The Fifth Set of AIM Class of 2019 Student Equity Presentations Was Delivered on Friday, 10/5/18

Four Marquette Students in the AIM Program Pitched Stocks on Friday, October 5^th

Follow the link to access the student equity write-ups.  You can also find every write-up since AIM's inception in 2005 here.

October 5th Write-Ups

Link to last weekend write-ups: September 28th Write-Ups

Sarf Mohammed, Will McMahon, Jacob Bishop, Stephen Lane
pitched stocks in the AIM Room on 10/5/2018

Presenter	Sector	Company Name	Ticker
Jacob Bishop	Intl Financial Services	PagSeguro Digital Ltd.	PAGS
Stephen Lane	Intl Consumer Staples	Pigeon Corporation	PGENY
Sarfaraz Mohammed	Consumer Discretionary	Wingstop Inc.	WING
William McMahon	Intl Industrials	Embraer S.A. ADR	ERJ

The AIM student presenters for October 5, 2018

Will McMahon pitched Embraer

Sarfaraz Mohammed

pitched Consumer Discretionary

stock: Wingstop

Sarfaraz Mohammed

pitched Consumer Discretionary

stock: Wingstop

Stephen Lane pitched Pigeon (PGENY)

Jacob Bishop pitched PagSeguro Digital Ltd. 

Marquette's Department of Finance Advisory Board Met on Friday, October 5, 2018

Members of the Finance Advisory Board Received Updates on Various Initiatives and Had an Opportunity to Lunch with Finance Students

Dr. Matteo Arena, Chair
of Department of Finance

Dr. Matteo Arena, Chair and Associate Professor of Finance at Marquette University’s College of Business Administration hosted the fall 2018 Finance Department Advisory Board meeting on Friday, October 5^th.

Members of the Finance Advisory Board:

Rick Broeren – BNP Paribas – Board Chair

Michael Adam – BankMyBiz

Frank Esposito – The Windsor Group 

Sarah Grooms – Wintrust

Amie Hahn – Northwestern Mutual 

Jerry Harried – Uline

Bob Hau –– Fiserv

Scott Hawig –Froedtert & Medical College of Wisconsin 

John Madden –FNBC Bank & Trust

Doug Neis –Marcus Corp

Stanley Nunoo –BlackRock

Guido van Hauwermeiren –Société Générale 

Kathy Vorisek – Mesirow Financial

Jeff Wuest – SynFiny Advisors

Rick Broeren and Matteo Arena began the meeting by updating the board on issues involving the Finance Department and College of Business Administration.

Michael Adam, who co-taught a course in the AIM program with Dr. David Krause during the spring 2018 semester, told board members about his Blockchain Project he is working on for the spring 2019 semester.

Dr. Krause, Elizabeth Wolfe, Tommy Borin
and Stanley Nunoo (BlackRock, AIM alumnus and board member)

Jim McGibany of the Economics Department discussed the new Business Analytics major being offered by the College. Kent Belasco provided an overview of the upcoming  Commercial Banking Conference and provided an update of the Banking Program.

Teresa Janusz and Dave Lawlor then met with the board to provide information about a potential new facility. The group then headed to the Memorial Union for lunch in the Lunda Room with a group of finance students and faculty, including Dr. Krause and several of the students in the AIM Class of 2019.

A current AIM Program Small Cap Equity Holding: CryoLife Inc. (CRY) by: Jack Senft. "CryoLife Not Crying for Growth - Buy Rating"

CryoLife Inc. (CRY, $34.03): “CryoLife Not Crying for Growth – Buy Rating”

By: Jack Senft, 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:

•         CryoLife Inc. (NYSE:CRY) is a medical devices company, which operates through two segments: Medical Devices and Preservation Services.  Processing and distributing implantable human tissues for cardiac and vascular surgeries.

•         A trial of BioGlue in China has now been completely enrolled at seven sites, expecting FDA approval in 2H19.  This product line is also looking to be expanded into Japan.  BioGlue accounts for ~28% of revenue.

•         On-X, or their Prosthetic Heart Valves product has gained ~10% market share since inception, and now equates to ~16% of revenue.

•         Successful integration of JOTEC, the company is now looking to grow this segment and add new products by 2019.    

•         The company has reported that the total addressable market is ~2 billion, potentially expanding by 50%, with efforts to complete the activation of PerClot at 22 sites.

Key points: 

CryoLife Inc. retains a “buy” status as the original investment thesis is still playing out while adding more opportunity.  Summing to about 28% of revenue, or $65.7 million, the company estimates a market size of ~$112 million.  While this product line has only seen a 3.3% CAGR from 2013-2017, CRY expects BioGlue to be approved in China in 2H19.  Along with this, BioGlue Japan has expanded indication, which should double the Japan market share from $5 million to $10 million.

Meanwhile, On-X, their Prosthetic Heart Valves product line accounts for ~16% of revenue.  This product line has seen a 6.3% CAGR from 2013-2017.  The company has reported an increase in mechanical valve market share from 22% in 2016 to 30% in 2017.  This increase comes from the drive of utilization in On-X hospitals, but the company did not report specifics.

