'As real as it gets'

UNIVERSITY PARK, Pa. — For more than a decade now, select Penn State Smeal College of Business students have been losing sleep and managing millions of dollars from real investors. Many of those students — now alumni — returned to campus on Sept. 19 to celebrate the 10th anniversary of one of their defining college experiences: the Nittany Lion Fund (NLF).

Many business schools boast student-managed funds, but the money often comes from endowments. The Nittany Lion Fund is different in that it features real investors with real expectations of return on investment.

At the beginning of every academic year around 600 students join the Penn State Investment Association and pick one of 10 investment sectors to engage in. At the end of the year, the lead analysts of each sector pick three to four students to promote to the Nittany Lion Fund. Only 10 to 15 make the cut each year.

“The way I like to describe the work of an NLF manager is that people do this for a living, without being in school,” said Ryan Limor, a 2009 Smeal graduate who is now pursuing his MBA at Wharton. “Running money is a stressful experience since you are the fiduciary for your benefactor.”

And that’s in the good times. Managing a sector of the fund in the middle of the worst financial downturn since the Great Depression came without a playbook.

“Being a student manager in the Nittany Lion Fund is as real as it gets,” said Jim Regan, a 2011 grad who is global TMT analyst at Surveyor Capital (Citadel LLC). “I managed the industrial sector from 2007-09, perhaps the most extreme market environment of all time. I'll never forget the feeling of dread when I woke up and saw that General Electric was down 20 percent.”

The Nittany Lion Fund launched in 2005 with students managing $2.25 million from 42 investors. Today, Smeal students manage roughly $7 million from 77 investors, most of whom are Penn State alumni.

While the fund has operated out of two different trading rooms in two different buildings with hundreds of students setting its direction, one constant has remained: professor J. Randall Woolridge, president of the Nittany Lion Fund and the Goldman Sachs and Co. and Frank P. Smeal Endowed University Fellow.

Woolridge — well known for his sayings, termed Woolridgeisms — makes sure his students realize the type of dedication that it takes to run the fund.

“I tell students, ‘If you don’t have a passion for this, don’t do it,’” Woolridge said. “You’re going to spend an extraordinary amount of time in the fund. That’s how you build your confidence and your knowledge base.”

By all accounts, Woolridge makes fund managers live up to exacting standards. They meet three times a week to present plans to buy or sell in the various financial sectors they manage. Woolridge, playing devil’s advocate, questions every decision, sometimes vehemently.

“I think all students go through a love-hate relationship with Dr. Woolridge,” Regan said. “He has to be hard on students in order to make them think more critically about their investment ideas. I don't have enough fingers to count the number of times I was told ‘you're falling in love with your losers’ or ‘you don't understand risk,’ but at the end of the day he plays a crucial role in reminding students that there are smarter heads out there, and you must always question your decision-making to come up with the best portfolio.”

If you did your homework, former fund managers said, you could go toe-to-toe with Woolridge.

“The thing is … he would really respect you if you could intelligently stand up to him,” said 2014 graduate and former NLF president Emily Zheng, now an investment banking analyst at Goldman Sachs, “though he would never let you forget your poor investment decisions.”

John Beberus, a 2007 grad who is vice president of GSO capital, said all of the demands on the students were well worth the time and stress.

“We had meetings twice a week at 8 a.m. in his office. We had to stay on top of invested names. We had to evaluate prospective investments. It was practically a full-time job,” he said. “But it was all worth it.”

Zheng remembers a gradual appreciation of the demands of the fund, and the realization of the long-term benefits.

“It’s probably a good thing that when we start out, we don’t fully realize the implications of running an investment portfolio at 19-21 years in age. Such realizations can honestly be crippling. We’re all young and green and think we can beat the markets, and we work hard with that mentality,” she said.

“As you become more tenured in the fund, and as you exit and enter the broader alumni group, you meet more and more people who have benefited and continue to mentor and help others progress, you grow to appreciate and love the fund incrementally more.”

That realization, Regan said, takes a while to develop.

“I think it takes a year in the industry to fully appreciate what a leg up the Nittany Lion Fund provides,” he said. “There are plenty of students nowadays with ‘investment experience,’ but managing a personal portfolio or endowment money simply doesn’t come close to the amount of pressure and real-world accountability that you get at Penn State.”

Media Contacts: 
Last Updated October 14, 2015