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The Student Investment Fund was created in April 2003 as one of the managed funds of the MSU Foundation’s portfolio. The foundation initially funded the SIF with $750,000 and has made additional contributions since. These allocations, together with the returns achieved by the students, have grown the fund to a present value of approximately $5 million.

Full-Time MBA, Master of Finance, Master of Accounting, and undergraduate students manage the Student Investment Fund (SIF) as members of the college’s Security Analysis class (FI 457/FI 857). Under the instruction of John Steffen and using the tools of the Financial Analysis Laboratory, the students master the essentials of stock selection, security analysis, and portfolio management. They continuously monitor the fund and ensure that its stated security selection discipline is maintained.

The investment strategy and portfolio decisions of the class are reviewed each semester by the Finance Advisory Board. During the board’s meetings, students present their analysis of the performance of the total portfolio and their buy and sell recommendations on individual stock holdings. Students gain experience in responding to the board’s questions regarding their thesis, overall analysis and future outlook.

Investment Style

The Student Investment Fund is a diversified portfolio of mid-cap U.S. common stocks. Stocks eligible for inclusion in the portfolio must be a constituent of the S&P 400 index. The fund utilizes a Growth at a Reasonable Price (GARP) approach and is managed with the intention of obtaining the highest possible total return consistent with maintaining prudent risk.


The fund limits purchases to individual equity securities, so the position does not exceed 5 percent of the total market value of the portfolio. Ideally, no more than 3 percent is allocated to any one stock.

Security Selection

Identification of Promising Companies

Each student identifies promising companies for investment from an assigned industry sector (financials, consumer discretionary, etc.). For each prospective investment, students calculate an intrinsic value, based on a thorough fundamental analysis of the company. An attractive candidate will be a business with growing revenues and expanding margins, generating consistent free cash flow, led by a strong management team and can be purchased at a reasonable price.

Analyses of Financial Statements

Students spread financial statements into a model and compare key financial ratios with those of close industry competitors, both in terms of levels and trends. They look for companies with low to moderate debt levels, stable or improving profit margins, and stable or improving asset turnover.

Forecast of Earnings

Students create 3-year pro forma income statements and balance sheets for the company. Students evaluate the company’s past record at creating value from its capital investment and R&D decisions, and develop forecasts for the future. In forecasting sales and profit margins they analyze the competition and barriers to entry in the business, the potential for cost savings through use of technology, the macroeconomic outlook and the company’s operating leverage. Earnings quality and Free Cash Flow are a strong focus.

Calculation of Intrinsic Value

Students recommend purchasing stocks using a price target generated from their intrinsic value calculation above the market price, thus providing a sufficient margin of safety. A sale is recommended when the market price exceeds the price target either because of a change in prices or fundamentals.

Based on their analyses students make recommendations to the class. All decisions to recommend purchase or sale of a security is made by the faculty advisor with input from the students and these recommendations are made to the MSU Foundation for trade execution.

Ethics and Reporting

Both student managers and supervising faculty have a fiduciary responsibility to the MSU Foundation. All participants in the SIF adhere to the CFA Institute Code of Ethics and Standards of Professional Conduct.

Following presentation standards, the class produces a monthly report that details fund holdings and investment performance.