Friday, January 20, 2017

An AIM Equity Holding: Beacon Roofing Supply (BECN) by Sarah Hillegass. “Heathy growth ahead? We think so"

Beacon Roofing Supply, Inc. (BECN, $44.00): “Who you gonna call? Beacon Roofing!”
By: Sarah Hillegass, AIM Student at Marquette University



 Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

Summary
·         Beacon Roofing Supply, Inc. (NASDAQ: BECN), headquartered in Herndon, VA, is the second largest distributor of residential and non-residential roofing materials in the United States. Beacon reports sales via three segments: residential roofing products (53% sales), non-residential roofing products (32%), and complementary products (15%).
·         The residential roofing industry derives nearly 80% of its demand from re-roofing, which is primarily non-discretionary. Leak damage, storm damage, and old age are the main causes of such demand. Thus, the storms in Texas last summer will continue to cause spillover demand in roofing until April, 2017.
·         BECN operates through a branch based operating model. This allows BECN to use its scale as a national distributor while providing local, customer service. The acquisition of Roofing Supply Group (RSG) in October, 2015 added 85 U.S. branches to make FY16 total to 368 branches.
·         BECN has struggled to breach the $50 mark throughout the last year. Therefore, our original price target of $49 is still within reach and attainable.
·         Due to BECN’s trajectory for continued growth, supported by a historical 12-year sales CAGR of 16.6%, I would recommend a HOLD until the next roofing season.

Key Points: BECN’s fiscal year 2016 ended September 30, 2016 with record results. BECN ended the year operating 368 branches in 46 U.S. states and 6 Canadian provinces, solidifying its position as the 2nd largest distributor of residential and non-residential roofing materials in the US. Their catalog includes 46,000 products with SKU’s to serve roughly 67,000 customers. 4Q16 net sales were 49.1% above the previous year. BECN reached just over $4B in annual sales for the first time and improved gross margins by 140 bps to 25.7%. BECN’s growth was led by 2.4% existing residential market growth, primarily in the Southwest, successful execution of its RSG acquisition integration, as well as strengthening of its balance sheet through incremental paydowns to affect its debt leverage ratio.

BECN wins the re-roof business for the residential and non-residential segments by differentiating itself to bring more value-added services apart from just providing roofing materials, such as installation, design, and layout services. In 4Q16, the residential roofing segment was the standout performer. This segment is projected to have 2017 organic growth of nearly 2-5%. Organic growth includes all owned branches held for four quarters or more. The organic growth is projected to come from continued storm repair from last summer, future weather related fixtures, and existing home sales. The residential roofing segment has a total addressable market of nearly $15 billion with the four largest distributors having 50% of the market share. 

With further consolidation in the industry through acquisitions, BECN should see stable growth in this segment. Additionally, the non-residential market has long term growth rates of 2-3%, which will be won by providing additional services and cross-selling of products. Per the National Association of Home Builders, approximately 94% of re-roofing demand is non-discretionary, which means when roofs need re-roofing, the wait time is minimal and the price is inelastic. The complementary products segment will be a growth driver in adding more value to roofing projects with siding, insulation, and window installation.

BECN’s Roofing Supply Group acquisition will also contribute to this growth in cross-selling of products, as well as geographic diversification of branches. FY16 saw exceeded cost synergies expectations from the acquisition with an additional $55 million of cost synergies expected for 2017. The cost savings have been the primary contributor to improved margin performance. For example, purchasing synergies led to a 3% product cost decline. Additionally, the acquisition expanded BECN’s geographic capabilities with 85 locations, primarily in key Western and Southern markets, which have the highest growth potential. Furthermore, the expansion into these key markets will allow seasonality to become less harsh as both regions have milder 2Q’s.

Lastly, BECN has benefitted from and will continue to benefit from its initiative to strengthen its balance sheet. BECN’s 2018 goal is to have a debt to leverage ratio of 2x. They have decreased the ratio from 4.3x in October, 2015 because of the RSG acquisition, to 3.3x currently. Further cash generation will be used to decrease this further. Any potential tax reform will most likely benefit BECN’s tax rate as it is currently one of the highest taxpayers at nearly 40%. BECN indicated that any excess cash they could use from lower taxes would be driven right back into the business for future growth, rather than a one-time dividend or stock buyback.

