TROY (WWJ) — A Troy money manager is treating Michigan like an emerging market, and is using a team of Walsh College students to run an all-Michigan-stock investment fund.
Leon LaBrecque, managing partner and founder of LJPR LLC, is personally funding a student-run investment portfolio called the Michigan Alpha Project.
LaBrecque said he came up with the idea last year after noticing that “Michigan has a lot of the characteristics of an emerging economy. We have great infrastructure, great intellectual and creative power, but we’re ignored as a rustbucket economy.”
So LaBrecque did what any good money manager would do — he checked out the numbers. And he learned that since the market bottomed out in March 2009, Michigan stocks brought in annualized returns of 25.2 percent, better than the 20.9 percent for the S&P 500.
Then, LaBrecque got in contact with Walsh College, and eventually three student teams competed for the right to invest $100,000 of LaBrecque’s money in select Michigan stocks.
The winning proposal divided Michigan stocks into three categories — alphas, the big names we’ve all heard of, like General Motors and Dow Chemical; betas, mid-cap companies like Mercantile Bank; and nanos, small growth companies like Advanced Photonix in Ann Arbor.
The students began investing Jan. 1, giving them real-world investment and business experience that they otherwise would never have. LaBrecque said he’ll be reporting investment results regularly at http://www.michiganalphaproject.org.
Only time will tell how they do, but LaBrecque is — literally — betting that Michigan’s winning streak will continue.
For one thing, Michigan’s economy is huge and diverse, so there’s plenty of companies to pick from. LaBrecque pointed out that the total market capitalization of Michigan-based companies that have publicly traded stocks is now about $388 billion, “bigger than the stock market of Thailand, bigger than Indonesia, bigger than Ireland and Israel combined. People don’t realize this. We have some good big names that pay nice dividends, some nice mid-caps, and some pretty exciting small companies that give us great movement and great action really quick.”
LaBrecque said he doesn’t recommend everybody have all their money in Michigan stocks, but there clearly is room in the market for a Michigan portfolio.
The Walsh students are doing their trading at the college’s $500,000 high-tech finance lab. Established in 2013, this 1,400 square-foot, glass encased lab features 24 work stations, 12 Bloomberg terminals, lab projectors, white board, and an interactive “market wall” with live feeds for market indexes, global currency movements, current commodity prices, bond prices and NASDAQ, NYSE and Watchlist feeds.
“It beats our firm’s trading room by a factor of about 10,” LaBrecque said. “I haven’t seen anything like it except on Wall Street.”
Besides making money, of course, LaBrecque is hoping the project can help solve the Michigan brain drain. “Maybe we can keep some of this talent in Michigan, so we’ll have some made in Michigan money managers and some made in Michigan wealth,” he said.
According to John Moore, Walsh associate professor of finance, the project benefits many important audiences for Walsh College.
“This is a win for students, a win for employers and a win for Michigan,” Moore says. “The MAP exposes our students to all aspects of the investment management business, including client interaction outside of the classroom. Student graduates will gain business experience that better prepares them for employment at Michigan’s leading companies.”
LaBrecque is a Walsh faculty alumnus, having served as a professor and department chair of finance and economics. He helped to establish the college’s Master of Science in Finance program, one of the first of its kind in United States. LaBrecque is the managing partner and founder of LJPR and a practicing attorney, CPA and financial planner. LJPR has $626 million under management and offers investment management, retirement plans, estate planning, and tax planning.