CFA INSTITUTE RESEARCH CHALLENGE IN SOUTHERN CALIFORNIAHOSTED BY THE CFA SOCIETIES OF LOS ANGELES AND ORANGE COUNTY

KICKOFF MEETING – 4 NOVEMBER 2013

Nathaniel Downes, CFAAssociate Portfolio Manager

Jitendra Motwani, CFASenior Associate

Chad NooraniRetirement Plan Consultant

CFA SOCIETIES OF LOS ANGELES & ORANGE COUNTY

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SPONSOR ACKNOWLEDGMENT

We would like to offer a special thank you to our sponsors for the 2013-2014 CFA Institute Research Challenge in Southern California

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2013 GLOBAL CHAMPIONS

Wrocław University of Economics representing the CFA Society Poland

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WHAT IS THE CFA INSTITUTE RESEARCH CHALLENGE?• How is it organized?

- Worldwide intercollegiate competition between teams of students

- Organized by local CFA Institute volunteers – usually through CFA member societies

- At least 4 teams of 3-5 students participate

• What does it involve?- Analysis of a publicly-traded

company- Interviews with company

management- Mentoring by a CFA charterholder- Research report writing- Presentation of research

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2013 RESEARCH CHALLENGE NETWORK

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2013 TOURNAMENT DIAGRAM

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90+ LOCAL LEVEL CHALLENGES

APRegional

~20 Teams

EMEARegional

~25 Teams

AmericasRegional

~48 Teams

Global Final

BENEFITS FOR STUDENTS• Best practices in research and report

writing

• Real-life learning experience as an Equity Analyst

• Access and exposure to leading industry professionals

• Professional report and experience to use on resume/CV and job interviews

• Experience presenting to top financial professionals

• Individual and team prizes

• Opportunity for travel

• Potential for media exposure

• Network of over 10,000 students and 2,200 volunteers worldwide

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GLOBAL NETWORK OF THE WORLD’S TOP BUSINESS AND FINANCE STUDENTS

PARTICIPATING TEAMS (CFALA)

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University Faculty Advisor

California Polytechnic State, San Luis Obispo Cyrus Ramezani, PhD

Pepperdine University Edward Fredericks, PhD

CSU, Los Angeles James Refalo, PhD

UCLA Anderson School of Management TBD

Drucker School of Management, CGU TBD

USC Marshall School of Business Suh-Pyng Ku, PhD

Loyola Marymount University Chun Lee, PhD

PARTICIPATING TEAMS (CFAOC)

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University Faculty Advisor

California Polytechnic, Pomona Majed Muhtaseb, CFA

California State University, Long Beach Peter Ammermann, PhD

Chapman University Fadel Lawandy

Claremont McKenna College Eric Hughson

University of California, Irvine Todd Richey, CFA

COMPETITION TIMELINE

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Today Kick-Off

TBD (Nov./Dec.) Company Presentation

24 January 2013 Register with CFA Institute

N/A* 1st Draft Due to Mentor

31 January 2014 Final Report Due

21 February 2014 Local Final Presentations

18-19 March 2014 Regional Final (Denver, CO)

25 April 2014 Global Final (Bangkok, Thailand)

*This date is at the discretion of both the team and mentor.

RULES OVERVIEW• Each team consists of 3-5 students

(undergraduate or graduate)

• Only one team may represent each university

• Students must be enrolled in the university they represent and registered for at least a part-time course load at the time of the kickoff meeting

• Reports and presentations must be the students’ original work

• Students may not have contact with the subject company outside of organized events

• Students may not enlist the help of any professionals other than the mentor or faculty advisor

• Mentors and faculty may NOT contact the company

• Mentors, faculty, and subject company may NOT provide material non-public information

• Written reports must conform to the guidelines set forth by CFA Institute and include the cover and back pages provided by CFA Institute

• Teams may not use props in their oral presentations

• Students, mentors, and faculty must all agree to abide by the CFA Institute Code of Ethics and Standards of Professional Conduct

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ADVISOR AND MENTOR INVOLVEMENT

Faculty Advisor

•Insight and guidance on research methods and tools as taught in academia

•10 hours maximum of productive time

•Access to faculty for other projects unrelated to the Research Challenge is permitted