What has the stock done lately?
BECN has volleyed between $40-$50 throughout the last three months, finding resistance near $50. Since the release of FY16 results, BECN has announced three new acquisitions to add to its branch portfolio. In December, BECN announced the acquisition of BJ Supply of Bristol, PA to add complementary branches to the Philadelphia and New Jersey markets. In January, BECN announced one acquisition related to seven branches in the Seattle market and one acquisition, which is an insulation distributor, to add-on to its complementary products segment. Neither of these three most recent acquisitions has made the stock pop however. What may be guiding the stock through these winter months is the seasonal climate. Harsh winter weather crowds the competitive landscape, while mild winter weather will provide for easy year-over-year comps.

Past Year Performance: BECN has substantially outperformed the Russell 2000 index over the last two years. The primary growth driver has been through continued stable market demand and consolidation within the industry. The more accretive acquisitions BECN can undergo, the better its sales and performance will be. The market is highly fragmented with nearly 1,500 players to act as potential acquisitions and room for future growth. Additionally, the continued synergies in cost through the RSG acquisition have been and will continue to be beneficial for margin expansion.



My Takeaway
BECN has a proven track record of successful, accretive acquisitions. In this industry, stable market growth in re-roofing demand and industry consolidation will be key to future growth. The RSG acquisition is a great example of an acquisition executed properly to yield significant cost savings and in turn enhanced margin performance. With the January announcement of the retirement of the longest serving director on BECN’s Board of Directors, Peter Gotsch, there is a slight risk that future growth and expansion opportunities will have different management advice. However, due to BECN’s expertise in acquisitive growth, complemented by organic growth and the development of greenfields, BECN seems poised to continue its healthy growth charge. Therefore, I recommend holding BECN until the next roofing season when future demand can be foretasted.




'Meet and Greet' for prospective AIM and Banking Program students today at 2:00 pm in AIM Room


Thursday, January 19, 2017

Marquette's AIM Program and the new Banking Program applications open for Class of 2019 - Interviews on February 18, 2017

Class of 2019 students should be preparing their applications for Marquette’s AIM Program and the new Banking Program: 
Applications due on January 27, 2017

U.S. News and World Report for 2017 recognized Marquette’s finance program as No. 15 among the nation’s top undergraduate business specialty programs. Undergraduate finance majors study the core areas of finance with an emphasis on corporate social responsibility.

The Finance Department is also home to the nationally recognized and highly competitive Applied Investment Management program. The AIM program allows a select group of undergraduate finance majors to get hands-on academic and security analysis experience, including summer internships and an opportunity to actively manage three equity and fixed-income portfolios throughout their senior year. [See a detailed program description below].

Note: beginning with the Class of 2019, the AIM program will cover four semesters (junior and senior years).

The Finance Department also offers a major in real estate, which emphasizes theory and practical applications of commercial real estate. Students learn how to apply principles of market analysis, financing and development with respect to commercial real estate.

Additionally, a new banking program is being added to the Finance Department’s offering. Led by Dr. Kent Belasco, the program offers a diverse range of courses, including an entry-level course in banking, an overview of the primary leadership functions in the banking environment, and a course focusing on risk management and the risk evaluation process which banks engage in as they execute their duties and responsibilities. The modern banking industry represents an exciting - and growing - career opportunity. Roles within the banking industry vary greatly and include operations, technology, lending and credit risk analysis.



For more information about the AIM program contact Dr. David Krause (david.krause@marquette.edu) and for the banking program, please contact Dr. Kent Belasco. (kent.belasco@marquette.edu).

                                        
                                                                 


College of Business Administration
APPLIED INVESTMENT MANAGEMENT (AIM)
 Program Description

BACKGROUND:  Marquette is home to one of the nation’s top undergraduate programs in applied investment management. The AIM program allows a select group of finance majors to get hands-on academic and financial analysis experience, including summer internships, and an opportunity to actively manage domestic and international equity and fixed-income portfolios. Students in the program study the core body of knowledge covered in the Chartered Financial Analyst (CFA®) Level I exam – preparing them to take the test upon graduation.

