darden capital management
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UV0517
DARDEN CAPITAL MANAGEMENT
THE MONTICELLO FUND
op yo In early April 2004, the Monticello Fund Management Team was in the midst of its first meeting of the new fiscal year. The team was part of the Darden Capital Management program at the Darden Graduate School of Business Administration, where MBA students were entrusted with managing endowment capital for the school foundation. The program sought to prepare its participants for careers in investment analysis and portfolio management, with the recognition that hands-on investment-management experience was an important aspect of professional training. The total assets under management for the Darden Capital Management program were over $3 million and were held in three funds: the Darden Fund, Monticello Fund, and Jefferson
Fund. Each fund was managed independently by a small team of MBA students, with some guidance from a faculty advisor and a board of trustees.
tC
The investment strategy of the Monticello Fund was to use fundamental analysis to identify and invest in companies that were well-positioned for growth but inexpensively valued. The fund team looked for stocks that would generate above-normal returns over a one- to four-year horizon.
The new team replaced a team that had generated returns of 42.9% on their equity positions over the 12 months ending March 31, 2004. Such return performance was impressive both in absolute terms and with respect to the strong 35.1% returns over the same period on the S&P 500 market index. Exhibit 1 shows the current composition of the fund portfolio. The new team was unified in its resolve to once again beat the market index in the coming year; however, there was some debate on the most appropriate strategy to accomplish this goal.
No
The Portfolio Allocation Decision
Do
Prior to the meeting, Senior Manager Steve Majocha solicited from the team a list of securities for consideration as investment candidates.
UV0517
DARDEN CAPITAL MANAGEMENT
THE MONTICELLO FUND
op yo In early April 2004, the Monticello Fund Management Team was in the midst of its first meeting of the new fiscal year. The team was part of the Darden Capital Management program at the Darden Graduate School of Business Administration, where MBA students were entrusted with managing endowment capital for the school foundation. The program sought to prepare its participants for careers in investment analysis and portfolio management, with the recognition that hands-on investment-management experience was an important aspect of professional training. The total assets under management for the Darden Capital Management program were over $3 million and were held in three funds: the Darden Fund, Monticello Fund, and Jefferson
Fund. Each fund was managed independently by a small team of MBA students, with some guidance from a faculty advisor and a board of trustees.
tC
The investment strategy of the Monticello Fund was to use fundamental analysis to identify and invest in companies that were well-positioned for growth but inexpensively valued. The fund team looked for stocks that would generate above-normal returns over a one- to four-year horizon.
The new team replaced a team that had generated returns of 42.9% on their equity positions over the 12 months ending March 31, 2004. Such return performance was impressive both in absolute terms and with respect to the strong 35.1% returns over the same period on the S&P 500 market index. Exhibit 1 shows the current composition of the fund portfolio. The new team was unified in its resolve to once again beat the market index in the coming year; however, there was some debate on the most appropriate strategy to accomplish this goal.
No
The Portfolio Allocation Decision
Do
Prior to the meeting, Senior Manager Steve Majocha solicited from the team a list of securities for consideration as investment candidates.