You are an investment advisory company. Your client is a large institutional investor looking to add one Financial Times Stock Exchange (FTSE) 100 Index (FTSE100) firm to their investment portfolio. They are particularly interested in a firm with a strong ESG (Environmental, Social and Governance) orientation but this firm must also represent a good investment opportunity with potential for high future returns.
What you need to do
You are required to form groups of THREE students. You will be assigned a group if you do not have a group by close of day 14th October.
Each group is required to select one company from the FTSE100 Index (you will be provided with a list of companies to choose from). Companies will be assigned on a first come first serve basis and no two groups will be allowed to work on the same company.
Your remit is to deliver a 15 minutes presentation to the institutional investor to advice on the suitability of your chosen company. This will be followed by 5 minutes of questions.
Your presentation should cover the following;
a) A short overview of the company and its industry
b) A brief assessment of the current governance structure of the company; nature and structure of the board, characteristics of key directors, compensation, agency issues etc.
c) A brief assessment of the firm’s ESG strategy and ESG performance.
d) An assessment of the firm’s systematic risk, idiosyncratic risk and expected return using data from the last 5 years.
e) An assessment of the stock price performance of the company over the last 5 years. You may consider an appropriate mix of performance measures including buy and hold returns, earnings per share, dividend payout ratio and dividend yield,amongst others.
f) An assessment of the current valuation of the company i.e., whether or not the firm is currently undervalued. Your assessment may use different techniques including PE multiples (e.g., price/earnings ratio, price/earnings to growth rate) and discounted cash flow methods (e.g., Dividend Discount Model and Discounted Free Cash Flow to Equity Method)
g) Based on your findings in (a) – (f), advice the institutional investor whether or not to invest in the company.
In parts (d) to (f), you are expected to use data covering the last 5 years. You can collect this data from some of the databases we have at the University (SUMS) including Bloomberg,Boardex (through WRDS), Thomson Eikon (including Asset 4 ESG on Datastream). If you are unable to use or access these datasets, you can manually collect the data from company websites, the financial press, company financial statements (available on their websites) and from the web (e.g., Yahoo Finance). Ensure to state the source of your data in your presentation handout.
In determining the grade to be awarded, examiners will take into account the following three criteria:
Criteria 1: Quality of the research, analysis and content (50%)
i.Clear evidence of a breadth of research and detailed understanding in parts (a) – (f).
In particular the examiners will be assessing the ability to identify and synthesise relevant materials and to build a coherent story from start to finish.
ii.Good choice of measures selected for analysis with evidence that good data has been used and the analyses have been correctly conducted.
iii.You are required to submit a printed handout that carries further details including your calculations etc. Only include results (not formulae and calculations in your presentation)
Criteria 2: Quality of the presentation including evidence of good teamwork (30%)
i.Presentation clarity, style and time management. Students will be assessed on the basis of their ability to communicate clearly in a professional manner and that information is presented in a clear and logical sequence.
ii.Students will also be assessed on their ability to respond to questions and the depth of their responses.
iii. Presentations should keep within the allocated timeframe. Specifically, the presentation should last a maximum of 15 minutes leaving 5 minutes for questions.
Criteria 3: Individual contribution.
i.You are expected to keep records of your meetings including minutes. These records should cover things like the date of the meeting, whether the meeting was online (e.g.,on googlemeet) or face-to-face, the location of the meeting, who attended and who did not, how long the meeting lasted, what was discussed during the meeting and what were the key action points.
ii.At the end of the presentation, you will be expected to evaluate the individual performance of your team mates and provide feedback using BuddyCheck. Your individual performance will contribute towards 20% of your score in the presentation.Tutors reserve the right to award a mark of zero for non-participation in the presentation.
Some advice on presenting:
Speak clearly, don’t rush or whisper. Don’t talk too slowly either, be natural. Pause at key points. Look at the audience as much as possible, but don’t fix on an individual.
Visual aids significantly improve the interest of a presentation. However, they must be relevant to what you want to say. For such a short presentation, I would recommend the use of PowerPoint. Keep it simple and try to limit words per slide. Point to the screen when explaining a slide rather than pointing to the computer.
You should provide a handout for the examiners and ensure you enjoy the presentation.
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