A mix of MSF, MBA, and Finance Undergraduate students, from FIN 473/573, had amazing success this past year. They placed 1st in the D.A. Davidson & Co. Student Investment Competition for 2021-2022, not only finishing with higher returns than all the other universities, but the S&P 500 benchmark as well.
Because of this year’s outstanding results, along with consistently being in the top five schools in the competition each year, PSU will receive the Fred Dickson Memorial Award, which is given annually in recognition of excellence to the most outstanding university in the competition. The winning university is chosen based on feedback from the local D.A. Davidson financial advisors representing each school, investment results, and other elements of program engagement.
Frankie Garcia, one of the students on the portfolio investment team, was able to provide firsthand context on the team’s thought processes, challenges, and overall journey to a remarkable and successful year:
How was the team able to apply the tools and skills you learned in the course to finalize the investment decisions?
One of the biggest skills used to finalize investment decisions was to analyze our sector at a macro level, then look at how the microenvironment will affect the companies we are holding and companies in the sector as a whole. Our individual expertise for each sector of the portfolio allows us to make better decisions as we have a deep understanding of our own sector and can foresee how scenarios can play out in the future regarding all aspects of our portfolio. Other important tools were the Bloomberg Terminal and Investing in Education. One of the key things all the analysts and I used were these sources to stay up to date with our companies within our portfolio and the economy. We were encouraged to check on news on our sector and earnings for companies coming out shortly, and then use that information to make better decisions. Lastly, be critical. Be realistic about the assumptions made and really think if it is feasible for this company to reach this valuation.
What were skills or knowledge you were able to take away from this experience?
One of the best skills I learned was to utilize the Bloomberg Terminal, and the ability to better tell a story with numbers. I previously used Bloomberg Terminal but through this experience, I learned to utilize it to its fullest extent. I am no expert, but my understanding of it is better and I am thankful because of it. The other skill is the ability to tell a story with numbers. Research and data analysis are useful tools to have, but without the ability to justify your reasoning and tell the story of the company you are presenting, all you have is data. This class taught me how to do this in a way I have never been encouraged to do in the past because we answer to shareholders, and if we fail to make a good pitch, our AUM in our portfolio may be reduced.
Were there any unique challenges you faced?
With an ever-changing market and different kinds of risks, it is hard to determine where the market will be even a month from now. A company you once researched as a potential addition to your portfolio may no longer be viable because of political risks from new bills introduced or from increasing interest rates. Also, since there are three portfolios that are managed within the course, you will also have to make decisions on what to keep. Me and my fellow information technology analyst decided to completely sell all our shares within the Information Technology sector of our D.A Davidson portfolio because of our belief that the current market will continue to worsen and supply chain issues will still affect company profits, especially with some of our holdings. This would ultimately limit our risk within the portfolio, thus helping us receive first place in the student investment competition.
Any advice for future students interested in the portfolio course?
This class is a time commitment and will ask for your attentiveness and effort. However, my time at Portland State has been one of the most rewarding classes and has provided me with opportunities and experiences I never thought I would have when I became a student at PSU.
In addition, Dr. Limpaphayom, faculty for the portfolio course, provided some insight into the three portfolios that the students were tasked with managing for the year.
“The first of which is the Scholarship Fund which belongs to the CFA Society of Portland and is used to give out annual scholarships to students at PSU and other local Universities.
The second portfolio is the Ray Guenther Fund which is managed by the students on behalf of the PSU Foundation. Last year, due to successful student management, the portfolio was able to donate $120,000 to the School of Business Hardship Fund.
The third portfolio is the competition with 20 other universities organized by D.A. Davidson. The PSU team in the D.A. Davidson & Co. Student Investment Competition for 2021-2022 finished with a staggering return of 2.9 percent during the past 12 months (S&P yields -11.2 percent for the same period) leading them to finish 1st amongst the competition and beating the S&P 500 benchmark by nearly 14%.”