By Phillip Milano
Most fund managers would rejoice over a 22 percent annualized return handling tens of thousands of dollars of other people’s money – or get jealous of whoever else could pull it off.
They’ll just have to drool over what three JU business students accomplished last semester handling The Dolphin Fund, an investment portfolio in the Davis College of Business.
The students – head manager Thomas “Trey” Douglas and team members Francesca Yong and Jimmy Murphy – managed to bring the fund up $19,000 in the three months ended Nov. 30, for a 5.43 percent return (annualized at about 22 percent). That compares to an S&P return of 0.68 percent (annualized at 3 percent) during the same period.
“Beating the market is a big deal,” said Dr. Bob Boylan, chair of JU’s Department of Accounting and Finance. He attributed their success to hard work; teamwork; guidance from Dr. Michael Adams, a JU associate professor of accounting & finance and professional portfolio manager himself; and a “healthy part good luck.”
The three are all varsity golf team members, which Boylan said he felt “gives them an edge, as they are very competitive.”
The 22-year-old Douglas called it “a dream opportunity” to manage the fund, which is now worth several hundred thousand dollars and began years ago with donations to JU.
“If we lose money, it’s not the end of world because the biggest thing is to learn how to understand the stock market,” he said. “But when you are sitting there with actual money, there’s a little different pressure on you. … I probably get more stressed than the other two team members.”
Working under the guidance of Adams, the students researched the fundamentals, watched trends, exercised patience during recent “fiscal cliff” market fluctuations, picked strong stocks … and listened to their instincts, Douglas said.
“We’d bring our ideas to Dr. Adams, and he was a tremendous help with advice and ideas,” he said. “You want long-term growth, but you have to look at the short-term technical side of things, too. And sometimes, you just have to see what your gut tells you, too.”
That paid off when Murphy, Douglas’ roommate, had “a feeling” about Home Depot stock, and the team made a short-term gain of $1,000 on its stock.
With Dr. Adams’ know-how, the three students created a diversified portfolio and steered money into a variety of stocks, several of which were in energy and insurance – AFL (AFLAC Inc.), PSX (Phillips 66), CVI (CVR Energy Inc.) and VLO (Valero Energy Corp.) – and did very well.
While the idea is to make a profit, the overriding goal is to gain from the experience of learning how the market works, Douglas noted.
“When we go into the real world, employers hopefully will see we aren’t coming in blind and that we know what we’re doing,” said Douglas, who graduates in May and would like to be a financial adviser and someday a chief financial officer. “We’re also trying to lay a foundation for other students, to draw them in and create a spark in them, and show them how we do this.”