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UNF Spinnaker

UNF's #1 Student-Run News Source

UNF Spinnaker

Student investment group avoids financial downfall

Osprey Financial Group, a student-run investment entity, has avoided the catastrophic losses that have plagued Wall Street and other less-intuitive financial investors, according to a preliminary fall financial report.

OFG removed 85 percent of the group’s capital from the market in June and the remaining 15 percent in early October due to foresight and early economic warning signs, said Dr. Reinhold Lamb, professor of Finance.

Prior to OFG pulling out of the market, the group outperformed its stated benchmark of negative 25.6 percent by incurring only a 4 percent loss, which outpaced the market considerably, Lamb said.

“The No. 1 concern is keeping capital preserved,” Lamb said. “We are respecting our client’s objective of prudently navigating the tumultuous market conditions. For the short term, we are going to stay in cash.”

However, the students are anxious to get back to investing.

“There is fear in the market place,” said Sebastian Naim, a senior finance major and member of OFG. “We were waiting for all the government packages to come out and see how the market reacted.”

Naim’s investment partner for the healthcare and industrial sectors of Wall Street, Alex Caraballo, also a senior finance major, echoed his sentiments. 

“[We will begin investing] as soon as we are assured there will be stability in the market,” Caraballo said. “As soon as confidence comes back, we will start seeing the market act more normal.”

The group is subject to the same investment standards as all UNF foundations – the Statement of Investment Policies and Objectives. This states the amount of market risk allowed and the type of financial instruments that can be invested in.

Besides holding stock in domestic corporations, the group focuses on U.S. Treasury Bills, Government-Sponsored Enterprises, asset-backed securities rated “AAA” and money market instruments rated A1/P1.

Per the group’s mandate, they may only invest in the highest rated investment instruments as to decrease the likeliness of volatility.

However, OFG is barred from short selling, buying options, having more than 10 percent international exposure and investing in foreign nations and corporations.

The foundation initially received a $500,000 endowment in 2002 from Jody and Layton Smith, a former partner in Salomon Brothers, which it in turn grew to $759,886 at its height – a 45.8 percent cumulative return.

“[The grant] allows students the ability to do what pros do,” Lamb said. “It bridges the gap between theoretical and practical uses.”

The group is managed entirely by UNF students – seven graduates and four undergrads – all of which must apply and be interviewed by Lamb before they are accepted into the two-term class.

Before new OFG investors begin work, they must go through an 80-hour training course, which certifies them through Bloomberg.

The active investment period is between October and April. During the summer, the portfolio is set for passive management.

E-mail James Cannon II at [email protected].

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