FMA Magazine 2021 - 2023

About the Auburn Student
Investment Fund
The Auburn Student Investment Fund
(“ASIF”) was founded in the fall of 2017
with the purpose of providing ambitious,
intellectually curious undergraduate
students with a deeper understanding
of financial markets through real
world security analysis and portfolio
management. The Fund focuses on
delivering hands-on, practical experience
in valuation techniques, equity research,
and risk management.
The Fund’s portfolio consists of single
equities, fixed income investments, and
alternatives selected by students with
advisor oversight. Members develop
investment theses by conducting research
and constructing financial models,
resulting in the formulation of investment
recommendations.
Investment Philosophy
Beyond our primary goal of student
education, the Fund secondarily aims for
satisfactory returns against the benchmark
of the S&P 500 Value Index, in order to
ensure the continued life of the Fund.
When selecting positions, the Fund looks
to purchase exceptional investments while
mitigating risk. Thus, pitch criteria include
finding investments that contain exposure
to large and growing markets, the ability to
provide value to its surrounding ecosystem
and customers, a competitive edge against
comparables, sustainable profitability, a
strong balance sheet, and attractive cash
flow generation.
The Fund is value-oriented, as it looks
to purchase undervalued investments
that demonstrate potential for steady
appreciation and resilience in various
market conditions.
Fund Structure
The Fund is comprised of eight sectors:
Consumer Staples (CS)
Energy & Defense (E&D)
Real Estate (RE)
Healthcare (HC)
Consumer Discretionary (CD)
2023 Investment Highlights*
Pitch Expectations
Industrials & Utilities (I&U)
Financial Institutions (FIG)
Technology, Media, & Telecom
(TMT)
Note: ASIF has also made investments in Materials, but does not
have a dedicated Materials sector.
Our Investment Process
Our Investment Process
Equity Selection:
Sector discusses
potential investments
and selects a single
equity to propose to
Exec team
Monitoring:
Exec continues to
monitor investment
while sector updates
model and Fund until
position exit
Pitch Approval:
Sector requests to
pitch with brief
explanation of thesis.
Exec approves or
denies
Voting:
ASIF Exec and advisor
discuss and vote on
investment, and if
approved, execute the
transaction.
59.1% Return 40.1% Return
Each sector is responsible for two comprehensive pitches per
After a net loss in 2022, it achieved $134.4 FY23 cloud revenue surpassed $110 billion,
semester, billion in revenue, including $7.7 billion an in investment operating thesis up 27%, and with Azure valuation accounting via for more
discounted
income, and $6.8
cash
billion
flow
in net
or
income
dividend
in
discount
than 50% of
model
the total
in
for
addition
the first time
to
FY23 Q2, indicating a turnaround in its retail Poised to benefit from AI monetization
public margins comparables. and AWS revenue growth. Due diligence for through pitches Azure integration includes and but Copilot is not
limited to:
31.5% Return 13.1% Return
• Analysis of the firm’s business and its industry, including its
Achieved record quarterly revenue of $6.0 FY23 Q3 earnings included record
strategy and the competitive landscape
billion and net income of $2.1 billion in
FY23 Q3, while also seeing 25.9% YoY cash
• flow Analysis growth of the firm’s financial condition Beneficiary including of sustained demand profitability, for farm
Beneficiary
balance
of strategic
sheet,
AI
and
investment
cash
in
flow
a
generation
and construction equipment and
large market with high barriers to entry
*Return • numbers A forecast of 7/31/2023 of (all YTD the returns firm’s except for performance DE, which the Fund bought structured on 4/5/2023 at $380 as per share) pro forma
financial statements with well-articulated assumptions about
Annual key Financial value drivers Report Sensitivity / Page 12 analysis and scenario analysis
• Analysis of the firm’s risk management and ESG
Due Diligence:
Sector completes
macroeconomic,
industry, company,
theses, and valuation
analysis
Pitching:
Sector presents
investment
PowerPoint or writeup
to ASIF Exec and
undergoes Q&A
quarterly gross margin of 35.7%, operating
margin of 19.7%, and net margin of 15.0%
improving supply chains
66 FMA 2021-2023 MAGAZINE