McIntire Investment Institute Shares Earnings, Earns Honors

September 19, 2006

Sept. 19, 2006 — “When we invest, we’re buying the company, not the stock,” says Michael Vellucci (A&S ’07), CIO of the McIntire Investment Institute.

Vellucci is explaining how the MII generated returns of better than 34 percent last year, with the Dow down 0.6 percent and the NASDAQ up a scant 1.4 percent.

“Anyone can look at press releases or at public information,” he says. “We really try to implement a value-added research strategy.”

Vellucci offers the example of the MII’s decision to buy shares in Harrah’s Entertainment, which runs casinos throughout the Deep South and Gulf Coast regions.

“The knowledge in the market was off — the assumption was that Harrah’s would suffer huge losses as a result of Hurricane Katrina,” Vellucci says. “In fact, only a small percentage of Harrah’s business was affected, which made the stock a bargain.”

Similarly, after MII president Eric Weiss (McIntire ’06) interviewed a number of doctors about the medical devices produced by Intuitive Surgical Robotics, the MII board decided to snap up some 400 shares of the stock, which went on to more than quadruple in value. “We try to find the piece of information that the market doesn’t know,” Weiss explains.

By the end of the school year, the value of the MII portfolio had risen by nearly $130,000, from $368,676 to $494,615. Of these earnings, the students donated $75,000 to McIntire’s building project on the Lawn. “Obviously, we’re incredibly grateful to the students for their generosity,” says McIntire Dean Carl Zeithaml. “But most importantly, we take a great deal of satisfaction in watching students successfully apply the lessons of the classroom to the real world of investing and decision making.”

In recognition of the gift, a room in the new building will be named in honor of the MII.

The MII investment team placed first in the hybrid funds category of the portfolio competition of the Redefining Investment Strategy Education (RISE) Global Student Investment Forum held last spring at the University of Dayton. The hybrid category included investment funds that have derivatives as well as short and long positions.

The RISE forum, the world’s largest student investment conference, brings some 1,200 undergraduate- and graduate-level business students together in an interactive learning environment to discuss a range of issues facing the financial services industry.

 “It’s really an incredibly high-powered group, in terms of both the level of the presenters and the level of the students,” says Professor Rich DeMong, the MII’s longstanding faculty adviser.