Just a few days before graduation, Michele Panzeri (MBA ’13) leveraged an investment idea into a chance to showcase his talent in front of legendary hedge fund managers at a world-renowned conference in New York.
Pazeri was chosen to attend the Ira Sohn Conference – the premier investment forum that brings together the world’s savviest investors to share fresh insights and strategies – in New York. He was one of just four finalists for the Ira Sohn Investment Idea Contest
based on his buy recommendation on Staples. Judges select semifinalists, finalists and a winner, who presents his or her investment idea at the conference which, since 1996, has brought together investors to share their expertise with an audience of more than 3,000 portfolio managers, asset allocators and private investors. The annual event benefits pediatric cancer research and treatment.
Panzeri, now a research associate at Manning & Napier, was a finalist, and Grier Buchanan (MBA ’13) was as a semi-finalist, and they were invited to attend the conference. Both took Applied Investment Management (AIM), a year-long course in which students manage a fund of approximately $2 million.
“We are proud of Mik and Grier, and excited to have two students in the top 12, and one in the final four of this prestigious competition,” said finance professor Chip Snively
“UNC Kenan-Flagler is doing an excellent job of training and developing
our students to prepare them for demanding careers in investment management,” Snively said. “From the curriculum to the many applied opportunities – AIM funds, Real Estate funds, Private Equity – and our annual Alpha Challenge competition, students have extraordinary opportunities to learn and practice for this profession.”
“Our students compete successfully with the best and the brightest in programs around the country and around the world. I’m not just saying that – they are proving it.”
Panzeri chose UNC Kenan-Flagler for “its strong investment tradition and alumni network. At UNC, I focused on becoming a better investor and consequently ended up representing the school in the final rounds of two prestigious MBA stock pitch competitions: the Cornell Stock Pitch Competition and the Alpha Challenge.”
He was the financials and healthcare sector analyst for the Global Prospective Fund, a $2 million fund run by UNC Kenan-Flagler students.
“I thought the Sohn competition was an extraordinary opportunity to get exposure and potentially introduce myself to these legendary investors that I respect and look up to,” said Panzeri. “I submitted my buy recommendation on Staples, which was my best idea at the time and a stock I had researched extensively.”
“My investment thesis on Staples was a simple one. Although Staples has been in business for decades, the market did not fully understand the stock. Investors hated Staples because of competition from Amazon, anemic demand for core office supplies and weakness in international markets. However, I was convinced that these threats, although real, were vastly overstated by the market. At $13 a share, the market cap of Staples only reflected the value of the commercial business, which is the ‘gem’ of the company. Essentially, investors were getting the retail and online and international business almost for free.”
In addition to his analysis, Panzeri conducted primary research and channel checks. He talked with sales people at Staples stores in New York and Chapel Hill, and conducted a survey of 50 small U.S. businesses. “Those findings confirmed my investment thesis that investors were overly bearish on Staples,” he said.
Four days after he submitted his report, his was selected as one of four finalists. Two days later, he arrived at the Ira Sohn Conference at the Lincoln Center in New York. He convened in the “green room” together with the other three finalists. “As soon as I arrived, I was introduced to Kyle Bass, the founder of Hayman Capital Management. We talked stocks for a couple of minutes before he went on stage.”
He also met David Stemerman, Conatus Capital founder. “I asked him about his long position in Intuitive Surgical (ISRG), a stock I was short in my personal account. I offered to provide him with my contrarian view on the stock, but so far I haven’t heard back from him.” ISRG is a stock that Panzeri pitched as a short at the 2012 Alpha Challenge and AIM Class; it is down 30 percent since it reported earnings this month.
In late afternoon Greenblatt announced the contest winner.
“Unfortunately it wasn’t me,” said Panzeri. “I was really looking forward to present my pitch so naturally I was a little disappointed. However, in the end, I came away happy knowing that if Michael Price, Bill Ackman, Seth Klarman, David Einhorn and Joel Greenblatt – the Idea Contest judges – liked my idea, then I did a pretty good job.”