APSU finance students outpace S&P 500 at TVA Investment Challenge
(Posted on Tuesday, May 16, 2023)
CLARKSVILLE, Tenn. - Finance majors from Austin Peay State University showcased their fund management skills in April by earning a performance award and more than $2,200 from the highly competitive Tennessee Valley Authority (TVA) Investment Challenge – beating the S&P 500 by nearly 3%.
Established in 1998, the TVA Investment Challenge allocates approximately $10 million to 25 universities to manage using actual investment portfolios. Students design investment strategies, execute trades and present performance and compliance reports to TVA leadership.
“Every decision is made by the students,” said Dr. Michael Phillips, Austin Peay professor of finance. “I’m there to make sure they adhere to the rules and learn the process of investing, but they actually manage the portfolio. They get the set of rules from TVA, they have to monitor compliance and they have to make sell decisions on the existing portfolio and replace them with buy decisions.”
This year, seven of Phillips’s FIN 4410 (Selecting Equity Investments) students traveled to a TVA Investment Challenge conference at the Renaissance Nashville Hotel to report on how the class managed its portfolio in 2022. Austin Peay was among 11 schools to earn the performance award by beating the S&P 500, continuing the University’s longstanding trend of excellence within the program.
“Being able to present to the TVA really brings an experiential learning aspect to the finance program,” said Ashton Weddington, a senior finance major who graduated on May 5. “A majority of the time in the classroom you’re doing theoretical work … but this class bridges the gap between theory and application.”
Weddington was also part of the class in Fall 2022, so he contributed directly to the decisions covered in the report. He said the students made investment decisions based on eight foundational questions they learned about in class.
“We did a breakdown of our top five holdings, and we went really in-depth and gave them an analysis of each one,” he said, citing T-Mobile and Lockheed Martin as significant investments. “We also had to practice a lot beforehand, so we spent a lot of time going over our presentation and making sure everything was correct with the numbers.”
For the other students, a semester’s worth of managing the fund helped them understand and discuss the investments made throughout 2022.
“We were essentially presenting on why we felt the previous class made those decisions,” said Keith Groll, a finance major preparing to enter his senior year. “It’s difficult to answer questions working backwards, but as a class we had to evaluate those same companies [to make buy-and-sell decisions].”
Groll said he and his classmates were proud to accept the performance award on behalf of the University, and the experience inspired them to succeed with their investments.
“It motivated us even more to put the time in and make sure we got it right,” he said. “Because we wanted to continue the legacy of Austin Peay being exceptional compared to the other 24 schools in the program.”
The cash prizes awarded through the TVA Investment Challenge are based on performance and used to fund trips to future TVA conferences, so the University has a strong incentive to succeed. Phillips said the experience is invaluable for students looking to enter the financial industry.
“They are able to listen to multiple panels from TVA senior leadership and investment professionals,” Phillips said. “There are several firms the students can go and meet with to talk about career paths, and for a select few students, the TVA has a special chief financial officer reception where they get to meet with the senior leadership.”
Weddington was chosen to attend the reception and said he appreciated the chance to gain new perspectives and career advice. The students were able to have in-depth discussions with more than 10 TVA executives from nine departments.
“The biggest thing you learn from talking with executives is that they’re people just like us,” Weddington said. “One of the things TVA emphasizes is that they’re service-oriented, so they’re trying to serve families – and a lot of them have families themselves, so they’re trying to balance that with their work … [and] they’ve been in the business for years, so you can get their takes on what aspects they like, what they don’t and things they wish they would have done in the past.”
Weddington’s goal is to become an asset manager, and he said both the TVA conference and Phillips’s class helped him along the way.
“In a way, what sparked that interest in me was being in this class and seeing how entertaining and fun it can be,” he said. “It’s not as fast-paced as in the real world, but we’re still seeing that flow of information come in because we have to track these companies the entire time we’re in class. You get to understand how businesses work without being in that business, and that’s an interesting thing that not too many people get to do when they take a class.”
Phillips said he was proud of his students’ success - but seeing them gain practical experience with investment strategies and compliance reporting was even more rewarding.
“They’ve done phenomenally well, and it shows that what they’re learning and how they apply it is working long-term with actual results,” he said. “This is one of the few opportunities for our students to gain real-world experiences that get them out of their comfort zone, and they’re accountable to people outside the University with the compliance reporting. That adds an element of realism that really enhances the learning process.”