By wringing a profit out of a bear market, a team of Terry MBA students managed to pulverize the competition in the 12th year of the Sterne, Agee and Leach Student Investment Fund Challenge.
Applying the financial theories they learned in class, along with their own market savvy, the team of eight full-time MBA students was the only university team in the invitational competition to take their $50,000 brokerage account and show a positive return at the end of the contest period.
UGA closed out the seven-month investment challenge, which ended in April, with a total account value of $52,820, representing a 5.64 percent return on investment. The University of Louisville finished a distant second, with a loss of 8.32 percent. The University of Mississippi, the University of Alabama and Auburn University posted losses between 9 percent and 31 percent.
For comparison, the S&P 500 stock market index lost 10.5 percent of its value during the same period as the competition.
Sterne Agee splits the earnings at the end of the contest with any schools that turn a profit (but absorbs any losses). Terry's first-place finish netted the college a victory check of $1,410. But far more important than the winnings, the students — all members of the MBA Finance and Investment Club at Terry — gained valuable experience, a marketable credential to add to their résumés and bragging rights.
Dan Cahill, who graduated this spring with his MBA and has since taken a job with Citigroup in New York, served as the team's portfolio manager. The other team members were Matt Barnett, Drew Green, Scott Hampton, J.R. Hill, Bradley Martin, Bali Shah and Ashton Windham. Finance professor Tyler Henry, who taught the Investments course in the MBA program last fall, advised the team. And Lee Smith, managing director of Sterne Agee's private client group in Atlanta and a Terry graduate, helped the team execute its trades, but he was restricted from making investment recommendations.
"Dan and the rest of the students deserve all of the credit for the team's success," Henry said. "They were responsible for the team's investment strategy and portfolio selections."
Each team had to follow the same set of 14 contest rules supplied by Sterne Agee, including what types of stocks, bonds and securities could be purchased. And the investment portfolio had to be kept diversified, with no more than 10 percent of a team's assets held in any single equity position.
Based in Birmingham, Ala., Sterne Agee has offices in 13 states and is a member of the New York Stock Exchange.