Author: GW Investment Institute

During the quarter that ended on June 30, 2023 the GW Investment Institute (GWII) hosted 14 industry professionals across four finance classes, held two stock pitch days, completed the spring 2023 semester classes, and held the annual GW Ramsey Scholars Ceremony to award the top 10 students in GWII classes with $50,000 total. The following commentary was written by Leon Kamenev, a GW undergraduate student, graduating in 2024 with a double major in Finance and International Affairs.

Full Report: GWII Quarterly Report June 2023

Overall, equity markets performed positively, with the S&P 500 up 8.7% over the past quarter. Markets reacted positively to lower inflation numbers. The year-over-year CPI in June decreased to 3.0%, the lowest in two years. The Federal Reserve paused its rate hikes during the quarter. It kept the range of the Federal Funds rate between 5.00% and 5.25%. Other economic indicators such as a strong labor market and consumer spending figures have caused recession fears to quell and fuel further optimism for markets. 

Not all sectors have benefited from the rally this past quarter. Energy (-0.89%) and Utilities (-2.53%) were the laggards, most likely due to lower oil prices and slower growth in China and Europe. Financial Services (5.33%) have rebounded from their poor performance in Q1 2023 as a result of the turmoil in the regional banking industry. Communication Services (13.06%), Information Technology (17.20%), and Consumer Discretionary (14.58%) were the leaders in the index, due to the positivity surrounding developments in Artificial Intelligence (AI) and strong consumer resilience. 

For the quarter that ended on June 30, 2023, the GWII’s Student Investment Funds in aggregate outperformed the benchmark with a return of 9.8% vs. 8.7% for the S&P 500, while also outperforming the benchmark in the past one year at 24.7% vs. 19.6% for the S&P 500.

During an interview on May 4, 2023, following the GW Ramsey Scholars Ceremony, William Ahrens, a sophomore and GW Ramsey Scholar, had a conversation with Mr. Russ Ramsey, Chairman of the GW Investment Institute (GWII) Governing Board and CEO of Ramsey Asset Management. They covered a range of topics including the inception and impressive growth of the GW Ramsey Student Investment Fund since 2005. Mr. Ramsey shared insights on the fund’s investment framework, the exceptional performance of students, and offered a glimpse into the future trajectory for the GW Investment Institute, emphasizing the significance of continuous learning and making meaningful contributions in one’s chosen field.

William Ahrens: Take us back in time to when you first came up with the GW Ramsey Student Investment Fund in 2005, how did you decide to give that first million dollars which went on to become the foundation for the GW Investment Institute?

Russ Ramsey: In 2005, I professionally was shifting from the sell side to the buy side. I’d been very fortunate to put together, co-found, and co-lead what ended up being the largest investment banking firm in Washington D.C. – Friedman, Billings, Ramsey (FBR). In the early 2000s, I had shifted my focus to building an alternative asset business and using primarily a long short equity strategy with the firm. By 2005, we were two or three years into building our standalone Chief Investment Office at The George Washington University. Chief Investment Officer (CIO) Don Lindsey, Rodney Lake, and I, along with a team that we had built, had taken the reins of actually putting together a portfolio, particularly a portfolio of equity managers. We had observed, which is true then and is still true today, that a shockingly large percentage of professional equity money managers don’t outperform their benchmarks. And in our case, we were primarily focused on the S&P 500. The CIO of the time was very much a top down kind of thinker. Ethan McAfee, who was another person who this fund wouldn’t be here without, was the Director of Research for Ramsey Asset Management. He had been trained at T-Rowe Price and had actually had some experience at a student run investment firm at his alma mater. He had some very strong views about what was the right way to construct and build a portfolio and compound capital. And from that, we decided to do what we believe in, which is to have a straightforward construct of the academic literature, primarily books that Charlie Munger and Warren Buffett had recommended over time. Let’s come up with a straightforward construct for the industry groups and the portfolio. And let’s give the students the skills to build a portfolio and be unconstrained in terms of the capital, so it would be permanent capital and see how we did. That was the thesis, that was the theory of the case.

