Email This StoryStudents manage $6.5 million in course
Jan. 26, 2006by AARON TURNEY, copy desk chief
For those looking for a hands-on taste of Wall Street, the Practicum in Portfolio Management class gives undergraduate and graduate students the opportunity to manage a fund worth $6.5 million -- one of the largest student-run portfolios in the nation.
The purpose of the fund is to raise money for scholarships. Last semester, $200,000 was donated to the athletic department for financial aid. Money is also allocated to Masters of Business Administration scholarships. "We try to fund at least one MBA scholarship each year," said Dr. Bill Reichenstein, professor of finance.
The class is taught in the Southwest Securities Financial Markets Center, a state-of-the-art classroom equipped with four large display monitors, digital stock ticker, a conference table and desktop computer with dual monitors.
Two professors, Investment Officer Scott Pittman and Visiting Professor Brian Bruce, teach the class of 15 graduate and undergraduate students. Pittman is physically in the class; Bruce is displayed on a plasma screen.
Teleconferencing software allows Bruce to see the class from his home in Boston, where he controls the cameras in the room to see individual students.
"It's awesome. He's a really good professor," Houston senior Ryan Tidwell said. "He has so much experience. He lets us learn as we go along."
The class has been offered for the last five years, but the earlier classes were not quite as high-tech. "We could hear him (Bruce), but we couldn't see him, so he was like this omnipresent voice," said Sarah Henze, a former Baylor graduate student.
The technology has advanced enough since the class started to make it feel natural.
"We really can communicate back and forth like he was in the room," Amarillo senior Ashley Mills said.
Students wishing to take the class are required to fill out an application.
The criteria for the application are a letter of intent, resume and transcript. Students must have a background in finance or be planning to get a job in financial planning.
"It isn't strictly a grade-based decision," Dr. John T. Rose, finance department chairman, said.
Once accepted, students are assigned to a sector of the S&P 500, the most popular index of top 500 large-cap stocks in the United States.
"Our objective is to beat it (S&P 500 index) on a five-year rolling basis," Reichenstein said.
Students analyze three to four stocks in their sector and present a case to the class on whether to buy, sell or hold the stock.
Professors and students fire questions at the presenters, which requires them to be well prepared.
"By the time you go through the questioning, you can tell how well they know the stock," Reichenstein said.
The stress of choosing which stock to buy and sell does not fall on the shoulders of any one student. Some are worth more than $350,000.
"The class collaboratively has to make the decision to buy, sell or hold the stock," Tidwell said.
Some students went to work for financial firms immediately after finishing the course.
"I went right out of school to work as a stock picker for a firm in Louisville, Kentucky," Baylor graduate Britt Bentley said.
Other students have gone on to work at Goldman Sachs, Morgan Stanley and J.P. Morgan.
"I've already signed with Goldman Sachs," Mills said.
The money raised as a result of hard work in the classroom is rewarding for students.
"I'm glad that we can contribute to the cause," Tidwell said.
The largest donation to date came from Don Buchholz, co-founder of Southwest Securities, Inc., who contributed $3.2 million to the program.
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