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 Notre Dame, Columbia, University of North Carolina, and University of Wisconsin.
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: Scott from The Mendoza College Of Business at Notre Dame
Scott has 7 years sales experience and will be working full time for UBS in fixed income sales and trading. Lets see how well he sells.
Here’s the scenario: In a surprise move, Chinese Vice Premier Wu Yi announces after his meetings with Hank Paulson next week that China will begin to let its currency float freely with the dollar, beginning in 2008. What are you buying, what are you selling in the lead up to this scenario?
Scott is selling Wal-Mart (WMT) because they import from China and buying Las Vegas Sands (LVS) for its exposure to China and Yum Brands (YUM) because Asia has a strong appetite for American food.
Guy Adami gives Scott a “B-“ in part, because he thinks Wal-Mart will be a crowded short.
Grad #2: Shira from The Columbia School of Business
Shira is fluent in 3 languages and has 4 years of management consulting experience. Lets see if she can translate her trades to an "A"
Here’s the scenario: Internet deal-making heats up and Microsoft (MSFT) buys Yahoo! (YHOO) Which are you buying, what are you selling as this deal and other big deals begin to unfold?
Shira is buying Google (GOOG) because she thinks the merger will fail, as well as Visual Sciences (VSCN) and ValueClick (VCLK) which would be bought out at high premiums. She’s also buying investment banks such as Goldman Sachs (GS), Morgan Stanley (MS).
Tim Strazzini gives Shira a “B+” because he thinks Google will be a short into this.
Grad #3: Tom from the University of North Carolina Kenan Flagler Business School.
Tom started an internet business in 2001 and is a member of UNC's mens championship intramural bowling team. Lets see if he can trade a perfect game tonight.
Here’s the scenario: Warren Buffett's Berkshire Hathaway (BRK.A) announces it is purchasing Sears Holdings (SHLD) and that Eddie Lampert will takeover as CEO of Berkshire in 2008. Buffett will retain the position of chairman. What are you buying, what are you selling as this scenario unfolds?
Tom is selling Well Fargo (WFC) and buying Citigroup (C) because Lampert bought Citi shares. Second, he’s buying homebuilders such as DR Horton (DHI) and KB Homes (KBH) as a value play.
Jeff Macke gives Tom a “B” and says the bigger play would be in the retail sector.
Grad #4: Adam from the University of Wisconsin, Madison School of Business.
Adam is a level 3 CFA candidate and also the proud father of 9 month old twins. Lets see if he's a candidate for an "A" tonight.
Here’s the scenario: A severe drought across the Midwest, causes the price of one bushel of corn to double this summer. What are you buying, what are you selling as this scenario unfolds?
Adam is selling Archer Daniels Midland (ADM) because they will face increasing costs and well as Smithfield Foods (SFD) because livestock feed will go up. He also selling Ralcorp Holdings (RAH) and buying Monstano (MON).
Eric Bolling gives Adam a “B” in part, because he didn’t talk about water.
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Trader disclosure: On May 17, 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 (YHOO), (GE), Strazzini Is Short (GOOG); Bolling Owns (NMX), Gold; Silver; Coffee; Sugar; Bolling Is Short Crude Oil; Bolling Owns Natural Gas Futures
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