There are good investors and then there are investors who can turn even Warren Buffett's head. At San Diego State University's Montezuma Money Management group, 18 student investors are doing just that. Here's how the Montezuma money managers scored an audience with the "Oracle of Omaha."
MMM Quick Facts
Membership: 18 (no new members are currently being accepted)
Money under management: $15,000 (approximate current value)
Number of Current Holdings: 9
Time-horizon/style: Long term; growth and value mix
Montezuma Money Management (MMM) was founded at the beginning of 2007 by a handful of students from San Diego State University who wanted a shot at managing some real investment money
. When the university wouldn't cede any of its endowment to the group, they did the next best thing and started using their own cash to fill their trading account.
"The school was pretty hesitant about moving forward, so we kind of came together and decided instead of involving the school, let's just put together our own fund and do this ourselves," explains Dave Seaton, the group's CEO.
Now more than a year into the endeavor, MMM students have started to see the fruits of their labor. The group's initial $11,000 investment has turned into almost $15,000.
aside, one of MMM's biggest successes was getting a meeting with Warren Buffett at this year's Berkshire Hathaway (BRK.B)
"It all started with a handwritten letter," says Seaton. "We shared our story, and said this is what we've done. His secretary got back to us and told us that he'd like to meet with us. We're going out to Omaha [where Buffett is based] on May 3 and we've got about an hour to sit with him and ask him questions."
Real World Connection
It's easy to make a costly mistake when you're managing a sizable chunk of money -- especially if you're a college student. But MMM has that covered. The group has an educational relationship with Brandes Investment Partners
, a San Diego-based firm that manages over $105 billion in assets.
"[The relationship with Brandes] initially started through an email that I sent out to Charles Brandes [chairman of the firm], just asking to meet with him. The next day, I got an email back saying, 'It sounds like you guys are doing a great thing, and we'd love to have you out here.'"
Through their contact with Brandes, MMM has had the chance to work on investment simulations with the firm's proprietary investment software. The student group also got the advice to create a sell-side
But that doesn't mean that MMM hasn't had its missteps.
"A couple of our picks have been a good learning experience for us. One of the things that's been hard in a large group has been placing stop orders
," says Seaton. "With UnitedHealth (UNH)
[a current holding], we'd gotten some pretty nice gains and we'd talked about doing a stop order
, but we never agreed on it. Now the stock's gotten pulled down over the past couple weeks."
So far, 2008 is proving to be a tough year for the group, especially after the stellar performance they had in 2007. According to Seaton, "after being up 27%" last year, MMM is "down since January right now."
Some of MMM's best performers last year were Chinese Web company Sohu.com (SOHU)
, the streetTRACKS Gold Trust ETF (GLD)
and agriculture conglomerate Archer Daniels Midland Company (ADM)
. Each of these investment picks scored double-digit returns in '07. However, so far in '08, these once hot names have cooled. Year-to-date, Sohu.com is down over 13%, the gold ETF is down over 5% and ADM is up only 1.9%.
Passing the Torch
If you're not already a member of Montezuma Money Management, don't count on joining. MMM is currently closed to new members. Still, they're trying to make student investing a much bigger deal at San Diego State and elsewhere.
In the next couple of weeks, they're hoping to expand their reach by creating a Web site for other students who want to form investment groups of their own. The site will give students a quick course in MMM's organizational model and a glimpse at the more technical side (like how to put together a legal partnership).
Why the outreach?
The group's reasons are simple. "We've gained so much from this -- not just knowledge about equity research, but also the personal growth of running a business," says Seaton. "We feel strongly about [the experience], so we want to get things started up at other schools."