1. Student Research Challenge
CFA Virginia Investment Research Challenge
January 28, 2016
CFA Institute Research Challenge
hosted by :
Local Challenge CFA Society of Virginia
Team E
2. NYSE: APLE
January 28, 2016
Sector: Hotel/Lodging REITs
Apple Hospitality REIT, Inc
StrongBuyHoldStrong Sell Sell
Recommendation: Buy Target Price: $20.06
Closing Price $18.29
Shares Out $174.4 Million
Market Cap $3.189 Billion
52 Week Range $13.82 - $20.97
Dividend $1.20
Dividend Yield 6.56%
Highlights
Long term strategy of minimizing risk by maintaining low leverage.
Apple maintains the lowest Debt/EBITDA level of it’s peers. The compa-
ny expects to fund it’s next four acquisitions through the use of it’s credit
facility. The four hotels are under construction, and are expected to come
online within the next 6 to 21 months.
We initiate coverage on Apple Hospitality with a Buy recommendation
based on our quantitative analysis suggesting a price $20.52. We be-
lieve Apple Hospitality is in a better position than any other publicly
listed upscale lodging REIT. Our highlights below outline these
thoughts.
With 179 hotels in 32 states Apple reduces volatility in it’s portfolio
with geographic diversification. Apple uses a disciplined strategy of in-
vesting in markets where diverse demand generators drive consistent per-
formance. Apple’s portfolio of properties has a low concentration in US
gateway cities. The appreciation of the US dollar has put pressure on hotel
operators to have the ability to raise rates in gateway cities where demand
is driven in part by foreign tourism.
Demand is expected to continue to outpace supply. Occupancy rates
are expected by PKF to have eight consecutive years of growth through
2017. Over 95% of Apple’s portfolio consists of upscale to upper midscale
select service hotels. Within this segment supply of new rooms is expected
to exceed 85,000 in the coming year.
Estimates
Year 2014A 2015E 2016E 2017E
1.18 1.37 1.42 1.50
AFFO/
Share
.70 1.54 1.64 1.72
Key Statistics
FFO/Share
1Q15A 2Q15A 3Q15A 4Q15E
2014A 2015E 2016E 2017E
ADR
Occupancy
% change
% change
RevPar
% change
$126.6 $131.3 $133.6 $133.0
4.71% 4.99% 5.51% 5.07%
74.0% 81.9% 80.6% 71.7%
2.64% 1.24% 0.88% 0.88%
$93.7 $107.5 $107.6 $95.0
7.55% 6.24% 6.44% 5.59%
ADR
RevPar
$122.0 $131.2 $137.8 $144.7
76.0% 77.1% 77.2% 77.4%Occupancy
$92 $101.1 $106.4 $112.0
2014A 2015E 2016E 2017E
Downside
Scenario
Current
Price
Price
Target
Upside
Scenario
$18.29$17.00 $20.52 22.00
4.5% 10.8% 16.8%
Significant balance sheet capacity. Apple has a remaining 478 million
left within it’s share repurchase program that ends in July 2016. In the past
six months Apple has purchased shares between $17.50 and $18.40. Given
the current price of the stock, and the capacity within the companies bal-
ance sheet we expect Apple to remain active in repurchasing it’s own
shares.
1
Team E Student Research
This report is published for educational purposes only by students competing in
the CFA Virginia Investment Research Challenge, part of CFA Institute Global
Investment Research Challenge.
Q/Q
3. Student Research Challenge
CFA Virginia Investment Research Challenge
January 28, 2016
Investment Summary
Our buy recommendation on the stock reflects our expecta-
tions that the company is well positioned to benefit from a
number of external, and internal driving factors.
Focused product knowledge: Apple’s focus within the
lodging industry is on select service upscale hotels. Select
service or room focus products have lower volatility as
they produce both higher, and more stable margins.
Competitive advantage: Compared with competitors
Apple is both geographically diversified through the num-
ber of hotels, and the number of rooms within it’s portfo-
lio.
Quality products: Apple has aligned with the Marriot
and Hilton brands exclusively. The Hilton and Marriot
family brands have a large focus on upscale select service,
and bring more business than any other brands in the seg-
ment. Through strong loyalty programs, and broad con-
sumer recognition that generate returning customers.
