The Second Place Pine Stone Capital Management team presents their GREAT model of stock selection during the Region 1 finals at the Penn Wharton China Center.
The Second Place Pine Stone Capital Management team presents their GREAT model of stock selection during the Region 1 finals at the Penn Wharton China Center.

Teams Show Off Their Strategic Thinking at the First-ever Investment Competition Regional Finals in China

The Penn Wharton China Center (PWCC) inside the World Financial Center in Beijing was a flurry of activity at 9:00 a.m. on Saturday, March 10. In keeping with the mission of the center, which was opened in 2015, it promised to be a day of collaboration, education and research with high school students and educators from all over China who had come to compete in the KWHS Investment Competition Region 1 Finale – the first ever to be held in Beijing.

The 11 finalist teams (Gold Standard from Hong Kong International School could not participate), including The Korean Bulls from South Korea, arrived excited and anxious to deliver their final team strategies to a panel of investment experts, which included Dr. Hua Fan, the head of the Asset Allocation Department at China Investment Corporation, the Chinese Sovereign Wealth Fund; Eric Leng, a Wharton MBA and managing partner at Crescendi Capital Management, a hedge fund based in Beijing; and Yanbing Qiu, the chief investment officer and board secretary at Hetai Life, a Chinese insurance company established in February 2017, with Tencent as the strategic investor.

The KWHS Investment Competition Region 1 finalists were selected from a group of 68 high school teams from around the world that submitted final written investment policies in January. Those final policies were the culmination of 12 weeks of studying and learning investing concepts, developing strategies in teams of four to nine students, placing online trades through Wharton’s OTIS platform, and thinking critically and creatively. While Chinese teams have previously participated in the KWHS investment challenge, which launched in 2012, this was the first year that finalist teams had the opportunity to advance to a China-based regional event.

The student teams competing in Beijing hoped to win top honors and earn the chance to advance to the Global Finale at Wharton Philadelphia on May 4 and 5. For many, it was the culmination of an educational journey that was new in many ways. “When I first came into contact with the game, I knew very little about finance,” admitted Jiaxi “Jessie” Cai, leader of the War Wolves team from Beijing Academy. “But when I heard that each group could be responsible for $100,000 of virtual capital and have 10 weeks of practice on the simulated trading platform, I quickly formed a team. In order to accumulate investment knowledge, we often learned some business knowledge and investment ideas from Knowledge@Wharton High School and gradually, we formed our own investment themes and strategies. After completing the interim report, we realized that what the competition tested was the rationality and effectiveness of the investment strategy, rather than simply looked at the profit and loss of each team’s online operation.”

It was the development and uniqueness of those strategies that ultimately elevated the 12 Region 1 finalist teams and led them to create a compelling message for their big day at PWCC. Those who articulated their strategies and their overall competition experiences the best during their 10-minute team presentations, as well as responded with insight and ease to the judges’ five minutes of questions, emerged victorious.

While many teams impressed the crowd with their analysis and poise on March 10, the judging panel settled on three clear winners. The winning teams received top scores in all areas of judging, including strength and clarity of investment strategy, articulation of strategy and competition experience, understanding of investing concepts, presentation skills, team member participation and creativity.

Earning the first-place trophy was RDFZ ICC from Beijing RDFZ, The High School Affiliated to the Renmin University of China, with an investment approach that was 80% qualitative and 20% quantitative, combining both bottom-up and top-down analysis. They started by studying a company’s business model and competitive landscape and then used the team’s quantitative scoring system that rated stocks in four metrics: quality, value, growth and competitiveness. Judges were impressed by the content of the team’s analysis.

Second place went to Pine Stone Capital Management, also from Beijing RDFZ. The six-member team summarized its GREAT model of stock selection, involving Growth, Reasonable price, Events, Attitude and Theme. Pine Stone’s energetic presentation skills incorporated humor, deep analysis and an especially strong and thoughtful delivery. Team captain Taotao Wang was thrilled for the win: “The Region 1 Finale on March 10 was a great experience for us, for we learned so much from others and had fun during the process. We were glad to present our investment strategy to the wonderful audience and professional judges, who put forward so many thought-provoking questions during the competition.”

