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University investment club has short-term horizon

Will Van Nest, 22

Occupation

Finance major at McMaster University's DeGroote School of Business

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The (club) portfolio

Includes shares in Silver Wheaton, Brookfield Asset Management, Bank of Nova Scotia, Enbridge and Dundee REIT.

The investment club

Will Van Nest is the current president and CEO of an investment club open to McMaster University students (MAC Investment Club). Every September, shares in the club are sold to students at a price of $250 each and the money ($58,250 in 2012) is invested in stocks. In March, the stocks are sold and the proceeds are distributed to club members.

"Our average annualized return over the club's five-year history is 6.3 per cent," reports Mr. Van Nest. The investments are auxiliary to the primary purpose of the club, which is "to educate our members and focus on developing a deeper understanding of capital markets research," he adds.

How they invest

The executive first determines which industries are most likely to prosper over the club's four- to five-month investment horizon. For the selected industries, research teams pitch approximately 20 companies to the membership, of which 10 to 15 are accepted through a voting process.

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The short-term investing horizon shapes the criteria used for selecting stocks. Technical analysis is one of the more prominent criterion. A buy signal might be given, for example, when a stock price breaks above resistance thresholds.

Event analysis is another tool. For example, the club may buy shares in a company just prior to its earnings report on the expectation the numbers will beat analysts' estimates.

Best move

The club gained 17.6 per cent on Bombardier Inc. stock this year, thanks to a series of contract wins by the company, "most notably their largest order to date from VistaJet," Mr. Van Nest notes.

Worst move

Surge Energy stock slid 35.7 per cent after it was purchased because the company's Valhalla South site experienced an unplanned outage. "This is a position we would have liked to hold for a longer period of time, however our investor base … is unwilling to sustain further losses," Mr. Van Nest says.

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Advice

"One unique aspect of the investing club ... is the collaborative environment.

"Due to the size of our club and the number of individuals contributing to our research, we get differing opinions and perspectives, which result in better stock picks."


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