It’s been a tough year to make predictions in financial markets, but Maryland Smith MBA students have been up to the challenge.
In the 12 months beginning April 2020, Maryland Smith’s team of Mayer Fund full-time MBA students helped the fund outperform the S&P 500 by 14.79% and grow it to roughly $7 million through appreciation and investment decisions.
Navigating through uncertain times and quickly adapting in an ever-changing environment can be challenging, says Mayer Fund faculty advisor Sarah Kroncke. But that’s the kind of atmosphere where students stand to learn the most.
“The markets have performed very well this past year, but the economic situation was certainly uncertain and that required more consideration on the part of the students. We saw parts of the economy perform well, while others did not. The uncertainty created an enhanced learning opportunity because there were more complexities to consider given the pandemic,” says Kroncke. “Observing abnormal events, experiencing how the market responds and making investment decisions in the midst of it all created more robust learning and will better prepare them for the next stages of their careers.”
The Mayer Fund’s investment philosophy is that of Growth at a Reasonable Price (GARP). A long-term outlook lends that expects growth, but targets assets that are considered undervalued at the time by discounted cash flow (DCF) models.
One of the biggest surprise winners for this year’s team came from iRobot, manufacturer of the Roomba vacuum cleaner.
“iRobot got caught up in the Reddit short squeeze just a few months ago and we yielded almost a 100% return over the course of several weeks. Once we observed the stock hit our target price and far exceed it, we took a vote and decided to sell it,” says Michael Lowney, portfolio manager of markets and external relations for the Mayer Fund. “Our portfolio manager of performance, Chidubem Amechi, made a compelling pitch about the company’s plans for diversifying product lines and growth. That ultimately made it a buy with our criteria.”
Another industry that has performed relatively well throughout the fiscal year was the financial sector, Lowney says. The fund made an acquisition into M&T Bank that has provided ample returns, and with the rising yield curve, he says, the fund’s financial holdings have continued to improve.
But it’s the energy industry, in particular, that has been a point of interest for fund members recently, Lowney says.
“Energy holdings took a beating during the crash last March to the point that they were just a small percentage of our portfolio,” says Lowney. “But we’ve begun to see a turnaround there. For it to be a place where we’re looking to see great earnings growth is really exciting.”
Established in 1993 and offered as a yearlong, advanced finance seminar for second-year full-time MBA students at the University of Maryland’s Robert H. Smith School of Business, the Mayer Fund offers students a unique opportunity to apply investment decisions and enhance career decisions.
For Lowney, it’s a valuable experience that he says is of interest to employers no matter where he goes or what he does
“Every successful job interview I’ve had has involved talking about the Mayer Fund because of the quantitative and qualitative analysis associated with it,” says Lowney. “I think even outside of finance employers, when you can articulate the value you get from this experience, they really respect it.”
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About the University of Maryland's Robert H. Smith School of Business
The Robert H. Smith School of Business is an internationally recognized leader in management education and research. One of 12 colleges and schools at the University of Maryland, College Park, the Smith School offers undergraduate, full-time and flex MBA, executive MBA, online MBA, business master’s, PhD and executive education programs, as well as outreach services to the corporate community. The school offers its degree, custom and certification programs in learning locations in North America and Asia.