Friday, February 12, 2016

On Friday four AIM students pitched stocks in the AIM Room before their peers (and on the web)

Third Set of AIM Presentations in the Spring 2016 Semester

On Friday, February 12, 2016, four AIM students in the Class of 2016 pitched stocks. 
Ryan Johnston, Joel Kretz, Brendan Fanning, Eric Christopherson
In addition to over 40 students attending the pitches in the AIM Room, their presentations were viewed on-line via a webcast by more than 20 alumni and parents across North America.
These presentations again included the opportunity for real-time micro-blogging (via Twitter). During the AIM student equity pitches on Friday more than 20 questions and comments were posted at #AIMpitch at the @MarquetteAIM Twitter site. 
The presenting students have the opportunity to respond to the questions over the weekend before the students vote on whether or not to add the stocks they pitched.
The student equity pitches have always been one of the main highlights of the AIM program. 
The opportunity for students to actively manage domestic and international equity portfolios has been an important part of Marquette AIM program’s experiential learning.
The AIM students who presented on Friday included:
  • Ryan Johnston (Home Bancshares, HOMB, Financial Services)
  • Brendan Fanning (Swatch Group,  SWGAY, International Consumer Discretionary)
  • Eric Christopherson (KornFerry, KFY, Industrials)
  • Joel Kretz (Associated British Foods, ASBFY, International Consumer Staples)

Their AIM equity write-ups can be accessed at:
Joel Kretz pitched Associated British Foods

Copies of all student presentations since the inception of the AIM program can be viewed at the AIM web site.

Thursday, February 11, 2016

View the Third Set of Marquette AIM Student Equity Pitches for the 2016 Spring Semester on Friday, February 12th at 3:00 CST

You Can Join the AIM Program Student Equity Presentations on Friday, February 12th at 3:00 pm CST  

The AIM student equity pitches take place each Friday afternoon during the semester – either in the AIM Room or at a local investment company. The students prepare and distribute a professional equity write-up (note: every AIM write-up since the inception of the program in 2005 is archived here). 

Student PresenterCompany NameTickerSector
Ryan JohnstonHome BancsharesHOMBFinancial Services
Brendan FanningSwatch GroupSWGAYInternational Consumer Discretionary
Eric ChristophersonKornFerryKFYIndustrials
Joel KretzAssociated British FoodsASBFYInternational Consumer Staples students are responsible for making a five-minute pitch before their peers, faculty and any alumni or investment professional in attendance (note: the Friday afternoon equity presentations are also webcast live - see below on how to join the webcast).


Following the student’s pitch the floor is opened for questions and answers for about ten minutes. This has been highly instructive as the students must be prepared to defend their investment recommendation and answer questions in an extemporaneous manner.

How to view the AIM Student Equity Presentations on February 12, 2016:


How to comment using Twitter:

Marquette AIMGo to the MarquetteAIM Twitter account (you can use Search Twitter on your site) and click Follow

During AIM presentations, go to #AIMpitch and follow the tweets (discussion) on Twitter (it will also be appearing on the Rise Display Board in the AIM Room and on your smartphone)

Tweet your comments and questions during the AIM equity pitches and remember to:

    • Follow the rules of etiquette for using Twitter during AIM pitches
    • Use the hashtag #AIMpitch to start each tweet
    • Use $TICKER (note: this is called a cashtag and it be should the unique ticker/symbol for the stock that is being presented, ex: $TSLA)
    • Keep you comment short because each tweet is limited to a maximum of 140 characters
    • Example for Tweeting on a student’s Tesla equity pitch (note: the ticker for Tesla is TSLA):
      •  #AIMpitch $TSLA How do lower gas prices impact demand for electric cars?

Wednesday, February 10, 2016

34th AIM student equity update by Dan Kralovec, Air Methods (AIRM) An air medical transportation services firm that is ready to ascend!

Air Methods Corporation. (AIRM, $38.87): “Can Acquisitions provide sufficient tailwinds going into FY16”

By: Daniel Kralovec, AIM student at Marquette University

Image result for air methods logo

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.


