-term and a small amount of short-term profitability for your prospective client. You will test your investment strategy using the Wharton School’s Online Trading and Investment Simulator (OTIS). And remember, OTIS can only accurately assess the performance of investments that are made for the short-term. So, while you should test your complete strategy and portfolio performance on OTIS, the majority of your investments should be long-term and therefore won’t require excessive buying and selling of stocks. Some active trading may well be necessary to fulfill Mr. Rekhi’s short-term needs.
Your team will start out with a portfolio of $100,000 in virtual cash, and will compete against students from all over the world. At the end of the 10 weeks, you will be required to submit a proposal detailing your recommended investment strategy. K@W judges will review your final investment thesis and select top teams. Those teams will be invited to present their strategies, either in person, or virtually, to a panel of experts.