Saltus aims for a third victory in stock contest

Saltus Academy hopes to score a hat trick by winning the top investors title in this year’s KPMG Investment Challenge.

The school, which has entered two teams, clinched first place in 2007 and 2008.

This year’s squads are the Saltus BRICs, who are named after the ‘BRIC’ economies of Brazil, Russia, India and China.

The acronym was coined because the countries are deemed to all be at a similar stage of newly advanced economic development.

The other team is Goldfinger, named after precious metal mining investments.

Teacher Steven Briggs is optimistic that a cautious then riskier strategy will pay off.

He said: “We’re at the start so it’s predominantly about education rather than the prize.

“Both teams have built a good long-term portfolio, which in 10 years’ time would probably be very successful.

“But the stock market in the short term can be very volatile. We will now try to trade some of the safer long-term investments for short-term riskier punts.

“We will certainly try to make it a hat trick.”

Mr. Briggs, a physics teacher, holds a weekly lunchtime session to build up the students’ knowledge of the financial markets.

Investments

He said: “We’ve taught them the basics of how companies are identified by their ticker symbol and how you work out the size of the company by their market cap (capitalization — the value of the company or stock).

“We will be looking at company reports next and how to use them.”

BRICs team member Peter Cooper, 15, said: “We’re going with some safe investments such as HSBC and Unilever and have also bought stocks in BP as they were fairly low after the (Gulf Coast) oil spill, so will be coming back up.

“We’ve also bought stocks in Activision (a U.S. video game company) because it is Christmas and so everyone wants games.

“We have our portfolio set up on Yahoo! Finance to monitor how we are doing.”

Fellow team member Mark Godfrey, 15, added: “At the start we decided to go for the bigger, safe companies to learn how stocks work but now we want to try to get riskier ones, such as exploration and mining companies.

“This could bring in a higher return, especially finding gold.”

School rivals Goldfinger are also keen to take more risks.

Danny Pell, 16, said: “To get the lead we will have to make daring decisions.”

Nick Barton, 16, added: “If we make some shrewd investments we’re in with a good chance of winning. In the first few weeks Warwick Academy’s Young Money made $6,000, so now we will be playing catch-up.

“We chose our team name after investing in gold, as it holds its value.

“But we won’t see huge increases so we need to get some riskier stocks in there. We are now looking at oil exploration.”

There are 15 teams from eight of the island’s schools taking part in this year’s KPMG Investment Challenge.

The annual competition sees the teams investing a virtual $50,000 each in the stock market for six months. The squad that makes the most cash wins.

Accountancy firm KPMG provides mentors to the schools. It launched the contest in a bid to educate teenagers about how to handle money and understand the financial markets.

The company monitors the trading activities and compiles a monthly analysis of their portfolios, which are printed in the Bermuda Sun.

Prizes

In May the top three teams will receive prizes of $10,000, $6,000 and $4,000.

In October after the first few days of trading, Warwick Academy’s Young Money had shot into first place.

But as of the end of last month, the first month of trading, Bermuda Institute’s Tradewins had flown forward.

Wanda Armstrong of KPMG said: “The Bermuda Institute Tradewins team are the runaway leaders in the KPMG Investment Challenge as at November 26, with a portfolio value of $57,402.

“This is an increase of 15 per cent from their initial investment of $50,000.”

Bermuda Institute’s other team, the Profit Bulls, is in second place with $57,267.

Warwick Academy’s Young Money has slipped to third with a portfolio value of $56,233.

Ms Armstrong said: “The Bermuda Institute’s Tradewins team’s success is largely built on their investments in Basic Materials, taking advantage of the rise in stock prices of Silver Wheaton Corp. and Hecla Mining Company.

Portfolios

“The current trading results of the teams are reflective of the current U.S. and international markets, which experienced overall positive performance as the stock indices reported gains in general. 

“The portfolios of most teams are highly concentrated in U.S. securities, with some investments in companies from Bermuda, the U.K. and Canada. All teams are required to hold at least one Bermudian company in their portfolios, with most teams opting for well-known names such as KFC, Bermuda Commercial Bank and Butterfield Bank.

“The teams have continued to invest primarily in common stocks with only a small portion being allocated to ADRs (American Depository Receipts).

“With the majority of the portfolios invested in U.S. dollar-denominated securities, foreign exchange movements during the period did not have a significant impact on the performance of individual portfolios.”