by T.S. Jarmusz , Daytona Beach News-Journal, 11/1/2016.
Most successful senior projects result in a good grade, but one at Stetson University amounted to something more: an investment of hundreds of thousands of dollars.
Five seniors in the school’s Roland George Investments Program pitched their top stock picks to a board of student and faculty trustees, who voted Oct. 24 on whether to invest real money from the program’s $3.5 million student managed portfolio. Their ideas — the result of two months of research and vetting — included the creation of three tech-heavy baskets of stocks, a post-election group and a single stock pick that capitalizes on death.
It was “Mad Money” meets “Shark Tank.”
A Virtual Steal
Finance major Chris Landers kicked off the show by asking the audience to close their eyes and imagine being in Hawaii. This is the last time people will have to “imagine” the trip because technology will make it possible for them to be there, he said.
No longer the stuff of sci-fi movies, virtual reality (VR) has made headway in video games. Sales of VR games are expected to outpace regular games by 2020 and Landers called figures “staggering.”
But that’s just the start. VR will be used in health care applications such as surgical training or studying 3D models of the heart. It has applications in education where students can learn from a virtual classroom. It also will be used in the military, where the Air Force plans to implement the technology to train pilots, Landers’ research shows.
His pitch to buy more than one stock rests on the fact that there’s no single company solely in VR. After doing an analysis of where VR hardware is made, Landers came up with four stock picks — all selling at a discount — and all potential takeover targets.
“Someone call Jim Cramer (host of CNBC’s “Mad Money”) and tell him that’s my call of the day,” he said of one stock being a likely acquisition target.
He asked the board to invest $70,000 and after a 5-2 vote, they agreed.
In the Cloud
Next, student Sal Raitano gave his pitch on the advancement of cloud computing.
“The cloud is the Internet,” he said. “All computing is moving into the cloud.”
A great deal of data already is stored on servers in the cloud, and Raitano said 75 percent of growth in the information technology field is tied to cloud computing.
It’s only going to get bigger. Soon, hardware will follow data and migrate to the cloud. Then all you’ll need is a screen and an Internet connection, he said.
After showing some impressive projections, Raitano asked the board to invest $70,000 for his Cloud4 ETF. They approved the request with a 6-1 vote.
Death Becomes Her
Clad in all black, as if dressed for a funeral, Hailan Castro Yan, 22, recommended only one stock: From a company that makes money when people die.
Yan opened with a deadpan statement as dark as her attire.
While death and taxes are the only certainties in life, one can’t invest in the IRS, she said. The next best way to capitalize on the inevitability of life’s end would be to invest in a company that profits from others’ misfortunes.
Service Corporation International is similar to a company Stetson added to its portfolio last year except that instead of specializing in child care, it specializes in death care, she said. Service Corporation runs the oldest and largest networks of company-owned funeral homes in the U.S. and have about 26 percent of the current market share.
Yan noted – to mixed reaction – how baby boomers are getting older and death rates are expected to increase.
That’s good news for stockholders and she shared data to prove it.
A stock chart she displayed showed sharp price increases for Service Corp. in 2015. It wasn’t the result of a strong earnings report, but rather, a severe flu outbreak in Canada.
“Basically a lot of people died,” she said.
One trustee noted that she hit both “apprehension and discomfort on the head.” Their 4-3 vote earned her stock a $70,000 investment.
While the students didn’t win anything for their picks being selected, not everyone walked away with bragging rights. Presentations on a self-driving truck and post-election basket of stocks (that should rebound after the election) weren’t approved because trustees said the picks too closely resembled stocks already in the school’s portfolio.
In the end though, students convinced trustees to fork over $210,000.
This is the school’s third year doing the “Shark Tank” format and not the first time trustees invested heavily in a recommendation. In March trustees invested $100,000 in a drone exchange-traded fund.
If championship wins are any indication, the students know what they’re doing. Since 2001, students in the investment program have won 15 collegiate championships and six second-place wins in various investment competitions.