Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: FRIDAY, April 2, 1993 TAG: 9304020159
SECTION: VIRGINIA PAGE: A-1 EDITION: METRO
SOURCE: MADELYN ROSENBERG STAFF WRITER
DATELINE: BLACKSBURG LENGTH: Medium
PLAYING WALL ST. WITH $1 MILLION, FOR REAL
There are no leather couches in the office of Virginia Tech's newest investment-management group, and no ticker tape either.In fact, there is really no office, just a classroom in Pamplin Hall where 17 students are figuring out the best way to invest $1 million of Tech's endowment.
"We're very diversified," said Mike Ackerman, head of the investment committee for SEED, or Student-Managed Endowment for Educational Development. "That's the key. As long as you're diversified, you're pretty safe."
Tech is not the first university to let its students play the stock market with real money. Schools such as Virginia Military Institute have let student groups invest funds in chunks of $200,000 at a time.
But the million-dollar bankroll is the largest in the state, and among the largest in the country, according to Edward Lawrence, a finance professor in St. Louis who has surveyed student-investor programs.
That means that Tech finance experts are watching carefully, making sure they haven't made a bad hire.
A consulting firm monitors the performance of Tech's investment companies twice a year. The Virginia Tech Foundation will take look at the student group again next winter.
"If they're doing well, we could increase the amount they invest," said John Cusimano, director of investment and debt management for Tech. "And if they're not doing well . . . we could dismiss them."
At the beginning of this week, SEED was doing better than the Standard & Poor's 500 stock index.
The group has been investing in 49 stocks since early February.
The group's strategy is long-term growth, said Frederick Rolle, the executive chairman. "We're looking for a capital appreciation, not dividends."
Rolle, a senior in finance from Delaware, has played the market a little himself - at least enough to raise the money for his 1989 Nissan.
When he returns to his Blacksburg apartment, his answering machine is filled with confirmations of trades made the previous day.
All trades go through a broker and are confirmed with the fund custodian, Dominion Trust. The students don't touch the money, but they do make the calls.
Each student in the club studies the market for about 10 hours each week, specializing in different types of industries.
"It's like a part-time job," said Audra Derr, who deals with textiles, automotive stocks and utilities.
She chose to invest in Chrysler, for instance, when she learned about the company's new line of cars.
As the students walked across campus Thursday afternoon, conversation turned to the market.
"Where's Wal-Mart?" one asked.
"That one's mine," said Aimee Johnson, a senior from Roanoke. When she started thinking about the stock, it was down 2 points. She scanned newspapers and magazines and attributed the loss to a negative advertising campaign by a competitor.
"Of course Wal-Mart came back," she said.
The students approached the Tech foundation with their proposal last semester.
Student Trey Snow said he was a little skeptical that the university would accept their proposal to invest $1.5 million, but after two presentations, the board approved a cool million.
"We have $160 million in our total portfolio," Cusimano said. "Now if we had a $10 million portfolio and we gave them a million dollars, we'd have been run out of town on a rail."'
The student group has its own list of bylaws and regulations, which include a minimum 3.0 grade-point average.
Someday, all of the students in this group figure they'll play the market using their own money - once they earn that money.
You need a lot of money to be diversified, Johnson said. "That's what I'll do with my first million."