2008 Headlines
Cayuga MBA Fund Generates 5.56% Return for the Second Quarter 2008
Student-managed fund outpaces HFRX Equity Hedge Index, HFRX Equity market Neutral Index and Dow Jones Industrial Average
July 22, 2008 | Ithaca, NY | The Johnson School at Cornell University announces that the student run Cayuga MBA Fund, LLC, a market-neutral hedge fund, posted solid gains during the second quarter of 2008, returning 5.56%. The 5.56% gain compares favorably to the market overall, as the Cayuga Fund beat both of its indexes, the HFRX Equity Hedge Index at 3.74% for the quarter and a gain of 2.30% for the HFRX Equity Market Neutral Index. The Dow Jones Industrial Average was down 7.45% for the quarter.
Key performers for the fund in the second quarter include Petroleo Brasileiro (PBR), Brazil's state-controlled energy behemoth. The Cayuga Fund maintained a strong position in oil over the quarter as PBR led the way with very strong returns as energy prices continued to soar. In April, PBR announced plans to double crude oil production by investing $15 billion in overseas projects.
The fund also shorted Temple-Inland, Inc. (TIN) which bolstered the fund's performance. Temple-Inland manufacturers corrugated packaging and building products. The building products division has suffered due to the economy's downturn in the housing market. In May, Standard & Poor's Ratings Services cut its outlook on Temple-Inland to negative from stable and shares of TIN fell to their 52-week low.
According to Trishul Patel, a student portfolio manager for the Cayuga Fund, "Is the worst behind us? Current sentiment reflects that conditions are not getting better, but perhaps have at least stabilized, and the U.S. Federal Reserve has been expressing confidence that the economy, although not growing dramatically, is not on the slide. However, the markets continue to display significant volatility, and because of our fund's strategy, our short positions continue to be our saving grace. We continue to
feel confident that our disciplined zero beta strategy will provide sound returns over the second half of the year."
The Cayuga MBA Fund is an investment vehicle that aims to provide a competitive rate of risk-adjusted return to its investors while enhancing the educational and professional opportunities of Cornell's Johnson School MBA students. It is supported by the analytical platform of the Parker Center, cutting-edge research by faculty members, and extensive participation by student portfolio managers. The Parker Center is a classroom providing real-time stock quotes, international data feeds, and financial analysis software and data valued at more than $1.8 million per year in licensing fees and comparable, if not better, than the resources found at many Wall Street firms.
The Cayuga MBA Fund is managed by 18 portfolio managers, two quantitative analysts, a trader, and an investor relations manager who, under the guidance of faculty and outside investment advisors, work to fulfill the investment objective of the fund to achieve consistent positive returns that are uncorrelated with equity market benchmarks, and to maintain significantly lower volatility than the broader market.
More information on the Cayuga Fund and the Parker Center can be found at the Parker Center web site.
