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Clarkson University Takes Fourth Place in Adirondack Cup Investment Competition, Beating Russell 2000 Index
[A photograph for media use is available at http://www.clarkson.edu/news/photos/adk-cup-2012.jpg .]
A team of nine undergraduate and graduate business students from Clarkson University has taken fourth place in the first Adirondack Cup Investment Competition, in which college teams competed against each other over six months to build and grow a small cap portfolio of stocks.
The competition is sponsored by the Adirondack Small Cap Mutual Fund (ADKSX), a Guilderland, N.Y.-based mutual fund. The owner-managed fund was recognized in March 2011 by Lipper Inc. as the best small cap value mutual fund in the U.S. for the three-year period from 2008 to 2010.
Students from 18 colleges and universities across the Northeast participated in the unique competition, managing a hypothetical small cap portfolio of stocks valued at $1 million each, while benefitting from the knowledge and experience of Adirondack portfolio managers.
The goals of the competition, which is intended to take place annually, were to teach students the difference between trading stocks and thinking through their investment decisions for the long term and to help them make appropriate connections in the financial services sector as they enter the job market.
“The Adirondack Cup was highlighted by an impressive performance by the top teams,” said Matt Reiner, Adirondack co-portfolio manager.
Clarkson University posted a 28.5 percent return. All of the top-five teams handily beat the Russell 2000 Index, which measures the performance of small cap stocks in the U.S.; the index had a return of 15.7 percent for the period.
The winner, Ithaca College, posted a 36.3 percent return. Rounding out the top five were Hofstra University (with a 33.8 percent return), SUNY Plattsburgh (32.6 percent return), and Stony Brook University (18.3 percent return).
“As an experiential learning exercise, the Adirondack Cup was a great extension of the classroom for our students,” said Clarkson faculty advisor Prof. Allan Zebedee. “It definitely helps them connect the concepts discussed in classes to the real world. By managing money and competing against other schools, they were given insights into the daily pressures associated with money management, as well as the exhilaration of beating the market.”
“When the Adirondack Cup Competition was envisioned, we were hoping to teach the students a little bit about what we do,” said Steve Gonick, Adirondack principal, “but the larger goal was to do our part to help these talented students get noticed by the financial business community as they near graduation. The Adirondack Small Cap Fund has a strong network of clients, particularly in the Northeast, who have been actively tracking the performance of students from their favorite schools. This has provided the students a great opportunity to build their contacts as they enter the workforce.”
At the start of the competition in October 2011, students were expected to do their research, create a thesis on their stock picks and determine investments and allocation by October 14. Each portfolio had to include a hypothetical $1 million invested in five small cap stocks (defined as companies with market caps between $50 million and $3 billion).
Each of the five stock picks had to be from a different industry (technology, health care, consumer discretionary, consumer staples, energy, materials and processing, producer durables, financial services or utilities) and each holding had to be at least five percent but no more than 50 percent of the portfolio. Teams were allowed to make changes to their portfolio only twice during the contest period, on December 16, 2011 and February 17, 2012.
Clarkson students in the competition used a disciplined approach to researching the economy, industry and finally individual stocks to determine the final investments and allocation.
“The Adirondack Cup competition was a unique and exciting learning experience for us students interested in becoming a portfolio manager,” said senior Alexander Cauwels, an innovation & entrepreneurship major from Robbinsville, N.J. “Creating a strong investment thesis was our main goal going into the competition, and it definitely showed in our performance. This competition really called on all areas of our college curriculum, specifically in our macroeconomic and industry analysis. Near the end of the competition, we were clearly one of the top contenders and the knowledge that I took away from this competition will transition well into my career path.”
Other Clarkson students managing the Adirondack Cup competition portfolio included seniors Matthew Gammariello, a global supply chain management major from Webster, N.Y.; Nate Hazen, financial information & analysis, Dalton, Mass.; George E Pettee, innovation & entrepreneurship, New Canaan, Conn.; Kylie Reid, financial information & analysis, Gardiner, N.Y.; and Chelsea Whiteman, financial information & analysis, Old Chatham, N.Y.; junior Daniel Matthews, financial information & analysis, Ellenville, N.Y.; and MBA students Khoa Nguyen of Ho Chi Minh City, Viet Nam, and Justin A. White of Syracuse, N.Y.
Through the Clarkson Student Strategic Investment Fund, a gift from class of 2011 parents Tim and Sheila Pettee, students also manage a portion of Clarkson’s endowment. This student-managed investment fund actively invests in the stock market using the Pettee’s gift, in order to provide students with real-life experience and accountability toward achieving financial goals. Clarkson has designed a curriculum focused on security selection and portfolio management in an effort to help promote this connection between the classroom and the real world.
The other colleges participating in the Adirondack Cup were Stony Brook University, Binghamton University, Siena College, Simon School at Rochester, Skidmore College, St. John Fisher College, St. Lawrence University, SUNY Brockport, SUNY Geneseo, Union Graduate College, University at Albany, University at Buffalo (with an undergraduate and a graduate team) and Wesleyan University.
The Adirondack Small Cap Fund was launched in April 2005 and has enjoyed strong growth. It has approximately $90 million in assets under management today.
Clarkson University launches leaders into the global economy. One in five alumni already leads as a CEO, VP or equivalent senior executive of a company. Located just outside the Adirondack Park in Potsdam, N.Y., Clarkson is a nationally recognized research university for undergraduates with select graduate programs in signature areas of academic excellence directed toward the world’s pressing issues. Through 50 rigorous programs of study in engineering, business, arts, sciences and health sciences, the entire learning-living community spans boundaries across disciplines, nations and cultures to build powers of observation, challenge the status quo, and connect discovery and engineering innovation with enterprise.
Photo caption: A team of nine undergraduate and graduate business students from Clarkson University took fourth place in the first Adirondack Cup Investment Competition, in which college teams built and grew a small cap portfolio of stocks. Front row (left to right): George Pettee, Alex Cauwels and Khoa Nguyen. Middle row: Matt Gammariello, Chelsea Whiteman, Daniel Mathews and Allan Zebedee (advisor). Back row: Justin White. Missing: Nate Hazen and Kylie Reid.