Mayo Center - Darden Capital Management

Fund Overview

The Cavalier Fund is a long/short equity fund investing predominately in domestic equities across the investable market capitalization range and targeting net long exposure of 80%. The fund aims to generate positive risk-adjusted returns by utilizing a bottom-up strategy to identify undervalued companies with defensible competitive advantages and long-term earnings potential. Additionally, the ability to short stocks and indices that are expected to decrease in value allows the fund to lower volatility of returns and enhance alpha. Over a medium- to long-term horizon, the fund seeks to outperform the S&P 500 Index through prudent stock selection and portfolio management.

The Cavalier Fund in alignment with the broader goals of Darden Capital Management aims to provide students with a unique learning opportunity to gain practical hands-on experience and enhance their understanding of security valuation and portfolio management with the expectation of furthering their pursuit of careers in the investment management industry.

Portfolio Leadership

Michael D’Onofrio — Senior Portfolio Manager

Prior to Darden, Michael worked in healthcare strategy consulting at Vizient, the 3rd largest healthcare management consultant. Prior to that, he founded a health-IT startup, Presage Health, which was a spin out of IP he patented while working as a product manager at Maxim Integrated. Michael graduated from Duke University with a B.A. in Public Policy and Markets & Management. This summer he interned with Credit Suisse Investment Bank.

James Nish — Portfolio Manager

Prior to Darden, James worked at Addepar, a late-stage fintech company, in Strategic Business Development.  Before this role, he developed strong financial acumen as a Cash Equity Sales Trader at Citigroup helping clients navigate the capital markets.  Before this role, James was a rotational investment analyst at Citigroup where he rotated through Alternative Investment Management Fundraising, Portfolio Management, OTC Derivative Sales, and FX Sales.  James graduated from Brigham Young University with a B.S. in Finance.  After Darden, he will be joining Morgan Stanley as an Investment Banking Associate in the Technology Coverage group.

Allie Ruark — Portfolio Manager

Prior to Darden, Allie worked at Huron Consulting Group as a Strategy & Operations Associate focused on the higher education sector. Before that role, she worked as a consultant at CrossLead and KPMG, and was also a Fulbright scholar to Sri Lanka. Allie graduated from Claremont McKenna College with a degree in Psychology and a minor in Leadership. After Darden, she will be joining Wells Fargo as an Investment Banking Associate in the Industrials group.

Tim Wilson — Portfolio Manager

Prior to Darden, Tim worked as an engineer on both domestic and international projects for Apache, an independent energy company. He graduated from The University of Texas at Austin with a BS in mechanical engineering. Tim will be interning with Lazard’s industrials M&A group this summer.

Cavalier Fund Investment Thesis

The Cavalier Fund strategy focuses on long-term performance through prudent security selection, portfolio diversification techniques, and the benefits of enhanced returns and lower volatility generated through short positions. The fund intends to minimize cash allocation and portfolio managers may invest opportunistically across sectors.

For long positions, the fund employs a bottom-up investment approach focused on identifying undervalued investment opportunities relative to long-term earnings potential using fundamental analysis. For short positions, the fund seeks to identify companies with flawed business models, unsustainable performances or financial positions, overly optimistic analyst expectations, and/or signs of potential earnings manipulation and may also consider event/catalyst-driven opportunities.

Our fund will hold approximately 15-25 long positions at all times. As well, the value of our short positions will not exceed 20% of our total assets. The Cavalier Fund is able to invest in all capitalizations and sectors, excluding the microcap designation.

Fund Overview

The goal of the Darden Fund management team is to deliver returns that exceed our benchmark while incurring a comparable level of risk. We believe that superior risk-adjusted returns will result from primary, value-added research that leverages our general management education at Darden.

Our equity investment strategy is focused on the small-cap segment; our equity portfolio benchmark is the S&P SmallCap 600. We believe that markets are least efficient in the small-cap arena, offering us the greatest opportunity for generating positive alpha. Furthermore, while we are focused on bottom-up research, we are optimistic about a reversal of the long bear market. Small-caps have historically outperformed in the initial stages of a bear market, offering additional upside potential to the Darden Fund.