William Ahrens: It’s been almost 20 years at this point and the fund and the GWII have grown from a million dollars to $7 million. What does that mean to you in seeing the continued success and the going concern of GWII?

Russ Ramsey: From that first class, and from that first premise: I think we can declare the thesis a victory and a win. Because investing is like any competitive sport and dynamic, there is no finish line. So every year you have another set of results that build on a previous year’s set of results that build on a string of continuous results. But unlike a lot of other places, we aren’t changing the benchmarks, we aren’t changing the rules, we aren’t changing the construct, it’s the same. It’s rinse and repeat. Now, obviously, through those markets, you know, we can give a soliloquy about all the things that have happened from the Great Financial Crash to the Flash Crash May to the recovery to the advent of big tech and the destruction of bricks and you can go on and on.

What I think has been proven by the methodology is we can pick good businesses at fair prices when run with very skilled managers with the right incentives, they can grow and compound in value, and you can sleep at night and build the portfolio. The students are unconstrained by all the noise that does get in the way of professional money managers outperforming: too much short term trading, too much focus on consensus earnings and beating earnings, too little real focus on long term thinking, too much worrying about monthly returns, daily returns, client meetings, and getting fired, all the things that go into constraints. I think we have demonstrated that the students do a better job than most of the professionals.

William Ahrens: It’s quite the achievement and quite the claim and it’s shown by the performance data which is really fascinating. The methodology works as seen in the case with a traditional fundamental approach that GW Phillips and GW Ramsey Student Investment Funds implement. But what’s next for GWII? Where’s the growth, how could the methodology be applied to other areas, for example with quant?

Russ Ramsey: Like any good team, we’ve gone from, sort of one voice, mine and my wife’s, to a real board and real leadership, amazing stewardship by Professor Lake. And in many respects, it’s going to be the collective view of all the stakeholders. We were just there at the beginning–Don Lindsey, Ethan McAfee, Rodney Lake, myself—we were pioneers, we were there at the beginning. No enterprise is successful without many partners and many people who care deeply about building intellectual capital that can be shared with the future citizen leaders of the world, here and elsewhere.

And by the way, we’re open architecture. Because without classes, we’re happy to share this with any other university, any other enterprise that wants to bring that to their own sort of special place. So in terms of the future, I think we should continue to be thoughtful about secular dynamics and changes that we can build classes around, where we either have some strength or can build some capability. And I think that’s how the quant fund came about. We have a wonderful alum, who felt like he wanted to share what he had built in and it complements perfectly kind of this bottom up fundamental [analysis], company by company, portfolio by portfolio, with really, very much a top down quantitatively driven strategy that Aron [Kershner] was part of building at Goldman Sachs. And so, what a gift. 

And so going forward: we don’t do derivatives, we don’t do any other types of macro strategies. Never say never, I think we should always be open as entrepreneurs to areas where we can bring some practical real world application if we believe in that construct. And we believe it’s repeatable and believe that it’s a pillar that our students should want as part of their foundation going out and that’s not everything, right. There’s dozens of strategies and dozens of asset classes which we should not spend any time focused on because it’s not something that we can take a 20 year view and say, this is something that is here forever and applicable, and hopefully can be used for generations to come in the future.

William Ahrens: It’s a really special day today with the GW Ramsey Scholars Program, $250,000 in awards, almost a quarter of the initial seed investment of $1 million back in 2005. What advice would you have for GW Ramsey Scholars as they take their experience at the GWII and their time on campus and go out into the real world and to become practitioners and decision makers?

Mr. Ramsey: My advice to new graduates would be to be a sponge. Take these pillars that you have learned in your academic coursework, and then just find those mentors and find those strategies, find those asset classes, find the areas that you just can’t sleep at night because you’re so excited about learning and applying.There’s no good or bad, there’s no right or wrong, there’s no good or evil–it’s about where you can apply and bring your skills to build a career and to grow and add value. 

