Cougar Investors Outperform the S&P 500

Undergraduates discover personal investment philosophies through real-world experience

Professor Mario Reyes

In business education, it’s not unusual for an investment class to practice hands-on management of an investment portfolio. Carson College students in finance Professor Mario ReyesCougar Investment Fund (CIF) course learn about investing principles and how to analyze stocks and industry sectors. Their job is to make investment recommendations for the University’s $2.8 million CIF with the objective of outperforming the Standard & Poors (S&P 500), an American stock market index based on the market capitalizations of 500 large companies having common stock listed on the New York Stock Exchange or NASDAQ.

Over time, Carson student investors have regularly outperformed the S&P 500—but during the 2017 spring semester, they beat it by a significant margin.

“It’s not easy to outperform the S&P 500 even by a slight margin, but to surpass it by 1.4 percent in essentially a two and a half month investment period is a testament to Carson Cougs’ research and investment insight,” says Reyes. “The uniqueness of our program lies in the size of the fund, class structure, and the handling and the diversity of their investment options.”

Investment strategies lead to success

A number of strategies led to students’ success—among the most significant was the appointment of two designated CIF portfolio managers, Eli Geranios, a junior from Spokane majoring in finance and accounting, and Mike VanVliet (’17), a finance graduate from Tacoma, who guided the class on investment decisions on a range of S&P 500 sectors. Advice and insights shared by guest lecturers Steve Scranton, CFA and chief investment officer for Washington Trust Bank, and Spencer Shelman (’06 Fin.), CFA, portfolio analyst for Hart Capital Management, and member of the Carson College National Board of Advisors, also contributed to the students’ success.

As portfolio managers, Geranios and VanVliet provided strategic guidelines to teams of students tasked with making an investment decision, developing a stock report presentation, and pitching it to the class.

From left, Eli Geranios and Mike VanVliet

“Everything matters when considering strategy,” says Geranios. “We suggested students find the drivers of their stock’s performance, for example, earnings, a new merger that would increase the value through expanded services, or new products, such as iPhone applications, that would have high stock prices.”

The whole class discussed each pitch and voted on whether to invest. Geranios and VanVliet had authority to determine the amount of the investment, or veto it. Decisions were based on staying within 5 percent of the S&P 500 sector benchmarks, and students only invested in stocks with a $1 billion market cap.

In general, Geranios and VanVliet found students favored growth stocks that increase rapidly from capital appreciation, such as Amazon or Tesla, versus value stocks that are well established over time, such as Macys or Sears.

Cougar Investment Fund ROI

“The biggest strength of the course was the open class discussion,” says Geranios. “It allowed students to act as real investment professionals and develop their own investment philosophies. What I learned about myself is that I am concerned more about debt. Others were more concerned about how to make more revenue.”

“For me, the most valuable experience was managing real money. It wasn’t just completing an assignment to receive a grade; the decisions and actions we took had a direct and lasting impact,” says VanVliet, who is now a valuation associate at Equity Methods, a firm that helps companies model, value, and account for equity compensation and other complex securities. “The critical thinking skills I learned at WSU, and especially in the Cougar Investment Fund, helped ease my transition from college to career.”