Air Methods Corporation. (NASDAQ:AIRM) operating through its subsidiaries provides air medical transportation services and systems in the United States. AIRM operates an Air Medical Services (AMS) segment (86% ~ total revenue), Tourism segment (11.5%), and a United Rotorcraft (UR) segment (3%). Through the medical services segment, the firm transports persons requiring intensive medical services to highly skilled trauma centers thoughout 41 states. The tourism segment provides helicopter tours and charter flights, primarily focusing on Grand Canyon and Hawaiian Island tours. The rotorcraft segment designs, manufactures, certifies, and installs modular medical interiors, multi-mission interiors, and other aerospace and medical transportation products for customers.

• AIRM is coming off a strong third quarter with positive revenue and earnings growth, despite a sharp decline in the share price over the past year.  

• The recent acquisition of Tri-State Flight Care, a critical care transportation business, extends the firm’s reach within the southwestern United States. ~ added 27 more planes to their already extensive fleet.

• Management has indicated that it will offer a plan to boost shareholder value in the 'near term'. This plan could very well include either an increase in stock buybacks, more acquisitions, or exercising early lease buy-out terms.

Key points: Air Methods quarterly earnings tend to be quite volatile due to many external factors such as weather and fuel/maintenance costs. Nonetheless, AIRM’s 3Q15 results beat consensus estimates. Revenue grew by about 12% compared with the prior-year quarter while earnings per share grew almost 36%, reaching $1.18. This was mainly due to an increase in revenue from both the tourism and medical services segments.

Air Methods Corp recently acquired Tri-State Flight Care LLC for $222.5 million. Similar to Air Methods AMS segment, Tri-state is a critical care transportation provider servicing Arizona, New Mexico, Nevada, and Colorado. This acquisition significantly broadens AIRM’s presence throughout the southwestern United States, adding 27 planes to their existing fleet of roughly 400+ planes. The transaction is expected to add $0.20 and $0.30 to earnings in FY2016 and FY2017 respectively. In light of this recent acquisition, the firm renegotiated their credit agreement, gaining access to another $400 million, thereby improving liquidity. Management intends on using this credit facility to repurchase shares, continue acquiring accretive businesses, or exercise early lease buy-out options. To date, no shares have been repurchased.

Regardless of whether a patient is insured or not, Air Methods will still provide patient transport services. It is for this reason that the firm bears collection risks for services provided to insured and uninsured patients. Net reimbursement per transport increased 7.2% in FY14 when compared to the previous year. Although positive, the fluctuation in this figure may vary due to changes in the firms pricing structure, pending and future legislation, as well as the overall health of the U.S. economy. In the near future, it will be interesting how future healthcare reform affects the firm’s reimbursement levels and customer breakdown.

What has the stock done lately?
Since the last quarterly update, the stock is down almost 7.5%. The current price of $38.87 sits on the lower end of the 52 week range ($32.81-$54.98). Since AIRM released its intent on acquiring Tri-State back in October, the stock hasn’t moved much. Short interest still remains a cause for concern sitting at 33%. A positive catalyst, besides another acquisition, is definitley needed to increase the value of this company’s shares and boost investor confidence.

Past Year Performance: AIG has decreased 7.6%% in value over the past year, but the stock is nonetheless appears to be a bargain play when considering a consensus of analyst estimates. With a target price of $54.60, the current market price implies an upside of roughly 30%. In light of this figure, it should be noted that insiders have been shedding shares over the last few months while hedge funds have increased positions. 

Source: FactSet

My Takeaway
While third quarter results beat overall estimates, Air Methods’ stock has performed rather poorly over the past year. The recent acquisition, enhanced credit facility, and potential share buyback program are definitley positives for investors that are frustrated with the slow growth of this company in recent periods. However, despite management’s new initiatives, the increasing short interest and presence of hedge funds coupled with insider selling might cause the stock price to remain within the lower bound of the 52 Week range. It is for this reason that I suggest we pay close attention to AIRM as FY16 progresses. It’s too early to place a buy/sell recommendation on this stock. The firm still has a few promising growth opportunities.

