Student-run portfolio outperforms S&P 500
An investment portfolio run by a group of university students has outperformed the S&P 500 index this semester — and for “several years.”
Grand Valley State University said last week that the latest portfolio update this month from the Seidman Investment Portfolio Organization, or Seidman IPO, a student club, indicated that the Seidman IPO returned an 11.4-percent increase from Sept. 4 through Dec. 4, while the S&P 500 returned a 3.8-percent increase.
Jacob Freeland, who's studuying finance and economics at GVSU and the president of Seidman IPO, said after closing out last year, the club returned 10-percent growth, and its portfolio was valued at around $57,000.
“In my first year in IPO, we were just over the $30,000 mark, and we are currently approaching the $70,000 mark,” Freeland said.
“This year has been great,” Freeland said. “It is kind of too soon to tell, because we have been in such a bull market, so maybe in the next week or so we might have a little bit of a pull back. The club has been outperforming the S&P 500 for several years.”
Managing the portfolio
Originally established as the GVSU Finance Club in 1976, the Seidman IPO was initially funded by the Seidman Endowment and operates with an 11-student executive board, including five portfolio managers, and faculty advisor Eric Hoogstra, a professor of finance at GVSU.
The club adopted a portfolio strategy in 2010 focusing on real capital appreciation with moderate risk and a goal to outperform the S&P 500 benchmark.
Each of the portfolio managers oversees a specific sector and reports to the vice president of portfolio management on the stock the IPO currently owns.
“A majority of the students like to go through the more value stocks, that are a little newer company with more room for growth,” Freeland said. “We are looking for companies that we think are maybe mispriced in the market.”
After researching a company, students can pitch a potential investment, and the club then votes on the trade before executing it using TD Ameritrade online.
A number of companies are in the Seidman IPO portfolio: Berkshire Hathaway, BlackRock Global, Cemex, Delta Airlines, Intel, Gentex, Immersion, Medtronic, Home Depot, Natural Grocers, Perrigo, Tyson Foods and Cisco.
“The portfolio performance is huge and great — I think the group is a lot more than that,” Freeland said. “It not only becomes a learning organization where we have this real portfolio, but also we get to network with each other and meet some really cool people.”
The Seidman IPO has an official membership around 30 to 40 students, but will see around 60 people at any given meeting.
Although participation is open to any GVSU student regardless of their academic background, Freeland said 90 percent of the members are studying finance, economics or accounting.