Copyright 1997 The Chronicle of Higher Education
Chronicle of Higher Education
December 12, 1997
SECTION: STUDENTS; Pg. A39
LENGTH: 1403 words
HEADLINE: Tulane Program Gives Business Students Direct Experience in Analyzing
Companies; It reflects a push by M.B.A. programs to link curricula to the
marketplace
BYLINE: Katherine S. Mangan
DATELINE: Baton Rouge, La.
BODY:
Paul Vallone wants some answers.
A contributor to the financial newsletter Burkenroad Reports, he's been
assigned to analyze the prospects of a company called Lamar Advertising.
After
arriving here at the company's headquarters, he and some associates are
ushered
into a meeting with Lamar's president and chief financial officer.
The analysts grill the executives about their expansion plans and about the
impact that tobacco-advertising restrictions are having on the company's
billboard business.
After the meeting, Mr. Vallone drives back to his New Orleans office -- which
happens to double as his Tulane University apartment -- to begin analyzing
the
data he's gathered.
Burkenroad Reports is a project organized by Peter F. Ricchiuti, a former
stockbroker who is now the placement director at Tulane's business school.
It is
designed to give students who are interested in careers in finance some
practical work experience.
About 100 student analysts take to the Louisiana and Mississippi highways
each week in search of investment opportunities. They visit companies that
are
too small to be more than a blip on Wall Street's radar.
Some students don blue smocks and hair nets to observe how efficiently
employees at a poultry-processing plant can behead chickens. Others fly
over a
bayou with an executive of a helicopter service, learning how its network
of
landing locations gives it a competitive advantage over its rivals. Still
others
learn about the economies of scale at a crematorium owned by a
"death-care"
company.
The students typically spend a full day with company executives, questioning
them on a range of subjects that includes projected earnings and
strategies for
dealing with competitors. The students receive no academic credit for
their
work, but their reports on the companies -- including recommendations on
whether
to buy or sell -- are sent to about 1,500 investors around the country and
are
carried by Bloomberg News, a global financial-news service.
"Being able to sit down and talk with managers and communicate effectively
is
extremely important," says Mr. Vallone, a first-year M.B.A. student.
"I think
this experience is definitely going to help me get a job."
Mr. Ricchiuti says he doesn't know of any other business school that offers a
program like his. But while its approach might be unique, the emphasis on
hands-on experience is becoming increasingly common at business schools
across
the nation.
Criticized for years for being far removed from the marketplace, business
schools have responded by setting up a variety of programs that give
students
actual experience working in industry. M.B.A. students at the University
of
Southern California, for example, are hired by Ernst & Young during
the school
year to provide on-line accounting advice to small companies around the
country.
A program called "The Hatchery," at Washington University's
School of Business,
in St. Louis, encourages students to create their own business plans or
design
one for a local entrepreneur.
The Tulane project, named after its late benefactor, the coffee importer
William Burkenroad, has become a hit with students who want a work
experience
that will stand out in a pile of resumes. One out of three Tulane M.B.A.
students takes part in the year-long program. Seniors majoring in business
make
up about a third of the participants.
Tulane shares some frustrations with the small companies examined by the
students: While the companies have a tough time drawing the attention of
professional analysts, Tulane -- which isn't in the top tier of business
schools
-- has trouble getting corporate recruiters to its campus.
The Burkenroad program helps students attract attention, Mr. Ricchiuti says.
Since it began, four years ago, about 50 of its 150 graduates have found
jobs in
securities analysis or corporate finance.
Eric Handler, who received his M.B.A. from Tulane in 1995, says the skills he
used in creating investment reports carry over to his job as a health-care
analyst with a New York investment bank, Commonwealth Associates.
"It was a great, practical application for a lot of the book learning we
were
doing in the classroom," he says. "No one really knows about
these companies, so
we'd often get calls about them. I received a call one day from a money
manager
out in California who had seen my name in an industry publication and
wanted to
find out more about the company I'd been researching. It was a great ego
trip."
Burkenroad Reports now tracks 31 publicly traded companies in Louisiana and
Mississippi, up from six when the program was started.
Small companies, such as Lamar Advertising, are happy to have someone paying
attention.
Rod Rackley, general manager of Lamar's print division, says the exposure
generated by the students' reports has contributed to a doubling of the
company's stock price in the past year. "Lamar's a small shop, so we
don't have
five people sitting here generating data about the company," he says.
"Any
coverage we get is helpful.
"The kids are pretty sharp," he adds. "They've done their
homework, and they
ask good questions."
In any event, the aim of a financial analyst isn't to keep corporate
executives happy, but to give investors an honest assessment of a
company's
prospects.
The Tulane students meet weekly to discuss their company research. At the end
of each semester, teams of three students each write a detailed report on
one
company. The reports, about 15 pages long, include advice for potential
investors. The teams rate each company -- 32 in all -- on a scale of five,
based
on the risks and rewards they have calculated, with "buy" being
the most
positive and "sell" the most negative. (Lamar received a
"buy.")
Each year, the students also hold a conference that brings executives of the
companies together with investors. The students help the companies prepare
their
presentations and introduce their executives to potential investors.
The students have established a solid track record. The stock prices of their
12 most favorably rated companies over the past year have risen an average
of 50
per cent. Such a return trounces that of Standard & Poor's 500-stock
index,
which had an average 28-per-cent increase during the same period.
John Bossler, a retired professor who taught geodetic science at the Ohio
State University, bought $ 4,000 worth of stock in Superior Energy
Services
after reading about the company in Burkenroad Reports. Shares in the
Louisiana
company, which provides drilling equipment to oil companies in the Gulf of
Mexico, were going for $ 4 at the time. Two months later, the stock was
worth $
11 a share. "It was just phenomenal," he says.
Why would Dr. Bossler have paid attention to a group of first-year M.B.A.
students and undergraduate business majors?
"Our analysts may not be as seasoned as some," Mr. Ricchiuti says,
"but
investors realize that they're objective -- and they don't have an ax to
grind."
The newsletter hardly has the influence of, say, the buy lists distributed by
Dean Witter. In fact, an analyst at the New York office of that company
said he
had never heard of Burkenroad Reports.
But being a little-known, regional stock analyst means focusing on
little-known, regional stocks. And it's with those companies -- not the
more
glamorous, heavily covered names -- that an astute analyst is often more
likely
to help investors make a big profit.
When Eric Stoerr, a first-year M.B.A. student, started in the program, he
told Mr. Ricchiuti he wanted to be assigned to a company like Netscape, in
California, which makes Internet browsers. Instead, he got Piccadilly
Cafeterias, based here in Baton Rouge, which operates 129 cafeterias in 15
states.
"To his surprise, it can be fascinating," says Mr. Ricchiuti.
"The company
doesn't have to be sexy to make money."
When Piccadilly's stock price rose 50 per cent in the year that ended in
September, Mr. Stoerr found himself cast as an expert. "The local
newspapers
called me for a comment when the first-quarter earnings came out," he
says. "To
see the way the stock has moved as the company has gained exposure has
been
amazing. It hadn't been followed by anyone on the Street until we picked
it up."
Mr. Stoerr hopes that some of the same Wall Street firms will pay attention
to him, too, when he goes looking for a job next year.
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