Source: FactSet

Mike McKay of Kramer Van Kirk Credit Strategies Visited the AIM Program This Week.

On Wednesday, February 10, 2016, Mike McKay, Managing Director and Head of Credit Research for Kramer Van Kirk Credit Strategies, presented in Dr. Krause’s AIM class. Kramer Van Kirk Credit Strategies (KVK) is a Chicago based, credit asset management firm. It was established in 2012 and managed by Principals Tom Kramer (Marquette alumnus) and Tim Van Kirk. 

KVK has more than 20 credit, operations and compliance professionals with extensive experience in the credit markets.  KVK’s strategy focuses on Collateralized Loan Obligation (CLO).  Since the firm’s inception, Kramer and Van Kirk have structured eight deals in excess of $4B in assets under management. KVK has extensive knowledge of bank loans and structured vehicles with a history of raising and managing eighteen CLOs.

Image result for collateralized loan obligationMr. McKay has the overall responsibility for the structure and development of the credit research group comprised of nine research analysts. Mr. McKay has over 20 years of company specific credit analysis and industry risk assessment and reports directly to the Chief Risk Officer. Prior to joining KVK, Mr. McKay was a Credit Director at GE Capital Commercial Finance where he was responsible for a team underwriting and managing a loan portfolio in excess of $1B.

He shared interesting material with the AIM students about the CLO market over the past decade. His presentation included a discussion about the process KVK employs in structuring collateralized loan obligations. The students learned about the CLO cashflow life cycle, tranches, and the sourcing of assets. He shared an interesting data item with the students – between 1994 and 2015, S&P rated over 6,000 CLO tranches and only 25 were downgraded to a rating of D – a mere 0.41% of all CLOS – and of these most were not structured as traditional CLOs. These weren’t the securitized products that were the gist of The Big Short!  

Monday, February 8, 2016

Barrett Willich (AIM Alumnus) Visited Marquette on Friday and Discussed Private Equity

Dr. David Krause and Barrett Willich
On Friday, February 5, 2016 Barrett Willich was a guest speaker in Dr. Krause’s Alternative Investments class – and he also visited with students in the AIM Room. 

In the Alternative Investments class Barrett talked with the students about private equity – he currently is a Vice President at Beverly Capital, a Chicago-area venture capital and private equity firm.

Beverly Capital brings years of successful investing and operating experience to middle market companies. They primarily focus on investments in smaller, growth-oriented companies in healthcare related niches and companies providing outsourced business services. The firm focuses on providing capital to companies with $2-8 million of EBITDA that are headquartered in the central United States. As Barrett pointed out, they bring a long history of providing private equity capital and strategic advice to growth-oriented companies.

Beverly CapitalMr. Willich joined Beverly Capital in 2014. Prior to joining Beverly, he worked as an Associate at Winona Capital Management, a Chicago-based private equity firm, which specializes in growth equity investments in consumer companies. At Winona, he assisted with deal execution and portfolio company operational improvements. Earlier in his career, Mr. Willich was an analyst in Robert W. Baird & Co.’s Healthcare & Business Services Investment Banking Group, where he worked with and advised middle-market corporate and private equity clients on M&A, debt, and equity transactions.

Mr. Willich holds an MBA from the Kellogg School of Management at Northwestern University and a BS in Finance cum laude from Marquette University.  While at Marquette University, Mr. Willich was a member of the Applied Investment Management Program.

Mr. Willich’s responsibilities at Beverly Capital include deal origination and execution, as well as assisting operating companies with strategic direction, operational improvements, and financing decisions.  Barrett is currently a director of American Prosthetic Components and Tree Street Dermatology.

Barrett Willich

Barrett Willich joined Beverly in 2015 – he received his MBA from Northwestern’s Kellogg School of Management in 2014 - and prior to that he was at Winona Capital Management. Barrett was an Analyst in the Investment Banking group at Robert W. Baird & Co. where he worked with and advised middle-market corporate and private equity clients on M&A, debt, and equity transactions. Barrett graduated cum laude from Marquette University with a BS in Finance and was a member of the Applied Investment Management program.