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Getting Real

How ONU's Student Investment Group is learning in a [Polar] bear market

Each year, Ohio Northern University gives six outstanding ONU business students the opportunity to manage an investment portfolio of close to $150,000. The Student Investment Group (SIG) doesn’t simulate the experience of investment management; they do it for real.

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This story is featured in the latest
issue of Business Exchange, the
magazine for James F. Dicke
College of Business Administration.

“The SIG is a classic example of learning by doing,” says Jim Fenton, dean of the College of Business Administration. “SIG members use all the tools that brokers and analysts use in the real world. It is one thing to study something in class; it is another thing to actually do it and be able to reflect on what you’ve learned.”

A generous gift from the Robert E. Hillier Family Charitable Trust led to the formation of the SIG in 1989.

Henry L. Metzger, BSEd ’41, Hon. D. ’94, then president of the trust, suggested that $35,000 of a $100,000 pledge to ONU be used for a scholarship fund that would be managed by student investors. Through the years, the SIG has made prudent investment decisions to grow the initial $35,000 to approximately $150,000.

With just six spots on the SIG – filled by three juniors and three seniors – students who want to join the group undergo a competitive application process. Only students with high academic standing (3.25 GPA or higher) are invited to apply. New members are selected based on the strength of a required essay and an interview process.

“Only three slots open up each year, and an appointment to the group is hard to come by,” explains Stefan Buchanan, BSBA ’10, a financial planner at Plante Moran Financial Advisors in Columbus. “I felt honored to be a part of the SIG while a student at ONU.”

The SIG meets every two weeks to review its portfolio and discuss investment opportunities. A faculty advisor provides guidance and oversight. Each member is assigned several stocks to track and must provide regular updates on the stocks’ performance and future outlook. After an in-depth discussion, the group must reach an agreement on which stocks to buy, sell or hold.

“SIG members take on a lot of responsibility,” says Cody Fisher, a senior finance major and SIG member from Helena, Ohio. “It can be a little scary at first, because you realize this is not a game.”

The SIG creates and follows an investment policy that outlines the percentage of cash, fixed capital and common stock in the portfolio. The policy can change based on economic conditions. “We are not a day trading group,” explains Fisher. “Our goal is to grow steadily over a long period of time. We don’t want to pass on volatile stocks to the next group of students.”

Dr. Dong Hyen Kim, assistant professor of finance, is the new faculty advisor for the group. He believes the best strategy is to buy a lowcost, broad-based index fund. “Since our goal is to meet our benchmark – S&P 500 – this strategy may be worth following,” he says. “I will encourage this year’s group to read useful material and to conduct a thorough analysis of securities through research and discussion.” Kim also recommends that SIG members read company proxy statements, which provide information on how companies are governed.

Through the years, the SIG has weathered ups and downs in the market. During the recent economic recession, the SIG portfolio plummeted to half its worth. SIG members, like investors across the nation, felt stressed and worried as they adjusted their investment strategy and tracked market conditions. “No matter where you had your money, you were going to lose,” says Fisher. “The SIG just tried to minimize the losses. We made decisions on which companies we thought would make it through the recession and which companies might not be so fortunate.” The SIG portfolio has since bounced back to its pre-recession worth – a testament to the hard work and wise decisions made by the group.

Current and past SIG members attest to the benefit of being part of the group. Through firsthand experience, they learn what it takes to be a professional investment manager. They also learn about research, teamwork, decision-making, and how to communicate effectively and persuasively.

“If you want the group to accept your opinion on stocks, you learn to present a good case,” says Fisher.

Fisher will graduate in the spring and is already going on job interviews. He says potential employers recognize the uniqueness of the SIG. “I spend more than 50 percent of my time during interviews talking about the SIG,” he says. “Employers want to know all about the group and what I’ve learned and how I’ve grown through this experience.”

Tim White, BSBA ’09, an investment counselor for T. Rowe Price in Washington, D.C., says his SIG experience jump-started his career. “I have no doubt that my ONU education and experiences, especially the SIG, gave me a leg up on the competition when looking for employment,” he says. “I was able to leverage my experience with SIG to showcase my financial acumen.”

Robert Frankle, BSBA ’09, an internal auditor for DSW Inc., in Columbus, agrees. “The SIG opened tons of doors for me as a professional,” he says. “When you interview, especially in the financial world, being able to show that you have taken on the responsibility to manage actual funds really stands out.”

The group’s portfolio performance can be tracked online.