About Us

History

Cal State Â鶹ÃÛÌÒAV's Student Investment Fund was established in May 2022 through the generous contributions of $277,000 from alumni Mike Coke, Michael Dance, and Ken Pereira. Mike Coke, President and co-founder of Terreno Realty Corp., credits part of his post-graduation success to the skills and knowledge acquired during his undergraduate experience at our university.

The Student Investment Fund serves a dual purpose. First, it enriches student education by providing hands-on experience in financial decision-making and teaches critical aspects of investment analysis and portfolio management. Second, it instills the value of philanthropy and the importance of giving back by sharing their success. Each year, 5% of the fund’s net assets are distributed back to students in the form of scholarships.

Advisory Board Members

Dr. Ching-Lih Jan- Professor of Accounting
Dr. Eric Fricke- Professor of Finance
Dr. Scott Fung- Professor of Finance
Dr. Sinan Goktan- Professor of Finance
Dr. Tina Lang- Assistant Professor of Accounting
Dr. Kourosh Shafi- Assistant Professor of Management
Mr. Mike Coke- President and CEO of Terreno Realty; donor
Mr. Ken Pereira- Retired CFO of SteelRiver Infrastructure Partners; donor
Mr. Louie Navellier- Chairman and Founder of Navellier & Associates; donor

Investment Policy Statement

Objective:
The Student Investment Fund (SIF) aims to provide undergraduate students with hands-on experience in the process of investment decision-making while maintaining a disciplined and diversified portfolio. The fund will focus on achieving long-term capital appreciation while adhering to the guidelines specified below.


Investment Guidelines

  • Asset Universe: Invest exclusively in U.S.-based companies whose stocks are traded on U.S. exchanges.
  • Market Capitalization: Minimum of $1 billion with a strong preference for large-cap companies.
  • Position Size: No single position will exceed 5% of the total portfolio size at the time of purchase.

Investment Strategy
The fund employs a bottom-up approach to identify potential investments, focusing on fundamental research and financial analysis. Each student analyst is assigned a sector of the market, where they evaluate hundreds of companies based on both quantitative and qualitative factors.

 

Quantitative Analysis
The following key metrics will be used to assess each company's financial health and attractiveness for investment:

  • Size: Natural Logarithm of Market Capitalization.
  • Valuation: Price to Free Cash Flow, Growth Rate of Free Cash Flow, Price to Operating Cash Flow, Price to Book, Growth Rate of Book Value.
  • Financial Stability: Dividends plus Net Stock Buybacks to Price.
  • Efficiency: Operating Cash Flow trends, ROA trends, Margin trends.
  • Solvency: Net Debt Issued to Free Cash Flow, Debt to Assets.
  • Growth: Growth Rate of Revenue.

Each company will be assessed and scored on these metrics, leading to a longlist of potential investment candidates.

Each factor is scored on a scale from 1 (worst) to 5 (best) based on the company's z-score within its respective sector. This standardized approach allows for the comparison of companies within the same sector, accounting for variations in business conditions across different industries.

 

The final score for each company is calculated as the weighted average of its individual scores.
The weights vary depending on:

  • Sector: Different sectors have different weights. For example, the financial sector will have more weight on Price to Book.
  • Market Capitalization: Small-cap and large-cap firms have different weights.
  • Growth vs. Value: Company’s life cycle and orientation for growth or value have different weights.

 

Diversification Strategy
The fund aims to maintain a diversified portfolio across sectors and industries, utilizing Modern Portfolio Theory to manage risk and achieve an optimal risk-return tradeoff. The longlist of candidates is further reduced to a shortlist of candidates following a three-tiered diversification strategy:

  • Industry Classification System: Companies are classified into broad sectors and then further divided into sub-sectors. This process ensures that investments are spread across a wide range of industries reducing exposure to industry-specific risks.
  • Correlation Matrix: Candidate’s price movements are compared to that of current positions on a 1-year and 3-year basis. This process ensures low correlation between potential recommendations and existing positions.
  • Geographic Diversification: Preference for companies with a larger proportion of sales outside of the U.S. This allows for risk reduction, growth potential, and access to broader market opportunities.

 

Qualitative Analysis
After shortlisting, student analysts conduct deeper research on the selected companies, evaluating:

  • Competitive Advantage: Sustainable competitive advantages (e.g., brand power, unique technologies).
  • Management Quality: Stewardship of capital by company leadership, transparency, and alignment with shareholders.
  • ESG Considerations: Environmental, Social, and Governance (ESG) factors as applicable to each company’s long-term viability.
  • Risk Assessment: Assessment of macroeconomic, geopolitical, and industry-specific risks.

 

Recommendation and Approval Process

  • Analyst Reports: Student analysts will produce comprehensive research reports outlining the rationale for their recommendations, incorporating both quantitative findings and qualitative insights.
  • Pitching to the Advisory Board: Analysts will present their stock recommendations to the Advisory Board.
  • Approval Requirement: A recommendation must be approved by the Advisory Board with a majority vote of 50% + 1 to be implemented in the portfolio.