War Wolves accepted the third-place trophy for its unique China-only investment strategy, explaining: “The 19th Congress of the Chinese Communist Party recently proposed an all-round plan for China’s future development, and we anticipated that China will continue to maintain a stable and sustainable development for more than 30 years, and China will provide good investment opportunities to global investors. Our investment theme is to invest in China and utilize China’s development opportunities. Therefore, our investment target is set on Chinese companies.” Added team leader Cai following the event: “We have never really thought about entering the top three of this competition before. In fact, the goal of our attending this competition is to enjoy the course of acquiring knowledge, but not to win an award. During the four months of the ‘protracted war,’ we have grasped the company analysis method, the stock method, the correct concept of the value investment and the enhancement of the financial quotient. Without doubt, the teamwork has made undeniable contributions…We hope more and more students could join this competition.”

Other strategy standouts who did not win prizes included the Seoul Global High School’s Korean Bulls, who created an industry analysis format and a stock analysis format to determine the viability of industries and stocks; Shanghai Pinghe Bilingual School’s Golden River Ventures, which compared investment choices to animals like the bull, elephant and leopard to show how they behaved; and BNDS Investment Group (BIG) from Beijing National Day School, which built a strategy that compared to The Art of War, with the right buying point, the right stock and the right portfolio.

As much as the Region 1 KWHS Investment Competition finale event was a day of performing and strategy pitching, it was also steeped in learning. Each judge offered a unique perspective on the day’s financial literacy and the teams’ takeaways. “There were no correct answers to a lot of our questions,” noted Fan, as she offered her congratulations to all the teams. “What we were looking for was your logic of thinking and especially we valued your independent opinion, and hopefully you can do even better in the next competition.”

Added Leng: “I’m a Wharton grad. About one-third of us become investors, either in investment banking or go to investors and present exactly what you did here today. When I got those job offers graduating from Wharton, I couldn’t have put together a presentation like all of you have put together – very, very impressive. I personally encourage you all to apply to Wharton. What you’ve learned gives you foundations for whatever career you choose. No matter what kind of career you choose, financial knowledge will be a very important part.”

Qiu made sure the students knew that when he was in high school he spoke poor English and knew nothing about finance. “Today’s experience was fantastic!” he said. Qiu asked students to consider his “ABCD” life lessons that he has found most valuable during his 16 years in business: “The four biggest words are ambition, big picture, curiosity and discipline – you learn very differently in school compared with what you learn in life. Keep trying to learn new things.”

Diana Drake, managing editor of Knowledge@Wharton High School, noted that it was encouraging to see all the hard work put forth by the Region 1 student teams, especially given the fact that Chinese schools don’t always provide business and finance education as part of the curriculum. The new China-based regional finals, she added, has been a necessary and successful addition to the competition’s global financial-literacy mission.

“It has been exciting to see the evolution of our investment competition, which began in early 2012 as a pilot project with a handful of Philadelphia teams, into a truly global experience,” said Drake, adding that KWHS started the challenge as an extension of its varied business and personal finance online content and experiences for high school students and educators. “The growth is so much more than the fact that we are now reaching thousands of students through the game,” Drake continued. “The inspiration comes in what students do with their new financial knowledge. For many, this is their first exposure to investing and the stock market. Ultimately, the deep learning they encounter both inside and outside the classroom helps to inform their investment strategies. We also witness such impressive teamwork and communication skills, and appreciate the students’ stories about the struggles and triumphs with these types of dynamics. From start to finish, this competition is a testament to the value of engaging, hands-on learning.”

Qui wrapped up the March 10 Region 1 event with these words of advice: “The finals will be very fierce. The teams from India and the U.S. and Europe are very strong in every aspect. You all still have lots of work to do to go to the final stage.” You can bet that the winning Region 1 teams are already preparing for the Global Finale. Pine Stone’s Taotao Wang, for one, has her eye on the prize: “We are all looking forward to going to Philadelphia in May and meeting stronger and more competitive teams around the world.” Stay tuned. #KWHSInvests