Written by Laurie McLaughlin
Investor Jeff Van Harte ’80 emphasizes both strong analysis and the courage to take the long view when it comes to investments.
“I feel a lot of investment techniques have become too short in their time-frame for analysis,” says Van Harte, who earned a degree in finance at CSUF and is now chief investment officer at Delaware Focus Growth Team. “It’s important for me to show students that they can look at a business, analyze it, hold it, make a good allocation decision and make a lot money.”
Van Harte is one of seven advisory board members providing guidance and mentorship to students in the Applied Securities Analysis Program (ASAP) at Mihaylo College. This two-semester course immerses a select group of finance undergraduate and graduate students in investment management: Two teams manage funds that are currently valued at about $95,000 each, and there are seven students per team; they analyze businesses and decide whether to buy, sell or hold the stocks they have within their portfolios.
“It’s a tough class,” says advisory board member Bob Kargenian ’81. He earned a degree in sports administration at CSUF, and he’s currently president of TABR Capital Management. “It’s real world, and more importantly, it’s real money. This is not hypothetical.”
Students manage funds that were provided several years ago by a number of donors for student investment. In 2011, Van Harte increased these funds with a $100,000 donation when the ASAP course was established.
In addition to being a year-long commitment, students must apply, interview and be accepted into the class. They must also take prerequisite courses and attend three day-long preparatory workshops over the summer. The proceeds from their investments will be donated to the Mihaylo College Tutoring Center.
Finance Professor Mike Milligan, who runs hedge funds professionally, is the instructor and managing director of the program. He agrees with Van Harte about the importance of research and analysis, which is the foundation of the course.
“When we created the class, we looked at similar programs across the country, and they were working on mutual funds or ETFs, but they weren’t actually doing stock analysis, and that’s one of the things that separates our program from others,” says Milligan.
“We wanted our students to look at a company, take the company apart, look at financials and fundamentals and determine whether it’s a stock they want to buy. They manage their own funds and make all of the buy and sell decisions.”
In addition to attending class, each student spends about 20 to 25 hours a week of their own time monitoring the fund (using Capital IQ, the industry software), working with teammates to decide what to buy, sell or hold, and researching and writing stock-analysis reports. Each student writes 10 to 15 analysis reports a year with their buy, sell or hold advice, and Milligan helps them fine-tune these reports before they are sent to advisory board members.
These board members, which assume the same role as an investment committee within a financial firm, read the reports and vote whether or not to accept the author’s recommendation. “The board members make sure the logic behind the report is sound,” says Milligan. “If not, they let the student know why and may ask for more information.”
In addition to Van Harte and Kargenian, the advisory board includes Ajay Bhootra, finance professor and executive director of ASAP; Dipasri Ghosh, finance professor; Raymond Goldblatt, partner, Joshua Doore Capital Group; Jennifer Hom, finance professor; and Dominic Nolan ’95 (finance), senior managing director, Pacific Asset Management LLC. Board members also give classroom lectures and serve as mentors.
With this intensive experience, many of the program’s students have entered the finance industry – at firms including Goldman Sachs, Pacific Life, State Street, U.S. Trust and Wells Fargo – with junior analyst positions versus the traditional entry point through sales or commission jobs. “I’m really happy with the quality jobs they are getting based on what they have learned in the program,” says Milligan.
The roughly $200,000 that the students manage was fully invested by last year’s class in mid-2013. This year, the teams’ portfolios are up 23% year to date; for comparison, the S&P 500 is up 15%, and the S&P 1500 is up 21% for the same time period.
“I envision this program growing both in scope and reputation,” says Mihaylo College Dean Anil Puri, who was instrumental in creating the program. “With the support that it is generating from our alumni and professional companies, I believe the program will become nationally competitive in a short time.”
Next year, Milligan would like to have students make presentations to potential donors to enhance the fund. “Just like they would in the real world, they’ll approach institutions who may be interested in investing in their fund,” says Milligan, who will reach out to alumni in the finance industry to help make the right connections.
“The difference between book knowledge and real application is night and day,” says Milligan.
“With this class, our students are mentally and academically prepared for what they are going to face in the finance industry.”
For more information on ways you can get involved in this innovative teaching program at Mihaylo College, please contact Michael Milligan, Managing Director of the Applied Securities Analysis Program at email@example.com.