Students Double Stake in Jaguar Investment Fund, Secure Additional Investment for Scholarships

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Posted on March 9, 2021

Thomas Becnel

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The Jaguar Investment Fund meets in the John B. Saint Financial Analysis Center, where students perched at Bloomberg Terminals face a wall of video screens with streaming stock quotes and breaking financial news.

This is where Wall Street meets the Mitchell College of Business at the University of South Alabama.

Each Wednesday afternoon, the nine students who run the fund vote on pitches to buy and sell certain stocks.

The best part?

These students are investing real money for the Jaguar Investment Fund. They are making decisions worth thousands of dollars. Success is measured with each trade.

The very best part?

These students are making real money for the Jaguar Investment Fund. In 2020, they outperformed the S&P 500 stock market index by 9 percent. The fund is now worth more than $1 million.

Hails Burnette, a finance senior from Chattanooga, Tennessee, is a risk analyst and operations manager for the student fund. Last semester, she and another student pitched a telecommunications company called Nextstar. The hundred shares of stock that the fund bought at $86 are now trading for more than $140.

She enjoys following a satisfying investment.

鈥淚 have this little widget on my phone that I swipe every day,鈥� Burnette said. 鈥淚t鈥檚 like, 鈥極h, look at that 鈥� we鈥檙e still doing well with that stock.鈥欌��

The success of the Jaguar Investment Fund recently prompted the University to invest $750,000 in a second student-run fund. It, too, will focus on long-term investments. Profits will go to scholarships.

Instead of pitching their classmates, students had to convince University leadership that their program was a sound investment. They made a formal proposal, and then waited.

鈥淚t was kind of nerve-wracking,鈥� said Christina Miles, a finance senior from Satsuma. 鈥淚鈥檝e never asked people for a million-dollar investment before.鈥�

Student-Driven Investments

Many of the top universities in the country have student investment funds. The South program began in 2015 with a $250,000 donation. Three years later, there was another $250,000 investment in the Jaguar Investment Fund.

Since then, it has grown in value. Buying stock in companies such as Amazon and PayPal has paid off. A diverse portfolio includes everything from manufacturing and agriculture to media and entertainment.

Dr. Chris Lawrey, an assistant professor of economics and finance, became the adviser for the Jaguar Investment Fund last year. Students are excited about starting a second fund. Reinvestment is a vote of confidence for the program.

鈥淭his is a unique experience,鈥� Lawrey said. 鈥淲e have some of our best students in here. This is totally driven by them. I sit back in the corner and let them do what they do.鈥�

His predecessor vetoed one trade in five years. He hasn鈥檛 been tempted so far.

In the past, students would draw money from a mutual fund account for their stock purchases. Now that fund has been exhausted. This means students have to sell underperforming stocks to raise money for new purchases.

鈥淚t鈥檚 getting more complex to manage,鈥� Lawrey said. 鈥淎nd, with the economy, it鈥檚 getting harder to find stocks that are undervalued.鈥�

Students who apply for the Jaguar Investment Fund must maintain a 3.5 grade-point average, complete a senior-level investment class and become certified in use of the Bloomberg software system. The Wednesday classes count as an internship in the Mitchell College of Business.

Those accepted for the program are expected to do research, write proposals and stand before the class when pitching a stock.

The rest of the class members sit in judgment at their computer stations in a classroom that replicates the trading floor at a brokerage house. An extraordinary amount of financial information is at their fingertips. Even if they like a proposal, students make a point to question stats, challenge arguments and force their classmates to justify their positions.

鈥淚t鈥檚 a little stressful,鈥� Miles said. 鈥淵ou really have to know what you鈥檙e talking about. If you don鈥檛, they鈥檙e going to destroy you.鈥�

Buying, Selling, Voting

On a recent Wednesday afternoon, the Jaguar Investment Fund considered several items.

John MacLatchie, a finance junior who grew up near Sacramento, California, led a few classmates in one proposal. They wanted to buy about $10,000 worth of stock in KB Home, a real estate company.

鈥淚鈥檓 pitching this in a little different light,鈥� he told the class. 鈥淚 want you guys to look at this as more of a value-based stock. This is a good hedge against some of these high-risk growth stocks that we鈥檝e had.鈥�

The class responded with a rapid-fire series of pointed questions:

What about inflation? What about interest rates? What about the housing market? 

How has KB Home done during the coronavirus pandemic? What about lumber prices? Why should they expect growth from an older, established company?

Why are its earnings per share lower than some competitors? Isn鈥檛 this stock already listed near its 52-week high? What makes you think this is the right time to buy this stock?

MacLatchie scrambled to defend his pitch. He admitted when he didn鈥檛 know the answer to some questions. He conceded that others raise legitimate concerns.

鈥淚鈥檒l be the first to admit that with real estate, it鈥檚 not going to be too glamorous,鈥� he said, 鈥渂ut I think this company will keep doing what works for them.鈥�

The students finally voted 7-2 to buy $5,500 worth of KB Home stock. To pay for the trade, they discussed selling shares of Alibaba, the Chinese e-commerce giant, which hasn鈥檛 done well for the fund.

Lawrey stepped in to suggest holding on to Alibaba and selling stock in American Tower, a communications company. The students discussed selling their stake in Verizon, the telecommunications company which has been underperforming for years.

The class noted that, since 2016, the Verizon stock has gone up 鈥� by a grand total of $1.34. Students laughed and gave this number a round of sarcastic applause, but one wouldn鈥檛 let the debate end there. 

鈥淚鈥檒l play devil鈥檚 advocate,鈥� MacLatchie said, 鈥渏ust for the sake of it.鈥�

After a brief debate, the students voted 9-0 to unload $11,000 worth of Verizon. 

Soon, Lawrey told the class, they鈥檒l be investing $750,000 from the University. These are exciting times for the Jaguar Investment Fund. The stakes keep going up.

鈥淭his is what we鈥檙e going to be doing in the second half of the semester,鈥� Lawrey said. 鈥淲e may have that money by the next time we meet.鈥�

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