In 4Q17, CryoLife acquired JOTEC in an upfront payment of $225 million, consisting of 25% stock and 75% cash.  JOTEC is a German-based company that develops and produces endovascular stent grafts, cardiac and vascular surgical grafts.  From 2013-2017, JOTEC has seen a 22.6% CAGR in sales, while still differentiating their product portfolio.  The JOTEC revenue has grown ~31% organically.  As the company is still learning the market of JOTEC, management is looking to develop three next generation products, expecting an approval and introduction date in 2019.

The company anticipates that the total addressable market is about $2 billion, potentially expanding by 50% from a multitude of R&D opportunities.  Adding to this success, PerClot is in clinical trials.  The company currently has 224 patients enrolled, with only 96 openings left to be filled.  PerClot is looking to have a trial completion date of 1H19.  It now has complete activation at 22 sites, since it already has 70% enrollment.

What has the stock done lately?

CRY has remained relatively flat over the past month, but over the past six months and year, the stock has accreted substantially in value.  While that may not sound positive, the company is trading near its 52-week high of $36.05, where the low is $16.80.  With the upcoming drivers and catalysts, this stock is in a great position even with their outstanding past performance.

Past Year Performance: 

CryoLife has increased over the past six months and year by ~75% and ~46%, respectively.  The stock currently trades a slightly higher than peer multiples, but with an added premium, this stock will remain a buy rating and should see a continued accretion past the current price.  When CRY was pitched in February of 2017, a suggested price target of $23.32 was calculated, showing that the thesis has played out.

 Source: FactSet

My Takeaway:

CryoLife is in a great position given their diversified portfolio of product lines, as well as a continuation of clinical trials and product integration.  Seeing the constructive environment that management portrays, CRY could see more potential upside and increased market share on all product lines.  Even though the investment thesis that was originally suggested has already played out, there is still more upside available.

Fifth Set of Fall AIM Program Student Equity Pitches on Friday, October 5th - Join Us in Person or On-Line

AIM Class of 2019 Student Equity Presentations 

Friday, October 5th

The fifth set of fall AIM student equity presentations for the class of 2019 will be on Friday, October 5, 2018. 

   

Follow the link to access the student equity write-ups.  You can also find every write-up since AIM's inception in 2005 here.

October 5th Write-Ups

• Location: Marquette University, College of Business Administration - Straz Hall, 1225 W. Wisconsin Avenue, Milwaukee 53233 - in the AIM Research Room 488, 4th Floor (pdf directions to AIM Room).
• Presentation Times: 3:00 to 4:00 p.m. CST
• Link to pdf Student EquityWrite-ups

If you are unable to attend, you can always view them via the webcast HERE

AIM will again be utilizing Twitter for your comments and questions.  Please follow the instructions below.

How to comment using Twitter:

• Go 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

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? 

Indiana State University is hosting the 2018 Student Managed Investment Fund Consortium (SMIFC) Conference

Four Marquette AIM Students and Bill Walker will be attending the 6th Annual Student Managed Investment Fund Consortium (SMIFC) Conference – at The James in Chicago on Thursday/Friday, October 4/5, 2018

Indiana State University is hosting the 2018 Student ManagedInvestment Fund Consortium (SMIFC) Conference. The purpose of the consortium is to enhance student learning and scholarship, record best practices in investment management among SMIF partners, provide a vehicle for student networking and exchange of ideas, and provide a permanent repository of relevant literature and recorded student experiences.

Representing Marquette’s AIM Program at the event (and competing in the stock pitch competition) are AIM juniors: Nick Arco, Nicholas Goehring, Robby Metcalf, and Daniel Ptacek. The Marquette faculty representative is Mr. Bill Walker.

The SMIF Consortium builds a community of institutions with a shared vision for student success and leadership in investing. The SMIF Consortium also establishes relationships with industry partners to assist in its primary goals of student education, research, and leadership.

The keynote speakers are Charles K. Bobrinskoy, Vice Chairman, Head of Investment Group, Portfolio Manager, Ariel Investments; Joseph Cusick, Director of OIC Education and Business Development, The Options Industry Council, Majed R. Muhtaseb, Professor of Finance, California State Polytechnic University, Robert Stein, Deputy Chief Economist, First Trust Advisors L.P.; and Daniel G. Sullivan, Executive Vice President and Director of Research, Federal Reserve Bank of Chicago.

2018 SMIF Speakers 

Tours of the Federal Reserve Bank of Chicago and Chicago Board of Trade will be available.

Colleges and Universities may bring more than one team and those may include both undergraduate and graduate students.

There are currently 525 student managed investment funds in the U.S., and between them they have $680 million invested. This is an opportunity for students and faculty to interact with students and investment professionals.  During dinner, there will be the stock pitch competition review and prize-giving on Thursday evening.

