UC Irvine business students are using their investment prowess to beat professional money managers and help offset tuition costs, thanks to a competition believed to be the first funded with real money.
The Polaris Investment Competition, open to all M.B.A. students at The Paul Merage School of Business, is a yearlong contest funded by local venture capitalist Charles D. Martin, chairman and CEO of Mont Pelerin Capital LLC.
Four of five teams in the 2007-08 competition outperformed 90 percent of professional Wall Street money managers. And the winning teams in all four competitions since the program’s inception in 2004 produced healthy one-year gains of more than 30 percent.
Each year, as many as six teams are selected based on the strength of submitted proposals. Groups apply an exhaustive analysis to decide which public companies to invest in, using up to $300,000.
Proposals are put into action using investment funds provided by Martin. After one year, winners are announced and cash prizes are awarded, depending on performance and finish.
Participants can receive up to $12,000 of the profits to help pay tuition. A total of $480,000 in cash awards has been distributed to Merage students since 2005.
“Polaris provides an experiential learning opportunity,” says Michael Cancelleri ’05, senior vice president of Mont Pelerin Capital LLC who co-runs Polaris. “Investment decisions are much different when there is real money on the line.”
Polaris’ objective is to foster small-group organization, teach a practical approach to evaluating companies, and provide participants with hands-on management and teamwork experiences.
“The experience was pretty powerful,” says Allen Joo, whose team won first place in the 2006 competition. “It changed how I look at companies and taught me to analyze them not just with charts and momentum, but through a systematic approach.”
The opportunity to work with a diverse team appealed to Darrin Brendel, who competed on Joo’s team in 2006. Brendel, an acquisition program manager at the Space & Naval Warfare Systems Command in San Diego, now provides independent investment consulting for family and friends.
He also will be starting the Certified Financial Planner program at UCI Extension in the winter. “My team members and I all learned so much during the competition,” he says.
Though the competition is decidedly finance-based, a majority of participants do not possess extensive finance backgrounds. Students with a variety of experiences and interests have competed, including Zhengyi (John) Ye ’09, who has a background in biomedical research but now is interested in finance.
“When I heard about this opportunity, I jumped in,” says Ye, who is participating in this year’s competition. “You get to put what you learned in class into practice.”