WEST DES MOINES, Iowa -- Iowa State University is the 2010 winner of the Krause Challenge. Launched in 1998 by W.A. Krause, founder and chairman of convenience store chain Kum & Go LC, the Krause Challenge gives finance students at The University of Northern Iowa, Drake University, Iowa State University and the University of Iowa real-world investment experience.
"We were very impressed with the performance of the ISU class' portfolio," said Kyle J. Krause, Kum & Go president and CEO. "The students did an outstanding job navigating the stock market in a tough [image-nocss] economic environment."
The students at Iowa State University saw a 22.34% return on their investment this year, nearly 5% higher than any other school.
"This year's win comes as a result of our synchronized attempts to buy companies that are temporarily undervalued, exhibit comparative advantages in their industries and do not deteriorate the diversification of our portfolio. We unloaded our portfolio by selling stocks operating in industries that are of higher risk, and made our portfolio more manageable both for educational and trading purposes," said ISU assistant professor of finance Ioannis Floros. "It was fun coaching this dedicated group of students."
Students participating in the Krause Challenge were able to gain hands on experience in the stock market.
ISU Student Jeremy Knudsen said, "The Krause Challenge Portfolio allowed us to relate research and analysis concepts learned in class to the real-life management of a stock portfolio."
Each of the four participating schools saw positive returns of at least 10% on their investments.
The final results:
Starting Amount Ending Amount Return
Iowa State University: $136,420.36 $166,895.95 22.34%
Drake University: $195,821.07 $230,165.15 17.54%
University of Iowa: $177,431.66 $205,236.97 15.67%
University of Northern Iowa: $109,339.81 $121,861.80 11.45%
The Krause Challenge started with a one-time gift of $400,000 in 1998 to be divided equally among the four institutions. The finance class or club at each university invested the initial donation and continued to study the stock market. In each successive year, the classes re-invest the money, which may have experienced growth or loss depending on the performance of their stocks. The four universities compete to see which delivers the highest return. The only guideline given is that at least 10% of the investments are secured with Iowa-based companies.
West Des Moines, Iowa-based Kum & Go is a family-owned company with more than 430 convenience stores in 11 states (Iowa, Arkansas, Colorado, Minnesota, Missouri, Montana, Nebraska, North Dakota, Oklahoma, South Dakota and Wyoming). In addition to a wide selection of products, Kum & Go provides customers a proprietary mix of products under the Hiland brand name. Other proprietary product offerings include Java Ridge Premium Coffee, Napa Creek and Sea Ridge wines, Go Fresh Market sandwiches and Nuclear energy drinks.
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