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calculating risk

Forty-Niner Shops Puts its
Money Where its Mouth is

When Forty-Niner Shops board member Alvaro Castillo suggested that the Shops invest a portion of its financial reserves with the Student Managed Investment Fund, the management team was extremely skeptical. The thought of having students manage the Shops' portfolio catapulted the concept of the organization supporting “student success” to a whole new level.
As one of the largest employers on campus, the Shops are committed to training more than 500 student employees, funding scholarships, providing internships and supporting campus-wide programs that promote student success. Yet the idea of allowing students to manage the corporation's finances seemed a little too risky.

Castillo is a CSULB alumnus who first learned about the SMIF when he served as ASI treasurer during 1995-96. “I met Dr. Dick Runyon, the program director for SMIF, when I was a student in the College of Business. It wasn’t until I served on the Shops Board of Directors that I realized the impact our support could have on this program.”
Runyon, a professor in the Finance Department, has organized SMIF since 1995. Runyon says, “What the team looks for is a real world investment experience?not just a virtual portfolio of investments, but a real customer with real money at stake."

Despite some skepticism, the board invited Runyon’s students to make a presentation. According to Shops CEO Don Penrod, “The students were well prepared and confident in their risk management strategy. They were professional and serious about their ideas. They sold us on their ability to safeguard the company assets and, as a result, we agreed to fund the account with $100,000.”

By combining diligent research with a conservative risk management approach, the SMIF team outperformed the market for the last two years and demonstrated outstanding success in managing their portfolios. “Had the Shops used the SMIF investment strategies,” Penrod states, “we might have performed better during the 2009 market downturn.”
“I am fascinated with the Shops portfolio because they are a true client. In addition to the investment analysis, we gave quarterly board updates and worked hard to ensure that the Shops were confident with our management style. The Shops offers a unique client-manager relationship that we are most likely to face after graduation," said SMIF alumnus Brian Cupp. “Currently, I am interning with Fieldman, Rolapp & Associates and I know that I am starting further ahead than my peers because of this experience.”

The future will tell how well the students manage the Shops investments, but both the Shops and SMIF are excited to collaborate on this worthy project. The impact is especially meaningful for the students. Recent SMIF alumnus Ruben Valverde said, “The experience I gained from this opportunity gave me the edge I needed for my professional career. Within a few weeks, I start a new job as a business reporting associate for Western Asset Management. I could not have imagined this opportunity without this experience.”

For the Shops to say that it supports student success is one thing, but putting its money where its mouth is says something entirely different.