There are two tracks within the program: Investments and Private Equity & Investment Banking. Students in the Investments track focus on asset management while the second track concentrates more on transactional finance. 


Investments Track Courses:  In addition to the regular finance courses, there are five unique AIM courses and one required finance elective:
·   Introduction to Applied Investment Management covers investment policy, securities regulation, and the mechanics of the securities markets and is intended to prepare students for their summer internship.
·   Research and Financial Analysis provides students a thorough understanding of the key investment tools – quantitative research methods, economic relationships, and financial statement analysis. During this course students will analyze securities and manage actual equity and fixed income portfolios.
·   Valuation and Portfolio Management includes the common approaches to valuing assets, the basic measurements of risk and return, and the key elements of the portfolio management process. Students will continue to manage the investment portfolios, evaluate performance, and prepare reports on the results at the end of the semester.
·      Fixed Income Securities focuses on the use of debt securities and structured products to fulfill investment requirements or accommodate corporate financing strategies.
·   Investment Management, Ethics, and Society emphasizes how to manage investments in a manner that is both ethical and socially responsible. Students will acquire a thorough understanding of the CFA® professional standards of conduct in the application of ethics to the moral dimensions of money management.  

Private Equity & Investment Banking Track Courses:  In addition to the regular finance courses, there are four required courses and two required finance electives:
·      Introduction to Applied Investment Management covers investment policy, securities regulation, and the mechanics of the securities markets and is intended to prepare students for their summer internship.
·      Investment Banking covers the common types of transactions that investment bankers work on and the different methods used to value those transactions. Some of these include IPOs, seasoned equity offerings, exchange offers, mergers, hostile tender offers, leverage buyouts, and going private transactions.
·     Applied Financial Modeling provides the Excel modeling skills to apply the theories, concepts, and tools for effective financial analysis and decision-making.  .
·    Private Equity, Ethics and Society Connects basic financial concepts with analytical skills in the evaluation of private equity opportunities. Valuation, capital structure and deal construction are evaluated through rigorous case study within the context of the moral and societal implications.  .  

REQUIRED INTERNSHIP:   Students accepted into the AIM program are expected to complete a summer internship between their sophomore and junior years or junior and senior years. While possible, students should understand that it will be difficult to study abroad during their junior or senior years while enrolled in AIM.  Also, given the required AIM courses, it will be challenging for students to obtain multiple majors in business in four years.

APPLICATION TO THE AIM PROGRAM:  Students apply to the AIM program during the spring semester of their sophomore year (having completed or currently enrolled in FINA 3001 and ACCO 3001) and notification of acceptance occurs before the advising period. If at anytime a student leaves or is dropped from the program, all credits earned at that point will be counted towards the finance major.  Acceptance into the program will be based on:
  • Resume & References
  • Interview
  • Declared Finance major
  • Application Essay
  • Grades earned by the beginning of the spring semester of the sophomore year (GPA ≥ 3.0)
Interviews for the summer internships will begin after acceptance into the AIM program.

Wednesday, January 18, 2017

A current AIM Fund holding: Berry Plastics (BERY) by Andy Krueger. A BERY attractive stock with above average free cash flows for investors

Berry Plastics Group, Inc. (BERY, $50.90): “Profitable Packing is the Game, Berry Plastics is the Name”
By: Andy Krueger, AIM Student at Marquette University


Disclosure: The AIM Equity Fund currently holds this position. This article was written by myself, and it expresses my own opinions. I am not receiving compensation for it and I have no business relationship with any company whose stock is mentioned in this article.

 Summary
Berry Plastics Group, Inc. (NYSE:BERY) manufactures value-added plastics for consumer packaging, hygiene, health & specialty products and engineered materials globally; however, the majority of revenue exposure (86%) is derived in the Americas.

• BERY’s CEO Jon Rich will retire as CEO in February 2017, although he will stay on with the company as the Executive Chairman.

• The acquisition of AEP was announced August 25 for $765 million in cash and stock and has a target close date of February 1.

• BERY’s diverse set of products defend against the slowdown in consumer spending and the food service market.

