UNIVERSITY OF DELAWARE
Department of Finance
FINC 854: Seminar on the World’s Wealthiest Shareholders
Instructor: Professor Raj Varma
E-Mail: [email protected]
(The best way to reach me is via e-mail; when you do so write this course number
ie. FINC 854 in the subject line)
Web: www.udel.edu/Finance/varma (Note that the web address is case-sensitive)
Course Description and Objectives
In this course we will conduct in-depth investigations of the activities of the world’s wealthiest
shareholders such as Warren Buffett, Carl Icahn and Donald Trump with the goal of getting a
better understanding of exactly what they do to amass such considerable amounts of wealth.
Specifically, we will uncover material related to the following topics:
• Characteristics of the investment programs of the world’s wealthiest investors,
including attributes such as the duration of their investment programs and the tactics used
for engendering changes at investment companies.
• Analysis of the changes in investment companies evoked by the activities of the
world’s wealthiest investors using accounting, finance and other approaches to the
examination of changes.
• Rewards from pursuing the activities of the world’s wealthiest investors, arising
primarily from shared benefits wherein the large shareholder gains, as do the small
shareholders of the firm.
• Risks from pursuing the activities of the world’s wealthiest investors, arising from a
variety of factors including private benefits for the large shareholder when block
ownerships are used by large shareholders to secure a variety of benefits to the exclusion
of small shareholders.
Throughout the course, our understanding of the material covered will be complemented
by the cases-in-point in class handouts.
I will assign each student several of the world’s largest shareholders and the companies targeted
by these shareholders. Each student, using a variety of analytical techniques, will conduct an
independent inquiry of these shareholders. Subsequently, each student will prepare a written
reports containing information on the background of the assigned shareholders, and a detailed
analysis of each assigned company targeted by the large shareholder.
The background section of the large shareholder should discuss issues such as the relevant
experience and expertise of the investor, the tactics used by the investor to pursue their
investment program, sources of funds to pursue the active investment program, motivation for
the pursuit of the investment program, personal loss if the value of the investment declines,
evidence on past performance in pursuit of investment program, opportunities for self-dealing
and evidence on these opportunities.
The analysis section should describe the effect of the large shareholder on the firm for each
targeted firm that the student has been assigned. The analysis must be descriptive and
evaluative. Each analysis should contain a discussion of the events in the investment program,
an examination of the changes in the stock-prices, accounting performance, and other structures
of the targeted firm, and a short conclusion.
Please plan on spending at least the same amount of time as you would on another three-credit
class. Also note that the class requires a considerable amount of individual work; so please make
sure there is a good fit between what you are looking out for and what the class offers.
How Buffett Does It by James Pardoe (McGraw Hill, ISBN 0-07-144912-4) is the optional text I
recommend for the class. Also, I will provide you with extensive handouts in class to assist you
with conducting your investigation.
Final Reports 100%
(Please see the section on final reports guidelines below for more information on these reports)
Requests for changes in the course grade must be made within one month from the date of the
last class for this course.
COURSE SCHEDULE-FINC 854 –Summer 2020
Wednesday, June 3 or so:
E-mail sent to all students registered in the class with attachments for the syllabus and an overview class
note on the world’s wealthiest shareholders.
Students should read the overview note on your own. Key information to get from the overview class
note is that in this class we will be looking at a sector of the world’s wealthiest shareholders who amassed
such large sums of wealth by being active investors (ie investors who used the clout that comes with large
shareholdings to bring about change in a targeted company). Three tactics have been used for bringing
about these changes: hostile, friendly and negotiated tactics. Students in this class will be assigned a case
for each of these tactics and will write a report on each of these cases.
Monday, June 8 or so: Students will be provided via e-mail a handout on the CalPERS versus Whirlpool case and also a link to a narrated power point presentation on this case. Students should over this material carefully as it will provide them with a template that can be used for each of the 3 cases that will be assigned to students. Each report the student writes will contain background information on the active investor and an analysis of the case. See relevant portions of the syllabus for more information. Most of the information needed for the analysis can be retrieved from my website. I will provide you with a handout an how to retrieve proxy statements needed for the analysis.
Friday, June 12 or so: Students will be provided with word copies of the 3 cases to be analyzed for this course. Please note that the files for these cases can be viewed but not downloaded. I will also provide you with the password for accessing excel files that students will need to retrieve data from my website (See syllabus for the web address).
Wednesday, June 3 to Monday, July 6: Students should feel free to ask me short questions on their cases or other class-relevant material via email. Students can ask me as many questions as they like or none at all. Please do not send me a complete or nearly-complete report and ask me to comment on it. Last day to ask me questions on your projects is Monday, July 6. Please note that this is an asynchronous online class; we will not be using zoom to communicate the way many of you were being instructed during the Spring 2020 semester.
Thursday, July 9 to noon Friday, July 10. Word copies of the 3 reports as due to me. Send these reports to me as e-mail attachments. Start sending me these reports any time on July 9 (not earlier) and no later than noon, July 10. Also the Certification of Integrity is due with the reports.
Guidelines for the Final Reports for FINC 854 (Final reports are due by the date indicated in the syllabus) • For the final report on each case, please include all of the seven sections described in the CalPERS vs. Whirlpool handout. Feel free to use your creativity with regard to how you present the material within each section. For example, you may prefer to use charts & graphs rather than tables to present your findings. • Also, include a separate bibliography for the material, if any, used in the analysis of each assigned company and investor. The bibliography should not include the articles I gave you for your assigned company or the active investor. If no additional articles were used in your analysis, you do not need to include a bibliography. Use any format you wish for the bibliography.
Please do not include the bibliography in the page count of each report.• The final report for each case should be at least 15 pages inclusive of the background section, the company analysis, and all exhibits/tables. So, for the 3 cases I will assign, the total number of pages for the final reports should be at least 45 pages. • Feel free to use single or double spacing and any font you wish but make sure that the approximate word count on each page is 250 words per page.
I do understand that this word count may not be possible for pages with tables and figures. If the report for each case is over 15 pages, that is fine. • The section on the background of the investor must be at least 3 pages long and no more than 4 pages. • Please do not include any exhibit used to calculate buy-and-hold or cumulative abnormal returns in your final reports as this could run into numerous pages. It is ok, however, to include a small portion (no more than half a page) of this exhibit in your written reports. • Please make sure you submit the Certification of Academic Integrity sheet that appears on the next page with your final reports (not before). Failure to sign and attach this sheet to the final reports will result in a one-letter grade reduction on the course, and may raise questions about the academic integrity of your final reports.
Certification of Academic Integrity: I certify that my work is solely my own, and I have not violated academic integrity guidelines in any manner. Academic integrity includes a commitment to not engage in acts of falsification, misrepresentation or deception. Such acts of dishonesty include plagiarizing, submitting another person’s work as one’s own, using Internet or other sources without citation, fabricating data or citations, ‘facilitating other students’ acts of academic dishonesty, using the reports you write for this class to gain credit for another class, etc. The University’s statement on academic integrity is available at: http://www.udel.edu/studentconduct/ai.html#stustrat IF IT IS DETERMINED THAT MY WORK HAS VIOLATED ACADEMIC INTEGRITY GUIDELINES, I UNDERSTAND THAT I WILL AUTOMATICALLY RECEIVE AN “F” ON THIS CLASS. Print Name: ______________________________________________________ Signature: ________________________________________________________ Please attach this sheet, with your name and signature, to your final reports for this course. Failure to sign and attach this sheet to the final reports will result in a one-letter grade reduction on the course, and may raise questions about the academic integrity of yourfinal report.