The stock ticker slides across the façade of the Maraist Financial Services Lab, its red and green arrows announcing the ups and downs of the trading day. Inside the lab, there’s a companion ticker. Company logos, followed by stock prices and up-to-the-second changes in their values, are displayed on a continuous loop.
Business students are seated at computers below. They’re in F.G. Mouton Hall, but their minds are on Wall Street. If the ticker doesn’t ensure that, Dr. Praveen Das does.
The assistant professor of finance reminds them that, as financial consultants, information about what’s happening in the market is their greatest commodity. It enables them to anticipate financial swings or identify opportunities for diversification. Such knowledge empowers them to make money for clients.
“You have to think ahead to the things that are going to affect their profits or their returns on investment,” Das counsels. “Ask yourself, how will it impact their money?”
For the juniors and seniors enrolled each fall and spring semester in Finance 480, the question isn’t theoretical. It’s real. So is the money. So are the clients.
In the course, students become managers of an investment portfolio for the UL Lafayette Foundation. Between 2015 and 2016, the Foundation, which invests and manages private gifts to the University, set aside $200,000 for students in the B.I. Moody III College of Business Administration to buy and sell securities.
The portfolio’s value has grown by nearly $100,000. It contains 31 stocks of companies with familiar names such as Amazon, Procter & Gamble, Walmart and Lockheed Martin.
In Finance 480, Das advises the advisers, and guides them as they review existing holdings, appraise potential additions and evaluate economic sectors. Students then write reports that outline revenue and earnings data, and growth estimates. The dossiers are similar to what a Wall Street analyst might provide a client.
“Don’t just put your opinion,” Das tells them. “A generalized statement is not meaningful, but if you back it up with data, it will be.”
The best data in the business is a few clicks away.
A $2.5 million gift from alumnus Michael P. Maraist and his family supported construction of the financial services lab. The lab opened in 2018. A dozen computers equipped with Bloomberg Terminal – a software system used by banks, corporations and government agencies around the world – are the lab’s centerpiece. The service provides real-time stock prices, market news and trading information that enable users to build and analyze portfolios and compare investment strategies.
Dr. Cary Heath is head of the Department of Economics and Finance in the Moody College of Business. He called the Bloomberg software and the information it provides “the gold standard.”
“It’s absolutely the best single source of financial and economic data that exists anywhere. It’s amazing what it can do.”
Das said students use the software “extensively” in creating reports that are the basis for end-of-the-semester presentations to the Foundation’s Board of Trustees. That’s when the students recommend whether to buy new stocks, or to trade, sell or hold existing securities in the portfolio they manage.
Last fall, for example, then-finance senior Michael Guillot mined the Bloomberg service for data that led him to recommend that the board maintain holdings in General Dynamics. The defense and aerospace company had surpassed six of the previous eight earnings estimates, and Guillot anticipated that increased defense spending in the United States and worldwide would strengthen the company further.
“I find that, as a fairly priced company, it is better to hold and seek the possible benefits of recent budget increases in defense rather than get rid of it now,” said Guillot, who graduated in December 2018.
The Foundation’s investment committee reviews the recommendations. Thomas L. Kreamer, a Lafayette financial adviser and 1980 University graduate, is the committee’s chair. He said the Foundation has heeded “every piece of advice students have given us – buy, sell or hold” since the class began in 2015. “They’ve done a great job.”
They’ve made money, too, despite market volatility. The fund’s value at the end of the third quarter of 2018 was $294,124. Fears of an economic slowdown and uncertainty in global trade marked the year’s final quarter, however. Those anxieties caused financial indexes to post their worst quarterly declines in nearly a decade. As a result, by year’s end, the account stood at $254,306; it has since rebounded to $286,715 in 2019’s opening quarter.
Inevitable market fluxes are why the Foundation instituted safeguards when it created the program, Kreamer said.
Rather than spread holdings over multiple market indexes, the portfolio contains stocks only in the S&P 500, which is divided among 11 industrial sectors, including energy, health care, information technology, utilities and communications services. The portfolio includes securities in each, but restrictions keep student managers from overinvesting in any one category. Finally, no individual stock purchase can exceed 2 percent of the fund’s overall value.
Heath said that while the University has made money from student managers’ investments, they – and anyone who uses the Maraist Lab – have earned something as valuable: an edge.
“It’s really an advantage for our students to have worked with Bloomberg Terminal. It isn’t just the data. It’s learning how to manage it, how to clean it up, how to present it in ways that people understand.”
He continued: “Information, and having it quickly and accurately, is what it’s all about in the financial world.
“There will be a time when students who don’t have access to a facility like the Maraist Lab are really going to be at a disadvantage. I think that time is now.”
This article first appeared in the Fall 2019 issue of La Louisiane, The Magazine of the University of Louisiana at Lafayette.
Photo: The Maraist Financial Services Lab, located in F.G. Mouton Hall, faces the University’s Quadrangle (University of Louisiana at Lafayette/Doug Dugas).