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NYU Stock-Pickers Beat Growth and Value Benchmarks

Stockpickr Staff

Last month, we saw how the Michael Price Student Investment Fund (MPSIF) at the New York University Stern School of Business was able to sift through the third-quarter earnings noise and stick to its investment strategies. Here is an end-of-semester rundown of how the MPSIF's growth and value student managers beat their benchmarks .

MPSIF Growth Fund: Up 9.7%

The MPSIF's growth fund, run by Ryan Fiftal, returned 9.7% between Aug. 31 and Nov. 30, beating the fund's benchmark, the Russell 1000 Growth Index, which returned a mere 3.7% during the same period. Fiftal attributes the growth fund's success predominantly to "good stock-picking." Fiftal says, "Our underweighting of financials was an excellent call."

Here are the growth fund's recent buys and sells:

Sold: DeVry (DV Quote - Cramer on DV - Stock Picks): Originally purchased on April 4 for $28.41 per share, the MPSIF growth team sold its stake in the education company on Nov. 7 for $57.77 per share.

Fiftal explains: "We sold [DeVry based] on valuation . The stock more than doubled since we purchased it, which was well in excess of our initial price target. Our thesis that DeVry is a great play on the growth of online vocational training was confirmed by the market. We did not want to be greedy."

Bought: Tessera Technologies (TSRA Quote - Cramer on TSRA - Stock Picks): On Dec. 3, Fiftal and his team invested into the semiconductor company for $39.14 per share.

Fiftal's reasoning: "Tessera is not a semiconductor manufacturer per se. Instead, it licenses its intellectual properties for a royalty. By doing that, Tessera's business model is insulated from the price wars of the semiconductor manufacturers, such as Intel (INTC Quote - Cramer on INTC - Stock Picks) and Advanced Micro Devices (AMD Quote - Cramer on AMD - Stock Picks). Our price target of $51 was based on a discounted cash flow model."

Bought: BlackRock (BLK Quote - Cramer on BLK - Stock Picks): On Nov. 26, shares of the investment management firm with $1.3 trillion of assets under management were added to the MPSIF's growth fund for $190.15 per share.

Fiftal recalls: "We liked BlackRock's recent growth and performance in spite of difficult conditions in the financial space. Our analyst was impressed with how smoothly BlackRock's merger with Merrill Lynch Asset Management progressed. In spite of Merrill Lynch's recent writedowns, we felt that asset management companies are more stable than investment banks and brokerage firms . Our analyst used a combination of PEG [price/earnings-to-growth] analysis, with expectations of superior growth compared to peers such as T. Rowe Price Group (TROW Quote - Cramer on TROW - Stock Picks) and Legg Mason (LM Quote - Cramer on LM - Stock Picks), and discounted cash flow analysis to arrive at a price target of $231."

MPSIF Value Fund: Up 3%

Marc Albanese, manager of the MPSIF Value Fund, also reported good results, with a return of a little over 3% from Aug. 31 to Dec. 5. This was stellar compared with the fund's benchmark, the Russell 1000 Value Index, which was down almost 2% for the same period. Marc attributes the results to "good stock-picking" as well, with the intent to "get international exposure." Examples include Yum! Brands (YUM Quote - Cramer on YUM - Stock Picks), Dell (DELL Quote - Cramer on DELL - Stock Picks) and PepsiCo (PEP Quote - Cramer on PEP - Stock Picks).

Marc Albanese details two recent investments that he believes will extend the value fund's winning streak:

Legg Mason (LM Quote - Cramer on LM - Stock Picks). Albanese explains: "Legg Mason enjoyed a 23% year-over-year growth in earnings per share in the most recent quarter. It's one of the larger asset management funds, with a big share repurchase plan. We valued Legg Mason using a discounted cash flow model, establishing a price target of $105."

Unit Corp. (UNT Quote - Cramer on UNT - Stock Picks) is a domestic oil and natural gas driller and explorer that Albanese picked as "more of a play on natural gas." Albanese says that the company's "management is taking advantage of the depressed natural gas [price] environment by buying rigs at a discount." According to his research, Unit is "poised to profit when natural gas prices rise." Albanese adds, "Based on the recent consolidation of Transocean (RIG Quote - Cramer on RIG - Stock Picks) and Global Santa Fe, we [the MPSIF] believe Unit could be in play as an acquisition (see "How to Play the M&A Game")."

Value and Growth Up, Small-Caps Down

While the MPSIF's growth and value funds saw benchmark-beating returns, the MPSIF Small Cap Fund ended the fall semester down 5% -- compared with its benchmark, the Russell 2000 Index, which was down 2.88% for the same period. What happened? Zach Shannon, manager of the small cap fund, cites a "difficult three-month period."

Next time, we'll take a look at Shannon's steps to navigate the small cap fund into positive territory.