Jim Kenyon: At Colby-Sawyer, a Big Return on Investment

Sunday, October 06, 2013
When students in Todd Emmons’ class at Colby-Sawyer College talk about buying Green Mountain Coffee, they don’t mean by the cup.

They’re talking shares.

Emmons’ Investment Management course is the epitome of hands-on learning. Emmons doesn’t lecture his students about how Wall Street operates or have them play computer games to make pretend investments with Monopoly money. This semester, students are managing a 47-stock portfolio worth $180,000 (as of last week, anyway). That’s 180,000 real dollars.

Students do their own research, digging into the financial health of publicly traded companies from Anheuser-Busch to Xerox, before deciding where, when and how much to invest. Outside of class, they follow the market’s ups and downs on their smartphones. Twice a week, they convene to go over their portfolio and plot strategy.

“This is not a class,” Emmons told me. “It’s an investment committee.”

Colby-Sawyer’s Business Administration Department had been offering the course for a while when, a couple of years ago, Suzanne Hammond, a Wall Street veteran and college trustee, suggested it was time to up the ante.

“She wanted to make it real for the kids,” said board Chairman Tom Csatari, a Lebanon lawyer. Hammond, a 1966 Colby-Sawyer graduate, and her husband put up $25,000 in seed money.

Last October, the college’s board of trustees voted to put skin in the game as well. The 19-member board turned over $50,000 from the college’s endowment fund for the class to invest as it saw fit. The board promised an additional $100,000, in two equal installments, if all went well. (In other words, if the students didn’t blow the initial 50 grand.)

At some colleges — a campus in Hanover where alums bleed green comes to mind — $150,000 is pocket change. But at Colby-Sawyer in New London, it’s real money. Colby-Sawyer, which has 1,400 students, isn’t a name-brand school. The college’s endowment stands at around $33 million. Dartmouth’s endowment, by comparison, is roughly $3.7 billion. Colby-Sawyer doesn’t have much of a cushion to get it through lean economic times.

A certain amount of courage and a commitment to providing young adults with real-life learning experiences is required for a college that, frankly, doesn’t have a lot of spare cash to play with.

Students haven’t disappointed. So far in 2013, the portfolio’s value has shot up by nearly $25,000, which translates into an investment return of 14 percent. (Memo to Dartmouth trustees: Since your investment pros recently announced only a 12 percent return on the college’s endowment, you might want to consider asking the kids at Colby-Sawyer for a few stock tips. I’m sure their fees would be much more reasonable.)

Emmons’ class — whoops, I mean investment committee — is made up of five juniors and seniors. Students can take the class for two semesters, but Cong Geng is the only holdover from last spring. Geng and Xuejia Mu, who are both from China, and Nghia Ngo, who hails from Vietnam, give the class an international flavor. Alan McDonald, of Watertown, Mass., and Rebecca Ferman, of Nashua, N.H., are the two U.S.-born students.

The two professors who usually teach the course are on sabbatical this semester, so Emmons, the college’s vice president of finance, is filling in. Emmons, who worked on Wall Street for 10 years before moving into higher education, helps oversee Colby-Sawyer’s endowment. But for two hours every Monday and Wednesday afternoon, he’s relegated strictly to an advisory role. “The students make all the decisions,” he said.

And they learn to take responsibility. Earlier in the semester, a student missed class, which threw the entire trading process into havoc. Votes on buying or selling specific stocks repeatedly ended in 2-2 deadlocks. At the first opportunity, Emmons let the student know that not showing up for class was akin to blowing off a corporate board meeting. The student hasn’t been absent since.

As a guy who can’t tell the difference between the S&P 500 and the Daily Racing Form , I had no idea how much work the students put into the class until my visit last Wednesday. Although the students change every semester, the approach to trading doesn’t. Students tend to favor companies that they’re familiar with, such as Walt Disney and Buffalo Wild Wings. Their early faith in Green Mountain Coffee has paid off, with the price of the stock jumping from $55 to $75 share. “We have Sam Adams in our portfolio, too,” said Emmons.

While the portfolio includes blue chippers like General Electric, Ferman keeps a lookout for companies not yet on Wall Street’s radar. On Wednesday, she had her eye on a company that’s developing a way to artificially inseminate bees.

At the start of the semester, the students had cash to burn. Ferman pitched Tyson Foods, which she argued was making strong inroads in the “healthy” frozen food market. Her colleagues agreed. “Some of my friends were jealous when I told them that we had just spent $7,000,” said Ngo.

On Wednesday, they debated whether J.C. Penney Co. was a risk worth taking. In recent years, the stock has taken a nosedive, scaring off Wall Street. Geng pointed out that there was some buzz in the retail industry about Nordstrom’s or Macy’s buying the retailer. “We could get in on the ground floor,” he said.

“If it comes back, we could make a lot of money,” added Ngo.

At day’s end, they stood pat. With no end to the federal shutdown in sight, they decided it wasn’t the time to buy or sell. Besides, the $50,000 infusion of cash from trustees is arriving soon. That could buy a lot of Green Mountain Coffee. Or Sam Adams.

The choice is theirs.

Jim Kenyon can be reached at Jim.Kenyon@valley.net.