Imagine walking into a finance class on the first day and learning that you are responsible for managing a $2.5 million investment portfolio.
That was the scenario that 22 undergraduate and graduate students faced when they began their Securities Analysis Class last fall in the Carlos Alvarez College of Business.
While the course was not new, last year marked the first time students were able to gain hands-on experience working with a real portfolio. The fund that they managed is owned by the University of Texas/Texas A&M Investment Management Company (UTIMCO).
Under the guidance of Ron Sweet, MBA ’91, professor of practice in finance, students learned what it takes to analyze, value and select investments in real time — skills that mirror what entry-level security analysts do in the field. Students were selected to participate in the class following a rigorous application process.
Over nine months, the investment portfolio grew by 18.8 percent, outperforming its benchmark by 0.5 percentage points and generating nearly $500,000 in gains.
“We started off buying exchange-traded funds that matched the sectors in the S&P 500,” said Sweet, who is the faculty advisor to the Investment Society. “Then I divided the class into teams by sectors such as technology, energy or healthcare. Students learned how to do evaluations and analyses of companies, and how to present their investment recommendations.”
Students built screening models within their sectors to evaluate stocks. From that list, team members divided up the top prospects to ultimately determine the three stocks that they’d pitch. As they chose stocks to buy from their analysis, they slowly replaced the exchange-traded funds. Currently, they have 42 stocks in their portfolio.
“This course develops several technical skills ranging from financial statement analysis, Bloomberg proficiency, Excel modeling and professional presentations,” said Nicholas Sanderson, a senior majoring in finance who interned with Frost this summer. “However, I found that the most valuable takeaway was non-technical. Rather, it’s the ability to construct a thesis, support it with data and communicate it with enough conviction that the team was willing to act.”
Connecting with those in the field
Throughout the course of the year, Sweet invited more than 100 alumni and finance experts to participate in the stock pitch presentations. He tapped into his extensive network of business contacts to offer students additional feedback as well as mentorship and networking opportunities.
“Professor Sweet keeps in contact with many Investment Society alumni,” said Andrew Hernandez, ’22, an equity research associate at Jefferies in New York City. “He asked if we could give feedback on sectors that we specialize in and put me in contact with a student who was working in the real estate sector.”
Hernandez worked with recent finance graduate Eugene Trevino, ’26, on his real estate sector pitch. During their calls, they discussed the industry and shared information that Trevino translated into his final presentation. Trevino also participated in a stock pitch competition at Frost based on this work.
“When I was a student, I wasn’t as aware of an analysts’ role in the stock market, but I would’ve enjoyed hearing more about it firsthand,” Hernandez said. “From my current colleagues, I can tell that by participating in these types of experiences it gave them a leg up earlier on in their learning process.”
Students heard from numerous guest speakers throughout the year as well to expand their industry knowledge. Sweet also organized several stock pitch competitions where students could present to working professionals in the industry. This past year, Frost, Valero and Victory Capital hosted student competitions.
“The speakers helped me get a deep dive into how professionals think and their processes to finding great companies,” said Andrew Dietz, a senior majoring in finance. “Most of the speakers started out as UTSA students in the exact position that I am in, so they gave great advice on how to be successful in my future career.”
“The students get to interact with people who are doing this for a living,” Sweet said. “They are not treating them like students, or watering down their responses. They are pushing back like they would normally do during a presentation.”
For Reed Knapp, a finance graduate student, the opportunity to learn from professionals with years of industry experience was invaluable.
“In certain instances, they gave us great industry-specific information that was very helpful in guiding investment decision-making,” Knapp said. “It was also helpful to hear how similar their process was to ours, and it reinforced that the classroom learning we were doing was very similar to what is done in practice.”
Beyond the classroom
Sweet has expanded opportunities for students to participate in managing the fund through the college’s Investment Society. Advised by Sweet, this student organization is devoted to furthering the students’ industry knowledge to prepare them for careers in high finance.
During weekly meetings, they reviewed the portfolio, looking at stock movements to determine buy or sell opportunities. They typically reviewed two to three stocks every week. While most student-managed funds are typically overseen by a small group of graduate students, the strength of the Alvarez fund is that a broad array of students get to be involved in the portfolio either through the class or through the student organization.
“One thing I emphasize is the purpose of finance is not analysis,” Sweet said. “The purpose of finance is to make decisions. If all you’re doing is analysis, which you do a lot in college, that is only part of the process. Our students get a chance to make actual decisions when they determine if we are buying or selling within our portfolio.”
Students also gained a clearer understanding of the implications of their investment decisions. Sweet reviewed the portfolio with the class weekly, and they could see whose stocks were doing well and which stocks were underperforming.
“It is an environment where intellectual risk has real consequences, and it is something most students don’t encounter until years into their careers,” Sanderson said. “This course compresses that experience into a single year while bridging the gap between academic theory and professional practice.”
While their ultimate goal is to achieve gains for UTIMCO, Sweet emphasized that isn’t the only objective.
“We are managing a portfolio, but this is also a college class,” he said. “We’re trying to perform well, but we’re also trying to make it an educational experience. We want to get the maximum educational benefit out of this portfolio as we possibly can.”
The student-managed fund marks a milestone in experiential learning for the college’s finance program. It builds on the department’s strong traditions of applied learning through initiatives like the Investment Society’s “Sector Wars,” where students build stock portfolios, and the CFA Research Challenge, an annual global competition that tests students’ ability to conduct professional-level financial research.
“A few of the biggest takeaways from the class included how subjective research can be,” Knapp said. “Many smart people can look at the same problem and arrive at different answers. Another takeaway is that analysis is not done in a vacuum or for the sake of interest or complexity, but it is done to make decisions. You are not pitching for the sake of being highly technical or to have the best presentation, but to communicate your analysis effectively and having a recommendation on a company to present to your boss.”
“Students are doing the exact same thing in this class that they would be doing on the job as an analyst,” Sweet said. “The biggest difference is we’re doing over a semester what you would normally do in a week or two on the job. This gives our students a huge advantage when they go out interviewing for positions. They have relevant skills and experiences as well as pitch decks and recorded presentations to share with potential employers.”
Sweet encourages alumni in this field to give back by listening to stock pitch presentations, guest lecturing in the classroom or hosting pitch competitions at their workplace.
“I’m so excited to see our dream of a student-managed fund realized,” Sweet said. “But we’ll only continue to be successful by engaging alumni and business leaders in the industry to assist us in this endeavor. This is just the start. So much more is yet to come.”
