Victor Dupont, president of the student investment group on campus, "Blue Chips," could not keep from grinning at the club's meeting on Wednesday.
Dupont, a fourth-year in the College, and other founding members had a big announcement to make: Their club had just received a gift of $100,000 to manage a real stock portfolio.
"It began as a dream," said Mike Fazekas, a fourth-year in the College and the club's founder, who first drafted some bylaws during winter break of his first year.
"When we started out, we didn't know our ass from our elbow," Fazekas said. "But we stuck with it, read a few books, and then things started to happen. A lot of you probably don't know who I am, and that's wonderful to me."
The chain of events that led to Wednesday night's announcement began three years ago when Nikhil Oberoia friend of Fazekas and member of Blue Chipshad coffee with a University alumnus named Greg Wendt, A.B. '83. When Oberoi, now a fourth-year, told Wendt about the nascent investment group he had begun with his friends, Wendt encouraged him to make it a serious enterprise. Oberoi and Fazekas redoubled their effortscreating sector research groups and education programsto model the operations of a real fund manager. And Oberoi stayed in touch with Wendt.
It was Dupont, who joined the club his second year, who made the announcement at Wednesday's meeting, stoking the suspense with a prolonged wind-up: "Today is a very special day because we have, over the past six months, been working to make a dream of managing real money a very real reality," Dupont said.
"It is my profound pleasure to say that you are now part of an organization that is managing $100,000 in real money."
A momentary silence filled the room, as the club members waited for Dupont to explain his announcement. Dupont told them that Greg Wendtthe alumnus with whom Oberoi had maintained contacthad wanted to give Blue Chips an opportunity few college investment groups get.
Wendt and his wife, Lisa Roets Wendt, donated $100,000 for the club to manage its own, real portfolio. In a press release issued Wednesday, Wendt said: "I wish a fund like this had existed when I was on campus. I have been in the investments profession for almost two decades and some of the most talented professionals I know were first exposed to the industry through student-managed funds at their colleges. I am delighted to be part of the effort to bring the same opportunity to my alma mater."
Dupont called the event "unprecedented" for the University, adding that the administration now takes the club seriously. Besides allowing Blue Chips members to manage real money, certain aspects of the club will also change.
Dupont outlined two types of membership: one for analysts, and another for affiliates. An analyst must apply and go through an interview process, and if accepted, he or she is expected to spend at least two and a half hours a week researching a given company. Anyone, however, may be an affiliate, and these positions do not entail applications or research work.
Oberoi was exuberant over the changes that the money would bring. "With the $100,000, members will become more dedicated," he said. "The club can offer students a real world experience, and that is extremely valuable."
Blue Chips' student investment committee will be working closely with Andrew Harris, associate vice president and budget director at the University, who will ultimately approve the legality of trades, making sure they are within the realms of the University's investment policy. A new addition to the University, Harris said he was approached last year by Bill Michel, who asked him if he'd like to work more closely with the student population.
"This is a significant acknowledgement of the maturity of these students that they would be given such an opportunity," said Harris, noting that he could count the college student investment clubs who manage real money on one hand. Harris said that the sum of money would be sufficient to put together a portfolio of a fair degree of diversification, and give students real experience with financial markets.
As for any positive returns the club might make, Harris was very clear on the subject: "All positive returns will go back into the fund. The students cannot use the funds for any club expenditures."
If that sounds like a killjoy, none of the founders were dismayed in the slightest.
"Our focus now is on developing talent," Fazekas said, highlighting a beginner and advanced class that the club offers for a half hour each Wednesday before meeting. Fazekas also spoke of a history of cooperation with the University's Career and Planning Services (CAPS). "We provide students with the experience they need to step through the doors of opportunity CAPS offers," he said.
How do Fazekas, Oberoi, Dupont, and the other graduating founders feel about handing off to the next generation of Chicago students? "We want to put the club in a position to go further next year than we have this year," Dupont said. "We've developed an infrastructure, a strong leadership pipeline, so that operations will continue once we are gone. In the meantime, the goal is to manage a portfolio as successfully as possible."