Brown Advisory Student-Managed Investment Fund Program is Experiential Learning at its Best
Innovative and award-winning program provides students with real-life investment experience, managing $1.5 million in assets
Washington College’s campus is pretty typical of most, with backpack-clad students in hoodies, sweats, and other casual apparel making their way to and from classes, meals, meetings and practices. Except, that is, on Wednesday mornings at 8 AM. That’s when about 20 students dressed in business attire arrive at Daly Hall and spend 90 minutes evaluating and making investment decisions on over $1 million in equities.
These students are part of the Brown Advisory Student-Managed Investment Fund Program, an innovative class that provides students with real-life investment experience. Students in this program have responsibility for researching, recommending, and executing equity trades for the student-run fund. They also go on field trips to finance markets and conferences, and interact directly with leaders in the field through guest lectures, industry talks and workshops.
It all began 13 years ago, when Washington College received a $500,000 gift that was to be used to start a student-run investment portfolio. It was originally founded as the Alex Brown Student-Managed Investment Fund, but was eventually renamed to honor the fund’s founder’s firm. At present, the fund has over $1.5 million in total assets.
It is open to all majors, but there is an application process that students must complete, which ensures that all participants have the right background and experience. Business and Finance majors make up the majority of students, and most begin the program in their junior year and stay with it until they graduate.
Richard Bookbinder, Adjunct Professor and Distinguished Executive-in-Residence has led the class for over a decade, and among other things, is the reason that students show up for class each week in business attire. “I think it’s important to fully play the part here, and that means dressing for the business world,” said Bookbinder.
Bookbinder also holds the class to a high academic standard. “Every semester, every year, I tell students that when you walk into Daly 108, you must be prepared to talk about each position – buy, sell or hold.” Weekly assignments include things like reading the financial press, or articulating their thoughts on a position, often in writing. His students are all educated on how to both speak and write about these topics. “These students have a thirst for knowledge,” he added. “It’s a great educational tool and a great way to introduce the concepts important to investing.”
Bookbinder’s students appreciate his hands-on approach. “Professor Bookbinder has a wealth of knowledge and he has created a very interactive learning experience for all of the Brown Advisory students to get the most out of the experience,” said Ryan Colbert ’22, a Business Management major with minors in Finance, Accounting, Economics and International Business. Colbert applied for the program because of what he saw as a unique opportunity to be involved in a program that handles real money and reacts to current market news.
Colbert cited the analysis of things in their entirety as a valuable take-away from the program. "I learned how to think critically and create pathways to connect one piece of market news to the impact it may have on another sector. In this process, you come to understand how things in the market and the economy are intertwined and how to be really thorough in reacting to market news."
Underscoring that point, Bookbinder begins class each week with a simple question – what’s going on in the world? They discuss current events and what those events mean for the markets. He teaches his students to be agnostic and to take a holistic view of the companies in the portfolio, looking for cracks in the armor, and trying to understand how what’s happening in the world might impact them, for better or worse. For example, what impact might higher fuel prices have on a company’s earnings, or what will supply chain shortages or higher labor costs do to a company’s bottom line.
“Washington College believes strongly in the value of experiential learning, and the Brown Advisory program checks all of the boxes on so many levels,” said Bookbinder. Over the years, the curriculum has incorporated visits to portfolio companies or meetings with companies and speakers. Recent speakers include the senior management team of Hannon Armstrong, an Annapolis based company that invests in climate solutions; a discussion with a WC alum who works for AbbVie, a large biopharmaceutical company; a discussion with the Executive Editor of CoinDesk, the premier news site that specializes in bitcoin and other digital currencies; and former Washington College president Sheila Bair, who discussed a wide range of topics including student loans, the state of the residential housing industry, crypto and blockchain, and career planning. Past outings include visits to GE’s main office in Boston, several annual trips to Brown Advisory’s Baltimore office, and two trips to Omaha for Berkshire Hathaway’s annual meeting and a unique meeting with Warren Buffett.
