Portfolio History                                                                                                                

The D.A. Davidson Student Investment Competition serves as a competitive platform for 20 schools across the west coast. The Oregon State Investment Group is entering its fourth year in the program. Each September 1st, all portfolios are reset to $50,000 for another year of competition. Any excess return beyond 5% is split evenly between D.A. Davidson and the participating school.

Investment Objective

Due to the one-year time horizon of the DADCO competition, the portfolio inherently lends itself to more risk. The objective of the fund is to capture value by indentifying companies whose earnings we expect to grow significantly, or those that we believe have been undervalued by the market and are priced at opportunistic levels. We consider value/distressed securities to be those that satisfy any of the following conditions: a P/E of less than or equal to 10, are trading below their current book value, or have a PEG ratio below 1. The DADCO portfolio is also dependent on the ability to capture unforeseen growth, so the group relies on indicators such as: rapid revenue growth, high margins, forward P/E and an ROE above 15%.

Portfolio Guidelines

  • Upon acquisition, an individual holding should make up a minimum of 15%, and no more than 33%.
  • Any individual value above 50% of the portfolio should trigger a discussion.
    • Provides cushion to account for a security’s potential strong rally.
    • The portion to be trimmed is left to the discretion of management and the portfolio manager.
  • If a position falls to 8%, the position should be increased back to the minimum 15%, or eliminated entirely.
  • Each position should be reviewed annually.
  • The portfolio beta should not fall below 1.2.
  • Cash levels should be around zero.
    • Maximizes portfolio’s exposure to the market and minimizes transaction costs from frequent trimming and reallocation.
    • Additions to the portfolio would be a swap with a preexisting holding.
    • Transaction costs can be taken out of the sale proceeds.
  • The portfolio should hold 3-6 securities.
  • Additions or alterations to existing guidelines may be implemented with a 75% yes vote in management.
  • Identify the time horizon for the holding.
    • Recognize catalysts that are expected to push the holding higher.
      • Ex. Speculative earnings release, new product announcement.
  • All market caps welcome, but mid/small cap preferred.