Brand expertise: Upper management sits on the boards
of seven advisory councils including the Marriott Owner’s
council, The Residence Inn Association Board, and the
Courtyard Franchise Council. Serving on these boards al-
lows Apple’s management team to have a say in develop-
ing brand standards.
Strong fundamentals: Apple’s balance sheet can sup-
port additional debt. They have sought to always maintain
very low leverage. Their debt is structured to maximize
return by utilizing short term debt. The company also pays
a monthly dividend of a $1.20 that has a current yield of
6.56%. Apple is unique in that only a handful of REITs
choose to pay a monthly dividend. Our research found in
the Business Description section shows that monthly divi-
dend payers reduce volatility in returns.
Institutional Recognition: The Vanguard Group estab-
lished a 10.8% position as of December 10, 2015.
Blackrock a previous buyer of “Apple REIT Six” in 2012
for 1.2 Billion, and has established a 5.8% stake in Apple
Hospitality as of January 28, 2016.
2
4. Student Research Challenge
CFA Virginia Investment Research Challenge
January 28, 2016
Valuation
Using four methodologies we have derived a range of reasonable
price expectations for Apple Hospitality in the intermediate term.
We expect the price of Apple’s stock to trade within a range of
$18 to $21 dollars with the expectation that the stock will reach
our target of $20.08 within the year.
Methodologies
Discounted Cash Flow Analysis: Using a two separate
discounted cash flow analysis we estimated price based on
five years of forecasted cash flows discounted at different
costs of capital. The two differences being the use of differ-
ing market proxies for the estimation of risk premium. Tradi-
tional equity risk premium estimation will use an annualized
return of the SP 500 as a market proxy. Given that Apple
Hospitality is a REIT we thought it would be more appropri-
ate to use the annualized returns of the NARIET All Equity
index over the same 30 year period for comparison. Given
out inputs we derived an intrinsic value of the stock to be
$23.71 using the SP 500 and $19.17 using the NARIET in-
dex.
Secondly in estimating the market risk premium we chose to
use the 10 year US Treasury at 2.05%. Given the volatile
nature of this asset who’s range has varied from 1.90% to
2.30% in the past month we decided to use a sensitivity anal-
ysis to approximate a range of prices for both the US Treas-
ury and our two market proxies.
In estimating the beta of Apple Hospitality we found that the
company did not have returns long enough to estimate it’s
beta appropriately. We used a list of comparable companies
based on size, and portfolio mix to determine Apple’s beta.
By un-levering the comparable companies betas we then re-
levered the average of those betas by Apple’s debt to equity
ratio. It is not surprising that Apple’s beta is lower than most
of it’s competitors as it has a comparatively low debt struc-
ture to that of it’s peers.
3
23.71 11.00% 11.25% 11.50% 11.75%12.00% 12.25% 12.50%
1.95% 23.98 23.06 22.20 21.38 20.61 19.89 19.20
1.98% 23.97 23.05 22.19 21.37 20.60 19.88 19.19
2.00% 23.96 23.04 22.18 21.36 20.60 19.87 19.18
2.03% 23.95 23.03 22.17 21.35 20.59 19.86 19.18
2.05% 23.94 23.02 22.16 21.35 20.58 19.85 19.17
2.08% 23.93 23.01 22.15 21.34 20.57 19.85 19.16
2.10% 23.92 23.00 22.14 21.33 20.56 19.84 19.15
2.13% 23.91 22.99 22.13 21.32 20.55 19.83 19.14
2.15% 23.89 22.98 22.12 21.31 20.54 19.82 19.14
2.18% 23.88 22.97 22.11 21.30 20.53 19.81 19.13
Sensitivity of US Treasury and Market Proxy
Figure 1
5. Student Research Challenge
CFA Virginia Investment Research Challenge
January 28, 2016
Methodologies continued
NAV Calculation: REITs are commonly valued us-
ing a Net Asset Valuation. This is due to the nature of
a REITs balance sheet having a large portion real es-
tate assets which are he greatest driver of value for
there investors. We backed into the market value of
equity by using an implied Capitalization Rate sourced
from Bloomberg. Calculating the firms 12 month for-
ward Net Operating Income (NOI), by first subtracting
total hotel expenses from total revenues we found raw
EBITDA and then subtracted out our calculation of
reoccurring capital expenditures. Dividing the NOI by
the implied Capitalization Rate of 7.26% and adding
back debt minus cash and cash equivalents as well as
restricted cash we found an implied market value of
equity. Dividing this number by the current share
count gave us an intrinsic value of the stock at $18.69.
