Sagehen Capital

Let me start by saying what a pleasure it has been to be a part of such a wonderful organization for four years, and to have had the privilege of leading the club for three of those years. This annual review will in many ways seek to demonstrate the positive trajectory of SCM over the course of the last several years, and to detail the significant... changes that are about to take place in the near future. Coming back from my junior year internship, I sought to utilize the newly acquired knowledge that I had obtained to teach our SCM members elements of being a successful analyst. The fall semester of 2017 was marked by an emphasis on several of the most important tools in the security analysts toolkit, namely techniques such as Porters 5 Forces & Value Chain Analysis to contextualize the operating environment for a given firm or group of firms. Students at the 5Cs are particularly well-equipped to perform this holistic analysis given their liberal arts backgrounds. Furthermore, our members delved into the study of companies KPIs (Key Performance Indicators) to figure out what drives their financial results. Following the fall semesters focus on high-level company and industry analysis, we began the spring semester by going granular single firm operating models. Over the span of approximately two months, our members learned the entire process of model construction; beginning with industry and firm analysis, then KPI estimation, to inputting historical financials to identify important trends, formulating various scenario analyses, linking the assumptions to the operating model, comparing model outputs to consensus to determine source and magnitude of variance, and finally valuation exercises (both idiosyncratic and versus peers). Building upon operating models, we decided to reverse the process through a strategy known as Expectations Investing. Whereas most analysts spend their time building models of various complexity and pushing their assumptions into the future, expectation-style investors play a very ...Read More