The economy may be struggling to recover from a recession, but these are exciting times for a handful of student investors on Franklin & Marshall's campus.
Members of the Student-Managed Investment Portfolio (SMIP) hosted top executives from Fulton Bank near the end of the fall semester, learning firsthand about the challenges in the banking industry. The session was a milestone for the group, which attempts to provide students with real-world applications of things they have learned in class. Along with the SMIP students, the meeting included Fulton Bank's Craig Roda '78, chairman and chief executive officer; Dave Hostetter, executive vice president; Amanda Sears, benefits administrator; and Ruhan Guonah '09.
"When we reached out to Fulton Bank, management was extremely responsive," says Dan Coffman '10, a member of SMIP who is serving as its organizer. "The executives came in and gave us an overview of where they're going in the future. We had managers, and the chief executive officer, talking about their business."
The meeting focused on the challenges Fulton is currently facing, and how the bank is changing its business model to adapt to the new environment. The SMIP purchased Fulton shares in 2006.
In SMIP, students manage a portfolio that is part of the College's endowment. Students meet weekly during the semester to monitor the portfolio and evaluate new investment opportunities, receiving one-half academic credit for their participation. They have approximately 20 holdings in their portfolio.
Coffman says the Fulton meeting was important because the bank is local and respected. "We found out that the best way our portfolio can support the local economy is to invest in Fulton," he says. "The meeting with Fulton speaks to the fact that we like to invest in local business."
SMIP started several years ago, when Glenn Stevens, emeritus associate professor of business, organizations & society, set up the group. Mary MacAusland, visiting instructor of business, organizations & society, has also worked with the students, particularly in their meeting with Fulton Bank and focus on local investing. This semester, the group is led by Mark McGrath, adjunct instructor of business, organizations & society.
The past year has provided valuable lessons for the students in SMIP, given the 2008 market crash. Coffman says the crash provided an opportunity to learn.
"We want to be diversified, and we want to minimize risk," he says. "We do it by industry, a top-down analysis. What industries are hot? If the telecommunications industry is hot, what companies are doing well in it? This semester, we're looking at electronics. We've determined that Apple and IBM are doing the best in their areas."
The students are also looking at clean and renewable energy, which is high on SMIP's priority list. However, Coffman says that industry has its challenges. "We don't know who the winners will be," he says. "It's high-risk but also high-return. It's important to support clean and green energy, but we also want the portfolio to grow."