Cap Rates: Hotel capitalization rates have bot-
tomed out in recent years due to US interest rate policy
(Figure 1). There is concern with the recent uptick
in rates that cap rates could follow which would lower
the value of a companies NOI. However, an analysis
of hotel cap rates, and 10 year US Treasury Bills da-
ting to the 1990’s revealed that given an uptick of 150
basis points in T-Bills only generated about a 50 basis
point rise in cap rates. (Commercial Real Estate Show)
In (Figure 2) we looked at Debt to Cap Rate to deter-
mine the effect of leverage on Apple’s share price. We
can see that leverage has a significant impact on Ap-
ple’s share price.
Value of the stock: Each method is at best an ap-
proximation of true valued based on it’s inputs. We
weighted each valuation method equally and deter-
mined a fair price for the stock would be $20.52
4
Industry Cap Rates Over Five Years
$18.69 7.10% 7.15% 7.20% 7.25% 7.30% 7.35% 7.40% 7.45%
1,034,045 19.26 19.08 18.91 18.73 18.56 18.40 18.23 18.07
1,059,045 19.12 18.94 18.76 18.59 18.42 18.25 18.09 17.93
1,084,045 18.83 18.65 18.48 18.30 18.13 17.97 17.80 17.64
1,109,045 18.40 18.22 18.05 17.87 17.70 17.54 17.37 17.21
1,134,045 17.82 17.65 17.47 17.30 17.13 16.96 16.80 16.64
1,159,045 17.11 16.93 16.76 16.58 16.41 16.25 16.08 15.92
1,184,045 16.25 16.07 15.90 15.72 15.55 15.39 15.22 15.06
1,209,045 15.24 15.07 14.89 14.72 14.55 14.38 14.22 14.05
1,234,045 14.10 13.92 13.75 13.57 13.40 13.24 13.07 12.91
Figure 3
Figure 2
6. Student Research Challenge
CFA Virginia Investment Research Challenge
January 28, 2016
5
Monte Carlo Analysis
Implemented 10 yr. Treasury, RevPar, ADR, and Oc-
cupancy to determine the true intrinsic value of the
growth stock. We input 10,000 iterations to come up
with a target price of $17.61 with a 95% confidence
level for a BUY position.
We used Periodic Daily Rate : LN(Todays $$/ Yesterday $$)
for all the closing prices since APLE IPO. We then found the
variance, average, and Volatility to use for Geometric
Brownian Motion. We used the values to get return of the
stock or “Drift” along with a random set ratios to get the di-
rection of the growth. Based on our analysis we conclude
that 95% of the 10,000 iterations would put us in a future
stock price b/t $17.31 and above trading price. We can also
see the mean of the Monte Carlo Analysis moving in a posi-
tive direction, using all closing prices since IPO.
We are 95%sure if price of the stock falls to
$16.42 is still in a position to BUY. Our estimated
fair value of $20.52 still puts Apple REIT underval-
ued. Appreciation towards this price target com-
bined with APLE’s current dividend yield would
result in a yield of ~13.2% or more.
We are 95% the next 30 trading days APLE will
have a HIGH $27.78 and LOW $15.29 shown in
theoretical future stock price.
Todays $$= Yesterday $$(e)^r
Where ris the periodic expected return since IPO in
May 18,2015. The varis the volatility.
BUY
Today
Figure 4
Figure 6
Figure 5
7. Student Research Challenge
CFA Virginia Investment Research Challenge
January 28, 2016
2013A 2014A 2015E 2016E 2017E 2018E 2019E 2020E
Total Revenue 6.13% 107.19% 320.76% 5.25% 5.25% 5.25% 5.25% 5.25%
Hotel Operating
Income 8.03% -60.93% 427.64% 4.66% 4.83% 6.08% 4.73% 4.71%
Net Income 52.66% -94.07% 545.36% -7.63% 7.05% 9.12% 6.47% 6.78%
FFO 6.64% -4.62% 372.07% 4.46% 6.18% 7.27% 5.89% 6.06%
MFFO 8.19% 82.66% 367.99% 2.32% 6.00% 7.07% 5.75% 5.92%
Financial Analysis
Growth Assumptions
Figure 7
Revenue Growth: Revenue growth is tied to the Average Daily Rate (ADR),
and the Occupancy of a hotel. We estimated 2015 by taking the quarter over quarter
growth in ADR, and Occupancy, and applied t to 4Q2015. 2015 is a volatile year for
Apple as they absorbed a number of properties in 2014 through acquisition. Almost
doubling there hotel count this produced triple digit year over year growth in all cat-
egories. Recording a non cash expense of almost 117 million dollars in the transac-
tion with Apple REIT Seven and Apple REIT Eight, 2014 would look unpromising
if not for the Modified Funds From Operations which adds back this expense.
