Thursday, May 5, 2016

View the 5th Set of Marquette AIM Student Equity Pitches for the Class of 2017 on Friday, May 6th at 2:00 CST

You can join the AIM Program Student Equity Presentations in person, online or via Twitter on Friday, May 6th at 2:00 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. Watch the third set of live presentations by the students in the AIM Class of 2017 (see webcast link below).

 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). 

This week’s equity write-ups can be found at: 

The students are responsible for making a five-minute pitch before their peers, faculty and any alumni or investment professional in attendance.

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.  

Wednesday, May 4, 2016

Matt Rose of Alpha Investment Consulting Group Presented to Marquette's Finance Classes Today

Matt Rose of Alpha Investment Consulting Group Visited Dr. Krause’s AIM and Alternative Investments Classes on Wednesday, May 4, 2016
Dr. David Krause and his students in the AIM program and Alternative Investments classes hosted Matt Rose (Marquette AIM 2007), a Consultant at Alpha Investment Consulting Group in Milwaukee. Matt is a frequent campus visitor and has spoken in Dr. Krause’s classes regularly since graduating from Marquette’s AIM program.
Dr. Krause and Matt Rose in the AIM Room
Alpha Investment Consulting is an independent, employee-owned, SEC registered investment consulting firm dedicated exclusively to institutional investment consulting. The firm has no affiliations with brokerage operations or other service providers, and they have no company-specific products to sell. Independence from other lines of business allows Alpha to minimize potential conflicts of interest.

Alpha provides the following services to their institutional and family clients:

• Manager Research& Evaluations
• Custodial/Administration Search & Evaluations
• Performance Monitoring & Reporting
• Investment Policy Development
• Fee Negotiations with Vendors
• Fee Benchmarking
• Fiduciary Standards
• Directed Investment Consulting
• Model Portfolio Development.
Matt Rose (AIM 2007)
Matt Rose joined Alpha as an Analyst in 2007, gaining experience in client performance reporting and manager due diligence, before transitioning into consulting. Matt previously worked for Robert W. Baird and Co., in the Baird Investment Management Group.
Matt advises clients on investment policy statements, asset allocation, manager selection and portfolio structure.  Additionally, he remains engaged in the due diligence process, conducting manager interviews and collaborating with other research staff members.
Matt Rose talks to AIM students
Matt holds a Bachelor of Science degree in Business Administration from Marquette University.  He currently serves on the Board of the Friends of the Haggerty Art Museum, as well as the Admissions Committee for Marquette University’s AIM Program, participates as a classroom volunteer for Make a Difference – Wisconsin, and regularly guest lectures at the Marquette University College of Business Administration.
Dr. Krause said, “Matt always does an excellent job in the classroom and in informal discussions with the AIM students. He provided a solid presentation to the Alternative Investments class on the trends in the alternative investments industry and was excellent at engaging the students in conversations in the AIM Room. Matt provides real world examples and tells stories that help bring the curriculum to life. It is great to have him return to Marquette."

Tuesday, May 3, 2016

64th AIM Student Update by Dylan Harkness. Agree Realty (ADC). "It's agreed that retail chains will rely on ADC for the development and leasing of properties"

ADC (Agree Realty Corp) Investors Agree on Q1 2016 Performance

By: Dylan Harkness, student at Marquette University

 Image result for agree realty 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.


• In the first quarter of 2016, ADC had an adjusted FFO of $12.7M ($0.61 per share), this represents a ~27.2% increase from last year.

• Total rent revenue grew to $18.7M, representing a 28.2% increase YoY.

• Acquired 13 high-quality retail net lease properties located in 9 states for $33.3M. Also completed the hobby-lobby development project in Springfield, Ohio.

• Targeted 2016 acquisition volume remains at $175-$200M.  

Agree Realty Corp (NYSE: ADC) Investors clearly enjoyed what they heard on the Q1 earnings call, as shares of ADC reached an all time high of $40.60 on April 26th. The portfolio occupancy was roughly 99.5%, with an average remaining lease term of 11.2 years. The properties acquired in Q1 are leased to 30 national and super regional tenants operating in 9 diverse retail sectors including the entertainment retail, specialty retail, quick service restaurant, discount, and auto services sectors. The properties were purchased at an average cap rate of 7.9% and an average remaining lease term of 7 years. ADC is currently conducting due diligence on a number of individual assets as well as portfolios. The company currently intends to reduce the portfolio’s exposure to Walgreens due to leases expiring and Walgreens’ properties currently being sold for cap rates in the low to mid 5s.

ADC also has the unique ability to develop properties and not just to acquire them. This gives ADC leverage to create structures on land it already owns and then rent it out – resulting in higher yields. Recently, construction has started in a developmental property that will house a Burger King. The development has a total cost of $1.6M and is the first project of ADC’s partnership with Meridian Restaurant to develop 10 Burger King locations – subject to 20 year leases. Currently, ADC is developing properties for Wawa, Chick-fil-A, and Starbucks.

Moving forward, ADC’s strong management team and conservative balance sheet should poise the company for steady growth – the company recently increased its quarterly dividend by 3.2% to $0.48. ADC’s 100% retail net-lease portfolio has been put together within the past 5 years and does not contain a significant amount of office supply, book stores, and other tenants that may be subject to the shift towards e-commerce and digitalization.

What has the stock done lately?

The FTSE NAREIT All REITs Index has gained nearly 10% in March and 5.86% over Q1 – outperforming the S&P even in this rising interest rate environment (Although Yellen gave dovish signals at last meeting).  ADC alone has outperformed the S&P YTD (17.54% vs 2.54%) and QTD (2.63% vs 1.17%).

