Rotman School of Management, University of Toronto

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Life at Rotman

As a Rotman MBA student, you will be challenged every day to push yourself and build a network of friends for life. Learn what makes Rotman such a dynamic place to study, have fun, and transform yourself.

As part of the Rotman Full-Time MBA class, you will find yourself challenged and motivated to excel by the caliber of your classmates — peers who will become your lifetime network of friends and business contacts.  We seek to admit candidates who have demonstrated excellence, be it in school or work, have been exposed to other cultures, and who do interesting things in their personal and professional lives. The result? An incredibly dynamic class full of uniquely talented and accomplished individuals.

By being admitted to the Rotman MBA program, you will surround yourself with peers like yourself, who have a winning track record and stories to tell.

“Over the next two years, I plan to collaborate with my classmates to have a positive social impact on the Rotman community and beyond.”

- Nicola Deery, Rotman MBA student from Dublin Ireland, in an interview for Poets and Quants

Student life begins at Rotman with an Orientation event hosted by Rotman faculty. You'll learn about Rotman, meet your classmates, and get to know what you should expect from your MBA experience. Right after this comes Orientation Camp, a weekend-long retreat to a private camp north of the city. This long-standing Rotman tradition is considered by many to be an early highlight of their time in the program.

The best part of student life at Rotman – and this is even true even before classes begin – is that it’s largely led and organized by Rotman MBAs themselves. Whether you are organizing an international case competition or pitching a fundraiser to a potential donor, there is no better way to build your real-life leadership skills than by getting involved in our student clubs. 

The Graduate Business Council (GBC) is the recognized governing student body for MBA programs at the Rotman School. By joining the GBC, you'll become part of a select group of students who are passionate about creating a strong and energized Rotman community, and who work hard to bring about activities and initiatives that enhance the Rotman MBA experience.

“There is a strong feeling of camaraderie among my peers, a sense of ‘we're all in this together.’”

- Stephanie Erb, MBA 

Helping build a supportive environment for students, the staff at the Program Services Office (PSO) and Career Centre (CC) pride themselves on friendly and approachable service. You will have their full support for any questions or concerns you have about your academic or career path. And since pursuing an MBA can be a big decision for both you and your family, the School also offers support for spouses, partners, and significant others of our MBA students. If you are an international student, we offer many programs, services, and social clubs to help you find your place in your new home.

You also have the opportunity to meet some of the top people working in business today. For example, Professor Eric Kirzner takes his second year Value Investing class to San Diego to meet senior executives at two leading investment firms. Here are some student stories from that experience.

Diary of Vicky Fan (MBA) following Value Investing class trip to San Diego

My colleagues and I were looking for a deeper understanding of value investing concepts when we went on a class field trip to San Diego to meet with the two great companies in the industry --- Brandes Investment Partners and Research Affiliates. We had some questions in mind: How does value investing apply to the real world of business? Can firms with a strong focus on value investing principles sustain growth in today’s volatile environment?

On a beautiful morning, February 6th, 2014, our first meeting was with Brandes Investment at their headquarters. It was truly our honor and pleasure to meet the CEO and the senior management team of the firm. The 5 hour meeting was incredibly inspiring, informative, and well structured. Each of us was given a copy of the book –“Value Investing Today” written and signed by Mr. Charles Brandes, the founder and the chairman of the firm.

In his opening speech, Mr. Brandes pointed out that in the current economic environment, many things are different, but fundamentals do not change. Since the financial crisis, many investors have lived with fears and a highly volatile market. They often buy high and sell low. But the right thing to do is to think long term and stick to the sound principles of value investing. Mr. Brandes showed us a series of charts and data to demonstrate that value investing has outperformed other investment tools over the long-term. The underlying driver of its success is value investing’s focus on how to create wealth instead of focusing exclusively on how stock markets will perform over the short-term. It is really this long-term perspective that gives value investors a key advantage. Even in the market downturn, the decline of stock prices is sometimes a sign for a better opportunity to invest. Value investing can give investors more confidence and more peace of mind compared to short term investment strategies.

The emerging market presentation was given by Mr. Gerardo Zamorano, the director of Brandes Investments. Brandes has built a diversified global portfolio covering many regional markets around the world. What attracted Brandes to invest in emerging markets are the high GDP growth and the relatively low valuation in those markets. In Brandes’ emerging market portfolio, there are more consumption related investments than energy or financial related stocks, which indicated that the main source of opportunities are coming from the strong demand by the rising middle class for consumer goods in emerging markets. As one of the value investing principles is to find the deeply undervalued stocks, the attractive valuation in emerging markets may indicate how we can better identify our investments and diversify our portfolio.