We see the industry growing year over year at roughly 5-6% based on estimates
from PWC. Occupancy will continue to drive RevPar, but as Apple matures the pos-
sibility for continued year over year double digit growth diminishes. 4Q15 brought
headwinds as 20 properties were under renovation. Which by our estimates cost
20,000,000 to complete.
2013A 2014A 2015E 2016E 2017E 2018E 2019E 2020E
EBITDA 47.2% 35.0% 35.6% 35.1% 35.0% 34.9% 34.8% 34.7%
Depreciation as a
% of Capex 3.3% 3.0% 3.2% 3.5% 3.8% 4.0% 4.4% 4.7%
Operating margin 21.33% 4.02% 19.88% 19.77% 19.69% 19.85% 19.75% 19.65%
Net margin 29.70% 0.79% 17.15% 15.61% 15.87% 16.46% 16.65% 16.89%
Figure 8
Margin Expansion: The company has acquired seven properties this year, and
has plans to acquire four more over the next 6 to 21 months. Factoring in this debt
we can see that after 2016E Apple’s net margin expands. This not to say that the
company will not acquire new assets it is only uncertain how they may purchase
these assets with cash, or debt. Operating margins will experience compression as
transaction costs are forecasted until 2017E, and will see further compression as
depreciation as a percentage of investment in real estate grows larger.
5
8. Student Research Challenge
CFA Virginia Investment Research Challenge
January 28, 2016
Business Overview
History: Apple Hospitality is a Virginia based self advised
Real Estate Investment Trust (REIT) that operates primarily
in the US lodging sector. The company was formed in No-
vember of 2007 and began operations in July 2008 with the
acquisition of their first hotel.
Apple has selected to exclusively partner with the Marriott,
and Hilton brand hotels due to their strong customer loyalty
programs, and offerings of hotels that match their upscale
select service portfolio.
As of March 1, 2014 Apple REIT Nine completed the mer-
gers with Apple REIT Seven and Apple REIT Eight through
an offering of 11.9 million common shares which the compa-
ny recorded a noncash expense totaling 177.1 million in the
first quarter of 2014.
As a result of the merger an additional 99 hotels were added
to Apple REIT Nine’s portfolio totaling 188 hotels in 33
states with an aggregate of 23,490 rooms. Upon completion
of the merger Apple REIT Nine officially changed it’s name
to Apple Hospitality.
Today: Apple Hospitality owns 179 hotels in 32 states
with an aggregate of 22,962 rooms. Focusing on select ser-
vice upscale to upper scale lodging Apple has a disciplined
strategy of investing in markets with proximity to guest
amenities, and diverse demand generators that drive strong
performance. Apple seeks to reduce volatility in their portfo-
lio by selecting to avoid concentration in any one geographic
market or in markets that are dependent on specific demand
generators.
Apple has sold 19 properties, and bought seven new proper-
ties. What they sold were low revenue producing assets in
tertiary markets that were older, and in need of capital im-
provements. What they bought tended to be larger assets with
higher revenues, and growth prospects.
Apples portfolio has an average effective age of four years.
Over 80% of the properties Apple owns are under six years
of age. This is consistent with their stated strategy of rein-
vesting in strategic assets to maintain a competitive ad-
vantage in existing markets.
6
9. Student Research Challenge
CFA Virginia Investment Research Challenge
January 28, 2016
7
Upper
Upscale
Upscale Upper
6.3%
5.9%
6.6%
6.1%
7.2%
5.3%
2015
2016
RevPar Growth, US Chain Scales
Supply Demand Occupancy ADR RevPar Total
RevPar
Operating
Expenses
1.7%
2.3%
0.6%
5.5%
6.1% 5.9%
3.6%
0%
2%
4%
6%
8%
10%
12%
Figure 10 Source: PKF Hospitality
Figure 9, Source: PWC
The lodging industry is highly competitive, and is driven by fac-
tors in the general economy as well as those specific to each lo-
cality.
