One glance at a newspaper suggests difficult economic times and discontent on Wall Street.
But one student group has actually found success in investing after beginning in one of the economic crisis’ most trying periods.
The Capital Management Club began as a class project in Professor Mark Fedenia’s finance class. After less than two years, the club has evolved into a robust and profitable organization with a democratic administrative structure and a better return rate than the Standard & Poors 500 stock market index.
“It’s just been snowballing from this project which has turned into a fairly extensive club with lots of participation from not only students that are coming out of my class but also sophomores and juniors in the business school that have an interest,” Fedenia said.
The club began after the students in Fedenia’s class realized they would need to become an independently operated Limited Liability Corporation since, at the time of its foundation, the Wisconsin School of Business could not help interested students get their idea off the ground.
William Graf, the club’s president and a UW senior, said the group’s initial membership contributed $100 per person to the club’s checking account, helping them begin the organization with $19,000.
Since then, the group has outperformed the market and is now worth about $130,000 dollars. In the 2010 calendar year, they saw a 19.5 percent return on their investment compared to the S&P 500’s 11 percent return, Graf said.
“When we got started [CMC] was kind of a loose group of 30 sophomores, juniors and seniors,” Graf said. “Given the fact that we had minimal support from the school at the beginning…we determined that the best course of action would be to actually manage our own money.”
Capital Management didn’t just grow financially. After stories of their success circulated throughout the School of Business’ community, alumni and business students who hadn’t yet taken Fedenia’s class began contributing to the fund.
Brandon Winikates, one of CMC’s portfolio managers, said the club’s current governance structure, in which all members have a vote on club policy, is unlikely to change. He also said the club will likely stay limited to Wisconsin alumni and students interested in investing.
“We really like [our governance] structure because we like to keep alumni from our own club involved,” Winikates said. “We also like to keep those relationships and connections to foster a two-way street.”
Since CMC is a registered student organization, any current UW student can join even if they are not enrolled in the School of Business. Because of this, the club has a broader audience than just business students – Fedenia said hard work and a willingness to invest money led to success for everyone involved in the group.
Winikates, Graf and Fedenia all said the club has one central mission: to educate its members on finance and investing.
“This is something where the students are putting in their own money and investing their own money,” Fedenia said. “And they’re tying it in with a lot of the academic training that they have in the classroom.”