The next presentation was about Complexity of the Institutional Sales Cycle given by Mr. Grant Duncan, the director of Brandes Institutional Group. Mr. Duncan has extensive experience in the institutional sales role. I was impressed by his presentation and communication skills. He demonstrated how to give a dynamic presentation with his clear, concise, confident, and interactive delivery.

 As MBA candidates, some of us will probably work as investment analysts after graduation. At Brandes, we had the heard from two senior analysts, Mr. Jeffrey Germain and Mr. Chris Duncan. They both have 12 years of investment experience and they shared their in-depth knowledge about the oil and gas industry and the opportunities in the European market.  It was interesting to note that Brandes did not have any oil holdings between early 2006 and the end of 2009 when the financial crisis devastated the market. After 2009, the company added Eni, Total, along with other oil and gas companies to the portfolio, and generated high returns. To achieve this, I believe their research team must have done a great job in forecasting significant market events and stock performance.

The next presentation was from Mr. Brent Fredberg regarding Finding Value in the U.S., where he highlighted the importance of stock picking skills in valuing U.S. companies. He initiated an interesting discussion about the rationale of holding Microsoft. He told us that the market viewed Microsoft as a big, slow and bureaucratic company. If so, why would Brandes still own it? Here we got another chance to understand the importance of fundamentals in value investing. It is the cash generating power, the distinguished competitive advantage in the software industry and the growing business outlook that made Brandes believe that Microsoft is a good investment. This was a great example which illustrated that we can certainly have a different view of the market and if we can dig into the fundamentals of a company, we might be able to find its true value and identify a good investment.

In addition, there was an enlightening presentation by Ms. Mary T. Singh regarding Brandes fixed income investments. The presentation started with a question: Can you find some corporate bonds that are really mispriced? She showed us a great example – a JP Morgan perpetual BBB bond that did not grab a lot of attention but was actually significantly mispriced.  Another example was the mispricing of BP corporate bonds after the BP oil spill crisis. Brandes bought the BP corporate bond when the bond price declined by more than 20% and the trade generated impressive returns after the bond price bounced back. Ms. Singh pointed out that no matter how many fears there were in the market, they believed that BP would not go bankrupt. And by buying corporate bonds, they were able to get coupon payments which added more value to the investment.

The final presentation was made by Mr. Robert Schimidt. He shared with us his interesting findings on the human brain and behavioral finance. He provided insights on why value stocks can outperform glamour stocks. People can be overtaken by their feelings and biases and make irrational decisions about valuation. If we understand value creation better, we will be in a better position to find great investment opportunities and not succumb to superficialities.  One of the take-aways for me was that investing is never simple. We need to dive into this world with an open mind and apply our integrative thinking skills.

After the terrific meeting with the Brandes Investment group, we headed to Research Affiliates to meet with the founder and CEO of the company – Mr. Rob Arnott and the Head of Equity Research – Mr. Vitali Kalesnik. Their company has created fundamental indexing which tries to capture the value premiums of stocks.  The empirical study they presented showed that deeper discount and dynamic value exposure leads to higher returns and when there are bubbles in the market, it will eventually burst. As they explained, it is crucial for investors to understand the dynamic nature of value premiums and to identify when mispricing happens and to what degree. I was also impressed by Mr. Arnott’s comments on how to view your counterpart on the other side of the trade. The counterparty holds an opposite view about the investment. Are we sure that our decisions are better than theirs? Are we better informed? Are we more knowledgeable? Or does our investing strategy work better? These are great questions to consider and I am going to give them some more thought.

Our field trip in San Diego was inspiring, enjoyable and memorable. Many thanks to professor Eric Kirzner, Ms. Kathleen Coulson, Ms. Molly Yeomans, our TA Jeff Nagashima and the trip planning team for bringing us this wonderful learning experience! 

Diary of Ya Hong Sung following a Value Investing class trip to San Diego

Feeling the ocean breeze of southern California, we walked into the office of Brandes Investment Partners at 8:00am on Thursday February 6th/2014. Mr. Robert Schmidt welcomed us and led us to the “Graham Conference Room” named after the founder of Value Investing, Benjamin Graham.

Charles Brandes, the founder and Chairman of Brandes Investment Partners, started the presentation by recalling his personal relationship with Benjamin Graham and showed us the congratulatory letter Mr. Graham sent to him to celebrate the inception of Brandes Investment Partners in 1974.