Small companies typically carry more firm-specific risk than larger firms. As a result, the current management team will ensure adequate diversification by holding a larger number of equity positions (~40) than has been true historically (~25). In addition, careful attention will be paid to matching industry exposure to the benchmark. 

Portfolio Leadership

Ryan McCarthy — Senior Portfolio Manager

Prior to Darden, Ryan was an investor at TZP Group, a middle market private equity firm in New York City focused on investments in Technology & Business Services and Consumer Products & Services companies. Prior to TZP Group, Ryan was an Investment Banker at Macquarie Capital in the Leveraged Finance & Financial Sponsors Group. He graduated from Villanova University with a B.S. in Finance.

Natalie Azarela — Portfolio Manager

Prior to Darden, Natalie spent 2 years in corporate strategy at WeWork. Before that, she developed expertise as a management consultant in the consumer, technology, and real estate industries, helping clients achieve operational efficiencies and financial success. Natalie graduated cum laude from Vanderbilt University with a B.A. in Public Policy and Corporate Strategy. This summer, Natalie interned as an Investment Banking Summer Associate at Harris Williams.

Jonathan Campbell — Portfolio Manager

Prior to Darden, Jonathan spent four years in Major League Soccer, playing for the Chicago Fire and Seattle Sounders. He graduated with the highest distinction from the University of North Carolina at Chapel Hill with a B.S. in Business Administration. During the summer, he interned with Bank of America’s TMT group.

Brett Johnson — Portfolio Manager

Prior to Darden, Brett was a medicinal chemist in the neuroscience medicinal chemistry group at Amgen in Cambridge, MA. Before Amgen, Brett spent two years working as a medicinal chemist at Eli Lilly and Company in the diabetes drug discovery group. Originally from Missouri, Brett graduated from the University of Missouri – Columbia with a Bachelor of Science in chemistry in 2013 and holds a Master of Science in organic chemistry obtained at Boston College in 2015. This past summer, he interned at Lazard in the Healthcare Investment Banking Group as a Summer Associate.

Darden Fund Investment Thesis

We believe that the market is least efficient in small-cap segment offering the greatest opportunity for generating positive alpha. Small cap stocks have outperformed mid and large-cap stocks for six consecutive years, and continued this trend in 2004 outperforming the general market by 10%.

It will be difficult for small-cap stocks to continue these outsized returns particularly in an environment of rising interest rates, which has traditionally favored large-cap stocks. However, The Darden Fund managers aim to outperform our competitive benchmarks through a process of disciplined fundamental research and analysis. By leveraging our team’s diverse experiences and educational foundations, we hope to realize superior returns while remaining conscious of the inherent risk of our investments.

Fund Overview

The objective of the Jefferson Fund is to maximize investment returns, while at the same time minimize systematic risk. Diversification is not only achieved at the sector/industry level, but also through asset allocation. As part of Darden Capital Management, the Fund’s other objective is to provide students with an opportunity to enhance their understanding of security valuation and portfolio valuation techniques, with the expectation of furthering their pursuit of careers in the asset management industry.

The Jefferson Fund seeks to generate excess returns through a value-based strategy, whereby out of favor or undervalued investment opportunities are identified primarily through a bottom-up process. We believe that this style of investment, which emphasizes the importance of valuation and seeks to identify companies trading at a discount to their intrinsic value, will lead to consistent long-term outperformance. The Jefferson fund concentrates on companies with market capitalizations in excess of $1 billion and with deep and sustainable competitive moats, which we believe positions the fund to capture above average investment returns. At any given time, the Fund will hold between 15-30 positions. Individual holdings will be limited to a maximum of 6% at time of investment.

According to the Fund’s mandate, it will hold a maximum of 30% of market value in international stocks, 20% in ETFs, and 30% in gross short exposure. From time to time, the Fund may invest opportunistically in corporate bonds or US Government issued securities. The managers intend to minimize the cash allocation.

The Fund is managed against the Russell 1000 Value Index.

Portfolio Leadership

Philip Apelles — Senior Portfolio Manager

Prior to Darden, Philip worked at his family business, The GTO Group, where he served as both a principal shareholder and a data strategist. Originally from New York, Philip graduated from Vanderbilt University with a BA in Mathematics and Economics. This summer he interned at Fayez Sarofim & Co as an Equity Research Associate.

