INvestment Series

The West Texas A&M University College of Business Investment Series is devoted to expanding finance knowledge throughout the Panhandle of Texas. The focus of the organization is on both students and the surrounding business community.

Students manage a portfolio of University funds that are used for scholarships. The students decide which stocks to purchase and sell and the weights in each industry as they follow a goal of long-term growth. Students learn investment fundamentals such as present value, fundamental analysis and technical analysis. The Investment Series is one of the largest sources of scholarships in the College of Business.

The Investment Series is the community outreach division. The Series brings in speakers to present to an elite group of Panhandle business individuals. The group consists of professionals in the medical, legal, financial services, investments, and real estate areas along with business owners. These individuals are active investors with an advanced level of knowledge in investing and high net wealth.

Speakers in the past have included analysts and economists from various financial institutions such as Merrill Lynch, State Street Research, Oppenheimer Funds, Janus Funds and Bank of America. The Series also has had mutual fund managers and Federal Reserve Bank economists along with industry analysts as speakers. The Series focuses on people who provide insights into future investment horizons. The speakers, if they have the time, also speak to the students in order to increase the awareness of the industry and of the individual firm.

Dr. Anne Macy serves of the Director of the College of Business Investment Series and can be reached at amacy@wtamu.edu or 806-651-2523.

Investment Series Speakers

2008

“State of the Banking Industry ” by Mr. Gerald J. Ford
Chairman of the Board, First Acceptance Corporation
April 2nd, 2008

“How to Invest in Today's Market ” by Dr. Matthew D. Medeiros
President and CEO, Institute of Wealth Management
May 13th, 2008

“Student Managed Investment Fund Decisions for 2008” by Student Fund Managers
August 2008

“TBA” by
October 2008

“TBA” by
November 2008

2007

“Calendar Effects” by Mr. Bill Sherman
Portfolio Manager, Portfolio Strategies Investment Managers
May 9th, 2007

“Behavioral Finance ” by Mr. Keith Van Etten
Fund Manager, Columbia Management
June 6th, 2007

“Student Managed Investment Fund Decisions for 2007” by Student Fund Managers
August 9th, 2007

“Picking Stocks: Texas Style” by Mr. Eric Marshall
Director of Research, Hodges Capital Management
November 9th, 2007

“Grande Expectations” by Ms. Karen Blumenthal
Bureau chief for the Wall Street Journal, business journalist, and author of Grande Expectations: A Year in the Life of Starbuck's Stock
December 7th, 2007

2006

“Portfolio Strategies for 2006” by John Ingle of the Smith Asset Group
Smith Group of Dallas, Texas co-sponsored by Amarillo National Bank
May 11th, 2006

“Up Against the Wal-Marts: Investing Techniques for Retail” by Mr. Don Taylor
Author and Executive Director of the West Texas A&M University Enterprise Network
June 7th, 2006

“Student Managed Investment Fund Decisions for 2006” by Student Fund Managers
August 8th, 2006

“The Advantage of Contrarian Investing” by Mr. Paul Horton
President and Managing Director, Lighthouse Capital Management
October 27th, 2006

“Where is the Growth? Economic Integration between the U.S. and Mexico”
by Dr. Bill Gilmer, Federal Reserve Bank of Dallas-El Paso & Houston Branches
December 8th, 2006

2005

“Investing in Antiques” by Mr. Gerald Tomlin
Appraiser, interior designer and a regular cast member/appraiser on PBS/WGBH Boston’s “Antiques Roadshow”

“Investing for the Next Generation” by Mr. Scott Burns
Business writer for the Dallas Morning News and co-author of The Coming Generational Storm

“Student Managed Investment Fund Decisions for 2005” by Student Fund Managers

“Finding Value in Today’s Market” by Mr. Kevin Rendino
Senior Portfolio Manager of the Merrill Lynch Basic Value Fund

“Adding Bonds to your Asset Allocation” by Mr. Mamundi Subhas
CFA and Senior Vice President of Neuberger Berman

2004

“Can Economic Recovery Be Sustained?” by Mr. John Balder
Senior Vice President and Market Strategist for State Street Research & Management Co.

"Economic and Portfolio Strategies in a Rising Rate Environment” by Mr. Michael Matthews
Vice President and Senior Fixed Income Portfolio Manager for Bank of America

“Student Managed Investment Fund Decisions for 2004” by Student Fund Managers

“E2: The Economy and the Election” by Dr. Harvey Rosenblum
Senior Vice President and Director of Research of the Federal Reserve Bank of Dallas

“Finding Profitable Stocks in a Flat Market” by Mr. Don Hodges
Portfolio manager of the Hodges Fund

2003

“Portfolio Strategies for 2003” by Mr. David Winter, CFA
Senior Vice President of Wells Fargo

“Where is Technology Heading?” by Mr. Joe Austin
Chief Operating Officer of Microsoft Services

“Student Managed Investment Fund Decisions for 2003” by Student Fund Managers

“Better Investment Results with Less Worry” by Mr. Archie Richards
Syndicated Columnist

“Investment Strategies for Technology” by Mr. Alex Morrow
IBM Fellow

2002

“How Institutional Investors Allocate Assets” by Mr. Howard Perlow
Principal of Angeles Investment Advisors

“Market Strategies for 2002 ” by Mr. Steven Young
Director of Asset Allocation and Senior Marketing Strategist for Bank of America

“Student Managed Investment Fund Decisions for 2002” by Student Fund Managers

“The State of the Energy Industry” by Dr. Simon Todd
Performance Unit Manager for BP

