Issue link: http://www.e-digitaleditions.com/i/499026
54 BizEd MAY | JUNE 2015 THE ROAD TO INNOVATION The first innovation I studied was the Burkenroad Reports program at Tulane's Freeman School. This program sends students out in the field to evaluate the stocks of actual companies. It began after Peter Ricchiuti became director of the Career Development and Placement Center at Freeman and de- termined that he needed to "attract the attention of Wall Street." He knew that many successful Louisiana companies traded on the New York and NASDAQ stock exchanges, but potential investors rarely heard the stories behind these or- ganizations. He also knew that Freeman students needed to have rich, practical experiences if they were to land jobs with financial services firms. In 1993, Ricchiuti pitched a solu- tion to dean James McFarland. What if the students could create professional equity analysts' reports on local firms? While some faculty resisted the idea, thinking that it might be too risky for the school, McFarland sensed that it had the potential to give students hands-on experience in the valuation of firms. McFarland gave Ricchiuti approval to launch the program. (See "Analyze This" on page 42 of the September/October 2002 issue or visit www.bizedmagazine. com/en/Archives/2001-2013/2002/ SeptOct.aspx.) Now endowed as the Burkenroad Reports, the course has developed into a systematic process whereby students collect, analyze, and disseminate re- search on selected firms. At the begin- ning of the term, about 200 students are divided into teams of five students each and matched with a company from the available portfolio of firms. Most are companies within a few hours' drive of New Orleans, including some that are headquartered in Louisiana, Texas, Mississippi, Alabama, Georgia, and Florida. Because these are companies typically overlooked by Wall Street, Ricchiuti calls their oerings "Stocks Under Rocks." Students spend one weekend in an Analyst's Boot Camp, learning the fundamentals of firm and stock valuation and modeling. Throughout the term, teams participate in classes with the entire cohort of students, but most of the real work happens in team meetings onsite at the firms' corporate headquarters. The heart of the task comes down to two questions. What price will the stock be trading at one year from now? Should an investor buy, sell, or hold the stock? Each team answers these questions in a 30-page equity research report. Each year in April, participating firms gather for an annual investor conference. Ricchiuti dubbed the first conference "Bargains on the Bayou," hinting that Burkenroad students fol- low firms that others don't. The event welcomes both institutional and indi- vidual investors and is free and open to the public. Thirteen years ago, the program initiated the publicly traded Burkenroad Mutual Fund, which goes by the ticker symbol HYBUX. The fund, now worth about US$850 million, is run by Han- cock Bank, which utilizes the students' reports to manage it. Today, Ricchiuti runs the Burkenroad Center full time with an annual bud- get of about US$700,000. The center's walls are filled with framed articles from The Wall Street Journal, The New York Times, Fortune, Businessweek, and others. The Burkenroad course also has been featured on "Mad Money" with Jim Cramer, "Nightly Business Report," and "Wall Street Week with Fortune." To date almost 700 students have graduated from the course, which typi- cally has a waitlist. Firms appreciate the attention, and many request the chance to be followed by the Burkenroad stu- dents. Rod Rackley, general manager of the print division at Lamar Advertising Company, says the exposure generated by the students' reports has contributed to a doubling of the company's stock price over the course of a year. What did the Freeman School have to be, know, and do to sustain curricular innovation at this level? The Burken- road Reports program is institutionally distinctive (it focuses on Gulf Coast firms), demand-driven (it serves the firms and the students), and collabora- tive (a team works under the direction of a visionary founder). It is pedagog- ically sound (it provides bootcamp