The Cameron-Banc First Investment Portfolio

OVERVIEW OF THE PROGRAM

 

BancFirst Cameron University Portfolio provides students with a hands-on experience on how to develop, and apply effective company analysis to manage portfolio risk and return for both bond and stock portfolios. This program presents students with an opportunity to invest real money and to interact with people in the field of investment and portfolio management. 

The student-managed investment portfolio is a two-semester program consisting of the Portfolio Management I (PM I) and Portfolio Management II (PM II) classes.  The PM I class focuses on fixed income securities, and the PM II class covers equity securities and client portfolio management

The fixed income portfolio is currently funded by a line of credit of $1,000,000 from BancFirst (Bank).  The equity portfolio is funded from profits that were generated from the fixed income portfolio and transferred to the Cameron University Foundation (Foundation).  Students manage both these portfolios under the supervision of Dr. Arif Qayyum (mqayyum@cameron.edu). 

 

 

Fall 2013

 

Spring 2014

Chief Executive officer

 

Santiago Romero
santiago.romero@cameron.edu

 

Sudipti Baral
sudipti.baral@cameron.edu

Chief Investment Officer

 

Florencia Tornero
florencia.tornero@cameron.edu

 

Shradda Sharma
shradda.sharma@cameron.edu

Chief Economist

 

Shradda Sharma
shradda.sharma@cameron.edu

 

Justice Berko
justice.berko@cameron.edu

Chief Bond Analyst

 

Sudipti Baral
sudipti.baral@cameron.edu

 

 

Chief Stock Analyst

 

Amanda Hosmer

 

Brian Schwabe
brian.schwabe@cameron.edu

 

Portfolio Management Class 


THE FIXED INCOME PORTFOLIO

 

The Management

The fixed income portfolio is managed by a Portfolio Management Board (board) and is led by the Chief Executive Officer and a Chief Investment Officer, who are assisted by the following committees:

 

¨       The Economics Committee monitors interest rates and the economic environment.

¨       The Security Tracking Committee reports new information on the stocks and bonds held in the fixed income and equity portfolios

¨       The Performance Committee monitors the performance of the portfolios.

¨       The Public Relations and Multimedia Committee promotes the class and organizes the semester banquet in which a presentation is made to the Bank, the Foundation, and prominent community leaders. This committee is also maintains the web page and prepares the PowerPoint presentation for the banquet.

 

Learning Opportunities

Funding the portfolio using a bank loan/line of credit presented the students with many learning opportunities:

 

¨       Most student-managed funds use money donated for the purpose or funds allocated by university endowments.  The use of borrowed funds by Cameron presents students with the challenge of earning at least the loan rate to breakeven.  The problem is complicated by the fact that the loan rate is a short-term variable rate, but the investments are made in a portfolio of short-term, intermediate-term and long-term fixed income securities.  Every class discusses this problem at the beginning of the semester and sets the yield spreads required over the loan rate for bonds with different maturities and credit quality.

¨       The change from a loan to a line of credit provided students with an additional decision variable - “to invest or not to invest."  Under the loan agreement, the portfolio was fully invested, since the loan rate had always been higher than the money market rate.  Under the line of credit, the class could sell bonds and pay down the line of credit when appropriate and draw on the line of credit whenever attractive investment opportunities were available.


 

THE EQUITY PORTFOLIO

 

The equity portfolio is managed by the Portfolio Management II class.  In addition to managing the portfolio of stocks and mutual funds, each student is required to do an individual project and a group project.  The individual project involves security analysis which consists of the following sections:

 

  1. Company history
  2. A survey of the industry
  3. Economic analysis
  4. Financial analysis, and
  5. Conclusions and recommendations. 

 

The knowledge and insight gained in this project is applied to selection of stocks for the equity portfolio. Students learn to analyze stocks and mutual funds using various sources of information such as annual reports, Value Line, Standard and Poor’s, Morningstar, and various Internet sources.  At the end of this process, each student is required to present stocks to buy or sell based on his/her analysis. The students also participate in a client portfolio management group project involving a real client.