Students entrusted with managing $1.7 million of University endowment in competitive two-semester course

Kathryn Nicolai, Investigative News Editor

Student Managed Investment Fund (SMIF) is a two-semester course within the School of Management’s experiential programs offered to juniors and seniors on a selective basis who manage over $1.7 million of the University’s endowment. The course is co-taught by management professors Curtis Nicholls and Frank Schreiner and meets twice a week, an hour on Tuesday mornings and three hours on Wednesdays. 23 seniors have been enrolled in the course since fall 2016, and seven juniors were recently added.

The program was launched in 2000 under professors David Jensen and Robert Needham with between $150,000 and $200,000 of the University’s endowment, later growing to the current $1.7 million through donations from alumni and growth of the investments in the portfolio according to Schreiner. In 2002, Schreiner became involved in SMIF as part of his job as a managing director in the equities division of BlackRock, an American global investment management corporation based in New York City and the largest in the world. Schreiner was working at BlackRock offices in Princeton, N.J. and said he would visit the class to share his thoughts on how institutional portfolios should be run, which eventually led to BlackRock’s hiring of 12 University students throughout the years. In Jan. 2016, Schreiner became a full time professor on campus which he described as “a dream come true.”

“We definitely don’t tell them what to invest in,” Schreiner said. The class is designed to be mostly student-run with Professors Schreiner and Nicholls’ in hands-off roles.

“The professors do not provide any insight or recommendation to how we invest our money. This is the student managed fund so the students are really in charge. The professors only make a comment if they fear a significant concern for the longevity of the portfolio,” Ryan Cutler ’17, a Managing for Sustainability (MSUS) major, said.

“It says in our charter that they will intervene if we decide to make a decision that is an obvious mistake. I don’t think this has ever actually happened,” Rory Bonner ’17, MSUS major, said.

“Most days it’s us coming in and setting our own agenda. If we’re stuck on making a decision, we can ask the professors for guidance but they’re really not supposed to provide us with their opinions or investment advice,” Accounting & Financial Management major Evan Bernstein ’17 said.

“We have a big belief that the best way to learn something is experience, to make mistakes. We do point out mistakes. The class votes on every portfolio change. We ask questions before every portfolio vote and share our thoughts after the class votes,” Schreiner said, emphasizing the value of mistakes. The main difference noted by Schreiner between SMIF and having a job at a real investment managing firm is the weight of mistakes. “It’s a very safe environment. The consequences of students making mistakes in a SMIF classroom aren’t as severe as making mistakes as a first year second year analyst at an investment management firm,” Schreiner said.

Each person in the class has a specific role that entail specific responsibilities.

“The class is divided into committees which are in charge of things such as performance reporting, and economic market updates, the other portion of the class is sector analysts which track and analyze a sector,” Cutler said.

Global Management major, Reagan Cerney ’17 outlined typical class periods. “Each week we reevaluate our holdings and understand how macro trends such as the political climate, economy, etc. affect these holdings. Certain class periods are dedicated to stock pitches where students recommend a stock based on deep analysis of the company and the sector of the stock market,” Cerney said.

“When you’re going to class every day you just need to be expected to be up to date on the securities that you cover in your sector and the overall economic scheme of things. If Trump announced something and it affected something in the market you’re expected to know that and talk about it … when you’re going to do your pitch that’s the really heavy bulk work. You’ll spend fifty to sixty hours preparing your pitch,” Bernstein said.

Amy Caporale ’17, MSUS major, said committee updates occur every Wednesday in separate groups to update students on the state of the economy and SMIF’s portfolio.

Students conduct their own research that is applied to class discussion and stock pitches. Schreiner explained that the professors provide students with tools to conduct research, such as Bloomberg terminals.

“Most investment managing firms use Bloomberg terminals in their research efforts. SMIF students are required to become Bloomberg certified and are able to chase down a lot of the information they use for their presentations to the class,” Schreiner said. The information that is taught in class, according to Schreiner, is how to analyze and interpret the research the students conduct.

“Having the ability to manage real money in college is an opportunity not a lot of competition for internship or job have,” Bernstein said. Benchmarking, setting target allocations, and being verse in current theories are all factors that give SMIF students a “step up to someone who doesn’t have that experience,” according to Bernstein.

Four speakers including alumni, parents and other people connected to the school spoke to SMIF students last semester.

“One of them taught us a ton on private equity that I never had any exposure to. Another one came in and talked about taxes. Beyond the learning experience it’s another good way to network. You get to meet these people that are coming from higher positions … and also exposure to companies that maybe don’t come here for the Internship and Job Fair,” Accounting & Financial Management major Brett Cleary ’17 said.

Annually, SMIF takes a two-day alumni-networking trip to New York City. This year the event will be held at the Harvard Club.

“Over two hundred alumni are there from hedge funds, investment managing funds, consulting firms and you’re talking to them about how the investments are doing, their time at Bucknell, networking,” Nicholas Gorab ’17, Global Management major said.

The hardest aspect of the class for many students is cooperation and agreeing on where to invest. Every stock pitch and investment is determined by a class vote.

“The most challenging part of being in SMIF would be working to come to class consensus. Everyone has different predictions of how the market will perform in the next few months (nobody knows if it will go up, down, or sideways) and then making decisions regarding investment strategies as a large group of diverse ideas,” Cutler said.

“Last semester I pitched a stock that I thought would show major growth in the future, but a lot of the class did not agree. Later on this stock boomed and it was frustrating that a potential idea could not be passed. That being said, when the class agrees on your ideas or something of yours gets passed it feel awesome and you know that there is a well-represented thought process,” Cerney said.

Students are graded on class participation, engagement, quality of analysis included in presentations given in class, and summer assignment work, according to Schreiner.

At some point in April, SMIF members hand over their current portfolio to incoming SMIF students to “bring [incoming students] up to speed on everything we’ve done, the theories we have for our portfolio and our ideas of the sectors moving forward and [incoming students] will be assigned either a sector or committee,” Gorab said.

This spring was the first semester that seven juniors were admitted to the class. Although it will make the application process for future SMIF members more competitive, current SMIF members believe it will be helpful overall.

“I think it will be a lot more helpful especially from the learning curve standpoint … [Incoming SMIF members] will have the juniors now to take lead of the class and guide it so that it will move a lot faster than we have in the past,” Bonner said.

“One of our holdings tanked and none of us were up to speed on it because we just had it handed off, but now [incoming SMIF members] have people that are at least experienced with it to watch over it a little more closely over the summer,” Cleary said.

Over the summer, incoming SMIF students are required to read three books, complete writing assignments, and update the class with news and price changes of the students’ specific sectors.

To promote students to stay in the class for the full year, students do not receive credit their first semester enrolled in the class. After the second semester students are given double credit.

“I think the most rewarding part of this course is that it simulates an environment similar to that in the real’ world—everything from the classroom dynamics to the independence of the work,” Tooba Ali ’17, an Accounting and Financial Management (ACFM) major said.  “The most frustrating aspect is that I wish this class was available as a sophomore or a junior because I’m learning so much and it would’ve been so helpful to explain what I did to employers, especially since so many of them hire from sophomore year on.”

“The University views the purpose of the Student Management Fund as twofold. The number one goal is to teach students. The second goal, and it is a secondary goal, is to make money for the University,” Schreiner said.

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