Overview
The Student Managed Portfolio of Northern Illinois University was established as a means for Finance students who are interested in the area of investments and portfolio management to gain real world experience. This goal is obtained by allowing the students to build a portfolio of equity investments, using real money. For the Spring of 2007, the class consists of 11 members (which can be found in the Current Members section). The students meet weekly to discuss stock buy/sell recommendations, portfolio performance, and current news pertaining to stocks and the equity markets.
History
The Student Managed Portfolio was established back in 1999. We were very excited to have the opportunity to manage $200,000 of the Northern Illinois University Foundation's endowment. We were also very grateful to the Treasury Management Association of Chicago for generously providing $20,000 in seed money, and to the NIU Foundation Board for backing this exciting program.
Fund Rules and Restrictions
The fund invests in U.S. companies (and ADRs) with market capitalizations of $1 billion or more. The fund is 100% equity and is value-style. The students follow a top-down approach, starting with an economic forecast, followed by an industry analysis and company analysis. Each company is thoroughly analyzed by comparing the following ratios to industry averages: price/earnings, price to sales, price to book, price to cash flow, price earnings growth, net profit margin, EPS growth, return on assets, and return on equity. Emphasis is placed on low P/E, low P/B, and high dividend yields. As value investors, the students look for mispricings in the market with the anticipation of a market correction. Next, they look at current company news, earnings reports, analyst ratings, and the price of the stock relative to its 52-week high. They vote on whether or not to purchase the stock. Current holdings are closely monitored and ratios are compared to the industry averages on a weekly basis. At any given time, the fund has between 30-40 holdings. The students use Baseline for valuation purposes.