UNYP/ESC students win CFA Research Challenge 2015

Tanweer Ali, M.A.

Business Administration Faculty

Investment analysts are influential people. They are often sought by the media to comment on all manner of news stories, and their recommendations to buy, sell or hold shares of a company move financial markets – and they have the ear of most corporate chief executives.

But what exactly does an investment analyst do? A team of UNYP and Empire State College students recently gained an insight into the day-to-day work of an investment analyst. Michaela Čunderlíková (the team leader), Denisa Valsová, Lenka Housková, Brian Bradley and Jakub Jurga took part in the CFA Research Challenge competition, which involves writing an investment report on a publicly listed company and presenting their findings. The organisers of the Czech round of the competition chose Pegas Nonwovens, a local company that manufactures nonwoven textiles, i.e. the material that goes into making disposable nappies and other hygiene products. Teams of students from participating universities were provided with data from the company, and with limited access to the management. They then got to work on their reports, analysing the company, the market it operates in and its financial prospects for the years ahead.

The foundation of any analyst’s report on a company is valuation – an estimate of the true value of the shares. There are numerous methods of valuing a business, ranging from simple rules of thumb to sophisticated models that require high-powered software well beyond the reach of mere mortals. The key to valuation is forming a coherent view of the company’s future financial prospects – in the absence of perfect clairvoyance (my crystal ball comes in quite handy here), the exercise is as much an art as a science. Understanding the dynamics of the relevant business sector and judging the capability of the management is as important as the requisite hour upon hour of work building spreadsheets and analyzing company accounts (more than one member of the team told me that they had even worked on their spreadsheets in their dreams).

The participants in the Research Challenge effectively took a crash course in valuation, learning skills in finance and spreadsheet modeling that well exceed what is typically taught at the bachelor’s level. Moreover, academic exercises tend to assume a world with near-perfect availability of information, and no real need for intelligent guesswork. Besides the finance, the students still needed to write a well-structured report in good, comprehensible yet professional English. Those teams who were deemed to have written satisfactory reports then had the opportunity to present their findings to a jury of professionals from the financial community in Prague – as indeed professional analysts have to present their work to often skeptical investors and clients.

The winners of the competition get the chance to take the CFA (Chartered Financial Analyst) exams at a reduced rate. Those who take up the offer will end up learning a great deal more about investment analysis. The CFA programme is a professional qualification that consists of three examinations that cover all that a competent analyst might be expected to know, and is often regarded as equivalent to an MBA in finance. The CFA Institute’s mission is „To lead the investment profession globally by promoting the highest standards of ethics, education, and professional excellence for the ultimate benefit of society.”  So ethics goes hand in hand with education as a central part of the raison d’etre of the organisation: ethics are an important part of the examination at all three levels. The first two levels have had a pass rate well under 50% in recent years; only level 3 has sometimes seen a pass rate slightly above 50%. So all in all not a particularly easy ride.

The CFA Research Challenge is only open to students, and those wit signifcant investment experience are not permitted to take part. The competition has been run in the Czech Republic for six years, starting in 2010. The first year was a pilot project, only open to one university in Prague. UNYP students have taken part in each of the five subsequent years. This year a total of 13 teams entered the Czech round, and seven were selected to present their reports. Our team was competing with teams from the Charles University, the Prague University of Economics, CERGE-EI and the Anglo-American University. The winning team will go to Amsterdam in early April for the next round – if they succeed there they will proceed to the final in Atlanta, Georgia. This year was the third year in row in which a team from UNYP won the Czech round of the competition. This was no easy feat and we are very proud of what they have achieved.

CFA Challenge CFA Challenge 

CFA Challenge CFA Challenge


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