Research + Patience = Profit
That’s the simple equation that helped a team of Manning School of Business
students defend UMass Lowell’s crown in the Student Managed Fund challenge, an annual investing competition sponsored by the UMass Foundation
The UML team, made up of more than two dozen finance students enrolled in Prof. Ravi Jain
’s Student Managed Fund course last fall, researched portfolio managers and investment strategies before picking real stocks to invest in at the end of the semester.
The UML portfolio gained a 10.24 percent return for the fiscal year ending June 30, which was on pace with the benchmark S&P 500 Index return of 10.42 percent. UMass Dartmouth finished second in the competition, which also includes UMass Amherst and UMass Boston.
“The fund is the most real-world course I’ve taken at UMass Lowell,” says Louis Cirignano, a senior business administration major from Winchester who was among a dozen team members to receive a certificate – and a $5,000 top prize to invest back into the fund – during a recent luncheon at the UMass Club in Boston.
Cirignano, whose concentrations are in finance and entrepreneurship, credits the UML fund’s success to Jain’s emphasis on “value investing,” which he says is “based heavily on financial indicators and long-term brand values.”
Since the competition was launched in 2008, when the UMass Foundation gave each of the four campuses $25,000 in seed money to invest, UML has won five times (most recently in 2018
) and has finished second in five other years.
“The fund is the most real-world course I’ve taken at UMass Lowell.” -Student Managed Fund member Louis Cirignano
Through capital gains and award winnings, UML’s fund has grown 11.4 percent annually to $160,000. The S&P 500 has grown 8.1 percent annually over that time.
More than 200 undergraduate students from the Manning School have participated in the fund over the past decade, while a new graduate fund competition launched last spring (the results of which will be announced in early 2020).
Jessica Maki, a senior business administration major from Taunton, says she learned “industry-applicable skills and techniques” in the course that would have taken her time to acquire on the job.
“With the research, presentations and analysis leading up to the real-life choices at the end of the semester when we invest, the class is almost more akin to an on-campus internship,” says Maki, whose concentrations are in finance and management information systems.
In addition to teaching students valuable career skills, Jain hopes the course helps demystify the investment world for them.
“More important than earning high returns is helping students get over the fear of investing,” says Jain, who does that by espousing what he calls a “sound process.”
First, students learn the philosophies of successful investors such as Warren Buffett, Charlie Munger and Catherine Wood. Then, they do a deep-dive analysis of well-established companies that have proven profitable over the long haul, looking at income statements, balance sheets and cash flows.
“A sound process is the best way to counter the continuous noise and volatility of financial markets,” says Jain, who teaches the course using the Bloomberg terminals in the Pulichino Tong Business Center’s trading room. He credits the support of Manning School Dean Sandra Richtermeyer and the efforts of Judith Murphy, the UMass Foundation’s associate vice president and controller.
While Jain provides students with guideposts for their investment decisions, Maki says he leaves the final decision in their hands.
“Professor Jain creates an environment that encourages us to question things and make our own decisions,” says Maki, who found that the course was an opportunity to apply the theories she’d learned in previous finance classes.
Senior business administration major Kellsie Howard
of Georgetown says the course “totally changed my outlook” on investing.
“Anyone can go onto Yahoo! Finance and look at financial data of a given stock and make an investment decision,” says Howard, whose concentrations are in finance and management. “But you don’t typically see a company that’s on the rise until, well, it’s actually on the rise – which means the investor wasn’t first to buy in.”
Rather than “gambling” on the “latest fad” in hopes of making a quick profit, Howard says she learned that investing requires patience.
“Study a company and learn what makes them a good investment,” she says. “Then be patient and trust that the company you invested in will stay true to the promises that you believe to be true. And with that, a profit can be made.”
It’s a formula that’s worked out well so far for UML’s Student Managed Fund.