URI’s amateur stock analysts impress pros
Dave Lavallee, 401-874-5862
KINGSTON, R.I. – January 4, 2011 – What if you worked for a major investment house and you learned of 11 amateur financial analysts who developed a portfolio that outperformed Standard & Poor’s 500 and two other S&P indices?
At a minimum, you’d probably want to interview them, but you’d be smart to make them part of your team.
The 11 analysts are actually University of Rhode Island seniors in the College of Business Administration who participated in the Ram Fund during the fall semester. Established in the spring of 2001 with $100,000 in seed money from the Alumni Association, the Ram Fund gives advanced business students the opportunity to invest and manage money for the long term.
When the 11 members of the class presented the results of their work last month, members of the Alumni Association Executive Board and professionals from Fidelity Investments, Washington Trust Bank, Bank of America, Goldman Sachs and others were all smiles as they learned that the portfolio was valued at $169,979. The fund holds shares in 21 companies, four of which were added during the fall: Diana Shipping Inc., Athens, Greece; Western Digital Corp., Lake Forest, Calif.; Preformed Line Products Co., Mayfield Village, Ohio; and Core Laboratories N.V., Amsterdam, Netherlands.
Samuel Cox, an equity research analyst at Fidelity Investments, said the level of detail in the group’s research was impressive, especially its completion of discounted cash flow analysis on each stock. Discounted cash flow analysis is a detailed and time-consuming method to estimate the attractiveness of an investment opportunity.
“When I do a discounted cash flow analysis, I am ready to tear my hair out, so great job all of you,” Cox said.
Andrew Macken, vice president and regional director of Goldman Sachs Asset Management, added similar praise, saying, “If we had $100,000 to work with when I was in school, I think something else would have happened with the money.”
Peter Dadalt, assistant professor in the College of Business Administration, who runs the Ram Fund class, said this is the first time the entire class had to complete discounted cash flow analyses.
“There were a lot of heated discussions among the students,” Dadalt said. “Two years ago, only one student could complete this type of analysis. Now this entire group can. I don’t spoon feed this class. I don’t go over every line of analysis with them. I guide them and they make their own decisions.”
Joseph M. Confessore, vice president and team leader of commercial lending at Washington Trust’s Warwick office and president-elect of the Alumni Association, said the students are phenomenal. “This program is consistent with what President (David M.) Dooley envisions for the University in terms of experiential learning. This program opens doors and leads to careers,” said the 1996 URI graduate who majored in finance.
Indeed, each member of the audience received a 43-page booklet that listed team members’ names and their resumes, detailed reports on each new stock purchase, performance comparisons and a hard copy of the Power Point presentation.
Nicholas Storti was one of two former members of the Ram Fund who attended the December presentation. A 2009 graduate of the College of Business Administration with a major in finance, Storti is now an associate underwriter for Bank of America.
“The most important things I got out of participating in the Ram Fund were the team aspect of the class, and the end-to-end credit process,” Storti said. “To have to justify your decisions in front of your peers was a great learning experience. You have to pay attention to very small, but important details. This is essential for a college that wants to attract top students who then graduate and land great jobs in the financial services industry.”
Many of the current Ram Fund members echo what Storti said.
Erin Murphy, a senior finance major from Portland, Conn., was the only woman on the team last semester.
“I am soft spoken and tiny, so Professor Dadalt said I needed to speak up more,” Murphy said. “This was one of the best experiences of my time at URI because it was like an internship.”
Kevin Flynn, a senior accounting major from Johnston, R.I. said Murphy’s work didn’t need much criticism. “Plus she was a lot nicer to us when she critiqued our work.”
Flynn added that working on the Ram Fund was like working on a real investment team. “By talking in class, we became really close, and we became comfortable learning from each other. We learned how to joke with each other.
Senior finance major Will Martel, a member of the Rams’ basketball team from Fairhaven, N.J., said he knew presentations in class prepared him well for the formal presentation to the financial professionals.
“I knew I would be presenting to very bright students in class,” Martel said. “Before the formal event, I took a look at my fellow students’ resumes, and I realized my experience was nothing like theirs. I feel honored to be in a class with some of the smartest students in the College of Business Administration.”
When the formal presentation was over, Elizabeth Flanagan, vice president of human resources at Washington Trust, said the students were well prepared to defend their stock buys.
“I was very impressed,’’ she said. “Their presentation skills are as good as any I see in the various business meetings that I attend. I interview a lot of people, and I can see that these students have been given a great opportunity to gain real world experience.”
The Ram Fund team members and their hometowns are:
Florian Behrmann, Hamburg, Germany
Benjamin Cheney, Newton, Mass.
Kevin Flynn, Johnston, R.I.
Michael Holden, Winthrop, Mass.
Yihe Luo, East Providence, R.I.
Will Martel, Fairhaven, N.J.
Eric Mundorf, South Kingstown, R.I.
Erin Murphy, Portland, Conn.
Derek Olson, Coventry, R.I.
Zachary Pierce, North Kingstown, R.I.
Ryan Ransford, Portland, Conn.
A BIT OF DIRECTION: Peter Dadalt, assistant professor in URI’s College of Business Administration, who runs the Ram Fund class, addresses the class as students Zachary Pierce, left, of North Kingstown and Florian Behrmann of Hamburg, Germany consider their professor’s points.
A BRIEF PAUSE: Kevin Flynn, a URI senior accounting major from Johnston, R.I., pauses for a minute from analyzing some data as a member of the Ram Fund.
TAKING STOCK: URI Senior finance major Will Martel, a member of the Rams’ basketball team from Fairhaven, N.J., and Erin Murphy, a senior finance major from Portland, Conn., put their heads together as part of the Ram Fund.
URI Photos by Michael Salerno photography.