February 6, 2002
For years, Peter Ricchiuti has been trumpeting the performance of companies covered by Burkenroad Reports as if it were a mutual fund. Now, it really is a mutual fund. On Dec. 28, Gulfport's Hancock Bank introduced a new mutual fund based on the Freeman School's Burkenroad Reports investment research program.
The Burkenroad Reports Fund, which trades under the symbol HYBUX, takes its name and investment focus from the Freeman School program started nine years ago to shine the spotlight on small, regional companies that often escape the attention of Wall Street.
According to Freeman School assistant dean Peter Ricchiuti,who is also research director of the Burkenroad Reports program, the volatility of individual stocks covered in the program--as well as their growth potential--makes the mutual fund a winning idea.
"Since we started doing this in 1993, real investment people have said these small, often obscure companies ought to be owned is as a group," Ricchiuti says. "The idea of being able to cherry pick one stock over another can be tough sledding, but owning them as a group it makes a lot of sense."
Burkenroad Reports uses teams of student analysts to research and write investment reports on 42 small, publicly traded companies across the South. The portfolio include such diverse bedfellows as Houston marine transporter Kirby Corp.; New Orleans funeral services provider Stewart Enterprises; Baton Rouge, La., restaurant company Piccadilly Cafeterias; Jackson, Miss., poultry processor Sanderson Farms; and Birmingham, Ala.-based book retailer Books-A-Million.
Rather than replicating the companies covered in the program, the Burkenroad Reports Fund is an actively managed fund that will use student research as well as independent research to invest in small-cap companies in in the Southeast. Investment decisions will be made by Hancock's David Lundgren, the fund's portfolio manager.
Lundgren says the fund is not limited to investing in the companies followed by Burkenroad Reports and may or may not include companies followed in the program. In exchange for allowing Hancock to use the Burkenroad Reports name, the bank will pay the Freeman School a fee based on the dollar amount of the investments in the fund.
"When we started Burkenroad Reports in '93, no other university was doing securities research," Ricchiuti says. "Now, we are the first university to have its research utilized as the basis of a mutual fund."
In 2001, the companies followed by Burkenroad Reports gained a collective 3.9 percent, beating both the Standard and Poor's 500 and the Russell 2000, an index of small companies.
"Plus, these stocks are the antithesis of the stocks people have been killed by in the last two years," adds Ricchiuti. "They may be companies that use technology but they're not tech companies. And nearly every one of these companies is profitable."
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