• Expectations for 2017 include additional reduction of debt to a sub 4x net debt/adjusted EBITDA, adjusted FCF of $550 million and organic sales volume growth of 1%.

Key points: BERY announced Jon Rich’s February 2017 retirement plans on September 30.  During the time since the announcement, the board of directors elected Tom Salmon to the fill the role of President and COO of the company.  Salmon will take over a company with annual revenues of $6.5 billion, 21,000 employees and 115 facilities globally.  Salmon joined the BERY team as part of the Covalence acquisition in 2007 when he was reassigned to serve as President of the Engineered Materials division.  After eight years of service in this position, Salmon became the President of Consumer Packaging, BERY’s largest segment.  Rich has fully indorsed Salmon publically.

The AEP acquisition is being funded using 50% cash and 50% stock.  BERY’s motive for the acquisition is twofold: AEP’s business provides a nice complement to the existing Engineered Materials division at BERY, and the acquisition will help lower BERY’s debt-to-earnings ratio.  BERY paid a 43% premium for AEP shares compared to the $77 closing price on August 24.

BERY offers a very diverse set of products, from plastic cups to pill containers, protecting the firm from a slowdown in select end markets.  The weak consumer spending environment and weakness in the food service market poses some near-term threat to BERY; however, the more stable end markets of consumer packaging and health, hygiene & specialty will be able to counterbalance the slowdown from the previously addressed factors.

The reduction of debt remains a top priority at BERY and the firm plans to achieve a sub 4x net debt/adjusted EBITDA figure before the end of 2017 by increasing the adjusted FCF earned by the firm and using the increase in FCF to pay down debt.  The adjusted FCF target of $550 million is pending the successful close of the AEP acquisition on February 1; any delays could reduce this estimate.  Companywide organic sales volume growth of 1% is projected to be achieved through 3% growth from the Health, Hygiene, & Specialties division, 1% from the Engineered Materials division, and -1% from the Consumer Package division.

Source: FactSet

What has the stock done lately?
Since Rich made his retirement plans public, BERY’s stock maintained its strong performance, up 15% to date.  BERY put together another strong quarter in fiscal Q4 as the company reported record highs in sales and operating EBITDA for any Q4.  A shift in strategic initiative to use assets to produce additional high-margin products instead of lower-margin products within the Specialty division caused volumes to decrease as margins and EBITDA increased for the segment and the firm.  Largely driven by the favorable tax accounting from the tax receivable agreement and NOLs from the Avintiv acquisition, BERY’s Q4 EPS of $0.73 beat the Street’s estimate of $0.59.  Unused NOLs of $500 million should continue to favor BERY in future reporting periods.

Past Year Performance: BERY closed the acquisition of Avintiv in October 2015 and since exceeded management’s expectations as synergy targets of reducing material and SG&A costs have already been surpassed with additional synergy opportunities yet to come.  BERY used diversification of product offerings to smooth the effects of inconsistent demand in certain end-markets over the past year.  Avintiv continues to have a positive effect while the AEP acquisition looks to perform just as well.

My Takeaway

BERY’s commitment to achieving a lower amount of debt on the firm’s books will make the company more flexible in the M&A market and ease investors’ concerns of tying up too much capital in interest payments.  Management has not released any news indicating the AEP close will be delayed; however, the financial benefits will be felt largely in 2018 as the additional $85 million in cash flow will be offset by the costs of the acquisition. 

BERY poses to lead their competitors in organic growth due to the firm’s scale and M&A activity as these factors provide pricing power and market consolidation opportunities for BERY greater than those experienced by the company’s competitors.  I expect these factors to continue to drive BERY’s share price higher as the firm’s leveraged business model continues to produce above average FCF and returns for investors.  I recommend that the AIM Equity fund maintain its position in Berry Plastics Group, Inc.

