Student manages UH stock portfolio
By Beverly Creamer
Advertiser Education Writer
Like many college students, Lexi Novitske manages her monthly expenses on a few hundred dollars and juggles finances around a part-time job.
"More than being a risky situation, this builds my confidence for the future," said Novitske. "But the market has been good."
In the past year her student government committee on Investments and Long-Range Planning has watched a portfolio that began just under $5 million last May ease into the $6.16 million range. That extra million bucks has meant that money for student government projects soared from about $300,000 last year to around $400,000 this year.
The student government money originally came from the 1975 sale of the old stadium, and has been managed by students since 1980 when the Associated Students of the University of Hawai'i (ASUH) received $836,000 from the sale to invest and create a fund for student projects.
"It's always been under student control," said Novitske. "We take out 5 percent a year and that money completely funds our entire Senate session. There is, of course, a concern. If it declines in a five-year period we're not allowed to take money out."
Hauling from her backpack a bent copy of the hefty quarterly stock reports provided by the team's Merrill Lynch management consultants, the UH senior flips through pages showing revenue data on dozens of stocks. Daily she checks earnings on the Internet, and created a Web page earlier in the year so her committee could too.
"I take a look at it every morning, definitely, but with a large, well-diversified portfolio, you don't really need to watch it every day because we're not doing day trading," she said. "We're following the long-run success of the market. Pretty much the importance of the portfolio is not making daily trades, but ensuring it's diversified enough."
But senior Michael Wun, vice-chair of the committee, wonders whether students really do have much of a role in running the show. "We have a voice," said Wun, "but they don't want to have the students have the day-to-day running of it."
The committee can introduce resolutions to give guidelines to the portfolio managers, but when it proposed passing a resolution calling for more socially responsible investing, ASUH voted it down.
Though Novitske favored the resolution, Wun was opposed, noting it would be unfair to future committees to impose a "green" rule that could also inhibit earnings.
"You could say I'm more interested in performance than trees," said Wun, a political science and economics major.
It's all part of the learning curve that comes with serving on the committee, working with the Senate, and learning about the intricacies of stock management.
While Novitske is the only one on the committee with a background in finance, she and the Merrill Lynch advisers have looked at educating the committee about that world. Robert Sarracco, first vice president and senior financial adviser at Merrill Lynch, meets with the student committee quarterly and has worked with Novitske to offer financial guidance.
"I've dealt with a lot of kids and I'd say Lexi is probably one of the most astute," said Sarracco. "She's the driving force behind that whole committee."
For 18-year-old freshman Kerri Tenno, a music education student, the investment committee wasn't her choice, but has been a challenge.
"There's still a lot I have to learn," Tenno admits. "From seeing what Lexi is doing and how she talks to the people at Merrill Lynch, she really knows her stuff. I didn't even know our school had money like this, so all of it is new to me."
Novitske has been investing her own money since she was 16 when she asked her parents for a $1,000 investment fund for her birthday. In five years that personal portfolio has risen to around $15,000 and she's now investing at the rate of $2,000 a year, putting her paychecks as a part-time waitress into stocks and living on her tips.
"Because I'm young I'm able to take a lot of risks," she said in defining her investment strategy. "One (stock) went up by 30 percent. But I hope for a 13 percent return."
In looking at the ASUH portfolio, risk is barely part of the equation, although Novitske and the committee in June plan to ask the Board of Regents to change some policies in order to "rebalance" the portfolio.
"We're given guidelines by the Board of Regents, but we're also allowed to submit petitions to change those guidelines. Every three years we're allowed to make major changes."
Merrill Lynch's Sarracco approves. "We'd like more flexibility to diversify the portfolio and improve the return. We've talked in the past to other (student) groups, but she's the first one who's really taken the ball and run with it. She's very involved in changing the investment policy statement."
While she relinquishes control of the committee in mid-May to next year's student senators, Novitske is not bowing out completely. She hopes to put into effect several other new ideas for next year, including starting an alumni fund to be managed by the UH Foundation to provide back-up in lean market years
With exams for her certificate as a Certified Financial Analyst in June, and a degree in business coming at the end of the summer, even Novitske's parents have begun coming to her for investment advice. She's decided to pursue a career in security and equity management, after she finishes a master's degree when she gets more real world business experience.
Already she's finance director (and wrote the business plan) for a Web-based company called Panaviz that provides virtual 360-degree panoramic tours of properties. It was also one of five finalists out of 80 entries in the annual College of Business Administration business plan competition.
She's also encouraging the chancellor's office to offer a support system for student entrepreneurs as part of the Manoa campus reorganization; and is launching her own on-campus business a smoothie stand that will operate in the Kuykendall Sustainable Courtyard.
"I feel like this is a starting point," she said. "Hopefully once I get this going smoothly and see it's making a great profit and doing something for the community, I'll have a buyer."
Reach Beverly Creamer at firstname.lastname@example.org or 525-8013.