He points to the last two years in particular, noting how well the students have performed in the face of unforeseen world events and the volatility of the financial markets. “There are no textbooks written to discuss portfolio management when global economies close, supermarket shelves are empty, and there are frequent shortages of products, including computer chips and cars. Nor did they have a roadmap for the birth of WFH as the new methodology for global businesses, U.S. equity markets staging the largest loss in the shortest period of time, followed by the greatest upswing in the shortest period of time, unprecedented asset purchases by the Federal Reserve, and trillions in spending by Congress.”
In each and every scenario, he says the student have rolled up their sleeves to understand what has happened, learning how to react to and dissect the evolving landscape. “We recently spent time discussing the new dual challenges of inflation and rising interest rates – that’s something that investors have not witnessed in over 40 years,” he said.
“If you want to learn more about an inverted yield curve or the outlook for renewables, just ask our students!” said Bookbinder.
Bookbinder’s own professional experience has certainly benefited the students, as he spent his entire career working in financial services in New York City. Early in his career he was a Limited Partner at Bear Stearns, and then a Founding Partner at Sandler O’Neill and Partners. He then went on to found two different firms focused in the hedge fund industry – Bookbinder Capital, followed by TerraVerde Capital Partners. The opportunity to lead the Brown Advisory program is his “retirement” gig, and one that he jumped at 12 years ago right after his son, Jonathan ‘10, graduated from the college.
“Professor Bookbinder is a renowned investor himself, and getting the opportunity to learn from him opens doors to a wide world of possibilities in investing,” said Henry Butterfield ’22, a recent graduate who was a double-major in Business and Economics, with a minor in Finance.
Butterfield benefited greatly from the program, which he applied for in his sophomore year. He appreciated the hands-on approach to investing, the collaboration with fellow students, and generally learning to be a professional. “The program teaches us what it means to be a professional in the equity trading market, starting with the way we dress, and finishing with the responsibility of managing funds that don’t belong to us as individuals,” he said.
A major highlight for the Brown Advisory Group in recent years has been securing first-place wins in the Undergraduate Value Portfolio category at two of the last three Global Portfolio Competitions at Quinnipac University’s annual conference. It’s the largest student-run financial conference in the world with over 1,700 participants representing 140 different colleges and universities, and some of the most respected industry leaders and experts serving as speakers.
They earned the top prize for the Undergraduate Value Portolio in 2020 and 2021, competing against over 40 schools in that category. They finished 3rd in 2022.
Competition is another aspect of the Brown Advisory Group program that Bookbinder highlights, as he has noticed in his years teaching that he tends to get a lot of student-athletes, oftentimes from the same team. “It’s a real positive for the class,” he said. “They are all naturally competitive, and they’re together a lot. So when they’re walking to or from practice or eating dinner afterwards, they start talking about the markets. It becomes an extension of the classroom.”
He also acknowledges that the world of finance tends to be male-dominated – this year there were 5 female students in his class out of 18 – but he is quick to point out to his students that female-run companies tend to have stronger returns.
Colleen Keefe ’22 is another one of Bookbinder’s recent students. She applied because she was interested in learning more about the financial services industry. Keefe, a Business Management major with minors in Finance and Accounting, appreciated that being in this program has given her an understanding of the stock market as a whole. “Through this program, I learned firsthand how to invest in a diversified portfolio and the decision-making process that goes into properly investing,” she said. “Each week, we stayed up on our current events and based our decisions on how these events could potentially impact our own portfolio.”
Overall, Bookbinder is proud of the legacy of success of the program, noting that many of the fund’s positions are long-term holdings that reflect the hard work done by alums from a decade ago. The actual performance of the portfolio validates this, with total assets growing now to over $1.5 million. Mostly, he is proud of the students who embrace the opportunity for hands-on learning, from their curious minds right down to their dress shoes.