Managing millions: Students prepare for financial careers running real portfolio

Jan. 28, 2020

This paid piece is sponsored by the USD Beacom School of Business.

How’s this for sound investment strategy? A fund that began with $10,000 in the early 2000s has grown to $2.2 million – while being managed by students at the USD Beacom School of Business.

They are members of Coyote Capital Management, or CCM, a student organization at USD’s Beacom School of Business with real-world applications.

“It’s really a good way for students to connect in the business school and learn how to manage real money. These are real dollars we’re making,” said Zachary Motl, a finance and accounting major who is the organization’s president.

The students manage three portfolios, using the S&P 500 as a performance benchmark. They use exchange-traded funds, or ETFs, in one of them, and focus more on individual equities and securities in the others.

“We set our allocations for all three, but with our larger two, we try to pick what we decide will be the best performing for each sector, using a number of different criteria,” Motl said.

About 130 business school students are part of CCM, but only eight are senior advisers with voting rights on investment decisions. The others research by sector, present their findings and can weigh in on investments without actually voting. Senior analysts usually lead a sector and are responsible for teaching other CCM members on the team. There are weekly meetings to evaluate existing holdings and investment opportunities.

“Since students work by sector, they develop strong teamwork and leadership skills as they move up the ranks over the years,” said Klaus Beckmann, an assistant professor of finance and one of four CCM advisers.

“In addition to strong interpersonal skills, the students also obtain financial skills to interpret financial data and communications skills to convey information to all members at weekly meetings. This has proven to be a very valuable skill, especially in job interviews.”

Senior Sophia Lima, a Sioux Falls native and Roosevelt High School graduate, served as president last year after joining CCM her first semester.

“I had always been interested in the financial industry and the stock market and wanted to learn more about it. I had also participated in stock market simulations in high school and wanted to learn more about how the real process worked instead of mainly guessing,” she said.

“I plan to start my career in public accounting, so although my job won’t be directly involved in valuation or portfolios, I will be working with clients in the financial industry. I expect to use what I’ve learned in CCM to have better knowledge of my clients, their operations and the industries they operate in.”

The organization is open to students in all majors and draws a cross section of interests, Beckmann said.

“Students bring a variety of skills that are not exclusively quantitative,” he said. “Some of our leadership positions require marketing and recruiting skills. While financial skills are important to analyze the value of a company and to run the CCM financial model, students need to be excellent researchers and interpreters of information to come up with reasonable values for our financial model.”

For Motl, a Sioux Falls native and Washington High School graduate, the experience is in line with his career aspirations in financial and investment management.

“When I joined, it was to learn about what I’d be doing in upper-level classes, get a head start and meeting seniors and juniors to make a connection, so when they’re in the workforce I know someone I can ask questions,” he said.

“A lot of what I’ve learned has been how to screen equities and build a strong portfolio with real meaning behind it. I know how to put in the research and build something that I have information to back up.”

Lima agreed the CCM experience helps in finding, using and understanding relevant data.

“In class, it’s relatively simple to work on problems because you know the formula and are given all the necessary information very cleanly. In real life, no one hands you the perfect data to use,” she said.

“You have to learn how and where to find the information you need, clean it up for use and apply it to your models and methodologies to arrive at an answer. Even then, with valuation, there is no one perfect answer.”

The newly opened Ellis Finance & Analytics Lab at the Beacom School of Business is assisting in the students’ research, offering them access to Bloomberg Terminal – the industry standard for business and financial information.

“It’s been very interesting,” Motl said. “We created a whole new financial model to evaluate our stocks. We’ll go in and see what other analysts are predicting and work that into our presentations.”

The soft skills gained in CCM are just as valuable as the technical ones, Lima added.

“I’ve learned how to present in front of others and convey my ideas and analysis,” she said. “Communication skills are difficult to teach, but CCM gives members so many opportunities to develop communication skills with their small sector teams, presenting to the whole organization and presenting to outside groups, such as the USD Foundation investment committee.”

The Beacom CCM organization also has fared extremely well nationally. It brought home the 2018 Quinnipiac G.A.M.E.  Forum championship, competing against more than 150 colleges and universities.

“I think a lot of it is due to our faculty and the fact that while it is a club and we want to make friends, at the same time it’s set up like a business,” Motl said. “We try to do social things outside of our meetings.”

As CCM’s success at USD has gained more attention, it has been a great recruiting tool for the Beacom School of Business as well as an advantage to students, Beckmann added.

“When our students are invited to job interviews, being part of CCM is almost always a main talking point. Employers are interested to hear about student engagement in the club. I believe CCM students have advantages due to the skills they acquire,” he said.

“And parents and prospective students are often impressed by learning that our students manage a stock portfolio that is valued well above $2 million.”

The fund, which has grown over the years, includes contributions from the Beacom School of Business, USD Foundation and other donors.

Most of the growth, though, has been because of sound investments from students.

“It’s all reinvested. Our main goal is to keep growing the pie, but for CCM itself, it’s not even about the underlying dollar amount. It’s to teach students and make connections,” Motl said.

“We care about staying profitable and managing our money, but that’s not our only focus.”

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Managing millions: Students prepare for financial careers running real portfolio

How’s this for sound investment strategy? A fund that began with $10,000 in the early 2000s has grown to $2.2 million – while being managed by students at the USD Beacom School of Business.

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