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Cole Schymanski

Mr. Corbo

English 12

1/20/200

Financial Analyst I-Search

What I Knew:

I was 13 when I started my personal stock portfolio and Apple was the very first

company that I invested in; I bought 2 shares. From a very young age, I watched the news every

morning while eating breakfast before school and kept a pulse on what was going on in the

world. I’ve always had an interest in technology and would follow companies such Apple,

Microsoft, and Intel. I taught myself what I needed to know to start a portfolio and purchase

stocks.

Most people do not understand the work that goes into picking a stock. You have to

choose a platform or person to make the sales or buying of stock. The trading platform I chose

was E-Trade because of its simplicity, account minimum, and it offered commission-free trading.

Stock is owning a part of a company and allows people to have say in the company. Before you

can own a stock, you have to know the stock ticker symbol. The ticker symbol is meant to

simplify the company name and be used by the Security Change Commission; for example,

Apple’s ticker symbol is APPL. The Security Change Commission is in charge of the regulations

and the laws of the stock market in the US.

Dow Industrials is one of the biggest stocks in the New York Stock exchange and has 30

companies in it. The Dow is used to show the health of the US market and which industries of

the country are strong. Nasdaq Composite and S&P 500 are some of the other stocks that show
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US health and have tons of companies in one stock price. Some of the companies will hand out

dividends which are quarterly or yearly cuts of their profit depending on how many shares you

own.

With this information, I wanted to find a way to build a passive income and help others

find success in the stock market. I joined the EHS Investment Club and worked with experienced

leaders, learned how to research companies, and the club had access to more capital. As a result

of my personal interest and my role in the Investment Club, I want to help people find a way to

make money and build connections with them. This Capstone Project is going to help me better

understand the stock market and learn the skills required to be a Financial Analyst.

What I Wanted to Know:

As my senior year starts coming to close, I need to find a major and career opportunity

that combines my passion and interests. I am planning on pursuing a Finance degree in college.

The Capstone Project will allow me to see what a financial degree can do for me and the

different types of jobs. Finance is defined as the management, creation, and study of money or

investments. Thinking of my Capstone Project, my overall question is, what does a financial

degree have to do with the stock market? Since this is too broad of a question, it may be helpful

to focus on careers related to the stock market. The real question is: What is it like to be a

financial analyst or planner, and what are the daily tasks?

What is the difference between a Financial Analyst vs a Financial Planner? A Financial

Analyst is a person who researches stocks, companies, and other financials to help investors or

corporations, while Financial Planners are used to advise clients and plan what stocks should be

included in a portfolio. Each of these jobs are very different but have many similarities with each
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other. What type of Financial Analyst do I want to be? Analysts can work with companies,

bonds, and stocks. I want to work with the stocks because of my experience. I am more

interested in being a Financial Analyst because I like finding the next big stock or big company. I

will be able to get a good foundation and experience with my Capstone mentor.

With my mentorship, I am looking forward to learning more about industry tailwinds and

gaining a better understanding of the stock market. My mentor has a major in Finance and

industry experience; this will allow me to see how a Finance degree factors into a career. It will

help me understand the daily tasks of a Financial Analyst and will provide an overview on how

to pick the next stock. This mentorship will provide firsthand experience working with an

accomplished Finance professional and an opportunity to learn from him and network.

The end goal of this project is to learn more about the stock market, the role of a

Financial Analyst, and ultimately to see if this is a potential future career for me. I am hoping

this experience will enhance the interest and passion I’ve had as a hobby and help in my decision

to pursue Finance as a degree in college. I do not want to work in a job or industry that I do not

enjoy or that is stagnant and boring. This Capstone Project will provide some insight into

potential, future career options.

What I learned:

The journey to finding out what it is like to be a Financial Analyst has exposed me to all

of the work and time they have to put in. Over the weeks, my mentor challenged me to focus my

research on the Naked Wine stock and in doing so, gaining more knowledge of the stock market.

An Analyst would do their research on Naked Wine research and report their findings to the

portfolio team. I had a general understanding of what a Financial Analyst is, but I wanted to

learn more about the job.

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What is a Financial Analyst? According to CFI, a financial analyst is, “Gathering data,

organizing information, analyzing historical results, making forecasts and projections, making

recommendations, and presentations” (What Does a Financial Analyst Do). This actively

demonstrates that the Financial Analyst requires many skill sets and has a lot of work to

complete. The position focuses on organizing/gathering data, and making presentations. I started

with E-Trade by understanding the website better and seeing all the resources they offered. E-

Trade has an analyst feature to show what the community recommends on the stock. This analyst

feature shows a track record of the person's financial recommendations. The E-Trade feature will

give me insight on how Naked Wine is recommended by other people and with other research.

