Taking stock In Students

Business students gain hands-on experience managing an Alumni Association investment fund.

Taking Stock In Students

By Dave Lavallee '79, M.P.A. '87Photos By Photos by Nora Lewis

When Keith Moore strode into the classroom one dreary March afternoon as the stock market continued its spring decline, he greeted his students by asking, "So what happened in the markets today?"

The 23-year veteran of the Wall Street investment world and 1974 graduate of the College of Business Administration smiled and repeated the question.

As students started firing answers, Moore's grin broadened at the evidence that his young charges were keeping their fingers on the financial markets.

That kind of commitment and interest were exactly the qualities that faculty from the college and officers of the Alumni Association were hoping to stimulate when they developed an investment fund to be managed by students.

They wanted to give the students real-world, hands on experience.

Thanks to the precipitous slides at the New York Stock Exchange and NASDAQ index during the early spring, the students have been welcomed into the world of high finance with all of the stress, anxiety, and indigestion that can be constant companions of the folks on Wall Street and in Washington, D.C.

At the beginning of the spring semester, 21 business students began managing the Ram Fund, which was backed by an initial $100,000 investment from the URI Alumni Association. By April they were poised to announce their first buy of stock in Tyco International Ltd. by presenting an update to the Alumni Association.

"This makes sense," Moore said, "because Tyco is a high-quality firm. The students have treated this fund like it's their own money, and they have exercised excellent due care."

The idea of a student-managed equity fund was first discussed in the spring of 2000 by Finance Professor Dennis McLeavy, Business Dean Edward M. Mazze, Vice President for University Advancement Bob Beagle, and leaders of the Alumni Association. At the time, the economy and the stock markets were chugging along. But by mid-March 2001, the Dow Jones Industrial Average had dropped 821.21 points, its biggest weekly point decline ever.

Has such market activity dampened the enthusiasm of the students? Not one percentage point.

"Managing the Ram Fund takes a lot of time, but you get exposed to more things than you ever would in a classroom," said Tommy Thompson, a senior finance and management information systems major. " This is awesome. It's the most rewarding thing I have done here."

As the information systems director of the fund, his primary goal was getting a Web site established to give members of the group remote access.

Shandra Parenteau, a senior accounting major, was the business manager of the fund responsible for setting up the office, setting up the computers, and putting together an information packet for those students who wanted to participate.

She admited that she had little experience in finance. "I have had only two classes in finance, but I am learning a lot from the members of the team. With some classes, you have a professor talking to you, but here, we are doing the work."

As the value manager of the fund, Chad Brayman oversaw 10 people. "I was one of the original members who helped develop the organizational plan and the business plan for the fund. We had to present our plan to the Alumni Association in the fall, and that was a great experience. With this program, we really have a chance to apply what we learn. We are doing many of the calculations to determine firms' values."

Those comments are music to Moore, who started work on a doctorate in business at URI in 1998. Initially, he was asked to teach two sections of an upper level finance course, but now he is just teaching one finance class and advising the students with the Ram Fund.

After working with the Ram Fund students during the fall semester on a business plan and organizational chart, Moore began preparing the students for their first buy. He also brought them to New York for a Wall Street tour.

"They are experiencing firsthand investing with real money," Moore said. "They are learning how to invest money for the long term. They are learning about fiduciary responsibility and their relationship to their client, the URI Alumni Association. How many students can say they participated in committing funds in this way?"

At the top of the organizational chart are the fund's advisory board and Moore as the faculty advisor. Students hold the positions of general manager, business manager, and information systems manager. Then the organizational structure is divided into positions that work with the value fund and the growth fund. The students in the value fund arena research undervalued securities for companies that are out of favor and do not pose much risk. The growth fund students manage and buy securities with the potential for strong investment return.

The students had to apply for their positions and provide complete backgrounds. If accepted, they earn three credits per semester for their work.

"We want to expose our students to a variety of people in the investment world," Moore said. " Some have already been approached with job offers."

"There were students not accepted into the fund, but we have encouraged them to become volunteer analysts so that they can learn the ropes and then reapply for a three-credit position."

In December and April, the students presented their business plan and organizational chart to the Alumni Association. The early returns show that people are impressed with their work.

"They were outstanding. They were prepared, professionally dressed, and they put together a wonderful Power Point presentation," said Michele Nota, executive director of Alumni Relations. "They anticipated every possible question. They stayed up long hours working on this."

Nota said Moore has been a wonderful mentor. "He is very approachable, and I think these students are going to stay in contact with him long after they graduate."

Alan Wasserman, Alumni Association president and a graduate of the College of Business Administration, said when the group finished watching and listening to the December presentation, they regretted that it wasn't taped.

"The students made a presentation to people who work for brokerage houses like Merrill Lynch and Smith Barney, and they were spectacularly impressed. Everyone who has had contact with Keith and the program has been very impressed. The Alumni Association is delighted to allow them to manage a portion of its assets. These students are wise beyond their years, and I give a lot of credit to Keith for that. But you can tell the kids have been charged up by the program and have put in tons of time."

"Oh, and by the way, we remembered to tape the April presentation," added Wasserman with a chuckle.

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