Value Investing U
Kelley and C.T. Fitzpatrick’s $3 million gift equips the University of Alabama business school to be the first to offer a value investing specialization at both the undergraduate and graduate level.
University of Alabama students Jack York, foreground, and Pavel Romanov, right, stand with confidence at Bidgood Hall, site of the new program in the Culverhouse College of Commerce. They are flanked by UA faculty members Matt Holt, left, and Shane Underwood, third from left.
C.T. Fitzpatrick has created a successful career in value investing. And he definitely sees value in investing $3 million in the University of Alabama’s Culverhouse College of Commerce to help create the Vulcan Value Partners Research Library and Trading Room.
The Fitzpatricks — C.T. and Kelley — made the donation in January, demonstrating their strong ties to UA. C.T. is an Alabama alumnus and founder of the Birmingham-based investment adviser Vulcan Value Partners. Kelley is the daughter of Lewis Manderson, for whom the university’s Manderson Graduate School of Business is named.
The gift will enable Culverhouse to become the first business school in the nation to offer a value investing specialization at both the undergraduate and graduate level. In addition, it will give members of the student-run Culverhouse Investment Management Group a dedicated space for meetings, along with the tools and equipment needed to make real-world investment decisions.
Value investors actively seek stocks of companies that they believe the market has undervalued.
“I wanted to take what they were already doing (at Culverhouse) to the next level and have a specialty in value investing,” Fitzpatrick says. “Out in the professional world, the only other school that offers anything like this is Columbia, and they offer it only at the MBA level.
“I see kids all the time who want to interview for jobs, and they have great academic credentials, but they don’t really know much about what we do in value investing. There are a lot of people like me who are looking for kids who have that skill set and knowledge base. I think this will turbo-charge their careers.”
The new facility, which is scheduled to be operational in time for the 2016 fall semester, will be located in Alabama’s Bidgood Hall, along with Culverhouse’s recently created Business Analytics Lab. The trading room will include Bloomberg terminals and stock tickers that students can use to monitor and analyze real-time financial market data.
“The idea is to really give the students an opportunity to see, feel and experience what they would encounter in a real trading room,” says Prof. Matt Holt, head of the department of economics, finance and legal studies “What we’re increasingly learning in higher education is that the traditional model that we used for hundreds of years of the professor standing in front of the class doesn’t work as well anymore.
“With this new trading room, as opposed to standing there and explaining how you go about trading, you can set the students down and actually illustrate to them how this stuff works. I guarantee if you do that with a small group of students, the vast majority will not be texting or posting on Facebook like they do during lectures. They’re going to be focused on what you’re showing them.”
And that experience, Holt says, will pay off when these students graduate and look for employment, because they will have the type of hands-on experience needed to compete with Ivy League and NYU grads.
“We hear the same thing over and over again from employers. They are looking for students who are largely ready from day one to assume the kinds of responsibilities and duties that they want them to have,” Holt says. “The more hands-on skills we can give them, the more likely they are to be appealing to employers.
“Let’s face it, we have many missions in higher education, but the most immediate mission is for our graduates to get a really good job when they come out of here. So to the extent that we can do something a little bit extra that will help catch a potential employer’s eye, the better we’ve done our job.”
While the trading room might have “sizzle,” according to Fitzpatrick, he says he actually is more excited about the creation of the research library.
“Value investing is about long-term investments. We don’t trade, we invest,” Fitzpatrick says. “So to me the emphasis should be on the research library. It’s a place where the kids can go and have a dedicated space to think and collaborate and try to figure things out, all with easy access to a professor who can help advise them.”
Jason Solomon, a junior majoring in finance and economics, says such a space is definitely needed at Culverhouse. He noted that it is not uncommon to see a half-dozen or so students at any one time crowded around the Bloomberg terminals in the business library.
In addition, Solomon says the student-run Culverhouse Investment Management Group is constantly seeking a place to hold meetings. CIMG was formed in 2009 with a portfolio of $315,000, which it has increased to more than $500,000. The group, which regularly consists of 35 to 40 members, meets once a week to discuss potential investment opportunities, looking in particular for companies that appear to be undervalued.
“So we’re always in the business library screening for stocks and looking for value plays. And then we have to make sure we can find a place to meet,” says Solomon, who spent this past summer working as a research intern at Vulcan Value Partners. “This will bring students of the same mindset into the same area, where we can collaborate and work together and share ideas and practice pitches. We’ll always have a place to meet and everything will be in one place. It will be valuable.”
In the end, Fitzpatrick says the true value of the new facility and curriculum will be felt by the state of Alabama in the years to come, as Culverhouse graduates find jobs and perhaps eventually form their own businesses in state.
“That is a really powerful model. It’s professionals, students and academic support, all coming together in this physical space,” Fitzpatrick says. “I think this can have a multiplier effect on the state. I went to Wall Street, came back and then started my own company in Birmingham. We’ve created a bunch of jobs in Birmingham.
“Now we’re going to graduate about 40 kids a year with this type of background. If just 10 percent of them — four a year — start a business in the state of Alabama, it’s going to move the needle. That can have a statewide and regionwide impact.”
Cary Estes and Art Meripol are freelance contributors to Business Alabama. Both are based in Birmingham.