Another point of being a Financial Analyst is that you have to be on top of daily news and

information. Investopia stated, “Analyst must be aware of current developments in the field in

which they specialize, as well as in preparing financial models to predict future economic

conditions for any number of variables''(Segal). I read the news every morning to be aware of

current events and see how this will affect Naked Wines.

One of the biggest current events that happened in January and February was the short

selling of GameStop and AMC stock. People who were borrowing the stocks lost billions of

dollars for doing this. CNBC had a good article about the short selling which said, “Short sellers

mostly are holding onto their bearish positions or they are being replaced by new hedge funds

willing to bet against the stock. GameStop shares that have been borrowed”(Li). How it worked

was that people who own GameStop shares would let investment firms borrow it for a fee. The

investment firm would then sell it to people who want to buy the share at a higher price. Then the

investment firm waits for the stock price to fall on the failing company. The investment firm will

buy back the share after the stock price falls. After, the investment firm must give back the
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borrowed stock to the real owner of the stock. CNBC also stated, “Short-selling hedge funds

have suffered a mark-to-market loss of $19.75 billion year to date”(Li). You can see this is part

of the dark side of the nonprofit side of the stock market and you can lose tons of money in this

business.

Mr. Gilcrist is my mentor who will help me with my research and what it is like to be a

financial analyst. He is the President and Owner of KCG Holdings LLC, which focuses on

primary investment research on a global basis. With his company, he invests in a spectrum of

public equities, public fixed income, private equity/venture capital, and commercial real estate.

He has a M.B.A. and B.B.A. from the University of Iowa and is a C.F.A. Charterholder.

Mr. Gilcrist told me that there are five parts that make a great investment. He told me,

“Macroeconomic tailwind, industry tailwind, company specific differentiation, what is under-

appreciated, and Valuation. When you have all 5, you have a top investment for your

portfolio.”(Gilcrist). The first one is macroeconomic tailwinds - this shows the overall national

health and wellbeing. The US Department of Labor reported the February job growth of the

nation and stated, “In February, most of the job gains occurred in leisure and hospitality, with

smaller gains in temporary help services, health care and social assistance, retail trade, and

manufacturing. Employment declined in state and local government education, construction, and

mining”(The Employment Situation February 2021). The nation is healing but there is still tons

of work to get this nation back to normal. With the new 1.9 trillion dollar stimulus will help heal

the nation. The US Department of Labor reported for unemployment, “Total nonfarm payroll

employment rose by 379,000 in February, and the unemployment rate was little changed at

6.2”(The Employment Situation February 2021). The government is still paying for a lot of

people unemployed and benefits. The national unemployment is better from the past year.
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Next is industry tailwinds which are to see how the industry is doing and is this the place

to put money in. With this, it allows us to see if the industry is growing faster than the GDP.

According to the Wine Intelligence US Landscapes 2020, “Wine drinking population of 77

million in 2019, or approximately 1 in 3 American adults, down from an estimated 88 million in

2015”(Courtney). This shows us that the wine drinker is going down but the cause comes from

the aging boomer generation. Vintage Economics shows the data of the population age in the US,

“The 50 to 64 population peaked in 2017 and will contract over the next ten years as Gen X

replaces the boomers. And the young adult population is nearing a peak as Generation Z, which

begins turning 21”(Bitter). There is going to be new growth with the millennials and generation

Z.

The next step is company-specific differentiation: learning about the business and

finding ways to make it different from others. The company we are looking at is Naked Wine

and the company has been doing very well. Drink International said, "Revenue increased 95% in

the US, 76% in the UK and 48% in Australia, with new customer sales, repeat sales and margins

all increasing"(Green). Naked Wine is growing but they still have a ton of growth ahead. Naked

Wine is a company that allows winemakers to avoid spending months distributing their wine and

getting wine company names out in the market, so that wine makers have the freedom to focus,

bring them better prices, and make great wine.

Now we have to find what is under-appreciated by the market, and find what makes the

company special, like when the stock was able to shoot up 200 percent. Naked Wine PLC is the

parent company of Naked Wine. The company is direct to consumers which means you do not

need a middle man to sell the wine. On their investor relation website, “Sales to new customers

+250% year on year from investment in new customers up 100% vs the same period last year.
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Sales to repeat customers +50% with sales retention in excess of 95%. The crisis has served to

demonstrate the resilience and scalability of the core”(Naked Wines Plc Annual Report). This

shows the company can keep their customers happy and get them to come back to the website.

Valuation is the last step to make sure the company is the right one and to see the

competition. This is what makes the stock have a target price, and what analysts say about the

price. The other part of it is the Free Cash Flow model (FCF). It also includes Customer

acquisition cost (CAC), Depreciation, and Amortization.

