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Investment Challenges: Students Manage Real Money in Real Time

Written by Brian Keefe

Core Trading Consultants make their pitch in the trading room.

Students in the Ithaca College School of Business are perhaps the best dressed on campus -- professional attire is the norm for the business meetings and presentations that occur daily. For one day each semester, though, a small group of students take extra care to straighten their ties or iron their blouses. This is the Real Time Portfolio Management Class, and on this day they present on the composition and performance of the Ithaca Fund to the Alumni Investment Advisory Board.

Originally founded after an anonymous $100,000 donation to the School of Business, the yearlong class has since allowed students to act as money managers for the Ithaca Fund, a real securities portfolio. Students use the state-of-the-art Center for Trading and Analysis of Financial Instruments to monitor the fund’s performance and research prospective securities to add to the portfolio. After a presentation to the class, the security is added to the portfolio upon a majority vote. At the end of each semester, the class holds a meeting with the advisory board, a group of business school alumni who now work for financial firms and are well-versed in the world of stocks and securities.

Taught by Professor Abraham Mulugetta, the senior-level course aims to teach students investment decision making, how to initiate and execute trades, portfolio risk management, and performance evaluation. Students utilize advanced financial software and mathematics to aid in securities research, and they practice daily what they’ll be doing in real finance careers after graduation.

At the meeting, the class had positive performance to report despite the downturn in the financial markets. Having 9.7 percent earnings year-to-date, and up 7.5 percent in relation to their benchmark, the class seemed to be practicing what they were learning quite well. New holdings such as Ultra Petroleum Corporation, Archer Daniels Midland, Wells Fargo, and Chicago Bridge & Iron added diversity through exposure to new market segments. The presenters used detailed financial ratios and future price per share projections to thoroughly explain why each company offered prospective long-term gains. They also offered an analysis of Merck & Company, a security in the healthcare sector that did not pass the majority vote restriction.

With only 77 percent of the fund allocated, there is a lot of room to grow. Jeff Gayer ’11 says, “We’ve reorganized the fund to be more attuned to the market and we’re now able to take it to another level.” Last semester, the class succeeded in reorganizing the fund’s industry group sectors and can now adapt a top-down method of portfolio management.

Looking toward the spring semester, Stefan Stefanov ’11 says that due to this shift in structure, the class can now “incorporate additional financial software into security analysis, and promote greater dedication to monitoring current holdings.”

After the class concluded their presentation, the Alumni Investment Advisory Board took the floor. First critiquing each holding that the class discussed, members of the board gave individual opinions regarding the decisions that were made. An additional piece of feedback was to utilize debt securities as an added tool for analysis. Most notably, though, the board also suggested that the class should track and monitor securities that are rejected in the majority vote. Doing so will prove if they are good at rejecting, or need to reevaluate the criteria they employ.

Combining the experience gained in the first semester with the feedback received from the investment board, the Real Time Portfolio Class is well-prepared for a successful second semester. Recapping on what was learning in the first semester, Scott Steimer ’11 says, “We learned to recognize what mistakes were made and what changes were occurring within our companies. Now we can update our holdings accordingly.”



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