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FIN 397 6-Special Topics in Investment-Hallman

By Bradley Simmons,2014-04-05 04:54
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students both real estate analysis and core investment skills as taught in dishonesty are described in detail in the Policy Statement on Scholastic

    DEPARTMENT OF FINANCE

    MCCOMBS SCHOOL OF BUSINESS

    UNIVERSITY OF TEXAS AT AUSTIN

    FIN 397.6 Special Topics in Investments: REIT fund

    Spring 2008

    Tuesday & Thursday 2:00-3:30, CBA 4.332, unique #03260

Professor: Greg Hallman (with guest lectures by Sheridan Titman)

    CBA 5.176A, Greg.Hallman@mccombs.utexas.edu

    Class website: Blackboard

    Office Hours: most Tuesdays & Thursdays 3:30-4:30

Course Description

This course is designed to train the fund managers of the McCombs REIT fund. The

    ultimate goal of the class is to train REIT fund managers in both the analysis of REIT

    stocks and in the construction of a REIT fund designed to outperform the unmanaged

    NAREIT index of equity REIT stocks. REITs are a unique combination of real estate

    assets and financial securities, and provide a very good opportunity for student fund

    managers to gain analytical skills in core real estate valuation and analysis, security

    analysis, and portfolio construction. The course is designed to teach students both real

    estate analysis and core investment skills as taught in both FIN 367 (undergraduate

    investments) and FIN 397.1 (MBA investments).

We start the course with a handful of lectures covering basic urban economics and real

    estate analysis and valuation skills. Students apply the early core real estate concepts

    through completing the Harvard Business School case “Angus Cartwright III”.

    Following the core real estate section of the course we will cover portfolio theory with

    the same lectures and portfolio theory problem set that I use in the MBA investments

    course 397.1. The portfolio theory section of this REIT fund class goes a step beyond the

    traditional investment courses through a lecture by Sheridan Titman on a “pairs trading”

    methodology used by professional money managers when managing against an index.

    The “pairs trading” strategy used by the McCombs REIT fund is an important portfolio

    management tool that the REIT fund managers learn through both lecture and practice in

    managing the portfolio. Following the portfolio theory section of the class we will move

    into the study of the REIT industry with presentation by the new fund managers on the

    various sectors of the REIT universe we will be analyzing, including presentation by

    students on the office REIT sector, the retail REIT sector, the multi-family REIT sector,

    and the industrial REIT sector.

In the second half of the course student managers will concentrate their efforts on

    analyzing REIT stocks to determine optimal portfolio weights in the McCombs REIT

    portfolio. To that end, the students will be trained in the design and use of the McCombs

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Syllabus, FIN 397.6, REIT fund class, Spring 2008, Hallman

    REIT analysis model. The McCombs REIT analysis model combines core real estate

    analysis and valuation through the calculation of a REITs NAV (net asset value) with traditional security analysis tools such as the dividend discount model and holding-period IRRs. Throughout the second half of the course student managers will work in teams

    consisting of both MBAs and undergrads and will present their analyses to the class for critique and debate to move to a consensus on the portfolio weights for the REITs in the portfolio.

    In addition to the REIT analysis work in the second half of the course, I will also cover fixed income and derivative topics that are traditionally covered in the investment courses, 367 and 397.1. The fixed income topics will include the calculation and understanding of various fixed income yield measures, along with work on duration and convexity

    measures. Derivative coverage will include coverage of both options and futures, and the use of options and futures in hedging portfolio risk. The fixed income and derivative material will be very similar to the material covered in the MBA investments class FIN 397.1.

Course Requirements and Grading

Grades will be based on the student’s performance on one quiz (on Liar’s Poker), two

    tests (the midterm and the final), and two cases/problem sets. The weights on each

    component of the overall course grade are as follows:

     Class Participation ongoing 20%

     Angus Cartwright HBS case Tues, Jan 29 10%

     Portfolio theory problem set Tues, Feb 19 10%

     Fixed income problem set Thurs, Apr 3 10%

    REIT analyses and presentations ongoing 50%

Academic dishonesty will not be tolerated. Your responsibilities with regard to

    scholastic dishonesty are described in detail in the Policy Statement on Scholastic

    Dishonesty for the McCombs School of Business.

Course Materials

The required material for the course will be provided on blackboard through lecture

    slides and readings. For a very good and complete coverage of the traditional investment topics, I suggest the text used in my MBA investments course,

    Investments, Bodie, Kane, and Marcus, Seventh Edition, ? 2008, McGraw-Hill.

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Syllabus, FIN 397.6, REIT fund class, Spring 2008, Hallman

    Course Schedule

meeting DAY DATE TOPIC

1 Tues Jan-15 Intro; meet and greet; go over schedule; talk about the fund structure and methodology

2 Thurs Jan-17 Real estate economics

3 Tues Jan-22 Real estate analysis and valuation

    (assign HBS Angus Cartwright case)

4 Thurs Jan-24 Overview discussion of REITs, review and talk through REIT

    primer(s) and REIT valuation metrics and methods

5 Tues Jan-29 HBS Angus Cartwright

    (case analysis led by MBA REIT fund managers)

6 Thurs Jan-31 McCombs MBA REIT portfolio

    (class led by incumbent MBA REIT fund managers)

7 Tues Feb-5 Portfolio Theory (FIN 397)

8 Thurs Feb-7 Portfolio Theory (FIN 397)

9 Tues Feb-12 Portfolio Theory (FIN 397)

10 Thurs Feb-14 Portfolio Theory (FIN 397)

    11 Tues Feb-19 Pairs Trading and Managing against an Index

    (taught by Sheridan Titman and Stephen Kim)

    12 Thurs Feb-21 REIT Sector Analysis (presentations by new fund managers)

    13 Tues Feb-26 REIT Sector Analysis (presentations by new fund managers)

    14 Thurs Feb-28 REIT Sector Analysis (presentations by new fund managers)

     GLOBAL TRIP WEEK AND SPRING BREAK

    15 Tues Mar-18 McCombs REIT Valuation Model design and methodology

    (class led by incumbent MBA REIT fund managers)

    16 Thurs Mar-20 McCombs REIT Valuation Model example analyses

    (class led by incumbent MBA REIT fund managers)

    17 Tues Mar-25 Fixed Income yield measures and analysis

    18 Thurs Mar-27 Fixed Income duration and convexity

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    Syllabus, FIN 397.6, REIT fund class, Spring 2008, Hallman

    REIT analysis presentations by fund managers

    20 Thurs Apr-3 REIT analysis presentations by fund managers

    21 Tues Apr-8 REIT analysis presentations by fund managers

     19 Tues Apr-1

    22 Thurs Apr-10 REIT analysis presentations by fund managers

23 Tues Apr-15 Futures and Options

    24 Thurs Apr-17 Using Futures and Options to hedge portfolio risk

    25 Tues Apr-22 REIT analysis presentations by fund managers

    26 Thurs Apr-24 REIT analysis presentations by fund managers

    27 Tues Apr-29 REIT analysis presentations by fund managers

    28 Thurs May-1 REIT analysis presentations by fund managers

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