Apple stock was a fantastic investment years ago, but is it too volatile now following an unsteady launch of the iPhone 6? Members of the student-run Rivanna Investments at the University of Virginia School of Law are learning the financial skills to know the answer — and how to pitch an investment strategy around it.
As one of several extracurricular activities that complement the school's John W. Glynn, Jr. Law & Business Program, Rivanna launched in 2010 with $100,000 in seed money from the Law School Foundation. Despite maintaining a sizable cash balance, the group has grown its portfolio to more than $130,000 today.
"The overarching goal of the group is to educate Law School students about the financial industry and how investing works. Law firms appreciate their incoming associates having such knowledge" said Rivanna Investments President Andrew Mandelbaum, a second-year law student.
On most Fridays during the school year, a student involved in the group will make a stock pitch that requires research on a given company.
"They try to make a persuasive argument as to why we, as an organization, should put money into it," he said. "It's a great experience for students. If they can successfully pitch a stock and defend their thesis, and then have the stock added to a real portfolio, that's pretty exciting."
After a stock pitch, Rivanna's investment committee votes on whether to invest in the company and how much to invest. Initial investments cannot go above 10 percent of the portfolio. All trades are run through the Law School Foundation and approved by faculty adviser Dick Crawford. Crawford, who teaches Finance of Small Enterprise, also has experience in management positions at major financial service firms, including Citigroup and Dean Witter.
"Since its founding, Rivanna Investments has developed nicely and progressed far beyond the original expectations of the dean and the trustees who supported its formation," Crawford said. "This practical experience gives students the background to better understand the issues in courses ranging from securities law to the Law & Business course in corporate finance."
The group also invites business experts to address the group. This year's slate includes Darden School of Business Dean Robert Bruner, Goldman Sachs partner and UVA Law adjunct professor Jim Donovan , and Darden professor Bill Sihler, a pioneer in finance who will discuss FRICTO analysis on Oct. 3. (Here's one lesson the students will learn: FRICTO is an acronym for flexibility, risk, income, control, timing and "other" — a framework that a corporate strategy management team can use to analyze how it will fund itself.)
Today at noon in WB105, Mandelbaum will give an overview of how to make a stock pitch to Rivanna's more than 20 members and other students who may join the group. Student stock pitches will begin two weeks later.
"We have ample opportunity to deploy more cash this year, so every member has a legitimate chance of having his or her pitch accepted by the investment committee," Mandelbaum said. "We're also instituting a mentorship program so that experienced partners can share what they've learned over the last one or two years with new members."
Prior to law school, Mandelbaum gained financial experience working for a hedge fund, worked as an analyst for a company that managed money for wealthy families in Israel and ran his own investment research company catering to high-net-worth clients. Despite his own experience, he said Rivanna Investments is designed to most help those without any financial background.
"If we can equip members with a basic understanding of what an income statement looks like, what a balance sheet is, and how cash flows are reflected between the two, that should make our participants stronger employees by facilitating their ability to comprehend a company's business model and where the risks may be," he said. "Whether Rivanna members go on to work in corporate law or as litigators, or transition into the financial or consulting worlds, the goal of the club is to instill knowledge that will give them a better understanding of the issues they will face in their professional lives."
Having just been through several job interviews as part of the Law School's on-Grounds interview process, Mandelbaum said he heard positive comments from potential employers about his involvement in Rivanna Investments. "Alumni and interviewers really appreciate that we're doing something like this," he said.
Mandelbaum said he envisions spending time at each of the group's meetings, which are open to all law students, teaching or reinforcing a new concept.
He also is looking at options to work more closely with the Charlottesville-based CFA Institute, which runs the highly regarded Chartered Financial Analyst program.
Founded in 1819, the University of Virginia School of Law is the second-oldest continuously operating law school in the nation. Consistently ranked among the top law schools, Virginia is a world-renowned training ground for distinguished lawyers and public servants, instilling in them a commitment to leadership, integrity and community service.