Currency headwinds: The strengthening US dollar is ex-
pected to apply pressure to RevPar growth as a certain gateway
markets that serve international travelers experience difficulty in
raising average daily rates (ADR). Average daily rates have seen
nominal growth as gasoline prices act to put downward pressure
on inflation.
Occupancy gains momentum: Occupancy has been the driv-
ing factor for RevPar growth in 2015 as favorable supply condi-
tions continue to exist. US lodging occupancy reached 65.7%
which is a level the industry has not seen since 1981. Increases in
average daily rates (ADR), are struggling to materialize, and
have reduced RevPar growth to just 6.5% in 2015. Lower gaso-
line price’s are positively affecting occupancy rates as PKF ex-
pects to see eight continuous years of occupancy growth through
2017.
Supply demand balance: In 2014 demand growth exceeded
supply growth by 2.5% in all of the top 25 MSA’s. This trend is
in continuation as interest rates rising will put pressure on new
construction. PKF Hospitality Research estimates that this trend
will continue as demand again outpaces supply by 50 basis
points in 2016.See figure X
Multiplatform booking: The continued gravitation to online
distribution channels through hotel websites and online travel
agencies has aided both consumers and hotel operators in making
hotel reservations Guest reservations through hotel websites
grew by 7.1% in 2015 while bookings through direct calling
dropped by 8.4%. Online travel agencies are picking up the slack
as they experienced an increase of 15.1% alone in the first quar-
ter of 2015.
The sharing economy: Platforms like Airbnb are changing
how consumers think in terms of traveling. Airbnb has a private
valuation of close to $10 Billion, and has served over 30 million
customer since inception. Airbnb is most popular in dense urban
areas on peak capacity nights when traditional hotels can not
scale to capacity. The effects of the sharing economy are hard to
measure as it is an unregulated industry in many localities. In
Dallas, Texas where Airbnb supply is greatest a study showed
that hotel operators responded by lowering rates. However, the
segment within the hotel industry most affected were lower pric-
es hotels, and those not catering to business travelers.
Industry Outlook
10. Student Research Challenge
CFA Virginia Investment Research Challenge
January 28, 2016
Competitor Positioning
Low leverage: Apple’s has maintained a strategy to use as
little debt as possible. They began with this strategy in part to
produce a product with a lower risk profile, and returns on par
with municipal bonds. The use of low leverage is rare in real
estate especially in an age of cheap debt, but the consistent re-
turns generated by Apple are proof that leverage is not neces-
sary.
Higher margin products: The majority of publicly traded
companies are invested in the upper upscale, or luxury seg-
ment. These hotel tends to be full service hotels with multiple
food outlets, ballrooms, and convention centers. These type of
extra amenities come at a higher cost, and lower there margins.
Apple focuses on the upscale segment of this industry which
tends to produce higher and more stable margins.
Outperformance: Apple has consistently outperformed it’s
peers, and the it’s benchmark the Dow Jones All Equity REIT
index (DJR) as can be seen in the chart below (Apple in
Green, DJR in Blue).
8Figure 12:
Source Yahoo Finance
Figure 11
Source: Capital IQ
11. Student Research Challenge
CFA Virginia Investment Research Challenge
January 28, 2016
Investment Risks
Historically low interest rates: Interest rates have remained low
for nearly a decade now, and are beginning to rise. As Federal Reserve
policy loosens the risk free rate will rise causing the risk premium in
cap rates to increase. As investors demand a higher return for less risk
the premium associated with REIT will diminish. Apple’s low debt
structure, and propensity to acquire assets net of no long term debt
lead us to believe this risk is minimal, but a very real consideration
when evaluating any investment.
Cyclical nature of real estate: Real estate tends to hit peaks and
then bottom out. The ultimate question for any investor is what cycle
are we in? Real estate valuations just recently reached their pre 2008
recession levels, and the economy has barely prospered enough for
the Federal Reserve to loosen monetary policy. We believe the real
risk comes from external forces on the United States. Contagion in
Europe or hyperinflation in Japan could interrupt the U.S. recovery.