“Where Are We Going?: A Forecast of the U.S. for 2003” by Dr. Harvey Rosenblum
Senior Vice President and Director of Research of the Federal Reserve Bank of Dallas

2001

“So what, exactly, is going on with the economy?” by Dr. Marci Rossell
Chief Economist of Oppenheimer Funds

“Stock Selection After the Internet Bubble” by Mr. Bob Markley
Senior Managing Director of Heartland Capital Management

“Student Managed Investment Fund Decisions for 2001” by Student Fund Managers

“Panel Discussion on the Aftermath of the Terrorist Attack” by WTAMU Business Faculty
Drs. Syed Tariq Anwar, Barry Duman, and Neil Terry

“The Silver Lining in a Cloudy Investment Environment” by Paul Horton
Managing Director of Lighthouse Capital Management

2000

“Choosing Your Options Wisely” by Mr. Walter Sall
Fund Manager for Gateway Funds

“Investment Outlook for 2001” by Mr. Rod Smyth
Chief Investment Strategist for First Union Securities

Investment Series Scholarship Winners

Investment Series Student Managers

Mr. Gerald J. Ford, Chairman of the Board and principle shareholder of First Acceptance Corporation.

Author Karen Blumenthal with Dr. Anne Macy.

Eric Marshall, director of research for Hodges Capital Management, with finance major Luis Cruz.

2007 SMIF Managers

2007 SMIF Managers giving investment advice on KGNC AM Radio.

Are we growth or value?

The student managed investment fund (SMIF) is predominately a large-cap blend fund.  Students are able to research stocks that are either growth or value. The students study the styles and the screens for growth and value.  They are then able to choose which style they agree with more and research stocks that fit those screens. 

The simple formula for a stock return is expected inflows divided by the purchase price.  Inflows are the future selling price and dividends.  Growth investors focus on stocks that are expected to have a larger than average future selling price in comparison to the current price.  Value investors focus on stocks that are currently trading at a lower than normal price and pay dividends.  Both styles are valid but at any one time the market values one style higher than the other.  Thus, our portfolio that includes both styles has a more even performance in all markets.  Because one of our goals is providing funds for scholarships, this type of diversification meets our goal.

What is our process for evaluating a stock?

In general, the SMIF follows a top-down investment approach.  First, we, as a class, examine the macroeconomy and identify sectors that should do well based on our forecasts for the various economy indicators and measures of growth.  These sectors are then studied to identify the best stocks within each sector as possible candidates for addition to the portfolio.  If a student has a particular interest in an industry, he or she is able to focus on that industry and seek out top-performers that still met the criteria of the class. 

After identifying an industry, a student is required to identify the major players in the industry along with potential new competitors from related areas.  The market structure of the industry and the relative size and position of each firm in the industry is determined.     Characteristics about customers and suppliers are examined including why these firms trade with the firms in question and who has the power in the relationship.  Ultimately, the student observes the final buyers of the product and what their demands and ability to pay are.  Geographic and regulatory considerations are included.  Finally, the student forecasts which firms will survive and thrive in the industry. 

After narrowing the industry to two or three competitors, the student begins the process of the financial evaluation of the firms.  It includes both a fundamental and technical analysis of the stocks.  The historical performance of the firms versus the index is performed.  Financial statement analysis including financial ratios and cash flow analysis are executed.  The student ranks the firms on solvency, activity, leverage and profitability.  Then a managerial comparison is performed.  In the comparison, the student examines the sales and earnings growth rates along with the dividend payout and P/E ratios to determine trend growth rates and average values. 

Upon completing the managerial comparison, the student calculates the stock valuation models.  First, the student calculates the required rate of return, which is the hurdle rate for the stock to beat in order to be considered for purchase.  If the stock pays dividends, the dividend growth model and Gordon’s Model examine the value of the dividends, in terms of growth in dividends and the actual dollar value of the dividends.  This helps to determine if the stock is a good buy for income purposes. 

The last part of the stock valuation model is the calculation of the holding period return (HPR).  This is the most valuable part because it determines if the stock’s return is expected to exceed the required rate of return.  The HPR is the expected return on the stock over a three-year time horizon.  It is compared with the required rate of return to generate an alpha, the expected excess return above the return needed to be compensated for risk. 

In order to calculate the HPR, the future price must be estimated.  Future price is the product of the future P/E and the future EPS.  Both of these figures are estimates.  Because there are two main assumptions in this model, a sensitivity analysis is also performed.  The HPR is calculated as the future price plus any dividends divided by the current price.  The value is then take to the one-third root in order to annualize the return. 

For the sensitivity analysis, using the trend and average data from the managerial comparison, the future P/E and future EPS values are altered to see the change in the future price and HPR.  As the values are altered, if the HPR return stays above the required return, the stock is more likely to provide a positive return if the current estimates are overly optimistic.  In other words, the sensitivity analysis asks what happens if things don’t go as planned.  If the answer is that the stock still returns an adequate amount, it will be considered for the portfolio.  

Finally, the line chart and point and figure charts are examined in order to recognize the current market feeling towards the stock.  The charts are also used to identify desired purchase price ranges.  While technical analysis isn’t a main step, it does provide conformation of the results from the fundamental analysis. 

Not surprisingly, the entire process takes most of the semester for each student.  However, at the end of the semester, the student has completed a thorough evaluation of the stock and can make a recommendation.  A student is not penalized for recommending to not buy the stock he/she presented.  The decision to not buy is just as important as the decision to buy. 

Investment Series News and Information