Students in USC’s Value Investing Group (VIG) share a passion for investing and investment strategy. In March, members of the group cinched first place in the 2014 Georgetown Stock Pitch Conference.By Laura Paisley
May 9, 2014
“America Runs On Dunkin.’ ”
Anyone who’s ever lived on the East coast is probably acquainted with the Dunkin’ Donuts slogan and their tangerine and hot pink color scheme.
One of Starbuck’s main national competitors, the Massachusetts-based coffee and doughnut company is among the world’s largest chains of its kind, with 15,000 restaurants in 37 countries.
Now Dunkin’ Brands Group is eyeing the Southern California market — and a group of young investment enthusiasts at USC is eyeing them.
Comprised of a dozen multi-disciplinary undergraduates, USC’s Value Investing Group (VIG) has analyzed the value in Dunkin’ Brands Group and sees upside potential. VIG is made up of students primarily from USC Dornsife and the USC Marshall School of Business who share a passion for investing. The group meets weekly and keeps active ties with a growing network of young VIG alumni.
On April 11, USC Dornsife alumnus Arthur Lev met with VIG students while visiting campus with his daughter, who had just been accepted to USC. Lev is managing director and head of Alternative Investment Partners at Morgan Stanley Investment Management in New York City and a member of the USC Dornsife Board of Councilors. He graduated summa cum laude from USC Dornsife in 1983 with a bachelor’s degree in political science before earning a law degree at Harvard University.
During the meeting, VIG members presented their pitch from the 2014 Georgetown Stock Pitch Conference, where they won first place on behalf of USC.
They also presented their Dunkin’ Donuts pitch to Lev, who offered feedback and raised questions for them to consider in their analysis.
“To have Mr. Lev here to meet the whole group was an unforgettable experience,” said sophomore VIG manager Kes Rittenberg, a major at USC Marshall with a minor in East Asian languages and cultures at USC Dornsife.
Ben Diaz, a senior economics major at USC Dornsife who recently won a University Trustees Award at the 33rd annual Academic Honors Convocation, appreciated the opportunity to learn about Lev and his career path.
“As Mr. Lev told us, investing is really all about being interdisciplinary and being able to bring a unique perspective to things,” Diaz said. “I think Mr. Lev epitomizes this fact, coming from Dornsife, getting a law degree and then bridging that into finance and investing.”
Diaz, who will earn his master’s in business taxation at USC Leventhal School of Accounting, plans to pursue law school.
Sophomore Daniel Clancy, a human biology and economics double major at USC Dornsife, also brings a unique perspective to VIG.
“I started out as a chemical biology major, thinking I’d be interested in pharmaceuticals and drug design,” he said. “Then I really began to get interested in economics and understanding businesses, so I added an economics major.”
Since joining VIG in the Spring of his freshman year, Clancy’s plans for the future have shifted. He now wants to work in finance, focusing on bioscience and biotech companies.
“One of the companies Daniel pitched this year was a heart valve company,” Rittenberg recalled. “And with his background in biology, Daniel is the only one that can understand it.”
Clancy noted a divide that often exists between understanding the science and the business at biotech companies.
“When you’re creating drugs, you want to help people and cure diseases, so your mindset is to get as much research and data out there as possible so people can use it and help develop it,” Clancy said. “On the other hand, the business mindset is, ‘don’t tell people our secrets, we need to make a profit on this.’ So I think it’s important to understand the scientific as well as the business motivations, and bridge that gap.”
VIG member Asher Genoot also spoke of the importance of understanding the world from many angles. A double major in business administration at USC Marshall and accounting at USC Leventhal, the sophomore is in the process of swapping accounting for a narrative studies major at USC Dornsife in addition to adding an economics minor.
“It is extremely important for all students, especially those in Marshall, to get a breadth of knowledge aside from core business concepts,” he said. “Whether that is expanding one’s knowledge of the sciences, technology, or any other field, it is important to be continually challenged with new topics and build upon one’s critical thinking skills.”
Genoot, Rittenberg and senior Brentley Campbell of USC Marshall were the VIG students who took home first place in the national 2014 Georgetown Stock Pitch Conference on March 22.
Representing USC among 20 other universities, the team’s pitch was a buy recommendation of Horsehead Holdings (NASDAQ: ZINC), a producer of zinc and related industrial materials.
The VIG team was awarded a $2,000 prize, half of which they will donate to the Dakshana Foundation, a nonprofit run by investment titan Mohnish Pabrai. The foundation’s mission is to provide educational opportunities to low-income but high-potential students in India.
In another endeavor, VIG members on May 3 attended the annual Berkshire Hathaway shareholders meeting in Omaha, Neb. Five VIG members and three VIG alumni stood in line beginning at 2 a.m. to secure the best seats in a stadium that held more than 30,000 attendees. At the event, VIG members received words of wisdom from two investment legends, Warren Buffett and Charlie Munger, who spoke about their experiences and ideas.
So returning to the stock pitch, did VIG think investing in Dunkin’ Brands Group would be a hole in one?
Citing the region’s lack of a familiar one-stop shop for low-priced morning fare, California’s favorable demographics and Dunkin’s highly efficient franchise model, VIG believes that Dunkin’ Brands Group will successfully expand into the West Coast despite strong competition. According to their analysis, (NASDAQ: DNKN) is definitely a stock in which to invest.