Michigan Tech Business Students Named National Investment Champs

In these volatile financial times, who can invest $1 million and reap a 13 percent return? The Applied Portfolio Management Program (APMP) team from Michigan Technological University, that’s who. They can, they did, and it won them their third national undergraduate investment strategy championship.

At the annual investment challenge called Redefining Investment Strategy Education (RISE), sponsored by the University of Dayton, the Michigan Tech team’s 13 percent return on investment beat 267 universities from more than 50 nations in the value category. Their back-to-back victory—they won the same category in 2007—is the third win in eight years for Michigan Tech.

The money they invest comes from private donors. The profits go into the Michigan Tech Fund—the University’s official nonprofit fund management and gift solicitation agency—to be used to support student scholarships and for APMP expenses.

“Consistency,” advisor Dean Johnson says of his young investment team’s winning record. “One time might be luck, but two years in a row and three years out of eight, that shows we are consistently succeeding in our investment strategy.”

“The competition is judged by risk-adjusted returns,” explains Johnson, an associate professor in Michigan Tech’s School of Business and Economics, “In other words, how much risk did we take?” A strategy of lower risk-taking, it turned out, equaled greater growth and another handsome bull-and-bear trophy for Michigan Tech.

In addition to capturing top honors for their investment strategy, two Michigan Tech students were chosen to close the NASDAQ market remotely, the first time it had ever been done in a university setting. Finance senior Mark Malekoff, from Grande Prairie, Alberta, was one of them.

“We were really excited,” Malekoff says. “I was there last year when we won, and for us to win again this year was great, especially the way the market has been.”

“It really has proved anything can happen if you diversify as much as you can, look at economic forecasts, find an investment strategy and stick with it,” Malekoff adds. “Don’t get wrapped up in emotions.”

Senior Bradly Harry says the team “stayed clear of the “underweighted financial sector. We went for healthcare and energy, and they both gave us great returns.” Harry hails from Atlantic Mine, Michigan, near Michigan Tech’s Houghton, Michigan, campus.

The team’s best returns came from Rofin-Sinar Technologies (stock symbol: RSTI), which rose from $30 to $48 over the year; Teva Pharmaceutical Industries, Ltd. (TEVA), which saw an increase from $31 to $46; ArcelorMittal (MT), $41 to $77; and Sadia, SA (SDA), $10 to $17.

The secret to Michigan Tech’s success, according to Johnson, is more than recruiting intelligent students, although the University does that. Students must apply and compete to join the APMP team. But the Tech team is also run differently from most.

“Our portfolio team has a lot of control over this real money,” Johnson explains. “They have an advisory board, but the ultimate decisions are theirs.”

Other university teams, Johnson says, only get to work with the funds for a few months and/or don’t have total control. The Tech team has a year-round strategy, and they start by dividing up the tasks: One team member does the accounting; another sets up meetings; and they start working on their portfolio in the summer. Come fall, they present what they think are good investments to the advisory board, get approval, then push their $1 million-plus in donated funds into the stock market.

Michigan Tech’s School of Business and Economics has also made a serious investment in the team. They subscribe to a whiz-bang financial and market database known as the Bloomberg Machine. Most team members receive scholarships.

Malekoff is a noteworthy exception. He is attending Michigan Tech on an ice hockey scholarship.

Now, everyone on campus is asking the APMP team the same question: “Can you handle my portfolio?”

The answer might be “yes” sooner than later. Team members have started their own investment portfolios, and a couple want to do it for a living. A third wants to be an entrepreneur. All have been inspired by the competition and the success.

Recently, a finance alumnus called. He'd heard of the victory and wants to come to Houghton to talk to the group or have them fly to New York to talk to him.

The Michigan Tech investment team is small: only eight members, with an eight-member apprentice team shadowing them and prepping for next year, when they will attempt a three-peat.

“No guarantees, though” says Tony Hellenbrand, a senior from Madison, Wisconsin. “We’re smarter than that.”

Michigan Tech’s APMP team consists of Joel Pergolski, Mark Malekoff, Korey Capello, Lorn Randell, Bradly Harry, Kartikeya Srivastava, Kayla McCormick and Tony Hellenbrand. The apprentices who will defend their title in 2009 are Kelly Gerzetich, Tyler Kunde, Jeremy Kunde, Don Murray, Malcolm Gwilliam and John Schwarz.

Michigan Technological University is a public research university founded in 1885 in Houghton, Michigan, and is home to more than 7,000 students from 55 countries around the world. Consistently ranked among the best universities in the country for return on investment, Michigan’s flagship technological university offers more than 120 undergraduate and graduate degree programs in science and technology, engineering, computing, forestry, business and economics, health professions, humanities, mathematics, social sciences, and the arts. The rural campus is situated just miles from Lake Superior in Michigan's Upper Peninsula, offering year-round opportunities for outdoor adventure.