Now we have to understand what a FCF (Free Cash Flow) model is. A FCF is to help

financial people understand where a company can go for future growth and see past growth. You

have to start with the revenue of the company (Naked Wines) and look at the past to help predict

what the future revenue will be. Then you find the free cash flow of the company, which is the

cash they have on hand and with no expenses with it. After that, then you find the shares

outstanding with the company or how many shares make up the company. You have to take the

free cash flow and divide it by share outstanding. With that you will have a free cash flow per a

share. The next part is to take the free cash flow per a share and divide it by the share price right

now. This will lead FCF yield which will help you see the growth of the company right now and

how much it is growing year over year.

Mr Gilcrist was the one who taught me how to do this and explained to me how it is

done(Gilcrist). If you have the percent in the decimal places the company is barely growing and

you want the percent to grow every year. I am looking for the companies that jump a few percent

a year, not just a few decimal percent a year. Naked Wines is one of those companies that is

growing. Mr. Gilcrist was able to calculate “6.9 percent growth for 2021,” and a, “7.4 percent for

2022”(Gilcrist). Those are impressive growth percentages for this company and the company can
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have a bright future if it can continue the growth. This is what is going to help make the stock

price increase based on future earning which is called a growth stock. You have to take a growth-

stock approach so it makes you make a profit and follow the positive of the stock market. The

Intelligent Investor states, "Growth stock may be defined as one which has done this in the past

and is expected to do so in the future"(Graham 91). The stock price is expected to do well on

future earning and what makes a stable stock. With these growth numbers, we have to

understand how the wine industry works and how they are planning to distribute it here in the

US.

There are three parts of the wine industry: the Manufacturer who is the winemaker, the

Distributor who transports wine and sells it to retail, and lastly, the Retailer who sells it to the

consumer because they have a state liquor license. The US has laws that prevent anyone in the

market from being 2 parts of the systems at all times. For example, California winemakers make

the wine and the distributor plans to sell in Texas needs to pay for sales tax or liquor tax. When

it goes to retail, then you have to pay state sales tax. This is showing the current US selling

model and type of costs added to consumers. I talked to Mr. Palacios about the wine industry

are looking for and what their profit margins are. Mr. Palacios (wine distributor) told me,

”Winemakers work on a 25%-30% gross profit, Distributor 30% gross profit, and Retail 25-35%

gross profit”(Palacios) Many people want to get a share of the pie and Naked Wine would

eliminate the retailer and take the distributor position in the pie. With the retailer gone, then the

winemakers can get a bigger share of the pie 35-45 percent, while Naked Wines can get 40-55

percent.

The current US wine model for the cost of 12 bottles: cost of the wine equals $56.00,

freight equals $76.00, distributor divided by .70 equals $108.57, retailer divided .65 equals

$167.03, and your total would be $167.99 for the end consumer(Woodward). I interviewed Scott

Woodward (Partner and Co-Founder, Appellation Wine Company), to get information about the
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current US model. The Naked Wines current model for 12 bottles costs $56.00, freight costs

$10.00, Naked Wine costs $25.00, Retail $0, and the total cost for consumers equals $91.00. This

shows how Naked Wine is going to disrupt the consumer market for wine and helps save cost for

consumers. This also helps make the wine company become more profitable and increase market

share as they get a bigger slice of the pie.

Why this is important to me:

First and foremost, I am thankful for my mentorship from Mr. Gilchrist. Mr. Gilchrist has

been very successful in his past, and current, career in Finance. I had the opportunity to work

with him in the EHS Investment Club and I immediately knew he would be the right person to be

my mentor for this Capstone Project. When I initially approached him, he was very receptive and

actually thought that I could help him since he works solo.

My goal initially was to just learn more about the stock market and the role a Finance

degree plays into a career. I’ve had a personal interest in the stock market since I was 13

however it’s always been more of a hobby. Up to this point, I wasn’t quite sure that it was a

career interest. Everyone had always pegged me to do more with technology, computers, and/or

engineering. I started thinking about Finance more as a career after my Junior year and

experiencing the EHS Investment Club. Working with Mr. Newkirk and Mr. Gilchrist exposed

me to the reality of Finance as it pertains to the stock market.

I had dabbled in the stock market at the age of 13 but it was with limited funds (birthday

gift money and summer earnings); the EHS Investment Club had capital of $50K. The last 6

weeks, I’ve had the opportunity to work directly with Mr. Gilchrist. He shared his investment

thesis with me and had me apply it to a stock of his choice-Naked Wines. Independently, I had to
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work through the 5 steps he outlined and we would touch base. He coached me along the way-

where I needed to improve, expand, etc. I enjoyed the process and I learned a lot about the

process which I can apply to future stock picks for my personal portfolio.

