Golden Eagle Opportunity Fund offers real-world investment training
Finance students manage the Marshall Geller Golden Eagle Opportunity Fund as part of the Financial Management Association. The team includes, from left, finance and law Professor James Refalo, students Jimy Romero, Jim Nhep, Mike Tran, Fransico Arrizon, Sabrina Antoine-Warner, Jose Mora, Moshen Abdul and Professor John Isaacson.
The opening bell rings. The “Big Board” flashes to life as brokers gather in the aisles yelling, trading stocks and carpeting the floor with discarded trading notes, until hours later when another bell brings the din to a screeching halt.
The iconic feverish pace of the New York Stock Exchange is recognized worldwide. While that excitement remains, today securities are also traded by a more diverse group of private individuals and entities, and more often than not, electronically.
On the West Coast, the Financial Management Association (FMA) team of Cal State L.A. finance students mirror today’s more technologically-savvy investment groups, as they manage the University’s Marshall Geller Golden Eagle Opportunity Fund (GEOF).
Like other investors, the FMA trudges through companies’ financial statements and carries out meticulous research, often online. The difference is that the FMA then seeks faculty advisement and presents trade recommendations to an educationally-focused advisory board before making a few “long-value” investments at the end of the academic quarter. This careful strategy has been key to the fund’s success.
“We’ve had good growth over the years. We typically look at larger corporations because they do better overall. We don’t invest in penny stocks, but we can invest in small businesses,” said Sabrina Antoine-Warner, who is president of the student-run FMA. “But we are unique [compared to other universities]. The difference is we are trading for real.”
The GEOF was launched in 2001 by Marshall Geller—the College of Business and Economics’ 2000 Distinguished Alumnus of the Year. He is founder and senior managing director of St. Cloud Capital, a Los Angeles-based private equity fund, and has spent more than 40 years in corporate finance and investment banking. The fund was started through the impetus of Geller and other investors. Today, the portfolio has grown to a worth of more than six figures, a 54 percent return.
The GEOF enables students to experience trading that significantly differs from the traditional university investment or securities analysis course.
Along with investing for real, the FMA serves as a bridge to link academic finance theories to a practical and modern fund investment environment. “When I go out into the real world after college, I will be able to use the unique strategies I’ve learned here from our great faculty,” said Antoine-Warner.
Guided by the instruction and support of faculty members John Isaacson and James Refalo, the FMA evaluates current market conditions, then designs and implements an investment strategy accordingly. The goal is to maximize the fund’s investment performance in a way consistent with the investment placed upon the portfolio as an academic program.
“It takes a bit of work. The FMA typically consists of eight to 10 finance students, and many didn’t really have a background in portfolio management,” said Isaacson. “So we put together a process that requires investigative and intelligent research, and it has been successful.”
Administered by The CSULA Foundation, the GEOF is overseen by the Fund Advisory Board, comprised of Geller, College of Business and Economics Dean James Goodrich, Finance Department Chair Cindy Fang, and Vice President for Institutional Advancement Kyle Button.
Rather than very short-term trades, Isaacson instructs the students to explore companies for trades that will grow over several years. This long-value and infrequent investing plan has meant success for the GEOF portfolio, despite the
After choosing attractive securities, student analysts make investment recommendations to the advisory board on whether to buy, sell or hold existing stocks. The recommendations include each security’s “weight” in regard to the total portfolio. The board makes the final decision regarding securities to be held in the fund.
“We take a look at the portfolio and decide what’s over- weighted in contrast to the S&P 500. The fund has been doing very well, but the market changes and sometimes we need to alter our investments,” said Antoine-Warner. “We run a Price Ratio Stock Analysis Excel spreadsheet to figure out whether or not a stock is undervalued. Then we research the company’s financial statements, such as the balance sheet and statements of cash flow, as well as do online research. We also review the company’s management, and the market as a whole.”
The FMA made a couple of its latest trades in November 2011 and again in January.
“First we presented stock choices to the board and finalized the trade, which was carried out through a broker,” said Antoine-Warner. “We purchased one stock at around $94 and now it’s close to $115. It turned out to be a steal of a deal.”