Saturday, January 14, 2017

Musings about Behavioral Finance and Valuation after reading The Undoing Project

Still working through the linkages of  The Undoing Project, Behavioral Finance and Valuation
As I prepare for the spring semester – and a new module on Behavioral Finance – I must admit that I’m still somewhat of a skeptic on the topic following my reading of The Undoing Project (See my previous blog entry on the review of Michael Lewis’ The Undoing Project). While each year more research is providing interesting results about the irrational behavior of individual investors and financial analysts, I remain committed to the ‘rationality’ assumptions that support classical finance theory and the belief in the efficiency of markets in the long-run.
I don’t want to ignore the reality that all individuals do not always act as wealth maximizing, risk adverse investors - and that we weigh losses more than equivalent gains. So my conclusion is that economists need to better specify the von Neumann-Morgenstern expected utility function; however, that's for another time...  

What has me interested in behavioral finance is its ability to hopefully improve investor performance. The annual Dalbar study, which follows the overall performance of the ‘average’ investor, certainly backs up the need for improvement. Note the dismal performance of average investors (yellow bar) over a recent 20-year period (the graphic below shows average annual returns of only 2.1% versus 7.2% for a 60/40 portfolio). [The table is from JP Morgan’s Q1 2017 Guide to the Markets].
20-Year Annualized Average Performance
Indicates Poor Returns for the 'Average Investor'

So, to be clear, I believe it is important for students of finance to understand the common behavioral investment mistakes made by individual investors and analysts (i.e. framing, overconfidence, anchoring, etc.). If they can learn to avoid these mistakes – and even better yet, help their clients avoid them as well - then it is a worthwhile endeavor. It would be great if over time the ‘average investor’ earned returns more in line with the 60/40 returns shown above – it would help minimize some of the concern about the looming retirement crisis forecast for Western economies.
I realize that the real world is untidy and not every investor or financial analyst has the same information or acumen to act rationally, so learning some basic rules of thumb (or heuristics) of behavioral finance might help some individuals avoid serious blunders. That’s a good thing.
I do find the chore of reconciling behavioral finance with traditional discounted cash (DCF) valuation to be challenging. Each semester I teach my students how to conduct fundamental investment analysis using various valuation approaches (DCF models, arbitrage pricing, and relative valuation). I continue to believe that the models hold up well and that there is a substantial body of empirical research that supports long-term market efficiency; so, I am not about to abandon classical finance theory.
As behavioral finance continues to make major inroads in academia and the investment industry, I don't believe that traditional intrinsic valuation approaches will change much at all. True, the expected future cash flows and the required discount rate in a DCF model still must be forecast; however, if an analyst has skewed or biased expectations that lead them to inaccurate valuations, then they’ll eventually be working in at another occupation.
It can be argued that assessing future cash flows is an undertaking that is subject to all sorts of behavioral deceptions and traps; however, in the end the truth comes out and either the analyst has a good batting average or not. So, while traditional, fundamental analysis can be rife with behavioral issues, the valuation process is worth doing. The fine line is to avoid being too mechanical versus too instinctive.  Forming expectations and adjusting for risk can be skewed by behavioral components; however, the key to doing good valuation work is to be aware of your own behavioral biases, how they might impact the modeling, and to learn how to counteract your prejudices.
Here is where I believe behavioral finance has value for investment students and future research analysts:
  • It can help explain why analysts arrive at different prices for the same stock. By studying the interaction between psychology and valuation, behavioral finance can help to identify systematic analysis errors (i.e. herding, availability bias, hindsight bias, etc.) in the valuation process.
  • It is useful in understanding why a stock price differs from an analyst’s estimate of intrinsic value. The price can diverge from the intrinsic value because the analyst makes estimation mistakes or because they missed or under-weighted some relevant information. The analyst could behave in an irrational manner (refusing to deviate from the crowd or exhibiting overconfidence, familiarity or home bias) that can cause prices to depart significantly from their estimated values.
  • Overconfidence can be detrimental to the analyst’s stock-picking ability in the long run and can lead to excessive trading. Analysts, like any other professional, tend to exaggerate their abilities and underestimate the likelihood of bad outcomes over which they have no control. This combination of overconfidence and optimism can cause analysts to overestimate the reliability of their knowledge, underestimate risks and exaggerate their ability to control events, which often leads to excessive trading.

