On grade the trade we test the trading prowess of some of the most promising business students in the nation. This week they’re from Purdue, University of Wisconsin, University of Richmond and Boston College.
Get ready – school’s in session.
Our business school students have been given the questions in advance, and have 30 seconds to answer.
Grad #1: Amy from Purdue University's Krannert School of Management
Here’s the scenario: Another major investment bank says it has to close a hedge fund because subprime securities in the fund are deemed virtually worthless. What are you buying, what are you selling as this scenario unfolds?
Amy is shorting major investment banks, as well as Citigroup (C), JP Morgan Chase (JPM) as well as others. And she would sell treasuries.
Jon Najarian gives Amy an “A-“ He says Blackstone (BX) would be a natural short.
Tim Seymour adds if this scenario actually did unfold Lehman (LEH) would be in trouble.
Grad #2: Chris from The University Of Wisconsin School Of Business
Here’s the scenario: Another steampipe in New York breaks and in the days that follow, cities from New York to Atlanta say they will double the amount of money they plan to spend to improve aging public works systems. What are you buying, what are you selling as this scenario unfolds?
Chris is buying engineering firms such as Fluor Corp. (FLR) and Shaw Group (SGR). He also is buying Caterpillar (CAT) as well as steel companies such as Nucor (NUE) and McDermott International (MDR).
Pete Najarian gives Chris an “A”.
Grad #3: Alex White from The University Of Richmond Robins School Of Business
Here’s the scenario: Retail deal making heats up as KKR buys Macy's (M) and Eddie Lampert's Sears (SHLD) buys Safeway (SWY). What are you buying, what are you selling as this scenario unfolds?
Alex is buying Kohl’s (KSS) and Dillard’s (DDS) as takeover targets. He’s also buying Supervalu (SVU). Long term he’s shorting all the companies mentioned above. And he’s buying Sears for management as well as Wal-Mart (WMT).
Jeff Macke gives Alex and “A-“ The only trade he doesn’t like is buying Sears.
Grad #4: Brian from Boston College Carroll School Of Management
Here’s the scenario: Turkey's prime minister wins a majority of seats in parliamentary elections Sunday. He then decides to invade Northern Iraq to put down Kuridsh guerrillas there. What are you buying, what are you selling as this scenario unfolds?
Brian is selling Turkish sovereigns. Also, he thinks the scenario is bullish for energy and he's buying Apache (APA) and Helix Energy (HLX).
Tim Seymour gives Brian a “B” and says the scenario is very complicated.
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Trader disclosure: On July 20th 2007, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s Fast Money were owned by the Fast Money traders;Macke Owns (SWY), (INTC); Jon Najarian Owns (RDC), (AAPL); (AMD); (CHL); (CLX); (CME); (F); (JNPR); (NKE); (SWY) (ZMH), (RDC);Jon Najarian Is Short (BX); Seymour Owns (AAPL); (BP); (GLD); (F); (INTC); (YHOO); Pete Najarian Owns (CLX); Seymour Owns (MSFT), (SWC), (HAL), (SLB), (BX); WWE Programs Air On Networks Of NBC Universal, The Parent Company Of CNBC; CNBC Is A Service Of NBC Universal And Dow Jones; Red Star Asset Management Is Short (XOM)