They are the few, the proud, the financial elite.
And they are taking on the responsibility for investing $80,000 at the University of South Florida. That's real money. This is not a drill.
A hand-picked, invitation-only class of seven USF business school students spent part of Tuesday afternoon pitching their stock picks to a room of about a dozen seasoned investment professionals from companies with names like Merrill Lynch, Morgan Stanley and UBS Financial. The pros then voted on the afternoon's best presentations, which helped decide which stocks to buy in building an $80,000 portfolio.
The students — six young men and one woman — make up USF's entire "applied security analysis" class, touted as the "toughest course you'll ever take" at the university. Nobody on Tuesday argued with that description as the septet was grilled by some of the investment pros, coaxed by others and ultimately congratulated for holding up under fire and sticking to their stock picks.
These students are the first wave to be given funds (supplied by the USF endowment fund and contributions from financial firms) to actively manage year-round. The performance of the student fund, which looks for stocks to do well over the next three to five years, will then be compared with other funds, including the USF Foundation's, for real-life comparisons.
A well-oiled team composed of USF students Robin Crauthers, Jean Pierre "JP" Eugene and Jeff Young pitched investing in Darden, the Orlando-based restaurant chain. They argued a recovering economy will boost dining demand.
A competing team of students — Alexander Bowers and Jason Grimes — picked beauty products company Nu Skin Enterprises but faced a more skeptical crowd.
Then Crauthers, Eugene and Young were back touting New York banking giant Citigroup, while a counterintuitive pick was offered by students Luis Tapia and Ryan Kania. Invest, they said, in Goldman Sachs — even as the CEO of the Wall Street heavyweight firm faced a critical Senate panel on Tuesday.
All in all, the students were not quite the Magnificent Seven. But some came close.
Jack Rader, who teaches the applied analysis class, says the seven students have sharply improved from their first and less persuasive pitches. Based on Tuesday's votes, stakes of about $8,000 will be taken in Darden while another $8,000 will be split between Citigroup and Goldman. Nu Skin got a thumbs-down.
USF College of Business dean Robert Forsythe said students have long done simulated investing. Now with real money, their investment picks are sharper, their due diligence is stronger, and their picks are more conservative.
With luck and time, Forsythe sees the student fund approaching $500,000 or more. Given the sobering volatility of recent stock markets, students in this class may be in for experiences of a lifetime.
At Tuesday's stock pitch, Dade City investor and USF alum Mike Mahagan was one of the tougher interrogators. He later explained why.
"It's real money. They need to learn, and there are still some rough edges," Mahagan said. "Hey, it's a cruel, cruel business world out there — especially if you lose clients' money."
Robert Trigaux can be reached at [email protected]