There’s just one question I think everyone should wake up in the morning and ask themselves: How am I going to add value today, am I going to make a deposit or withdrawal? 

I think everyone should wake up doing that in whatever their chosen field is. And I predict that applying that simple sort of approach will lead to a very successful career and outcome.

William Ahrens: Anything else to add?

Mr. Ramsey: It’s just a pleasure to be back here. As I shared at the GW Ramsey Scholars Ceremony, I don’t get on campus that much anymore. And the true highlight is to see why we should all be so optimistic about our society’s future and our country’s future because these young minds are going to be amazing professionals.

On May 4, 2023 the GW Investment Institute awarded $50,000 to our top 10 performing students from our classes from this past academic year. These students are now distinguished as GW Ramsey Scholars and have joined 40 other GW alumni with this designation. In total, including this year’s group GWII has awarded $250,000 to 50 GW Ramsey Scholars. We look forward to continuing this program established by our chairman Russ Ramsey and his wife Norma. 

“We started this [GW Ramsey Student Investment Fund] 18 years ago and now that we’re in the fifth year of the Ramsey Scholars it brings a couple things to mind: one, the value of compound returns which we all learn in the class and two, I’m amazed at the enthusiasm and skill and knowledge and the impressive nature of these scholars every year. They continue to impress me and I can’t wait for the future.”    – Russ Ramsey, GW Investment Institute Chair

Check out the video (done by Willow Newcomb) for more info:

GW Ramsey Scholars Ceremony video, May 2023

During the quarter ended March 31, 2023 the GW Investment Institute (GWII) hosted 15 industry professionals across four finance classes, continued to integrate FactSet into class curriculum and worked with BlackRock to introduce a new cohort of students to their Aladdin technology. Additionally, on March 24 the GWII held the 2023 Annual Conference – Quant Investing for over 60 attendees with alumnus Aron Kershner as the keynote speaker. The following commentary is written by Alyssa Shen, a GW School of Business senior, graduating with a B.S. in Finance and B.S. in Economics. Alyssa is the Co-President of the GW Finance and Investment Club and is an incoming investment banking analyst at Citigroup.

Full Report: GWII Quarterly Report March 2023

At the start of the quarter, equities and fixed income reacted positively to falling inflation (CPI 5.1%), signs of slowing monetary tightening, and China’s economic reopening. Inflation was the focus of 2022 and now is beginning to ease in Q1 of 2023 following lower energy prices and rate hikes. In March, the collapse of the Silicon Valley Bank and Signature Bank shook the financial sector, leading to major sell offs in the U.S. and European markets. The Fed increased the federal funds rate by just 25 basis points. As businesses rebalanced their inventories and pulled back spending, GDP growth slowed to 1.1% year over year, below expectations of 2.0%. Further, the geopolitical backdrop remains challenging with the continued war in the Ukraine and tensions between the U.S. and China. 

The S&P 500 closed the first quarter with a growth of 7.5%, bringing the year over year decline to 9.6%. Consumer Discretionary (+16.2%), Technology (+21.6%), and Communication Services (+21.3%) rebounded drastically in Q1, with Consumer Staples (+0.7), Real Estate (+1.9%), Industrials (+3.5%), and Materials (+4.3%) sectors remaining positive. Energy (-4.4%), Financials (-5.6%), Health Care (-4.31%), and Utilities (-3.2%) were the greatest laggards.

The quarter ended in March 31 2023, the GWII’s Student Investment Funds in aggregate outperformed the benchmark with a return of 12.2% vs. 7.5% for the S&P 500, while also outperforming the benchmark year over year at -5.5% vs. -7.8% for the S&P 500.

Last weekend (April 29 and 30) students in Applied Financial Securities Analysis (FINA 4101) class pitched their buy and sell stock recommendations for the GW Phillips Student Investment Fund. The fund was launched in 2008 and it currently has over $2.5 million in assets under management (as of 5/2/2023). Check out the most recent GWII Quarterly Report for the fund’s performance details. 

