Student team wins USC Stock Pitch Competition

Our WashU team placed first at the USC Stock Pitch Competition, a national stock pitch competition hosted by the USC Value Investing Group from March 31st to April 1st, winning $1,000. We pitched a short on 2U, Inc. (NASDAQ: TWOU), an online program manager (OPM) that partners with universities to create the online equivalents of their on-campus degree programs. Our investment thesis was that investors were overlooking the impact of increased competition and overestimating the quality of the company’s business model.

While the company has grown revenue considerably over the past several years, we believed that this increase in revenue did not translate into meaningful economic value creation, and that the company was likely to disappoint on analysts’ overly-optimistic revenue estimates going forward.

As part of our preparation, we spent close to a month conducting extensive primary research. We held discussions with former employees of OPMs, market research analysts, and 2U customers in order to inform our view of the business and the industry.

The competition began in February, when teams submitted a two-page investment summary. From these submissions, of which a record number were received this year, 23 teams were invited to the competition held at USC. There, teams were divided into groups, with the top team from each group advancing to the final round.

In the final round, teams presented their investment thesis to final round judges in a 12-minute presentation, followed by a 10-minute Q&A. The competition was judged by investment professionals from Oaktree, Capital Group, Solstein Capital, Deep Field Asset Management, and TCW.

We competed against universities from the United States and Canada, including teams from UC Berkeley Haas, NYU Stern, UT Austin McCombs, Notre Dame, USC and the University of British Columbia, among others. The competition also included networking events and a career panel.

Guest Blogger: Christopher Campbell, BSBA’17