Brand attachment: Apple partners exclusively with the Marriot,
and Hilton brands. These franchise relationship’s determine the val-
ue of Apple’s brand. If Marriot or Hilton faces trouble so will Apple
Hospitality. Marriot recently acquired Starwood Hotels. The merger
may dilute the customer loyalty programs Marriot is known for, and
Apple believes is a major driver in value.
10
Increase in Real Gross Domestic Purchases increased 1.1% Q4
compared to an increase 2.2% in Q3. The bureau of Economics re-
leased statements last Friday at 8:30 am stating that there is still po-
tential for more growth in the REAL GDP. This benefits our analy-
sis in a positive direction making the value of our stock more valua-
ble and potentially increase due to positive market feedback in in-
creased stock prices. We will continue to see growth with the stock
along continued growth with the APLE REIT.
Figure 13:
Source US Economics Bureau
14. Student Research Challenge
CFA Virginia Investment Research Challenge
January 28, 2016
BUY
Figure 5 & 6:
Source: @Risk Monte Carlo Simulation
15. Student Research Challenge
CFA Virginia Investment Research Challenge
January 28, 2016
Figure 4:
Source : Operating Model-Income statement
2013A 2014A 2015E 2016E 2017E 2018E 2019E 2020E
Total Revenue 6.13% 107.19% 320.76% 5.25% 5.25% 5.25% 5.25% 5.25%
Hotel Operating
Income 8.03% -60.93% 427.64% 4.66% 4.83% 6.08% 4.73% 4.71%
Net Income 52.66% -94.07% 545.36% -7.63% 7.05% 9.12% 6.47% 6.78%
FFO 6.64% -4.62% 372.07% 4.46% 6.18% 7.27% 5.89% 6.06%
MFFO 8.19% 82.66% 367.99% 2.32% 6.00% 7.07% 5.75% 5.92%
16. Student Research Challenge
CFA Virginia Investment Research Challenge
January 28, 2016
Figure 6: RevPar Growth, US Chain Scales
Source: PWC https://www.pwc.com/us/en/asset-management/hospitality-leisure/publications/assets/pwc-hospitality-directions-us-
Upper
Upscale
Upscale Upper
6.3%
5.9%
6.6%
6.1%
7.2%
5.3%
2015
2016
RevPar Growth, US Chain Scales
Figure 6, Source: PWC
Figure 5:
Source: Operating Model-Income Statement
2013A 2014A 2015E 2016E 2017E 2018E 2019E 2020E
EBITDA 47.2% 35.0% 35.6% 35.1% 35.0% 34.9% 34.8% 34.7%
Depreciation as a
% of Capex 3.3% 3.0% 3.2% 3.5% 3.8% 4.0% 4.4% 4.7%
Operating margin 21.33% 4.02% 19.88% 19.77% 19.69% 19.85% 19.75% 19.65%
Net margin 29.70% 0.79% 17.15% 15.61% 15.87% 16.46% 16.65% 16.89%
17. Student Research Challenge
CFA Virginia Investment Research Challenge
January 28, 2016
Figure 7
Source: http://www.hospitalitynet.org/news/4073153.html
Figure 8
Source: Capital IQ
19. Student Research Challenge
CFA Virginia Investment Research Challenge
January 28, 2016
CFA Institute Research Challenge
Disclosures:
Ownership and material conflicts of interest:
The author(s), or a member of their household, of this report [holds/does not hold] a financial interest in the securities of this company. The au-
thor(s), or a member of their household, of this report [knows/does not know] of the existence of any conflicts of interest that might bias the
content or publication of this report. [The conflict of interest is…] Receipt of compensation:
Compensation of the author(s) of this report is not based on investment banking revenue.
Position as a officer or director:
The author(s), or a member of their household, does not serve as an officer, director or advisory board member of the subject company.
Market making:
The author(s) does not act as a market maker in the subject company’s securities. Disclaimer:
The information set forth herein has been obtained or derived from sources generally available to the public and believed by the author(s) to be
reliable, but the author(s) does not make any representation or warranty, express or implied, as to its accuracy or completeness. The information is
not intended to be used as the basis of any investment decisions by any person or entity. This information does not constitute investment advice,
nor is it an offer or a solicitation of an offer to buy or sell any security. This report should not be considered to be a recommendation by any individ-
ual affiliated with [Society Name], CFA Institute or the CFA Institute Research Challenge with regard to this company’s stock.
