Students make 18% by managing funds

Fundmanagers, here they come!

"So far, Peters and the other 26 Smeal College of Business students who manage the Nittany Lion Fund have been right about a lot more than Nike. Since the fund was launched in January, it has generated returns of 18.4 percent through Dec. 2 vs. the 6.2 percent return on the Standard & Poor's 500. "

http://www.post-gazette.com/pg/05345/620253.stm



Nittany Lion Fund
ASSETS UNDER MANAGEMENT
$3 million, 91.1 percent in stock, 8.9 percent in cash
Of the 35 stocks in the portfolio, only four are down for the year
LARGEST HOLDINGS
Nike, 5.3 percent
United Health Group, 5.3 percent
Pharmaceutical Product Development, 4.8 percent

BEST PERFORMERS IN THE FUND
Western Gas, up 62 percent
Consol Energy, up 45.6 percent
Seaboard Corp., up 42.6 percent

WORST PERFORMERS
Pfizer, down 14.1 percent
Mitsubishi UFJ Fin, down 5.7 percent
Lyondell Chemical, down 4.7 percent

 

Sounds nice. But remember these are STUDENTS, the money is not theres, the folks still send them pizza money and the freight to get then through school. The real world still lurks in the not so distant future. Lets hope they learn something, because once they hit the bricks of real life and the bills are in their own name it is a different ball-game....

 

Something like that here:



http://www.acs.ucalgary.ca/~cpmt/

"The Calgary Portfolio Management Trust has been a training ground for the top finance students in Canada. The students gain investment experience and knowledge through active management of a real money stock portfolio. The purpose of the Trust is to augment scholastic knowledge with hands-on research, analysis and investment. Trading of the Fund began on October 18, 1996 and has since grown to over $270,000.

"

 

Just put their asses on the line and watch them all f*ck up worse than a bum on the street.

 

Their final exam is what they do during a long losing streak.

 

I guess some of you are pissed at their success!

The more interesting question would be:

Just how do they make decisions, when 1-2 dozen students are involved in the decission making?

 

Last time I checked, fundmanagers also handle OTHER people's money.

If you read the article, the students were bullish on NIKE when the big fundmanager was shorting it, NIKE promptly went up 4%...

 

But still, the fund managers’ careers and reputations are on the line.

I made my cliché reactionary comment to this thread because at least once a year, we hear success stories about students managing portfolios, real or hypothetical. And once again, we see the perpetuation of prejudice that education is a prerequisite for thinking outside the box, which is false.

The students may have an advantage of seeing some opportunities because they are fresh and outside the industry. But consistency is key and they must eventually work in the industry and see the opportunities their colleagues do not see.

The fact is that practically every college is doing this, and we don’t hear about the mediocre or poor performers. So this news is no more remarkable than hype around some dog having his day. What is even less remarkable is their “best performers.” Getting into defensives like food and energy (and metals) as far back as 2003 was common sense to a lot of us, and I never got my common sense from college.

I’m sure there are a lot of aspiring college students in ET, and I just want to point out that just because you are in college doesn’t mean you are in the “know” when it comes to buying and selling and building portfolios.

 

From my experience, the students work under the professor who in turn coordinates with the true fund manager who is running the school's endowment funds. For example at George Washington where they also started this class, the professor is the head manager of the group that manages the school's endowments so all trades have to clear through him.

So basically the students become a research pool for the manager to make the final decision. Therefore it really gives the students first hand knowledge on researching and overseeing a portfolio which is quite valuable. However returns are always all over the place and usually track the market. When the market is good, they usually do well, when it is bad the good ones still eek out something while the norm has a small loss. Since the money is endowment funds earmarked for the business school, there is a tight reign on the stocks chosen since the school does not want to lose that money. Profits are usually used for the school itself. But the fund is usually hampered by the manager to pick mostly large-cap stocks or at least avoid most small not widely covered issues.

So these class funds usually track most majot large cap growth and value funds and like most muutal funds, some do exceptionally well in a given year. More interesting is a school whose class has consistently put up such returns which is unlikely since the students change every year and therefore research is always diferent.

Certainly fun to do if you are a student though.

 

whats the big surprise? this kind of stuff happens EVERY year. i would be surprised if they did it year over year though... that's like getting H H H H H H H H H in a coin toss.

btw their top 3 was over 40% returns but only did < 18% cumulative. obviously they werent confident there.