Alaska Student Investors Turn Online Stock Profit, Fund Scholarship - Brief Article

Black Issues in Higher Education, Jan 6, 2000

FAIRBANKS, Alaska -- A New Age stock ticker rolls across the Web site, displaying up-to-the-minute trading information on a select group of investments.

But this isn't just any portfolio. It started eight years ago as an experiment for a group of student investors at the University of Alaska-Fairbanks, and has since flourished in the bull market of the '90s.

A $100,000 endowment from the University of Alaska Foundation in 1991 had grown to $530,000 as of Dec. 9. The technology-heavy portfolio is up 72 percent this year alone.

It has also yielded its first dividend -- an $8,000 scholarship fund for future UAF students.

"This is different from dealing in a mock portfolio because we're managing real money," says Jason Carroll, a student stock analyst. "There isn't a more optimal way to educate students in this area."

The current group of 11 student managers has invested heavily in telecommunications and other high-tech issues. Those sectors account for 88 percent of the portfolio's overall return this year.

"We really believe the students are doing a good job of prudent investing," says Mary Lindahl, faculty adviser for the student investment fund. "But on the other hand, I think we're as risky as we can be."

Lindahl is referring to an aggressive investment strategy, known as GARP -- growth at a reasonable price -- that her students have used.

Each stock purchase is subjected to a 60-point scoring model specifically tailored to the investment fund's desires.

The students have divided the fund into separate portfolios. The larger portion -- nearly $340,000 -- is managed through Morgan Stanley Dean Witter broker Vona Husby. She has advised the student group since its inception, and they in turn have named a scholarship after her.

Students handle a separate online portfolio themselves, trading stocks at a much lower cost after conducting research on the Internet. The online investors have finished ahead of the S&P 500 index, and for the past two years the group has also outperformed the NASDAQ index, which gauges the technology sector.

"They now have access to information that used to cost thousands of dollars a year," Lindahl said.

The students plan to share this success with the community and foster a better image for the university. Carroll discussed the possibility that the fund could one day finance full scholarships. In the future, they would like to teach nonprofit organizations how they might use stock holdings to offset operating costs.

Many in this group hope university officials take note of this success. They decry the fact that the university's School of Management has no undergraduate program in finance.

"We would love to have a finance program, and it's not possible," Carroll says. "It might make sense for the university to invest a little more in the school of management."