Despite Capstone ending, this mentorship program has allowed me to develop a

connection with Mr. Gilchrist and I look forward to working with him the remainder of the

semester in EHS Investment Club and as a mentor beyond. The time with him was valuable and

it more than adequately provided me with an answer to my initial question. I clearly see how a

degree in Finance has a direct connection with the stock market. I have a better understanding of

the role of being a Financial Analyst and the steps that are required to analyze (on so many

levels) to make an informed stock pick. This experience has solidified my interest in Finance and

will allow me to be successful in a job/industry I will enjoy and be able to help others too. I feel

fortunate to have been able to establish this relationship with Mr. Gilchrist and the opportunity to

have him as a mentor beyond Capstone.

Work Cited

“2020 Year in Review.” Naked Wines PLC, Naked Wines, 17 July 2020,

www.nakedwinesplc.co.uk/investor-centre/year-in-review/.
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Abernathy, Courtney. “Press Release: Frequent Wine Drinking Population in the US in Decline,

Led by Younger Consumers, Though Overall Participation in Wine Category Up.” Wine

Intelligence, Courtney Abernathy Https://Www.wineintelligence.com/Wp-

Content/Uploads/2018/07/logo5.Png, 13 Jan. 2020, www.wineintelligence.com/press-

releases/press-release-frequent-wine-drinking-population-in-the-us-in-decline-led-by-

younger-consumers-though-overall-participation-in-wine-category-up/.

Bitter, Chris. Demographic Change and Wine, Vintage Economics, 30 May 2019,

www.vineconomics.com/blog/demographic-change-and-wine.

Cory, Gilchrist. Personal Virtual Interview. February 2021.

“THE EMPLOYMENT SITUATION — FEBRUARY 2021.” Bureau of Labor Statistics, United

States Department of Labor, 4 Mar. 2021, www.bls.gov/news.release/pdf/empsit.pdf.

Green, Martin. “Naked Wines Revenues Increase 79.6% - Drinks International - The Global

Choice for Drinks Buyers.” Global Drinks Industry News, Analysis and Brand Updates,

Agile Media Ltd , 19 Nov. 2020,

drinksint.com/news/fullstory.php/aid/9228/Naked_Wines_revenues_increase_79.6_25.ht

ml#:~:text=Naked%20Wines%20enjoyed%2079.6%25%20revenue,the%20firm%27s

%202021%20financial%20year.

Graham, Benjamin, 1894-1976. The Intelligent Investor: a Book of Practical Counsel. New

York: Harper, 1959.

Li, Yun. “GameStop Short Sellers Are Still Not Surrendering despite Nearly $20 Billion in

Losses This Month.” CNBC, CNBC, 29 Jan. 2021,

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www.cnbc.com/2021/01/29/gamestop-short-sellers-are-still-not-surrendering-despite-

nearly-20-billion-in-losses-this-year.html.

“Log On to E*TRADE: E*TRADE Financial.” Log On to E*TRADE | E*TRADE Financial,

E*TRADE Financial Holdings, 2021, us.etrade.com/etx/mkt/quotes?

symbol=MJWNF#/snapshot.

“Naked Wines H1 FY21 Investor Presentation_lowres .” H1 FY21 Results Presentation, Naked

Wines, 28 Sept. 2020, file:///Users/markschymanski/Downloads/Naked%20Wines

%20H1%20FY21%20Investor%20Presentation_lowres%20(1).pdf.

“Naked Wines Plc Annual Report and Accounts 2020.” Naked_Wines_AR20_WEB , Naked

Wines, 2020, file:///Users/markschymanski/Downloads/Naked_Wines_AR20_WEB

%20(2).pdf.

“NAKED WINES PLC ORD 7.5P (WINE.L) Stock Price, News, Quote & History.” Yahoo!

Finance, Yahoo!, 15 Mar. 2021, finance.yahoo.com/quote/WINE.L/.

Segal, Troy. “Becoming a Financial Analyst.” Investopedia, Investopedia, 28 Aug. 2020,

www.investopedia.com/articles/financialcareers/06/financialanalyst.asp.

Scott, Woodward. Personal Interview. February 2021.

Velez, Jorge. “The GameStop Situation: Simplified.” Learning Decision Theory and Its

Applications., Learning Decision Theory and Its Applications., 29 Jan. 2021,

jorgevelez.substack.com/p/the-gamestop-situation-simplified.
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“What Does a Financial Analyst Do? Job Responsibilities, A Day in the Life.” Corporate

Finance Institute, CFI Education Inc, 25 Feb. 2021,

corporatefinanceinstitute.com/resources/careers/jobs/what-does-a-financial-analyst-do-

day-in-the-life/.

“WINE Stock Price: Naked Wines PLC Stock Quote (U.K.: London).” MarketWatch,

MarketWatch, 2021, www.marketwatch.com/investing/stock/wine?countrycode=uk.