Confidence in American Auto Industry Fuels Ithaca College Team to Investment Challenge Victory
ITHACA, NY — By betting on the rebound of the American auto industry, a team of students from the Ithaca College School of Business bested a field of entries from colleges and universities in New York and New England to win the inaugural Adirondack Cup.
The competition pitted 18 teams of students against one another in selecting and growing a portfolio of small-cap stocks. Ithaca won by getting a 36.3 percent return on its mock $1 million investment.
The contest was sponsored by the Guilderland, New York–based Adirondack Small Cap Fund (ADKSX) as a way to give business students experience in making investment decisions. ADKSX was recognized in 2011 with the prestigious Lipper Fund Award as the best small cap value fund in the U.S. from 2008–2010.
Comprising the winning team were seniors Mike Severo, Aaron Heltsley, Alex Gifford, Alyssa Ross and Jared Finke; juniors Alex Pelzar, Jesse Held and Spencer Grossman; and sophomores Qingqing Jiang and Will Shuttleworth.
The six-month challenge began in October, with each participating team creating a hypothetical $1 million portfolio invested in five small cap stocks traded on one of the two major U.S. exchanges. Each of the five stock picks had to be from a different industry sector, and each holding had to be between 5 and 50 percent of the overall portfolio.
At the close of the stock market on April 5, Ithaca College had posted a 36.3 percent return on its investment, beating its closest competitor by 2.8 percent. It more than doubled the Russell 2000 Index, which measures the performance of small cap stocks and had a return of 15.7 percent for the period. If real money had been invested, the portfolio would have been worth $1,363,000.
How did the Ithaca students get such a great return on their investment? By wagering that the American auto industry was due for a recovery. Because they were limited to small cap stocks — defined as companies with market capitalization of between $50 million and $3 billion — they couldn’t invest directly in Ford, General Motors or Chrysler. But each of the five companies they chose to invest in had some connection to U.S. carmakers: Penske Automotive, American Axle, Armstrong World Industries, Haynes International and Citizens Republic Bancorp.
“Citizens is based in Flint, Michigan, and finances a lot of auto-related businesses,” said Severo, who served as the team leader. “In fact, it was a loan from the bank that helped William Durant, the founder of General Motors, get his start as an automaker. The triple-digit return on our Citizens investment helped put our portfolio over the top.
“The Adirondack Fund has provided a fantastic opportunity for students to develop their abilities in a pragmatic and competitive environment, and Ithaca College’s faculty and administration was very supportive of our team,” Severo added. “I can’t express my thanks enough, and I’m confident that the School of Business will continue to be heavily involved in the competition going forward.”
Other schools taking part in the contest included Binghamton University, St. Lawrence University, the Simon Graduate School of Business at the University of Rochester, Union Graduate College, the University at Buffalo School of Management and Wesleyan University.
“Winning the Adirondack Cup against such tremendous competition is a testament to the excellent education in financial theory and application that our students have received, including hands-on experience in our world-class Trading Room,” said Mary Ellen Zuckerman, dean of the School of Business. “This is a great example of the motivation and hard work of our business students.”
“When the Adirondack Cup was envisioned, we were hoping to teach the students a little bit about what we do,” said Steve Gonick, executive vice president of ADKSX and himself a 1985 graduate of the Ithaca College School of Business. “But the larger goal was to do our part to help these talented students get noticed by the financial business community as they near graduation. The Adirondack Small Cap Fund has a strong network of clients, who have been actively tracking the performance of students from their favorite schools. This has provided the students with a great opportunity to build their contacts as they prepare to enter the workforce.”
For more information on the Adirondack Small Cap Fund and the Adirondack Cup, visit www.adirondackfunds.com/. For more information on the Ithaca College School of Business, visit www.ithaca.edu/business or contact Paul Deamer, marketing communications manager, at (607) 274-1279 or email@example.com.