Meanwhile, Student Managed Fund Takes Second in Annual UMass Foundation Competition
11/10/2016
By Ed Brennen
Finance students in the Manning School of Business are on a hot streak.
Not only did their Student Managed Fund recently take second place in the UMass Foundation’s annual intercampus investment competition, but they also have been invited to meet billionaire investor Warren Buffett this February in Omaha, Neb.
“It’s a dream come true to have the opportunity to meet with him,” says senior business administration major Jacob Ashley, co-president of the UMass Lowell Finance Society. “I’ve been a pretty big fan of Warren Buffett from a young age and I’ve read a lot of books on him, so I’m excited.”
This is the second time Manning students have been invited to meet with Buffett, who hosts select groups of business students from around the world several times each year. In 2011, Assoc. Prof. Ravi Jain took 20 students to Omaha, where they (along with students from seven other universities) picked Buffett’s brain during a two-hour Q&A, toured local businesses owned by his company, Berkshire Hathaway, and were treated to lunch at one of his favorite restaurants.
“It’s an excellent opportunity for students to not only meet Warren Buffett, which is a big deal in itself, but also to meet and interact with other students from other universities,” says Finance Department Chair and Assoc. Prof. Saira Latif. “It gives them a macro perspective of ‘Why am I in college?’ and ‘What’s my goal?’ That becomes clear to them.”
Jain will take up to 20 students on this February’s three-day trip, depending on how much money they can raise to cover travel expenses for airfare, hotels and meals. Buffett requires that one-third of the student group be female, although Manning Dean Sandy Richtermeyer has bumped that requirement up to one-half.
“I like how he’s almost never satisfied,” Winter says. “He didn’t need to keep working at a certain point, but he chose to because he enjoyed it. It’s not about the money anymore.”
Winter and Ashley are both involved this semester with the Student Managed Fund, a course taught by lecturer Chan-Wung Kim. The fund was started in 2008 by the UMass Foundation, which gave $25,000 to four of the system’s campuses — Lowell, Amherst, Dartmouth and Boston — to invest in the market for real-world lessons in fund management.
Each fall, students in the course analyze companies across different business sectors and put together analyst reports recommending particular stocks. Kim and the students collectively decide which investments to pursue with the ongoing fund; at the end of the semester, the holdings are finalized.
Since the initial investment of $25,000 in 2008, the Manning School’s fund has grown nearly 400 percent to $95,000 as of June 30. For fiscal year 2015, the fund grew 10.88 percent, compared to a 7.42 percent return for the Standard & Poor’s 500 Index during the same period.
The fund, which has never lost money, has won the annual competition against the other UMass schools three times and finished second the past two years. Students in this semester’s course visited the UMass Club in Boston on Nov. 2, where they accepted the second-place award for the FY15 performance.
In addition to turning textbook finance theory into real-world investments, Latif says the course helps students learn the patience required for long-term investment strategies. Once the class buys its stocks, its choices are locked in through the spring semester — no matter how much the market fluctuates.
“Being young adults, they have to come out of that instant gratification mode,” Latif says. “They have to wait nearly a year to realize whether the decision that they made actually panned out or not.
“This isn’t day trading,” she adds. “That’s not what finance is all about. People who are in the finance field don’t take it as a casino game. We look at the fundamental ability of a firm to make profits over the long run.”
That’s a fundamental ability that Buffett has perfected over the course of his career — and something Manning students plan to learn about firsthand in February.