L-R: Dylan Adrian, Samuel Chong, Yousif Al Rikabawi, Forres Salekian

 

By Millie Muroi
Beating the market is no easy feat, but a 500-million-dollar portfolio created by four UWA students could do just that.

 

“Every day you got a news headline that changed the entire market,” Yousif Al Rikabawi says.

 

The team, “CASA Capital”, consisting of Yousif Al Rikabawi, Forres Salekian, Samuel Chong, and Dylan Adrian, were recently crowned champions of the Citi Global Markets Challenge: an annual competition that requires teams to construct a global active investment portfolio.

 

“It was especially interesting doing it during this COVID-19 crisis because we had to be really dynamic with our portfolio,” says Sam.

 

“We were changing things every second day.”

 

What is immediately clear from chatting to the group, is how supportive they are; amidst banter, they play down their own strengths, while consistently talking each other up.

 

Asked if there was a leader in the group, they immediately identify Yousif, who gives credit to his team for their various ideas.

 

“Yousif would delegate, and we’d all go off and do our research,” says Dylan.

 

“Sam looked into commodities, I looked at Foreign Exchange, and Forres looked at equities.”

 

The team estimates that they individually spent at least ten hours a day on the competition for an entire month.

 

“We would stay at uni until 1am or 2am”, says Dylan. “Yousif once stayed up until around 6am.”

 

So how did they allocate their portfolio?

 

“A lot of our trades were driven by the coronavirus,” Forres says. “That was the black swan…one of our biggest catalysts.”

 

The team also conducted analysis and banked on a number of other factors: an increase in oil prices, a Chinese recovery, the election of Biden and a Republican Senate in the US, the recovery of China, and the easing of money supply by the Federal Reserve.

casa capital

Image Description: A pie chart listing the optimal split of portfolio assets. Equities at 43%, Fixed Income at 29.5%, Foreign Exchange at 12.5%, and Commodities at 15%.

At 43%, equities were the most heavily-weighted asset class in their portfolio, with Yousif saying it was where the team “found the most opportunities”.

 

Forres says they took a “defensive stance” by investing in relatively non-volatile equities in “consumer staples, utilities, healthcare, that have a beta of less than one.”

 

Dylan adds that they “didn’t have as much conviction” in other safe-haven assets, citing that they had “shorted the dollar,” with the view that it would depreciate over the six-month investment horizon.

 

Facing inherently volatile market movements, compounded by the coronavirus, the team say they were constantly kept on their toes.

 

“Across the three rounds we had positions that materialised within a week and we had to take them off,” Yousif says.

 

“You have to be on top of the news, because markets are reacting and changing all the time.”

 

An example he points to is their position on the dollar.

 

“We longed the dollar at the start of the competition, then after the campus finals we went short because the Fed injected a lot of US dollars into the market.”

 

What was their winning strategy?

 

Yousif believes that what differentiated their team was that they “looked at the big picture.”

 

“Other teams completely neglected the US elections moving the markets,” he says.

 

Sam adds that on a practical level, “starting with the appendix first will give you a more holistic view of everything” – referring to the extensive slides of research added onto the back of their presentation.

 

Asked where they drew their inspiration from, the team points to a variety of resources.

 

Yousif regularly “reads a lot of books” including those containing interviews with hedge-fund managers, which he says, “are really good for this kind of competition.”

 

They also accessed online resources, with Dylan saying that “there’s so much information from banks, wealth managers, and recent outlooks.”

 

What advice would they give future teams?

 

“Start thinking early,” and “play to win” are Forres’ words of wisdom.

 

“Go really in-depth with your research…we had an appendix slide for every trade,” he says.

 

At the same time, he advises that teams shouldn’t “go overboard and think of every possible thing,” but focus on “finding the dominant factors and keeping trades simple”

 

Yousif says “presentation is very important,” suggesting that “for every trade you make, you should come up with at least five questions on why this trade could go wrong.”

 

“Make sure they also know the correlation between different assets in their portfolio,” he adds.

 

“Consider how FX positions impact your equities portfolio…we were long the dollar, but a majority of our portfolio was in global ETFs with companies getting their revenues from outside the US…so when the dollar appreciates against other currencies, the money they get back is actually less.”

 

The team says that these correlations were also the basis of some of the toughest questions they faced.

 

“We got asked about the relationship between unemployment, inflation, and gold,” says Dylan.

 

Would the team do anything differently? 

 

“For the campus finals, we had a little incident where we went into the wrong room,” Dylan says. “So, we were judged by the wrong people and had to come in and do it again the next morning.”

 

“Make sure future teams are on top of the admin.”

 

For the online presentations, Yousif adds that they “kept entering the wrong chat rooms.”

 

“We did everything right but follow the instructions,” he laughs.

 

What was the best part of the competition?

The learning aspect and practical application of theory seem to be the consensus for CASA Capital.

 

“How often are we going to be able to experience a financial crisis?” Forres asks, “we were tracking the markets and navigating as though we were in one, so I think that taught us a lot.”

 

“Here in UWA, we’re very isolated, so we don’t really think about global markets,” Dylan says.

 

“You can learn about valuing fixed income in the classroom, but you don’t get exposed to what happens in markets.”

 

“Being able to witness and learn from that was one of the best things for me.”

 

What did the judges think?

 

Asked for comment, Youssef Abawi, Head of Australian Credit Sales at Citi, says that “once again, UWA raised the bar” on their competition.

 

“What really impressed me was how they handled the Q&A. We had four directors across asset classes judging, and we didn’t hold back on grilling teams. They responded with really well-thought-out answers, showing us they had really done their due diligence.”

 

Where to from here?

 

Yousif aims to go into “asset management and portfolio allocation in global markets,” while Dylan and Forres say that “keeping up with headlines and news” is definitely something they will be doing going forward.

 

Sam says that the challenge has made him more aware of different pathways in finance, and that a “career in global markets” is something he would definitely consider pursuing.

 

CASA Capital are keen to do another competition together, but for now seem content catching up on uni work and reminiscing their reign.

 

“Yousif would refer to us all as kings,” Forres recalls, to everyone’s laughter.

 

Yousif rightly replies, “you guys ended up being kings.”

four bros

Image Description: CASA Capital practicing social-distancing.