Students manage about $2 million in stocks
Hands-on learning is taken to a new level in the College of Business Administration.
The college’s Portfolio Management class allows students to handle more $1.6 million in real world money while the Finance Club handles more than $170,000.
With few examples nationwide of students managing real money funds, the college decided to give students a practical experience in investing by creating a fund in 1993.
The first fund began with a donation from Martha Seger, a former Central Michigan University professor who was later assigned by President Ronald Reagan to be on the Board of Governors of the Federal Reserve.
By matching her donation, money from corporations, former alumni and the finance department, the Martha Seger Fund had a modest $12,000 by 1997. By 2015, the fund has grown to $170,000.
“The growth is primarily from the stock market growth,” said Dean Charles Crespy. “A better way to put it may also be that prudent and well-advised strategies by the students investing the money yielded a high amount of return.”
The college then gained the Tom and Vicki Celani Fund, when Celani pledged $1 million to start a student-managed fund. He began by giving colleagues Harley Davidson Motorcycles that were auctioned off by marketing students on eBay. The money awarded in the auctions went into the fund that the finance class soon began to manage.
Celani began donating money in 2005. The money would come in “odd amounts” sometimes, said Senior Associate Dean of the college and the founder of the Seger fund Daniel Vetter. It took about six years to get the full million dollars.
The fund has since grown to $1.6 million. Since gaining the Celani Fund, the management of the Martha Seger Fund shifted to the Finance Club while the Celani fund is now managed in the Portfolio Management class.
Students managing the Celani Fund view the portfolio to determine how well diversified the market is and how much risk is being taken. Stocks that were doing well and which may be overweight, or expected to be above the average return of the overall industry, are also checked.
Students used a “top-down” approach for individual stock analysis. The “top-down” approach consists of students looking at the economy's given predictions for the upcoming year. This included viewing which industries they believed would do the best and then looking inside those individual industries to see which stocks are excelling.
“The model is the kind students would use if they went into a corporate setting so we are mimicking what they’d do on the job,” Crespy said.
Students present in groups to determine which stocks they want to invest in and why. The class votes on the proposed stocks, but the decision ultimately lies with Professor James Felton, who teaches Portfolio Management.
The Celani Fund is invested in over 140 companies, including Apple, Cerner Corporation and Silicom Ltd. The Martha Seger Fund is invested in 39 companies, including Adobe System Incorporated, Perrigo Company Public Limited Company and Lockheed Martin Corporation.
The Martha Seger Fund earnings are required to go toward something student related. Money from the fund contributed toward trips to New York. On the trips, students visit major financial institutions like the Federal Reserve and the New York Stock Exchange.
Felton said using real money gives students interest, and experience doing analysis of the economy and industries. Having the experience under their belt, he said, helps them while interviewing for a job.
“Handling real money gives them something good to talk about, and because they know something about a couple of stocks they could explain to a company for an investment career,” he said.