The one area of behavioral finance that I concede is not properly or adequately addressed by classical “rationality’ economics is loss aversion. This refers to an individual's tendencies to prefer avoiding losses over acquiring equivalent gains. In common terms it could be said that most people feel it is better to not lose $100, than it would be to gain $100. Amos Tversky and Daniel Kahneman conducted studies and suggested that losses are at least twice as powerful, psychologically, as are equal gains. This observation (loss aversion) needs to be incorporated into expected utility theory.

As an investment professor, it behooves me to help my students become conversant with the concepts and findings of behavioralists so that they can recognize when their instincts or prejudices could lead to poor outcomes. The CFA Institute is also adding more content on behavioral finance.
So, you ask, if most analysts and investors have behavioral biases, then how can markets be efficient? The answer for me is clear... while any analyst can be wrong about their price estimate for Amazon, the many independent analysts who cover Amazon are likely to collectively get the valuation correct, on average, in the long-term – the trick as an analyst or investor is to have fewer missed estimates!

Wednesday, January 11, 2017

Mr. Dan Fuss Presented the “4 Ps” and his Bond Market Outlook to the Milwaukee CFA Society

Dan Fuss, Distinguished Marquette Alumnus, Spoke at the CFA Society of Milwaukee Luncheon on January 11, 2017

On Wednesday, January 11, 2017, the CFA Society of Milwaukee hosted its annual Dan Fuss luncheon event at the Milwaukee Athletic Club. Similar to past presentations, Mr. Fuss spoke about his “4 Ps” and gave his bond market outlook.
Mr. Dan Fuss with the Marquette AIM students

Daniel Fuss, CFA, is the vice chairman of Loomis, Sayles & Company and manager of the Loomis Sayles Bond Fund. He has won numerous awards for his outstanding performance as a fixed income manager and SmartMoney magazine in July 2008 called him one of the world's best investors. He earned his bachelors and MBA degrees at Marquette University and he is a former U.S. Navy lieutenant. Dan Fuss is one of the early supporters and advocates behind Marquette’s Applied Investment Management (AIM) program.

Dr. David Krause, AIM program director, and over a dozen Marquette students attended the event and enjoyed meeting with Mr. Fuss afterwards. Dr. Krause said, “Earlier in the day on Bloomberg I watched Bill Gross and Jeffrey Gundlach talk about the bond market and both were referred to by the TV analysts as “bond royalty.” However, to many of us who follow the fixed income market, the real “bond king” is Dan Fuss, whose tenure in the fixed income market has spanned more than 50 years. After hearing his talk today and getting to spend time with him, I can say that Dan is on top of his game. The same way that Warren Buffett has a special sense for the stock market, Mr. Fuss displays the same clarity regarding the global bond market.”

Dan Fuss Presented to the CFA Society of Milwaukee

Dan Fuss indicated that the cycle of low interest rates and low inflation appears to be coming to an end and he was clear in stating that “both will rise and that is not a good combination for the bond market in the short-term. It appears that we are moving back toward a more normal condition, which isn’t a bad thing.” 

More broadly, he talked to the audience of nearly 200 CFAs and investors about the bond market – and like past years he framed his talk around the “four Ps” – peace, people, prosperity, and politics – in addition to commenting on the role of central bankers and changing weather patterns.

Image result for dan fussSimilar to past years he began by talking about “peace” - or its absence. He is worried about events and developments in the Middle East, terrorism, immigration and events unfolding in the South China Sea.

Fuss’ “prosperity” concerns related to the possibility of tariffs and increased defense spending. He was optimistic about increased fiscal spending on infrastructure and the possibility of lowered  U.S. tax rates, which could boost GDP and lead to increased inflation – especially wage push in certain fields (e.g. medical technology) and regions (East and West Coasts).

Regarding “people,” Mr. Fuss noted the polarization of political parties in the U.S. and Europe, as well as the aging and declines in developed country populations. He noted that these changing demographics will favor bonds over stocks in the long-term.

Dan Fuss commented on the political issues in the developed economies and noted the potential for a movement away from globalization – which he viewed negatively.  He cleverly avoided any direct discussion about the new U.S. President-elect's campaign promises.
Image result for dan fuss

Regarding central banks, Mr. Fuss indicated he believed the Federal Reserve had laid out a clear rationale and agenda for future rate increases – and commented that he felt the other central banks would follow suit, but lagged by a few years.

