Prepare for the Fast Money final exam. In this feature we test the trading prowess of some of the most promising business students in the nation. This week they’re from Babson College, Ohio State, University of Texas and Indiana University. 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:
Dennis from the FW Olin Graduate School of Business at Babson College.
This year he was on the winning team of the CFA investment challenge, and also ran the Phoenix marathon. Let's see if he can become the front runner in grade the trade:
Dennis, here is your scenario: Microsoft (MSFT) buys Yahoo (YHOO), sending ripples throughout the tech sector. What are you buying and selling if the scenario unfolds?
Dennis thinks it’s a bad deal for 3 reasons 1) MSFT would be buying unproven technology, 2) there would be a culture clash and 3) the companies wouldn’t perform better, combined. Therefore he’s buying companies DoubleClick competed in, before they went private; 24/7 Real Media (TFSM) and ValueClick (VCLK)
Guy Adami gives Dennis an “A” for analysis, but an “F” because he didn’t give many trades
Grad #2:
Adam Grimes from Fisher College of Business at Ohio State
He spent 8 years as a futures, options, and equity trader. He was also a professional musician and a French chef before becoming a trader. He's saving his top dish for grade the trade ..
Here’s the scenario: The costly section 404 of Sarbanes-Oxley, which requires auditors to verify a company's financial reporting, is repealed. What are you buying and what are you selling as this scenario unfolds?
Adam is selling accounting firms, buying the exchanges, and selling volatility puts.
Tim Strazzini gives Adam a “B+” because he doesn’t think this scenario would create so much volatility.
Grad #3:
Nelson from McCombs School of Business at University of Texas, Austin
He is a CPA, with 3 years experience in public accounting and was a collegiate tennis player. He's hoping to win grade the trade in straight sets.
Here’s the scenario Spiderman 3 clears $180 million this weekend, while the new Pirates of the Caribbean flops later this summer. What are you buying and what are you selling as this scenario unfolds?
Nelson doesn’t see Disney (DIS) getting hurt because they generate revenue from too many other places. He’s also selling Marvel (MRVL) on the news, and buying Hasbro (HAS) for the upside on toy sales.
Jeff Macke gives Nelson an “A-“ because Children’s Place (which is owned by Disney) could get hurt by a Pirates flop.
Grad #4:
Dan from Kelley School of Business at Indiana University
He has 4 years trading experience and helped drive up shares of Spartan Motors (SPAR) after pitching to Jim Cramer on CNBC’s “Mad Money”
Here’s the scenario: The U.S. strikes a deal with Syria, Iran, Egypt, Turkey and Saudi Arabia to hand over Iraq security and the transfer of power to Iraq's government. U.S. begins a pullout of Iraq in 2008. What are you buying and what are you selling as this scenario unfolds?
Dan is shorting Force Protection (FRPT) because it will get crushed. He’s buying healthcare because that’s where he thinks Congress will put more money when the US pulls out of Iraq.
Eric Bolling give Dan an “A” and adds he thinks the scenario is never going to happen!
Questions? Comments? fastmoney@cnbc.com
Trader disclosure:
On May 4, 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 (JWN), Strazzini Owns (MPEL), (NWS-A), (YHOO) Bolling Owns (NMX), (DIS), (MPEL), Gold, Silver, S&P Futures, S&P Options, Nasdaq Futures, Nasdaq Options.
Pali Capital Acts As An Underwriter In The Public Offering Of Securities And Structured Products. Strazzini's Statements Are Not An Endorsement Of Such Securities Or Structured Products.
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