Evan Berenholtz — Portfolio Manager

Prior to Darden, Evan served eleven years in the United States Navy as a Naval Aviator and Joint Terminal Attack Controller. Evan graduated with distinction from the Virginia Military Institute in 2009. This summer he interned at the DC office of the J.P. Morgan Private Bank as a Banker Associate. 

Harrison Clement — Portfolio Manager

Prior to Darden, Harrison spent four years on the investment team at Brown Advisory, an investment management firm, where he helped manage balanced portfolios for private clients. He graduated from the University of Virginia with Bachelors of Arts in Economics and Public Policy. Over the summer, he interned as an Investment Banking Associate with Bank of America’s Leveraged Finance team.

Lauren McDermott — Portfolio Manager

Prior to Darden, Lauren worked in Marketing and Business Development at Lyxor Asset Management. She graduated from the University of Virginia in 2016 with a B.A. in Media Studies. Lauren spent this past summer interning at Goldman Sachs.

Jefferson Fund Investment Thesis

The Jefferson Fund seeks out of favor or undervalued investment opportunities. At any one time, we intend to hold between 15-30 equity positions. The managers will have no industry bias and will invest opportunistically in any and all sectors. The Fund will purchase companies with a minimum market capitalization of $1 billion, with no maximum capitalization. Because of the managers’ bias towards undervalued companies and businesses that demonstrate high returns on invested capital, the managers expect new investments to concentrate on companies with market capitalizations on the lower end of the Fund’s mandate. From time to time, the managers may identify and invest in undervalued companies with larger capitalization.

Managers intend to minimize the cash allocation.

Fund Overview

The Monticello Fund’s philosophy begins with the premise that superior returns over time can best be achieved through investment in undervalued companies with superior and sustainable growth prospects while integrating macroeconomic and local market factors into stock selection decisions. As a result, the Fund will consist of a blend of companies domiciled around the globe.  By employing a bottom-up approach with intensive research focused on company fundamentals and macroeconomic and local market factors, the Fund’s managers are able to identify undervalued, financially strong, and well-managed domestic and international companies in a global sector context.  Further, the managers each strive to continuously educate ourselves with regards to investment analysis and portfolio management theory. The Fund's benchmark is MSCI All Country World Index.

Portfolio Leadership

Mudit Bothra — Senior Portfolio Manager

Prior to Darden, Mudit worked in various roles with Deloitte, PwC and EY, advising clients across industries and geographies on internal audits and process improvement. In addition to holding a Bachelors in Commerce, Mudit has also cleared all three levels of the CFA program. He interned with Credit Suisse’s M&A Group this summer. 

Stephen Frankiewicz — Portfolio Manager

Prior to Darden, Stephen spent four years with EDENS, a privately held real estate investment trust, spending time in roles across the development, investments, and capital markets teams. Stephen graduated from the University of South Carolina with a B.S. in International Business and Finance. This summer he interned at Evercore Partners as an investment banking associate.

Tomas Barriga — Portfolio Manager

Prior to Darden, Tomas was Head of Investor Relations at LATAM Airlines Group, managing the communications between the company and the financial community. Tomas graduated summa cum laude from Pontificia Universidad Catolica de Chile with a B.S. in Civil and Industrial Engineering, and a major in Mechanical Engineering. This summer, he was an intern with Amazon.com.

Sharon Zhou — Portfolio Manager

Prior to Darden, Sharon worked in various roles with Cummins, leading processes such as functional annual financial planning and policy implementation post acquisition. Sharon holds a bachelor’s degree in Business Administration and a master’s degree in Human Resources and Labor Relations. This summer she interned with McKinsey advising a banking client.
 

Monticello Fund Investment Thesis

Buy decisions are based on a rigorous research process that pays special attention to relative valuation on a local market and broad sector basis, profitability, management strength and competitive advantage while taking into consideration both global market and business risk.  As a result, the Fund will be comprised of approximately 20-40 individual equity holdings with differing market capitalizations from a variety of countries and sectors.

