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Next stop: Wall Street
Virginia Business
January 2005
The
Madison Investment Fund has beaten the S&P 500 by
an impressive 40 percentage points since its inception
in 2000, but don’t bother getting out your checkbook.
This student-run fund at James Madison University is
not open to the public. Instead, it’s meant to
give students hands-on experience in the research, analysis
and evaluation of securities. Apparently, it’s
doing a good job. Fund managers report a profit of more
than $27,000 on their initial $100,000 investment, and
they recently received recognition for having the best
student investment fund in Virginia at a conference
sponsored by Virginia Tech’s Pamplin College of
Business. “We don’t pick many losers,”
says Gerald Henderson, a third-year economics major
who manages the fund’s energy sector.
And
that’s without any real research capabilities.
Relying only on the Internet and S&P 500 reports,
students look for companies with strong fundamentals,
solid management and growth themes that fit well in
the larger economic environment. Admit-tedly, students
don’t have the same element of risk as real portfolio
managers because the investment money comes from —
and returns to — a JMU endowment. But student
managers and analysts, most of whom aspire to careers
on Wall Street, still put in a lot of hours, getting
together for weekly meetings and performing analyses
in their spare time. Not only does being part of a top-performing
fund look good on a resume, says Henderson, but “if
we lost money, that would be pretty embarrassing.”
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