What impressed me most was that he and his team persisted in practicing the value investing philosophies for more than 30 years. He remarked in his book that “achieving better-than-average returns depends upon thinking and acting differently than the average market participant”. To me, to think and act differently not only requires profound knowledge and diligent work but also the courage to appear “foolish” at least over the short-term. It requires “better-than-average” discipline and resolution.

After taking photos with Charles Brandes, the Brandes investment team presented their investment strategies and assets allocation over the world and across sectors. Mr. Gerardo Zamorano discussed opportunities and challenges facing emerging markets, such as political unrest, fears over the Federal Reserve tapering, currency devaluation and China’s credit and commodity demand dynamics.

Mr. Jeffery Germain and Mr. Chris Duncan provided insight into the attractive investment opportunities in Europe despite the recent market rally. The European equities appeared very attractive in terms of reasonable P/E multiples on possible depressed earnings, discount to book value and healthy dividend payouts. I was impressed by the thorough analysis of European market and valuation characteristics comparison of MSCI Europe to history.

Mr. Brent Fredberg elaborated about how they selected stocks at a time when the whole of the U.S. stock market was no longer undervalued. And Ms. Mary T. Singh brought a new perspective of implementing value investing as applied to corporate bonds, siting the case of British Petroleum.

Last, but not least, was Mr. Robert Schmidt’s investment psychology test to distinguish shades of gray. The cognition defect was prominent in this case because the same gray looked totally different under different circumstances. The inspiring test showed the gap between the perception and the truth and made me reflect how to strike a balance between intuitive thinking and rational judgment. Then he drew a dot and a circle on white paper, which represented the things we know, the things we could influence and the rest being the unknown. It made me think deeply about how we should deal with the relationship between our perceptions and the real world. It revealed a simple but hard-to-practice rule: to know yourself.

Around 2pm, we left Brandes Investment Partners and headed for Research Affiliates, LLC, a global leader in smart beta and asset allocation strategies. As of December 31, 2013, about $166 billion in assets are managed worldwide using investment strategies developed by Research Affiliates.

Mr. Vitali Kalesnik, the VP of Equity Research, elaborated on the method of composing the FTSE RAFI Index Series using value investing principles. In particular, the RAFI index solves the current index problem of overweighting stocks disproportionally from their economic value. Using a four value factors model, which separates the connection between price and weight, the RAFI adds approximately 2% to total returns above traditional index returns.  This gave us a whole new way of thinking about how to add value to customers by smartly improving an index.

The discussion with Mr. Rob Arnott was insightful. His questions such as “consider who your counterparts are and why they have different views from you” reminded me of game theory.

The two companies we visited had presented two different thinking models. I was thrilled to see the real world evolvement of value investing theory and to discuss with and learn from experienced practitioners.

This fruitful day ended with a trip along the pacific coast-line and a tasty dinner in a cozy restaurant with partners and managers of Brandes investment. What an amazing day! I would like to give my heart-felt thanks to Professor Mr. Kirzner for giving us such a precious opportunity to touch the real world of asset management. Special thanks to organizers, Ms. Kathleen Coulson and TA Jeff Nagashima, for your organizational support and patience!

Diary of Ameet Rawtani (MBA) following a Value Investing class trip to San Diego

As someone who believes in the value of financial history, as advocated by Ben Graham in Security Analysis, I found the opportunity to hear Charles Brandes most refreshing. Rather than listen to a wet behind the ears hedge fund manager, I would enjoy the thoughts of someone who started investing in 1974, when the Dow around 600 and Buffett was quoted in Forbes as feeling “[l]ike an oversexed guy in a harem” about all the bargains on the market. Never turn down the opportunity to learn something vicariously rather than through bitter experience.

And Charles Brandes did not disappoint. When he made a point about how the “old, fishy approaches emerge, under new wrappings,” I was astounded that I had not made the connection myself between old, discredited approaches like market timing, and their reincarnation as “Risk On, Risk Off”.

As to why the old approaches keep on emerging, I believe the answer lies in our dislike of downward volatility paired with our need to change courses should something seem to not work in the short term. Perhaps because we dislike volatility so much, we have equated risk with volatility. As a result, regardless of whether we are sophisticated or naive, we try to structure our market operations to avoid, or at least minimize volatility. We sell when momentum is going against us. We buy, often too late, when the quotation is finally increasing in value. We try, and end up failing, to time the market.

