ROANOKE TIMES
Copyright (c) 1996, Roanoke Times
DATE: Friday, May 3, 1996 TAG: 9605030013
SECTION: BUSINESS PAGE: A-7 EDITION: METRO
SOURCE: MAG POFF STAFF WRITER
ALTHOUGH BUSINESS STUDENTS receive no class credit, it can only help them with their resumes when they tell a prospective employer that they handled $2 million of real money.
Virginia Tech earned such a good return on $1 million it gave a group of students to invest that it has handed them a second million.
The students, who call themselves SEED - for Student-managed Endowment for Educational Development - outperformed two of the professional money managers that the university hired to invest its $200 million endowment.
Lori Ratliff, a senior majoring in finance, heads the team of 17 student investors. She said the group was given responsibility for its first $1 million about three years ago. It is money Tech received from private sources; it does not include any state appropriations or student tuition.
Last year the students' investments earned a return of 32.53 percent on the money, Ratliff said. That is nearly equal to the 1995 gain in the Dow Jones industrial average of 30 blue-chip stocks, meaning many stock fund managers would envy the students' performance.
Their return placed them second among the four in-house managers of equity investments for the university's endowment funds. Virginia Tech also has managers for investments in bonds, real estate and the like.
SEED, one of about three dozen student-run investment programs at U.S. colleges and universities, will grow to about 21 student members next year. They have two faculty advisers and two advisers from Tech's office of investment and debt management.
The activity is extracurricular, Ratliff said. The students receive no class credit and no monetary compensation.
Ratliff said the students are excited about their work, and it will help them with their job resumes, she pointed out. Any time graduates can tell a prospective employer that they handled ``$2 million of real money, it's impressive."
She called Virginia Tech's action "an incredible statement from the school investing in the quality of education."
The students work through three committees: accounting, administration and investments. Each member of the investment committee follows a specific industry, doing preliminary checking for financial statistics.
The whole committee then reviews various companies in those industries, Ratliff said, choosing a portfolio of about 35 stocks.
Ratliff said the team is composed of candidates for masters' degrees as well as undergraduates. Some, but not all, have investment experience, such as a student from India who has worked on international stock exchanges. A few have worked as interns for money managers.
SEED members tend to be conservative in their stock choices, said Trey Snow, an alumnus of the team who now serves as one of its advisers. "As much as they don't want to be, they are'' cautious with the money, Snow said.
Snow said he worked as a member of the team in his senior year at Tech and during the two more years it took him to complete his master's in business administration there. Now he is cash-and-reports manager for Virginia Tech's department of investment and debt management, which handles the university's endowment.
The students want to make their mark on the portfolio, Snow said, and they know that the best strategy is to buy and hold their stocks for a few years. "They usually end up being conservative," he said.
The stocks they picked are widely diversified, he said. They cross all classes and types of industries and even include international companies.
Students interested working with the team apply in February, said Don Chance, professor of finance at Tech's Pamplin College of Business and a SEED faculty adviser. They must fill out forms and go through an interview.
Each team picks its successor team, Chance said.
The students picking next year's team look at applicants' grades, their responses to questions and the amount of time they are willing to give to the work.
Most are business majors, Chance said, but some are in other fields.
Chance said the university is "quite pleased" with the results achieved by the student team. Many professional fund managers have not performed equally well, he said.
LENGTH: Medium: 83 lines ILLUSTRATION: PHOTO: ALAN KIM/Staff. Business students will manage a secondby CNB$1 million from Virginia Tech's endowment fund after the group
called SEED made a 32.52 percent return on its investment of the
first $1 million. Four of the 17 student investors are (from left)
John Pataki, Lori Ratliff, Hollie Anderson and Kevin Rogers. color.