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Real-world finances highlight Student Managed Investment Fund

By Lauren Lamb
University News Service
September 11, 2008

Sixteen students at Texas State University-San Marcos won’t have to wait for graduation to roll around to experience what it’s like to be on the trading room floor.  They have their own.

The students, who are enrolled in the university’s Student Managed Investment Fund (SMIF) course, are allowed to manage $150,000 of the McCoy College of Business Administration Development Foundation’s endowment fund.  The endowment began in 2004 after Emmett and Miriam McCoy pledged a $20 million gift to the college.

Texas State University trading lab

SMIF students learn how to navigate the stock market in the T. Paul Bulmahn Research and Trading lab. 

“Essentially, you are employees in our professional management firm.  You are a special group of students who have been selected because we believe in your potential,” Bill Chittenden told the students during the first class of the semester.

Chittenden co-teaches the course alongside Ken Moon and Hol Toles.

In order to enroll in the course, students must submit an application and go through an interview process with all three professors.

Other universities have similar investment funds, but many are restricted to graduate student involvement.

“What makes our program different from others is that our mission is to provide the opportunity for our students to practice applied business management techniques,” said Denise Smart, dean of the McCoy College.

“The chance to take what they are learning and apply it in a real world situation, especially as undergraduate students, is what makes this approach so unique and important,” Smart said.

While the students have full control over when to buy and sell stocks, they must present their ideas to the class.  “Everyone must be in agreement,” Moon said.

“Another advantage to this program is because students must present their ideas to the class, by the end of their experience here, they know how to give concise, effective presentations,” Chittenden said.

“We’ve had students come in this class who could barely stand the thought of raising their hand, let alone give a presentation,” he said. “By the end, an audience member would never know they had stage fright.”

For Craig Simonson, a Texas State alumni and member of the first SMIF class in 2006, being nervous was a small obstacle to overcome in comparison to the experience of presenting his ideas.

“I’ll always remember the day we had to present our ideas and stocks to Mr. and Mrs. McCoy, along with Dr. Smart and other finance and economics professors,” Simonson said. “It is not every day that a student gets to stand before an audience of doctors and speak about his investment strategies and be taken seriously.”

Simonson also credits his SMIF experience with helping him get his first job out of college.

“Being involved with SMIF was without a doubt the reason I was hired at Freescale Semiconductors,” Simonson said.  “Not only was I referred to the company by a fellow SMIF student, but I was also able to talk to my interviewer about the financial markets as a whole and explain my thoughts on where the technology and semiconductor industries were headed.”

SMIF students are also held to a higher standard of professionalism in the classroom.  The class meets in the T. Paul Bulmahn Research and Trading lab, a state-of-the-art facility funded by a $1.5 million donation from the chairman and president of ATP Oil and Gas Corporation.  Bulmahn received his master’s of business administration from Texas State.

The lab boasts a solid wall of windows, allowing anyone passing by to observe the students making trades and presentations

“You are an example to your fellow classmates,” Moon said.  Students are expected to wear a suit and tie to every class and risk being “fired” for not completing work on time or disobeying the rules.

But for Justin Sullivan, who has had the opportunity to hire a former SMIF student for Lehman Brothers, the expectations are part of what makes these students appealing perspective employees.

“Just having a great GPA doesn’t guarantee you a job out of college anymore,” Sullivan said.

According to Sullivan, the student his company chose to hire beat out honors students from some of the most well-known business programs in the nation.

“The experience that the student gained from SMIF really did stand out on his resume and help him compete in a candidate pool where his resume would have otherwise probably been brushed aside,” Sullivan said.

What’s next for this group of young investors and the professors who are committed to their future success?

The McCoy College of Business Development Foundation’s endowment fund awarded SMIF an additional $50,000 in August and will give the class another installment in a few months.  The students will be able to invest a total of $200,000 during the spring 2009 semester.

Moon sees the addition of funds as a stepping stone towards his ultimate goal for the class.  “I’d like to see the SMIF students eventually be responsible for investing $2.5 million,” he said.

Chittenden has been surprised by the quick success of the SMIF, and hopes the fund will continue to grow.  “But, one of the most rewarding parts of being a professor for SMIF is when I get to see that light bulb go on for a  student…and I know they're evolving into an exceptional professional,” Chittenden said.