Queenie Stone started her career as an asset manager for a large investment bank in New York City. Her manager tasked her with creating a new three-stock portfolio and investigating how changes in her inputs of expected returns, standard deviations, and correlations would impact her portfolio asset weights. The stocks included the Procter and & Gamble Company (PG), JP Morgan & Chase & Co. (JPM), and Advanced Micro Devices, Inc. (AMD). Queenie created an equally weighted portfolio as a base case to compare with Markowitz’s optimal portfolio construction methodology, based on modern portfolio theory. Using Queenie’s equally weighted model with the necessary formulas, students use Excel’s Solver tool to find the optimal portfolio allocations among these stocks.
This note provides an overview of asset management and capital markets, the different types of firms in this industry, types of investments, the different investment styles and strategies employed by asset managers to help them achieve their goals, and asset manager roles and responsibilities.
On September 25, 2019, an activist investment management company, which was sometimes referred to as the biggest activist hedge fund in the world, publicly released a detailed report advocating for Marathon Petroleum Corporation to be split into three separate companies, divided along three major business lines: oil refinery, midstream services (i.e., pipelines), and retail. The refinery company would consist primarily of 16 oil refineries in the United States and would retain the Marathon name. The midstream company, which would consist of pipelines, logistics, and oil terminals, would be formed from MPLX LP, the publicly traded subsidiary that was 63 per cent owned and fully operated by Marathon Petroleum Corporation. The retail company would be formed from Speedway LLC, the wholly owned subsidiary of Marathon Petroleum Corporation that operated 3,923 retail locations across the continental United States. The investment company argued that Marathon Petroleum Corporation's shareholders stood to benefit considerably from the proposed split. Was the proposition a good idea?