overview

The Investment Board manages our chapter’s $47k real-money portfolio. The Board meets weekly during the school year to discuss stocks pitched by Research Analysts and I-Board members themselves. Each Board member is assigned a portfolio and watchlist stock, sets a target price when initiating a new position, evaluates whether holdings should be bought, held, or sold, and keeps track of changes in prices.

The Board makes the ultimate decision regarding their allocation of the Investment Fund. The Co-Chief Investment Officers lead a thorough, multi-step decision-process for each stock pitch to determine whether a new position should be initiated and at what percentage. Based on the investment memo and ensuing Board discussion, the co-Chief Investment Officers may choose to conduct additional research or hold an anonymous vote on a stock.

• If the majority of the Board votes “yes” for the stock, the CIOs will conduct a subsequent vote to decide what percentage to initiate at. The percentage weight of any one stock is limited at 10 percent of the portfolio. The CIOs use the average percentage to execute the agreed-upon transaction(s).

• If the majority votes “hold” for the stock, it is placed on a watchlist in order to collect more information over time to make an investment decision. Coverage of each watchlist stock is assigned to a Board member, who will track the stock’s performance and stay up-to-date with market perceptions.

risk management

We seek to effectively manage risk — that is, to build safeguards that help control the risk of market uncertainties through diversifying and closely monitoring the portfolio. When making investments, we balance the weight of each industry that we invest in. Through investing in both cyclical and counter-cyclical businesses, we aim to minimize the volatility of our portfolio return.

We monitor portfolio risk by conducting biweekly investment discussions, led by the CIO, on portfolio stock updates and performance reviews. The CIO assigns coverage of each portfolio stock to an I-Board member, who follows the news and analyzes the performance of her assigned stock. The Board sets 8% as a warning sign: if the stock price falls more than 8% within the two weeks, or falls 8% as compared to the original purchase price, the Board will discuss to distinguish “market noise” from events that change our initial thesis points. Depending on this analysis and discussion, the Board may decide to buy additional stocks if the Board believes that the stock is undervalued by the market, or to sell a portion of stocks if they believe that the event is significant enough to change the initial investment thesis points.

exit strategies

For each portfolio stock, the I-Board calculates a target price at the time of investment, with consideration to the weighted average of our own financial analysis and target prices provided by analysts from well-known institutions on Bloomberg. When the target price is reached, the Board will sell the stock and turn unrealized returns into realized returns.