SBE Undergrad Beats the Pros in Stock Market Challenge
Despite a heart-attack summer for technology stocks, undergrad investor
extraordinaire Cayle Dantzman has been doing handsprings, thanks to a
dream investment in a little-known computer firm.
Dantzman, a 21-year-old SBE student, outdid dozens of experienced investors
(including SBE Dean Gene Klippel) to win the 2000 Pine Mountain Music
Festival Stock Market Challenge. She credits luck and investment savvy
gleaned from the Applied Portfolio Management program, a course offered
by Assistant Professor Dean Johnson.
More than 100 people paid $50 each to join the challenge, in which participants
invest a hypothetical $100,000 to develop their portfolio of choice. After
three months, the heftiest portfolio wins. The challenge is a fundraiser
for the Pine Mountain Music Festival.
"I didn't expect it, but it turns out I had the right strategy," Dantzman
said. "I was looking for short-term growth."
She pegged her hopes on two IPOs--initial public offerings, in which
stock first goes on sale to the general public. "I knew IPOs would most
likely go up," she said.
She put most of her funny money, $70,000, into the biotech company Cepheid,
and hedged her bet with a $30,000 investment in a new company that was
making hand-held computers: Handspring.
"I knew that when students were going back to college, that's when they
would be buying," she said, explaining her strategy. "So I thought Handspring
would go up in September, and it did," more than doubling from $26.375
to over $69 a share at the close of the contest.
Cepheid, meanwhile, turned out to be a dud. "In midsummer, it went from
$8 to $27. If the contest had ended then, I would have done really well,"
Dantzman sighed. But by mid-October, it had slid back to a little less
than the initial $8 per share.
Klippel, who won last year's challenge, is not in the least put off that
he didn't repeat. "Actually, it feels pretty good," he said. "I'm glad
it was won by one of ours. . . . This was a particularly difficult time
period [in which to pick stocks] because the techs got beat up so bad.
It's quite a feat to pick stocks that survived that," he said. "Mine sure
didn't."
Dantzman credits her success to the Applied Portfolio Management class.
"I've learned so much this year," she said. "A lot of the techniques I
used in class coincided with the contest. . . . It tells me my professors
have taught me a lot, since I was able to outperform them."
Robert Tompkins took second place in the challenge; Steve Zutter of Edward
Jones came in third. Dantzman originally had considered a career in banking,
but has since changed her mind. "Now I definitely want to go into investments,
probably as a stock or bond analyst," she said.
As the winner, she'll receive $500 and two round-trip airline tickets
courtesy of Goodman Travel. It's a tidy sum, but not quite as rewarding
as the $48,000 she would have made on Handspring if her virtual investment
had been hard cash.
