Renee RosenowAs America’s economy began to decline over the past year, it took some people by surprise. On the other hand some saw it coming, including the group of students who make up the Student Investment Management Program along with SIMP director Ray Hughes. While some responded unfavorably to the declining economy, SIMP looked at it as a valuable learning tool to be used when those in the program become professionals in their fields.
SIMP is a program open to junior and senior business students. The students in the program actively manage the Clearwater Fund, a portfolio of equities and fixed income securities established by the
UW-Eau Claire Foundation in 2002 with a grant of $200,000 and deriving its name from Eau Claire meaning “Clear Water” in French, Hughes said.
The program was created with many goals in mind. First was to help improve the presentation skills and research skills of the members, Hughes said. The students research stocks or securities, listen in on analyst calls with companies, research companies’ financial statements and look at publications and news releases. Also members spend a significant amount of time preparing to look at sector industries, developing a business plan for how they will manage the $200,000 from the UW-Eau Claire Foundation, and developing an asset allocation strategy to achieve what their purpose is for managing this money, Hughes said.
“They learn how to look at portfolio management practices,” Hughes said. “They get to develop their own strategies . We don’t do it for them, we ask them the tough questions and they develop it.”
Historically the program has been set up with two different levels of analysts. Junior analysts come in and learn about sectors and industries, companies, what to look for in management and they help the seniors do the ratio analyses, Hughes said.
He added they get to sit in when seniors make a presentation to a company that the juniors helped them prepare so there isn’t the same type of demand on them to earn their one credit from the independent study.
Then as seniors they become the second level of analyst and go through a three-week summer class, where they start from scratch on how to research and value a stock. They then develop a business plan to manage the Clearwater Fund and once they have the business plan done they present that to the UW-Eau Claire Foundation advisory board.
“We don’t let them do a presentation until they are prepared to make a professional presentation,” Hughes said, adding if they are successful they can start managing the funds to earn their three credits in the fall.
Hughes said he feels students are given an opportunity to approach the program from a graduate level where students put in the time they want. Hughes doesn’t dictate how much time each student spends working besides the requirements that they have to each other.
“It really is a responsibility that they take very seriously,” Hughes said. “I couldn’t make the students in a class work as hard as these students do . they are interested in what they are pursuing and we give them a structure to do what they want.”
One of the students taking advantage of the program is senior accounting and finance major Andrew Kriesel. Having taken many finance and accounting classes, Kriesel said he feels that being part of SIMP is overall one of the best learning experiences he has had, not just at UW-Eau Claire but in his life overall.
“I feel very good about being involved in the program,” Kriesel said. “It’s definitely a prestigious program to be involved with.”
SIMP offers Kriesel and his fellow students something that not many of the states offer and which is literally being allowed to manage real money, Hughes said. There are other programs that treat it more as a simulation game and do not have the same type of “build a portfolio, strategy and business plan” style. Others are focused on stock selection and looking at stocks, whereas SIMP is one of the only ones that manages real money and develops it as if the students had a company and a strategy, Hughes said.
“I definitely see (SIMP) helping me,” Kriesel said. “I have been contacted by a few employers who have been impressed . that I have been involved with (SIMP) and had this on my resume.”
Kriesel’s experience is not uncommon, as Hughes said he has received a number of testimonials from former students of the program, reporting they were able to use the knowledge that they gained and the ability to use words fluently with business people as they pursued their interviews for their jobs.
From his experience with students reactions and people calling him for references, Hughes said SIMP compares very favorably with a lot of the internships and is much better than a lot of the internships out there because the students are actually spending a year literally being part of the management of the money. Hughes said numerous employers have told him the students actually understand the theory and not just the practice because of what they have gone through, which is really the objective of an internship.
On top of that, Hughes said there are a fair percentage of the students that take the charter financial analyst exam, one of the top recognized certifications in the investment world. There is about a 34 to 37 percent pass rate for each of the three levels Hughes said, adding that on the first level students have achieved a tremendous level of success in passing.
“Hopefully as we go forward,” Hughes said, “we can continue to bring (students who have passed) back as speakers and continue to have that awareness of that certification.”
At the end of the 2009 spring semester SIMP will begin a temporary suspension. According to a SIMP press release given to The Spectator, due to limited resources and the small number of students SIMP serves (20 per year), a college-wide decision was made that the resources supporting the program could be better utilized supporting other programs. The decision was made only after reviewing all of the college’s resources and the programs to identify where eliminating programs would have the least impact and resource enhancement would produce the greatest benefit.
“Even though this program is hard for me to let go of and I am disappointed we are doing it,” Hughes said, “I know there are going to be other things that will come along . and we’ll move forward with the new opportunities.”
