UI Investors Land Big Trophy In Bear Market Student Group Follows Adviser’s Tip, Sells Before October Crash

Investors worldwide panicked when the stock market plunged last month, but the University of Idaho’s student-led Davis Investment Group laughed all the way to the bank.

The students have invested about $512,000. In early October, three weeks before a major correction in the stock market, they decided to sell off $351,000 of vulnerable stocks.

Mario Reyes, a UI business professor and the group’s adviser, told students he thought market conditions were right to sell. They thought he was crazy at first. “We were kind of surprised, but after we started talking about it, we all were thinking the market was pretty high and finally decided to do it,” said UI senior John Leichner of Coeur d’Alene.

“We have a really strict policy regarding buying and selling stock, and this was a pretty liberal move for the Davis Investment Program,” Sandpoint’s Eli Meyer said.

The 16 students made nearly $200,000 in profits, which will be split between college scholarships and re-investment.

They sold all stock except 100 shares of Intel, 100 shares of Home Depot and 100 shares of Coca-Cola. Had students left their stocks in the market, they would have lost $30,000 on Oct. 27, when the Dow Jones Industrial Average fell 554 points, the worst point drop in history. Students would have regained only $15,000 when the market rebounded by 337 points the following day.

“It turned out to be a good move,” said Brett Villaume, a senior in economics from Coeur d’Alene. “I would imagine there are other people who did what we did.”

The Davis Investment Fund was the brainchild of two generous brothers, A. Darius Davis, UI class of 1929 and James Davis, who attended the UI for one year. Now deceased, the Davises owned the Winn-Dixie chain of supermarkets across the South. In 1988, they donated $100,000 to their alma mater so students could get hands on investment experience. The UI matched $100,000. The brothers stipulated that if the fund grew to over $400,000, the profits could be used for student scholarships. “Not only have the students done a remarkable job in managing the portfolio,” said Byron Dangerfield, dean of the College of Business and Economics, “but they’ve also been successful in raising money to help other students.”

The ups and downs of the stock market create an unreliable source for student scholarships, Dangerfield said.

So school officials are trying to determine the percentage to go toward scholarships and the percentage to be reinvested.

Villaume is pushing for reinvestment into a U.S. telecommunications equipment company called Tellabs.

“We’re tossing around a lot of ideas right now. Everything’s up in the air,” he said.

, DataTimes