Past Year Performance: ADC has increased 24.81% in value over the past year and has already given shareholders returns in the 20% range this year. From a 52 weeks perspective, the stock has fluctuated from $26.62-$40.22.


My Takeaway

With a strong management team that has the ability to hand pick existing properties, as well as develop their own, ADC should grow from a standard retail REIT into one that has a significant development arm. Each quarter the company is adding new tenants which will continue to grow and lead to new development opportunities. In the future, it is my opinion that retail chains will rely on ADC for the development and leasing of properties. 

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Monday, May 2, 2016

63rd AIM Equity Update by Clermond Jean. BioAmber (BIOA): “Looking for a Pathway Towards Profitability”


BioAmber (BIOA, $4.11): “Brace Yourself for a Bumpy Ride”

By: Clermond Jean, AIM student at Marquette University

Image result for bio amber 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.

BioAmber, Inc. (NYSE:BIOA) is an industrial biotechnology company which produces sustainable chemicals. The firm combines chemical catalysis with industrialized biotechnology to convert renewable feedstock into sustainable chemicals with widespread application ranging from plasticizers to food additives and resins

• BioAmber continues to gradually ramp and optimize commercial production at Sarnia, Canada.

• The average selling price for Q4 2015 was above the $2,000 / MT guidance, despite low oil prices;

• After 4Q15 Mitsui invested $CDN25MM (US$18.8MM) in the Sarnia joint venture.

• Bio-SA sales were ~$1.1MM in the period including first shipments to key off-taker PTTMCC Biochem in Thailand.

For BioAmber the road towards translating environmental sustainability into profitability has been anything but a smooth ride. Over the past year, BioAmber stock price has been in a tailspin downward due to a variety of factors including: suppressed energy prices and a need for additional capital. The current stock price for BioAmber is almost half the value it was when coverage was initiated on the company. Nevertheless, during this same time period, BioAmber has begun commercial production at their Sarnia facility and secured several strategic partnerships that better position the company for future success.

BioAmber’s products have faced pricing pressure as a result of low oil prices. Although BioAmber’s supply contracts have selling prices decoupled from oil, the Company has reduced their selling price for certain customers to have them more align with petro-based counterparts. Furthermore, there is no guarantee BioAmber’s customers will not seek lower prices when they renegotiate their contracts, prices are currently set based on the value the company’s biosuccinic offers. However, in their fourth quarter earnings call, CEO Jean-Francois Huc noted that BioAmber could be exposed to softening demand for its products if oil prices were to stay in the $30-40 per-barrel range for an extended time.
Nevertheless, BioAmber has also had two equity offerings over the past year raising $35.1MM (May 2015) and $11.8MM (January 2016) in net proceeds. Both of the offerings led to a significant decline in the Company’s share price. Proceeds from the offerings were used to reimburse $12.5MM of corporate debt that it has with Tennenbaum Capital Partners to remove a restriction it had on the use of $15MM of cash. Proceeds will also be used to finance construction of a new facility that is expected to open in 2018.

BioAmber has begun commercial production at their Sarnia facility, achieving several milestones in their commercialization stage. Their Sarnia facility has been performing well and the bio-succinic acid produced has met the quality standards set in 2015. Over 100 companies have qualified the bio-succinic acid produced in Sarnia and more than 100 additional companies are currently at various stages of assessment and qualification. After the end of the quarter, the Sarnia facility obtained several important quality management certifications. The average selling price for 4Q15 was above the $2,000 / MT guidance, despite low oil prices.
BioAmber has also forged several strategic partnerships with other companies that will further promote its growth. Mitsui & Co. have invested $CDN25MM in the Sarnia joint venture, increasing its equity stake from 30% to 40% and committing to play a bigger role in commercialization of the facility. Other strategic partnerships include technology licensing and off-take agreements in order to also support their Sarnia facility. BioAmber has signed take-or-pay agreements with both Vinmar and PTTMCC that represent sales volumes of over 15,000 metric tons of succinic-acid in 2016 and 2017. BioAmber has also signed a number of other supply agreements with non-binding volume commitments that collectively exceed the available capacity in the plant. These strategic partnerships coupled with new supply agreements shows a bright road ahead for BioAmber.

What has the stock done lately?

Past Year Performance: Over the past year, this stock has performed terribly. In 2015, the stock traded as high as $10.98, versus $4.74 on 4/25/2016. (In 2015, the stock retreated significantly from its high, and by the end of the year was at $6.18). For the 52 weeks ending 4/25/2016, the stock of this company was down 59.5% to $4.74. During the past 13 weeks, the stock has risen modestly to 11.8%. Bioamber Inc is trading at 2.41 times book value.

1 Year Stock Chart vs. Benchmark from FactSet here


 Source: FactSet


My Takeaway

Over the past year, BioAmber has experienced a lot of the ups and downs as they have begun transitioning from their demo-phase to commercial production. Nonetheless, management at BioAmber have developed a strong plan to achieve success in their commercialization stage, making strategic decisions that better poise the company for long-term success. I continue to believe BioAmber is a long-term play for shareholders and that they stand to become an industry giant in the fast growing industrialized biotechnology industry. In the short term, I believe BioAmber’s focus on a long-term growth strategy will hamper the performance of their shares. I believe that although the original drivers of the Company’s growth remain intact, the market will continue to undervalue the company until the pathway towards profitability becomes clearer.

1 Month Stock Chart from FactSet here (optional)


 Source: FactSet