Stock symbols and percentages march across a long ticker screen, but it’s not a Wall Street brokerage firm. It’s the fourth floor of Todd Hall at WSU, and the eyes monitoring the stock market belong to undergraduates managing the Cougar Investment Fund.
The students invest $1 million of the university’s endowment—the Cougar Investment Fund—in a large capitalization equity portfolio. Under the supervision of Rick Sias, WSU finance professor and Gary P. Brinson Chair of Investment Management, the class has outperformed the S&P 500 since 2001.
Sias approached the WSU Foundation and suggested the program in 2000. “We wouldn’t charge any fee—unlike most managers. We take a very small portion of the portfolio,” he says. He based the idea on funds at other universities, such as Cornell, although those funds are often managed by MBA students.
Students take a year-long course, where Sias teaches them investing principles and how to analyze stocks and industry sectors. The students often conduct research in the state-of-the-art trading room, which was also made possible by MBA alumnus and financier Gary Brinson.
Two students act as portfolio managers for the semester, organize the presentation of sector and stock reports, and keep track of the fund’s investments. The other students become sector analysts.
“Sector reports tell what we hold in that sector and what happened to those stocks in the last couple of weeks,” says Sias. “For example, did Google beat the technology sector the last couple of weeks? If it did, tell us why.”
The students operate under several limitations to safeguard the university’s investment. After class discussion and voting, they present their buy and sell recommendations to Sias and then to WSU’s senior investment manager for execution.
Stacee Wilson, a senior finance major from Stanwood, took on the portfolio manager role last fall. She says the learning curve is very steep, but the hands-on approach pulls it all together. “It doesn’t make any sense until you practice it. A lot of it is learning the tools to tell you what a security is going to do in the future,” says Wilson.
Sias says the students absorb the knowledge and tools quickly, then learn how to write and present the information. “You get five minutes to present your stock and give your pitch, and then five minutes of questions and answers. One of the best parts of the class is the chance for students to present and know they’re going to get challenged, because that’s what happens in the real world,” says Sias.
The “real” world is where Jeff Troxel ’09 now uses the skills he gained as portfolio manager of the fund in 2008. He works for a small Seattle investment management firm, Progeny 3, landing the job immediately after graduation.
“The analysis and reports [in the Cougar Investment class] are exactly what I do every day in my work,” says Troxel. “The reports we put out were sufficient for a professional recommendation.”
Another former student and portfolio manager, Kari Miller-Pauley ’03, appeared on CNBC in 2002 to talk about the fund. The program, shot live at the Lewis Alumni Centre, was “a once in a lifetime chance,” she says. “We talked about our stocks that worked well, like Starbucks, and how we managed the fund.”
Miller-Pauley describes the Cougar Investment Fund class as the best one she took at WSU. “It’s a unique experience,” she says. “It’s like a real job, not paid, but you get to make decisions.”
She now works in Seattle as a vice president for international investment firm BlackRock. She coordinates divisions within the company to increase transparency, consistency, and quality, “like an internal consultant to improve our business’s integration,” she says.
Miller-Pauley continues her involvement with the College of Business, mentoring current students and remaining active in the business alumni group.
The investment fund experience has already paid off for current student Wilson as well. Her winter holiday was booked for six job interviews before the end of last November.