Product Overview

Set in late 2016, this case recounts the remarkable performance record of Blue Chip Growth Fund (BCGF), a mutual fund managed by Larry Puglia at T. Rowe Price, Inc. The case describes the investment style of Puglia, whose record with BCGF had on average outperformed the S&P 500 since the inception of the fund in 1993. The tasks for the student are to assess the performance of the fund, consider the sources of its success, and decide on the sustainability of Puglia's performance. Consistent with the introductory nature of the case, the analysis requires no numerical calculations. The instructor should not be deceived, however: the absorption of capital-market background and the implications of financial concepts in the case will fully occupy the novice. This case updates and replaces “Bill Miller and Value Trust” (UVA-F-1481) and "Peter Lynch and the Fidelity Magellan Fund" (UVA-F-0777). The case is intended for use in the opening stages of a finance course. It provides a nontechnical introduction to the U.S. equity markets and lays the foundation for some basic concepts in finance.

Learning Objectives

Motivate a discussion of the concept of capital-market efficiency; Impart some recent capital-market history—in particular, regarding the market crash of 1987, the Internet bubble of the late 1990s and early 2000s, and the credit crisis/recession of 2007-08; Convey a perspective on the role of large institutions in setting securities’ prices; Introduce the basic concept of value additivity. As illustrated by the net asset valuation of mutual funds, the value of a firm will be equal to the sum of the values of its parts; Affirm the notion of using market benchmarks to assess performance;.