Rarely do students get real-world stock market experience at running an actual stock portfolio. However, through the McIntire Investment Institute, students can accumulate funds and gain real investment experience.
Although many other schools have investment clubs that usually study and hypothetically plan a portfolio, the MII is unique.
One of the things that "makes us different from other student investment clubs is that we are entirely student run and we invest real money," fund manager Milgo Galaydh said.
In recent years, the MII generally has performed at or above broad market averages.
In years when they made considerable profit, the group gave money to the University and charitable groups. It donated $50,000 for construction of the Bridge Center for Financial Markets in the lower level of the Commerce School. They also donated money to a cancer group, fund manager Felise Agranoff said.
But even with the recent economic downturn, the MII is "doing better than the market on the whole," MII Faculty Advisor Richard DeMong said.
Even so, the bear market has caused them to change some of their strategy. About two years ago, they sold some of the stocks they were invested in because of the economic conditions. Now, we are generally "holding more cash," fund manager and president Jason McDougall said.
McDougall said he thought the MII was more defensive because of the downturn and was spending a lot of time doing research on stocks and "making sure our thesis about a stock holds true," he added.
But the MII is trying to generate more long ideas, so they stay invested, Agranoff said.
The MII was founded in 1995 by an endowment established by John Griffin, a McIntire graduate, who now runs Blue Ridge Capital, a hedge fund.
"But our ultimate mission is not making money, but educating students who are interested in investing and finance," fund manager Matthew Crosby said.
To achieve this goal, the MII uses "value added research to get an edge on the market," Galaydh added.
The institute's value-added research philosophy encourages students to get out and get to know the company by talking to managers and looking at reports rather than just listening to the media.
"We encourage members to do their own research and get to know [the prospective] company well so they can make their own decisions," Crosby said.
The Institute has between 50 and 75 active members and eight fund managers. Five of the fund managers are "long fund-managers" who focus on long investments -- investing money in stocks in the hope they will go up and then be sold at higher levels for profit.
The other three fund managers are "short fund managers," who handle "short investments." Going short entails borrowing a stock in the hope that it will go down. Eventually the stock has to be paid back, but the hope is that the stock will go down so that the stock shares can be paid back at a lower price than at what they were purchased. This way, the investor can keep the profits.
Each weekly MII meeting features one investment idea presentation. Any student at the University is eligible to make a presentation to the MII. After a student makes a presentation on a stock idea they are considered an "analyst."
McDougall said he thought most presentations are about long investment ideas, since short investments involve lots of liability and only can make up to nine percent of the MII portfolio.
After the MII meeting, the fund managers meet later in the week to decide if they will take on the idea. They debate the pros and cons of the proposed stock idea and then vote to decide if they will accept it. Only the five long managers vote on long investment ideas, but the long and short fund managers vote on the short market ideas, because they are generally considered more risky.
In addition to the investment idea presentation, students hear one "Fundamentals of Investing" presentation. Sometimes a student presents and other times officials from corporations such as Merrill Lynch come to speak to the students, Agranoff said.
Crosby said he thought you did not have to know anything about investing to attend meetings and be a part of the group.
The MII provides "hands-on" experience so you can learn about investing, Agranoff said.
At the meetings, "there is a positive network of learning," McDougall said. "Everyone in the room cares [about investing] and everyone adds a little insight" to the conversation.
Interested students are encouraged to check out the MII Web site (http://orgs.comm.virginia.edu/mii) and to come to the MII weekly meetings at 5 p.m. Tuesdays in Monroe 134.
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