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Red Investment Fund

Red Investment Fund

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Investment Philosophy

We use a GARP (Growth at a Reasonable Price) approach when deciding to invest in a company's stock and have a long-term investment approach of 3-5 years. When analyzing a company we use a value investing approach taking into consideration internal factors such as the quality of management of the company as well as external factors such as the current trend of the economy.

Investment Strategy

With our 3-5 year time horizon being long and minimal liquidity requirements ,we can afford to bear above average market risk. With this in mind, our return objective is to beat the S&P 500 Index on an annual basis with a return at least 2% above inflation. We use a team of 2-3 members to analyze potential companies by researching economical, industry, and company trends in order to reach a valuation.

Process

Each team (2-3 members) selects two stocks with an assigned sector to analyze for the semester. It is also the responsibility of all student analysts to discuss events or topics related to all portfolio companies and market conditions. At the end of the semester a research report is submitted and presentation made by each sector team to the rest of SMIF student analysts. Two-thirds of the class must approve the recommendation before any action is taken.

investment fund

SMIF and IPS

Students participating in SMIF have been given a tremendous opportunity to gain real world experience in investment analysis and manage funds for the UCM Foundation. SMIF offers students a hands-on experience that isn't available in a traditional classroom setting. Directors (Dr. Laurian Lytle and Dr. Arthur Young) are responsible for overseeing all aspects of the investment program. The SMIF Advisory Board and UCM Foundation will monitor the results on a quarterly basis.  One of the main focuses of SMIF is learning how to work together as an investment team. Though the class is split up into teams of 2 or 3 students, the entire class is taught to work together to make sound investment decisions.

When deciding to invest a company's stock, the following criteria is used:

  • Small to Mid-Cap focus: Generally $2B-$25B in market cap
  • A GARP (Growth At a Reasonable Price) Approach
  • Good quality management
  • Strong credit rating
  • Diversified revenue mix
  • Positive and growing cash flows

To monitor risk of the portfolio attribution analysis along with standard portfolio risk measures will be used. If a security falls more than 15% it is up to the student analysts to determine if the security remains consistent with portfolio risks and objectives and whether the investment thesis still holds.