How it Works

Our Objectives

The Cougar Investment Fund is a private investment fund that holds equity securities traded in the United States markets. The Cougar Investment Fund is considered a multi-cap core investment vehicle. The Cougar Investment Fund's objective is to supply investors with superior risk-adjusted returns through a managed portfolio of investments in stocks that have both value and growth characteristics. The Cougar Investment Fund's student managers attempt to add value to the portfolio by investing in undervalued stocks discovered through in-depth fundamental analysis of the business, financial, and market characteristics of individual firms. Each stock considered for the portfolio is required to undergo a thorough due diligence examination of its investment merits based on appropriate implementation of free cash flow valuation procedures. The portfolio is managed with a long-term perspective with the expectation that stocks will be held for a number of years. Thus, portfolio turnover is expected to be low.

The student managers of the Cougar Investment Fund closely monitor risk and seek to maintain a risk level comparable to the Cougar Investment Fund's benchmark, the S&P 500 Index. The portfolio is not managed based on sector rotation considerations. Instead, the student managers seek to eliminate sector risk by employing sector diversification through approximating benchmark weightings. The portfolio does not use derivatives.

Fund Management

The Cougar Investment Fund portfolio is managed by four teams of student portfolio managers, each team managing a specific style of equities within the Cougar Investment Fund. The four styles of stock are divided first according to the market capitalization of their respective firms and secondly according to style, i.e. growth or value. There are, therefore, the:

  • Small/Mid Cap Growth (SMG) team
  • Small/Mid Cap Value (SMV) team
  • Large/Mid Cap Growth (LMG) team
  • Large/Mid Cap Value (LMV) team

Equities managed by the SMG and SMV teams are of firms whose market capitalization's are between $100 million and $5 billion, whereas equities managed by the LMG and LMV teams are of firms whose market capitalization's are above $5 billion. The LMG and SMG teams focus on evaluating equities displaying growth characteristics, which are more likely to have risks somewhat above the average risk of the benchmark. The LMV and SMV teams focus on evaluating equities displaying value characteristics, which are more likely to have risks somewhat below the average risk of the benchmark.

Each stock or American Depository Receipt is assigned to one of these four teams and assigned to a student manager for monitoring or for reanalysis, as are new stocks under consideration for inclusion in the Cougar Investment Fund. Once the due diligence process is complete, each team discusses its stocks for consideration and comes to a consensus as to which will be bought, sold, or held. The team's analyses and recommendations are presented to the entire class for feedback and critique. The final buy and sell decisions for any stock in the Cougar Investment Fund are made by the senior portfolio managers.

Cougar Investment Fund Advisors

Graduate students registered in two investments courses in the University of Houston’s Bauer College serve as investment advisors to the Cougar Investment Fund. The Cougar Investment Fund is a student managed equity portfolio created to broaden and enhance Bauer College’s MBA/MS programs, to improve curricula in the area of Management of Financial Services, and to bring students, faculty and investment professionals together to study real-world financial, accounting, marketing, and information technology problems. In these classes, students:

  • Set procedures to screen for investment ideas
  • Perform extensive due diligence on individual companies
  • Work in style specific, portfolio management teams to develop written security analyses, to form estimates of the future prospects for the firm, to estimate firm value based on those forecasts, and make buy and sell decisions for the Cougar Investment Fund
  • Execute transactions for the portfolio
  • Evaluate the Cougar Investment Fund’s compliance with security and portfolio limitations and trading requirements
  • Negotiate and maintain brokerage relations
  • Participate in accounting and NAV calculation for the Cougar Investment Fund
  • Work with the Cougar Investment Fund custodian to insure the security of assets