Fund Overview

The Rotunda Fund integrates sustainability research with fundamental analysis to select investments that are likely to outperform the market due to the improved long-term financial performance and lower risk features that accompany sustainable practices.  Sustainability research provides unique and valuable insights into management and internal operations of an organization.  Companies with sound environmental, social and governance (“ESG”) practices have competitive advantages over their peer institutions; these competitive advantages can include lower costs due to efficiency, reduced risk of litigation/environmental liabilities, and lower volatility of raw material costs.  Therefore, sustainability practices are expected to yield market-outperforming risk-adjusted returns.  The Rotunda Fund integrates sustainability research with fundamental analysis to purchase “best in class” companies at attractive valuations. 

Portfolio Leadership

Mac Kyle — Senior Portfolio Manager

Prior to Darden, Mac worked at Allen & Company, an investment bank in New York, in their Wealth Management group. Mac graduated from the University of Richmond in 2015 majoring in 
Accounting, Finance, and General Management. He interned at Calvert Investment Management and Research, an ESG investment firm owned by Morgan Stanley. 

Percy Oliver — Portfolio Manager

Prior to Darden, Percy served on the transaction banking team at MUFG in New York, focusing on providing working capital solutions to Japanese subsidiaries based in the US. Percy started his career at JP Morgan as a rotational analyst, serving in the New York and Santiago, Chile offices. He graduated with honors from the University of Georgia with a BBA in Finance and International Business and a minor in Chinese. This summer Percy gained experience in real estate acquisitions and asset management through his internship at Beacon Capital Partners.

Elizabeth Ughetta — Portfolio Manager

Prior to Darden, Elizabeth worked as a commercial real estate advisor for Newmark Knight Frank in New York City. She worked directly for a Vice Chairman and her clients primarily included foreign financial institutions. She graduated from Hamilton College with a Bachelor of Arts in Creative Writing and a minor in Anthropology. She was the co-head of the inter-society council, representing all of Greek life at Hamilton, as well as the President and Rush Chair of her sorority. She graduated high school from The Lawrenceville School in Lawrenceville, New Jersey. 

Christina Walters — Portfolio Manager

Prior to Darden, Christina served as an executive director at The Yale Club of New York City, the world’s largest college clubhouse, where she oversaw investment strategy and operations. Christina graduated magna cum laude with a B.A. in Asian Studies that focused on economics and security policy. While attending Darden, she interned with Barclays as an Investment Banking Summer Associate and with Thomas Park Investments, a real estate private equity firm, as an Acquisitions Associate. 
 

Rotunda Fund Investment Thesis

The Rotunda Fund employs a two-step process to select and evaluate opportunities: a threshold step (size and information availability) and an investment evaluation step (ESG, industry, and financial evaluation). 

The threshold step requires (i) market capitalization of $500 million and above and (ii) sufficient disclosure of relevant sustainability-related data.  It is expected that companies reporting under the Carbon Disclosure Project, or a similar industry-standard report, will fulfill this threshold of required disclosure.  Alternatively, companies that publish a corporate sustainability report and/or are required to report data to the US Environmental Protection Agency, such as the chemical and utility industries, will also meet the threshold criteria. 

The companies that meet the requirements in the threshold step will then be analyzed in a three-part investment evaluation step.  This investment evaluation step seeks companies with:

1. Best-in-class ESG metrics relative to peer companies and industry best practices.
2. Industry or industries served, and position within those industries, that is conducive to long-term financial strength.
3. Superior fundamentals, both qualitative and quantitative/valuation, which indicate the potential for favorable risk-adjusted returns.

The 10th annual Darden at Virginia Investing Challenge (DVIC) will take place at the Darden School of Business in Charlottesville, VA on Friday, October 29th, 2021.

If you are interested in participating in DVIC or recruiting participants at DVIC, please contact DCM Chief Financial Officer, Mary Winston Richardson (RichardsonM22@darden.virginia.edu).

Our stock pitch competition is held in conjunction with the University of Virginia Investing Conference (UVIC). DVIC brings to Charlottesville teams of students from top MBA programs to compete for cash prizes. 

The challenge selects a different theme each year to frame each school's stock pitch. Competing teams have the opportunity to present their pitches in front of judges from the investment management industry in a two-round format. 

The competition provides an ideal training ground for MBA students interested in the investment management profession as it gives students the opportunity to practice their stock pitching skills. Additionally, the challenge leverages UVIC which provides a forum for recruitment and knowledge sharing, as UVIC brings together nearly 500 investment professionals, recruiters, and students each year.  