However, for someone willing to learn vicariously rather than through bitter experience, there are better ways to structure one’s investment operations, if truly seeking long-term absolute performance.

First, as Brandes and any value investor would say, remember that volatility is not risk, but rather a potential opportunity. After all, since in summer you know winter is coming, why not look at the discount rack for some cheap winter clothes?  Similarly, when deepwater drillers like Ensco were pummeled when the Deepwater Horizon crisis hit, one could have done the research to venture that 1) oil demand would be sufficient for deepwater drilling to be needed; 2) the US government would not have an endless moratorium on deepwater drilling in the Gulf; 3) other markets were available for deepwater drilling needs; and 4) given that all companies were pummeled by the crisis, but only Transocean, BP and Halliburton faced unknown legal liabilities, the rest were the baby thrown out with the bathwater and hence respectable investment candidates.

And this brings us to two of Brandes’s points: think like the owner of the business; and have a long term perspective, as this is your key advantage. In the example above, as an owner, we could have asked if the market opportunities were permanently impaired for Ensco. Then we could have asked what the value of our fleet was, for if prospects were permanently impaired, so would the value of our fleet. Happily, if we judged little long term impairment of market opportunities, we could buy our fleet back at half off, as the market quotation for Ensco at the time was half the value of our fleet of drillships. All we had to do was think like an owner and ask if business was impaired over the medium and long term; and then answering that in the negative, we just had to sit back and be patient. Ensco, by the way, traded around $35-7 during the beginning days of the Deepwater Horizon crisis, a fall from $52. The market quotation was back at $52 by the beginning of 2011.

Finally, we must redefine risk. To Brandes and many value investors, risk is the probability of permanent capital loss. The only practical way to reduce such risk, short of buying a crystal ball that actually works, is to not overpay for the company or asset you are buying. In short, demand a margin of safety.

Such is Brandes’s philosophy.

To conclude, I hope you, like I, were reminded that risk is not volatility; and that prudent investment operations are structured to act like an owner, take advantage of volatility, retain a long term perspective, and avoid overpaying for one’s purchases. Finally, history seems to repeat itself in markets because of our desire to avoid volatility. Perhaps that was the best lesson I took away: that through knowledge acquired vicariously, one will not be burned by the latest fads.

Diary of James Laureys following Value Investing class trip to San Diego

“Index funds are anti-capitalist”. This was the opening remark by Charles Brandes at a value investing conference in San Diego. The conference was organized for students at the Rotman School of Management who are studying value investing. For those unfamiliar with Charles Brandes, he is a billionaire investor and founder of Brandes Investment Partners. He was also an acquaintance of Benjamin Graham, the father of value investing. Charles opened the conference with some remarks on Brandes Investment Partners and his value investing principles. He was open, honest, and passionate about the economic and social merits of value investing. Charles explained his anti-capitalist comment with the following argument that I have paraphrased.

 If it is the role of a capitalist to allocate capital to firms with the best business prospects, then a capitalist should not invest in an index fund since the goal the fund is to spread capital and risk across many companies, with varying business prospects.

The conference also included a presentation from Robert Arnott. Robert Arnott is the founder and CEO of Research Affiliates. In direct contrast to Charles Brandes, Robert Arnott talked about the merits of index funds. In particular, he talked about the RAFI Fundamental Index Fund. This particular fund belonged to a category of funds called “smart beta”. Smart beta funds are rules-based and use weighting factors other than market capitalization to weight the stocks in the portfolio. The trick is to find factors that are indicative of a company’s size but that are uncorrelated to price (i.e. sales). By doing this, the RAFI Fundamental Index Fund has outperformed the S&P 500 by 2% on average. Robert also pointed out that a portfolio constructed by monkeys throwing darts at a dartboard will also outperform the S&P 500 by 2% on average. The difference is that the RAFI Fundamental Index Fund has a much lower turnover and hence much lower cost. In a telling moment, a student from Rotman asked Robert if he invested his personal capital in the RAFI Fundamental Index Fund. His answer in short was “not currently”. His argument was that markets were fully valued and approaching “bubble” territory; such conditions are not ideal for a diversified index fund.

So who is right, Charles or Robert? Are index funds anti-capitalist or do they provide superior risk weighted returns at a low cost? I think it depends on your investment knowledge and the state of the market. Index funds are well suited for individuals with a modest amount of capital and a limited amount of time to dedicate to investment decisions. However, for the sophisticated investor with serious capital and resources, perhaps Charles was right, maybe index funds are anti-capitalist.


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