During the Stock Pitch Days each student used the collective knowledge that they have gained throughout the semester to develop an investment pitch while utilizing the GW Investment Institute Framework of BMPB: Business, Management, Price/Valuation, and Balance Sheet. After each student gave their pitch, the investment committee, i.e., the other students in the class voted on their recommendation. Students must convince at least 80% of the investment committee members for the recommendation to be accepted for the portfolio. 

Here is a brief summary from the GW Phillips Stock Pitch Days:

Thank you to all of the students for their hard work and dedication.

A special thank you to our teaching assistants Trevor Haen and Shirin Rateshari as well as alumni speakers. 

Professor Lake and Song look forward to teaching two sections of the FINA 4101 class in the Fall of 2023.

Last week students in our Quantitative Investing class presented their quantitative models and investment recommendations for the GW Quant Student Investment Fund. The fund was established in 2021 and currently has over $98,000 in assets under management (as of 5/5/2023).

Further, thank you to Aron Kershner, our portfolio advisor, who has supported us since the inception of the GW Quant Student Investment Fund. Also thank you to our guest speakers Ethan Baron and Joseph Pecora for your valuable feedback and insights into the quantitative investing world. Mr. Baron and Mr. Pecora are alumni of the class who now work as quantitative analysts.

We look forward to running the FINA 4103 Quantitative Investing class in the Spring of 2024.

Last week we held final startup idea presentations in our venture capital class co-taught by Professors Bill Collier and Rodney Lake. During the semester the student teams built startup companies and also competed with their ideas in the New Venture Competition (NVC). Five teams made it to the semi-finals of the NVC. 

For the students’ culminating course experience, teams pitched their startups ideas to professors and alumni: Dr. Randy Graves, James Huckenpahler, and Bojana Jankovic. All student teams focused on building product solutions within the tech industry, see below for more information:

In the fall 2023 semester Prof. Collier is teaching another Foundations of Venture Capital class, stay tuned for more details. 

Thank you for your generosity on GW’s Giving Day and your continued support for the GW Investment Institute! Stats for the GW Investment Institute (GWII) on GW Giving Day April 4/5, 2023:

Special thanks to our student and alumni advocates; and our GWII Team:

Check out a brief video by our team from April 5th:

You can still support us by giving via go.gwu.edu/givetogwii.

Thanks for your continued commitment to support experiential investment learning at GW.

Raise High!

Rodney E. Lake, Director, GW Investment Institute

The GW Investment Institute hosted the 2023 Annual Conference on Friday, March 24th in Ric and Dawn Duquès Hall, connecting 60+ students, faculty, and alumni with industry practitioners and professionals to discuss the latest developments and advancements in quantitative investing. The conference brought together invaluable perspectives and insight into the rapidly developing space and offered students an opportunity to hear first-hand how to prepare to enter this emerging career opportunity. To learn more about the conference and our featured guests, please access the GWII 2023 Annual Conference Summary and Booklet.

GW graduate student advocate Hilal Uyanik reflected on her experience in the GW Ramsey Student Investment Fund class. Hilal is graduating in May 2023 form GWSB with MS in Management with a concentration in portfolio & investment management.

“My time at The GW Investment Institute has provided me with invaluable experience and knowledge I can apply in future full-time roles. The institute presents students with many opportunities such as panel discussions with alumni in the field, real-time market exposure, and the opportunity to learn software essential to the industry, such as FactSet. FactSet provides students useful analytics including global market and individual stock data to further aid in decision-making while analyzing the portfolio. With the use of FactSet, I was successfully able to analyze risks associated with the energy & utilities sector of the GW Ramsey portfolio and eventually manage the risk by constructing a buy-sell pitch to present to fellow analysts within the fund. 
This Giving Day I invite you to support GWII so that students like me can continue to have access to FactSet.”