•All work must be the original work of the students

Industry Mentor

•Insight and guidance on industry practice

•6 hours maximum of productive time

•Face to face or virtual

•Company management question development

•Review first draft of research report

•Presentation development assistance

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ETHICS RESOURCES

• Ethical Standards for Investment Professionals: An Interactive Case-Based Course 

• Ethics Course Module 2: Standard II—Integrity of Capital Markets

• Ethics Course Module 3: Standard III—Duties to Clients

• Ethics Course Module 6: Standard VI—Conflicts of Interest

• Ethics Course Module 7: Standard VII—Responsibilities as a CFA Institute Member or CFA Candidate

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SAMPLE REPORT

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REPORT SCORING

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SectionMaximum

Points Comments

Business Description 5 Lack of sufficient information to support recommendation.

Industry Overview & Competitive Positioning 15

Not a comprehensive understanding of the company's positioning and/or competitors. No understanding of company's economic advantage, Overstated company's advantage - not grounded in facts.

Investment Summary 20 Not logical. No or insufficient summary of salient points. Strategy is not grounded in financials.

Valuation 20 Method is flawed. Not substantiated with industry information.

Financial Analysis 20Flawed assumptions. Too many errors in financial analysis. Financial analysis does not support conclusion.

Investment Risks 15 Missed too many important risk items. Risk and conclusion are not logical.

Other Headings 5 Missed important information available.

Total 100

PRESENTATION SCORING

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SUBJECT COMPANY : MATTEL INC TICKER: MAT

Mattel, Inc., together with its subsidiaries, designs, manufactures, and markets various toy products. The company operates in three segments: North America, International, and American Girl. Its products comprise fashion dolls and accessories, vehicles and play sets, and games and puzzles. The company also publishes advice and activity books, as well as magazines. It offers its products under the Mattel Girls and Boys brands, including Barbie, Polly Pocket, Little Mommy, Disney Classics, Monster High, Hot Wheels, Matchbox, Tyco R/C, CARS, Radica, Toy Story, Max Steel, WWE Wrestling, Batman, and Superman; Fisher-Price brands comprising Fisher-Price, Little People, BabyGear, Imaginext, Dora the Explorer, Go Diego Go!, Bubble Guppies, Thomas & Friends, Mike The Knight, Octonauts, Mickey Mouse Clubhouse, Disney’s Jake and the Never Land Pirates, See ‘N Say, and Power Wheels; and American Girl Brands, such as My American Girl, Bitty Baby, McKenna, and the newest Girl of the Year. The company sells its American Girl products directly to consumers through catalog, Website, and proprietary retail stores in the United States and Canada. Mattel sells its other products directly to retailers, including discount and free-standing toy stores, chain stores, department stores, and other retail outlets; to wholesalers; and through agents and distributors worldwide. The company was founded in 1945 and is headquartered in El Segundo, California.

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SUBJECT COMPANY (CFAOC)

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Reed’s, Inc. (NYSE: REED) makes the top-selling natural sodas in the natural foods industry sold in over 13,000 natural food markets and supermarkets nationwide. Its six award-winning non-alcoholic Ginger Brews are unique in the beverage industry, being brewed, not manufactured and using fresh ginger, spices and fruits in a brewing process that predates commercial soft drinks. The Company owns the top-selling root beer line in natural foods, the Virgil’s Root Beer product line, and a top-selling cola line in natural foods, the China Cola product line. In 2012, the Company launched Reed’s Culture Club Kombucha line of organic live beverages. Other product lines include: Reed’s Ginger Candies and Reed’s Ginger Ice Creams. In 2009, Reed’s started producing private label natural beverages for select national chains. Reed’s products are sold through specialty gourmet and natural food stores, mainstream supermarket chains, retail stores and restaurants nationwide, and in Canada, as well as through private label relationships with major supermarket chains.

Website: http://www.reedsinc.comFounded: 1987Total Worldwide Employees: Approx. 61Chairman and CEO: Christopher J. Reed

WHERE TO BEGIN

• Visit the CFA Institute Research Challenge website: www.cfainstitute.org/researchchallenge

• Register for the competition

- Peruse educational materials selected specifically for participants

- Watch videos of past presentations

- View past reports from winning teams

• Students MUST register on the CFA Institute website using the registration form provided by the local host.

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QUESTIONS?

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