Lion Fund Capital Management President and CEO Michael Hansen CC’16 says people tend to think of a college investment fund as “a romanticized image of a bunch of students getting together and trading.” But Hansen emphasizes that Lion Fund, a student-capitalized fund on campus, is about much more than just trading stocks — it is about giving students the opportunity to gain practical investing experience. “Money is secondary,” says Hansen. “Hopefully, if we’re learning, money will follow later.”
Lion Fund was founded in 2011 by members of the Columbia Financial Investment Group who saw a void of a strong student-run investment fund on campus. Since then, the fund — which is now composed of 38 members and has a portfolio valued at $100,000 — has become a magnet for Columbia students with a passion for finance.
Investment funds combine investors’ money before investing, lowering the risk on returns. A fund’s management is responsible for all investment decisions, a practice that relies on the expertise of a fund’s managers. At Lion Fund, the Columbia students who run the fund are both the fund’s investors and its managers. Every Lion Fund member plays an integral role in the fund’s investment decision process.
Lion Fund executive board (left to right): Michael Hansen CC’16, George Liu CC’17, Harris Shabbir SEAS’16, Douglas Kessel CC’15, Nick Ellenoff CC’16, Matthew Chen SEAS’17, Ömer Alaettinoğlu SEAS’16, Rafael Schwalb CC’17. Photo: Courtesy Lion Fund
Each month, Lion Fund’s general members, known as analysts, are required to submit a write-up on a business of their choosing to Lion Fund Managing Director Douglas Kessel CC’15 and the other four managing directors. The managing directors serve not only to manage portfolio strategy, but also to advise the analysts in the write-up process.
Working with the managing directors, analysts turn their initial write-ups into research-driven pitches to present to the entire fund’s membership during their Tuesday-night meetings. “The key [is] creating consistent and regular engagement,” says Kessel, who has been a member of Lion Fund since 2013. “Here, everyone has a substantial commitment."
“If you want to get good at this field, you need to be practicing, like anything else,” adds Hansen. “So [here] students are constantly practicing; they’re constantly learning; they’re constantly getting better.” Because the fund tends to focus on specific companies rather than macro themes, Hansen says, “independent research is what ultimately fuels our investment decisions and affords us the financial success we’ve had. [Our] ability to make … good investment decisions stems from each and every member of the fund.”
When selecting applicants each fall, the fund gives students of varying skill levels the opportunity to get involved. “First years and sophomores are given a lot of room to learn,” says Sonia Parekh CC’17, a Lion Fund analyst. “I wasn’t expected to know much going in, and I think that speaks to the mission of Lion Fund… You’re not supposed to come in knowing [everything]. You can, and that’s great, but the [fund] is also willing to cultivate that.”
Parekh, who will be interning as an investment banking analyst at National Australia Bank during summer 2015, says other fund members guided her when she first joined Lion Fund. When she was accepted, she says, Hansen recommended dozens of finance books she might find helpful. “I used to send him questions like, ‘I don’t understand page 36 of this book,’” Parekh says. “And he would go reference it and reply to me. It was such an inspirational experience, and I think we have that kind of buddy system in Lion Fund.”
According to Hansen, this support system extends beyond the current members of the fund. Sending the majority of its members on to jobs in the financial sector, Lion Fund connects students with a new and growing network of Columbia alumni who were once members of the fund and who now hold prominent positions in finance. “We have people that are in posts at most of the Wall Street institutions…. We have a reputation of excellence, and a lot of people doing resume reviews will call me and ask me to send [them] the names of Lion Fund members.”
Kessel notes that this network is a product of the work the fund has put into defining its culture. Lion Fund is built around the principle that decisions made by members are “the most transparent, the most obviously legal and the most honest,” says Kessel. “The fact is that we’re still setting up the attitudes and behaviors… for the longer term.”
Harris Shabbir SEAS’16 walks the fund through his discounted cash flow valuation model for Marin Software on March 3, 2015. Photo: Courtesy Lion Fund
Kessel, who will graduate this May with a job on a corporate bond trading desk at Bank of America Merrill Lynch, says he made the decision to attend Columbia because he wanted more than a pure pre-professional experience. “I also wanted the liberal arts, traditional college experience… And Columbia was really the only [school] I could get both in a place where I could apply it within a 15-minute subway ride.”
Hansen, who works part-time throughout the school year at a fund called International Value Advisers, says that Columbia’s location is also crucial to the fund’s success and to the development of its members. “You have to understand that New York City alone is an educational experience. [The] city is one of the financial capitals of the world,” he says. “Having a presence here definitely helps make Lion Fund stronger.”
Though all at different stages of their undergraduate careers, Hansen, Parekh and Kessel all insist that the test of Lion Fund’s strength will be time. “I just really hope I can come back in a decade and see that the fund’s still going strong,” says Hansen. “I think we have the right people to make it [last],” adds Parekh. “And I think the passion is contagious.”
Sally Whalen CC’17, from Spokane, Washington, is a student web editor for the Columbia College website.