Pitch Competition - New this year, Marquette AIM students are participating in a stock pitch competition that includes a 5-page paper with maximum 5-pages of attachments or a 7-minute YouTube video with no school identification.  Submissions will be narrowed down to 5 teams plus one best paper by panel of judges prior to the conference. The “Best 5” videos will be shown during Friday’s dinner and each table will vote on “Best 3”.  All schools submitting will be announced during dinner.  

Updated Fall Speakers for Marquette's Financial Management Association (FMA) Student Club as of October 3, 2018

Updated Fall Speakers for Marquette Financial Management Association (FMA) Student Club

(times and locations will be updated regularly and emailed to FMA members near the meeting dates)

FMA Fall Schedule:

October 3 – Chaz Muth, Lazard Middle Markets, 4:00-5:15 & 5:30-6:45

October 5 - Dayton Hoell, Michael Sullivan, Mike Dennison, JP Morgan Private Bank, 2:00-3:00

October 10 – Steve Beckert, Smith Brinker, R.W. Baird, 4:00-5:15 & 5:30-6:45

October 11- NYC Trip meetings, 3:30-4:30 & 5:00-6:00

October 17-20 - FMA trip to New York City

October 24 – John Splude, CEO, HK Systems , 4:00-5:15 & 5:30-6:45

November 5 – Dough Neis, CFO, Marcus Corporation, 4:00-5:15 & 5:30-6:45

November 16 - AIM Program / FMA trip to Chicago

Investment Club Meeting Dates:

Thursday, September 27

Thursday, October 25

Thursday, November 29

A current AIM Program Small Cap Equity Holding: Planet Fitness Inc. (PLNT) by: Sarfaraz Mohammed. "Let's Make Some Gains"

Planet Fitness Inc. (PLNT, $50.02): “Let’s Make Some Gains”

By: Sarfaraz Mohammed, 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

• Planet Fitness Inc. (NYSE:PLNT) is American franchisor based in Hampton, New Hampshire. Planet Fitness provides gym membership services for individuals looking to improve their fitness and overall well-being and emphasizes its “Judgment Free Zone,” which provides a non-intimidating gym environment for its members.

• In its latest quarterly report, PLNT indicated that it has 12.1 million members, and 1,608 owned and franchised locations.  This is a pleasant increase since its 2017 10-K, which reported having 10.6 million members.

• PLNT has a highly attractive franchise system which is built for growth.  This allows franchisees to easily adopt their model, making it appealing and easy for PLNT to increase their store numbers.

• The company is focused heavily on expanding and increasing their store numbers, even internationally.  For the first 2 quarters of 2018, PLNT opened 91 stores total.  Its franchisees have signed ADAs to open more than 1,000 stores over the next 5 years as of the end of 2017.

• Over the past year, the stock has increased from a share price of $26.40, to $50.02 currently. This represents a YoY upside of 89.47%. 

Key points:

Planet Fitness is a market leader in providing gym memberships to all types of individuals looking to improve their fitness and overall well-being. Its main driver is its differentiated gym membership experience.  As mentioned previously, PLNT focuses on providing a space that is non-intimidating, so that all its members, beginners and experts can have an enjoyable experience at the gym.

Planet Fitness has predictable and recurring revenue streams with high cash flow conversion. In 2017, approximately 90% of both their corporate-owned stores and franchises consisted of recurring revenue streams, including royalties, vendor commissions, monthly dues and annual fees. Their business model is intriguing as a gym membership at Planet Fitness only costs $10 for its standard membership and $19.99 for its Black Card membership.  This is significantly different from other gyms who typically charge around $50 monthly for their memberships.

Planet Fitness Inc. has a strong and proven management team.  PLNT’s CEO, Chris Rondeau has been with the company for 25+ years and has helped developed its business model.  Also their CFO, Dorvin Lively has had experience in corporate finance for over 35 years and they both help drive the culture and believe in ‘Fitness for Everyone.’

Planet Fitness is all about growth.  It aims to expand its stores and members.  By providing a low cost membership and easy franchise model, it is easy for the company to do.  It’s planning to open 500 new stores in the next 3 years and has 1000 stores already signed for in the next 5.  Growth is a key driver for this company, and with its strong management, it’s more than possible.

What has the stock done lately?

Planet Fitness has been improving steadily.  Its earnings growth has steadily increased and has come in at 19%, 20%, 42%, and 55% over the past 4 quarters.  PLNT has showed potential for strong earnings growth going forward.  Many investors are also investing in the company further, as Syntal Capital Partners LLC purchased a new position in PLNT during the 2^nd quarter, purchasing 45,525 shares valued at ~$2,000,000. 

Past Year Performance:

PLNT has made some serious ‘gains’ this past year as it’s stock price has increased ~89% over the past year.  This is exceptionally strong growth and with its strong management team and growth plans, it seems this trend will continue upward. 

Source: FactSet

My Takeaway:

Planet Fitness Inc. holds a unique business model attracting many new customers and its easy to operate franchise model makes it easy for franchisees to open up stores.  Additionally, PLNT has a strong management team and a solid plan for growth going forward as well.  Due to these factors, as well as impressive earnings historically, I am recommending a buy for this stock going forward as I expect the positive tide to continue.