His comments about climate change and the emergence of extreme weather patterns were a new angle that he had not mentioned in previous years. Fuss noted that he felt it was important to study global supply chains to assess the impact of potential increased tariffs and long-term weather changes.  

While his forecast for the bond market in 2017 was less than rosy, he did suggest that it would be good in the long-term for pension funds, foundations and endowments as we return to more normal interest rate levels. He suggested that the wildcard remained geopolitical events.

Dr. Krause said, “It is amazing what Dan Fuss remembers. He has managed through numerous bond-market crises and his experiences provided the students in attendance with useful advice and guidance. We look forward to his return to campus next year to meet with all of the students in the AIM program – which he helped create in 2005.  It was a great afternoon with Dan Fuss.”


Tuesday, January 10, 2017

Dr. Krause and the Marquette AIM students will visit with Dan Fuss this week

Dan Fuss, Prominent Marquette Alumnus, is the Speaker at this Week’s CFA Society of Milwaukee Luncheon

On Wednesday, January 11, 2017, the CFA Society of Milwaukee is hosting its annual Dan Fuss luncheon event starting at 11:45 am at the Milwaukee Athletic Club.

Image result for dan fuss
Dan Fuss of Loomis, Sayles & Company
Daniel Fuss, CFA, is the vice chairman of Loomis, Sayles & Company and manager of the Loomis Sayles Bond Fund. He has won numerous awards for his outstanding performance as a fixed income manager and SmartMoney magazine in July 2008 called him one of the world's best investors.

Mr. Fuss earned his bachelors and MBA degrees at Marquette University. He is a former U.S. Navy lieutenant he formerly managed the Yale University endowment. Dan Fuss is one of the early supporters and advocates behind Marquette’s Applied Investment Management (AIM) program.

Image result for daniel fuss
Mr. Fuss is a legendary fixed income manager
Mr. Fuss manages the Loomis Sayles Bond Fund—which won the 2009 Morningstar Fund Manager of the Year award in the fixed income category. He also manages or co-manages the Loomis Sayles Investment Grade Bond, Investment Grade Fixed Income, Strategic Income, Fixed Income, Institutional High Income and Global Equity and Income funds. 

Image result for morningstar manager of the yearIn 2012, Dan Fuss received both the Institutional Investor Money Management Lifetime Achievement Award, and the Lipper Excellence in Investing Award. In 2013, Dan received the CFA Society of Milwaukee Lifetime Achievement Award. 

In 2000, he was named to the Fixed Income Analysts Society’s Hall of Fame in recognition of his contributions and lifetime achievements toward the advancement of the analysis of fixed income securities and portfolios. Mr. Fuss has been a multiple winner of the Morningstar Fixed Income Manager of the Year and he has twice been president of the Boston Security Analysts Society.

Image result for cfa society of milwaukeeIn describing the CFA event, the Society’s noted that it’s not just that Dan Fuss has seen it all, it’s that he remembers it.  The 83-year-old Mr. Fuss has managed through numerous bond-market crises and his experiences with both high-yield bonds and the classic mutual funds that he manages also provides the luncheon attendees with useful guidance. While he has experienced periods of underperformance, he has always bounced back with top-tier returns – earning him his deserved reputation as one of the great fixed income managers.
Image result for dan fuss and aim
Dan Fuss and David Krause in 2016

Mr. Fuss says that while the biggest opportunities are over for now, he thinks the fixed income market is almost back to what might be considered normal, which means he still sees buying opportunities for selective high-yield investors.


Dr. David Krause, AIM program director, and over a dozen Marquette students are once again honored to be attending the event and sharing time with Mr. Fuss. “We again plan on attending the CFA luncheon and expect that Mr. Fuss will talk about market instability, the impact of the Trump administration, how he feels about rising interest rates, Federal Reserve policy and if junk bonds are worth buying now. It is always a treat to be with Dan Fuss – he is a true legend in the investment world. Just think - the AIM students will have met with Warren Buffett and Dan Fuss within the past two months!”