2006 Headlines
Cayuga MBA Fund Generates 2.95% Return for Third Quarter 2006
October 17, 2006 | Ithaca, NY - The Johnson School at Cornell University today announces that the student run Cayuga MBA Fund, LLC, a market-neutral hedge fund, posted solid gains each month during the third quarter and delivered a return of 2.95%, compared to 0.65% for the HFR Equity Hedge Index and 0.33% for the HFR Equity Market Neutral Index. The S&P 500 had a return of 4.81% in the same time. Year-to-date, the Cayuga Fund continues to beat most benchmarks, and posted a return of 11.2%, compared to 2.7% and 3.4% for the HFRXEH and the HFRXEMN indices, respectively. The S&P 500 was up 6.72% in the same time.
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 virtual trading room and 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-significantly more than most Wall Street firms.
In a highly selective process, new students are chosen each year to take over management of the Cayuga MBA Fund. This year's 22 students come from diverse backgrounds including several former research analysts, a former Oakland Athletics player, and a recent mathematics Ph.D. There are 18 portfolio managers, two quantitative analysts, a trader, and an investor relations manager who 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.
One of the quarter's stronger long positions was CPI Corp. (CPY). CPI Corp. sells and manufactures professional portrait photography and other related products and services, principally at Sears, Roebuck and Co. locations. Earnings for the second quarter, announced on August 22, were $0.10/sh, compared to a loss in 2005. CPI achieved profitability by up-selling its new digital offerings. CPI also completed a Dutch Auction self-tender earlier in the year, decreasing diluted shares outstanding from 7.8 million to 6.4 million.
Navteq (NVT) was one of the quarter's strongest short position performers. Navteq is an application software provider that provides digital map information, and related software and services for use in various navigation, mapping, and geographic-related applications. The fund has been short this position since spring and has seen its stock price plummet. Navteq shares underperformed significantly in the third quarter due primarily to woes relating to the company's second quarter revenue and earnings shortfall.
More information on the Cayuga Fund and the Parker Center
Contact:
Deirdre G. Snyder
Public Relations Officer
The Johnson School at Cornell University
(607) 255-3494
dgs37@cornell.edu
Lakshmi Bhojraj
Director of the Parker Center for Investment Research
The Johnson School at Cornell University
(607) 255-1135
lr10@cornell.edu