Listen to a WSJ podcast featuring an interview with the 2016 winning team, the Wharton School of the University of Pennsylvania.

DCM Resources

Darden Capital Management (DCM) provides a variety of resources for helping students manage portfolios and learn about the markets. Each year, Darden Capital Management leads a series of trainings that follow the structure below:

• Utilizing available resources to monitor investment holdings
• Introduction to pitching a stock
• Comparing companies across sectors
• Portfolio theory
• Managing through market cycles

These trainings are led by both the DCM leadership team and University of Virginia alumni who have expertise in these areas. In addition to formal training, members of DCM have access to databases, research and speaker events. These resources include:

• FactSet, Bloomberg, S&P Capital IQ, Investext, Morningstar, PitchBook, and others
• Written guides and presentations from the trainings
• Access to the Wall Street Journal and Barron’s
• Guest speakers and lunch & learn events

For any questions about Darden Capital Management research and training, please contact Mark Llanes.

The Advisor

Current Issue: Spring 2021

The Advisor is a newsletter dedicated to highlighting the activities of Darden Capital Management, a student run club responsible for managing approximately $18 million of Darden’s endowment. Each edition features a Q&A session with an asset manager, a review of the funds’ activities and holdings as well as several stock pitches from our classmates.

This newsletter has two objectives: to raise awareness of Darden Capital Management and to contribute to Darden’s recognition as a high-caliber finance and asset management school. The publication will be distributed electronically four times a year, positioned so that we can reflect on the prior quarter’s activity.

The newsletter is distributed electronically to the current Darden community, members of the Darden Foundation investment committee, Darden and UVA alumni working in the asset management industry, prior Darden Capital Management Portfolio Managers and contacts of Darden Capital Management members.

We look forward to sharing the activities of Darden Capital Management.

To be added to the electronic distribution list send an email to Rachel Gibson.

The Advisor Archive

• Fall 2020
• Spring 2020
• Winter 2019
• Fall 2019
• Spring 2019
• Winter 2018
• Fall 2018
• Spring 2015
• Fall 2012
• Fall 2011
• Summer 2010
• Fall 2008
• October 2007
• July 2007
• April 2007
• October 2006
• March 2006
• November 2005
• May 2005
• November 2004
• May 2004
• February 2004
• November 2003
• May 2003
• February 2003
• November 2002

Berkshire Hathaway

Each year eight students from both first and second year are invited to travel to Omaha, Nebraska, to attend the Berkshire Hathaway shareholder meeting thanks to the generous donation of a Darden alumnus.

If you are interested in learning more about the shareholder meeting please visit http://www.berkshirehathaway.com/.

DCM Partners

• Trustees of the Darden School Foundation
• McIntire Investment Institute

Fund Managers

Each of the five funds is managed for a full year by a team of Second Year students at the Darden School. Each team consists of one senior portfolio manager and three portfolio managers. In addition to the hands-on experience of managing a significant amount of capital and the opportunity to meet with and present to the Darden School Foundation’s Board of Trustees, the managers receive 4.5 class credits toward their MBA. Managers are selected in February of their First Year on the following criteria:

• Overall commitment to the club as a First Year.
• Commitment to stock selection and asset management in general.
• Recommendations from the previous year’s portfolio managers and analysts.
• The quality of investment ideas presented to the funds during the first year — both on “Super Sunday” events and in individual fund meetings.
• An interview with the Darden Capital Management faculty advisor, Pedro Matos.
• A one-page letter outlining the improvements the applicant would like to make to the club in the coming year and how they would benefit from being involved with the management of the funds.

Members

All members of Darden Capital Management are encouraged to take advantage of every aspect of the club. Monthly meetings of the club will often feature presentations by industry professionals, résumé and interviewing workshops, and reviews of the funds’ activities (see the Calendar for details). Additionally, each of the five funds welcomes members to attend any of the weekly, individual fund meetings, and the funds strongly encourage students to present investment ideas for consideration. All members will find that attending fund meetings are a valuable way to prepare for the interviewing process. Please feel free to contact any of the DCM fund managers with any additional questions.