Kum & Go Awards University For Finance Finesse

Students in a University of Iowa finance class cashed in on an opportunity to show their investment skills, a feat that won the school Kum & Go’s 2008 Krause Challenge investment competition.

The Krause Challenge started in 1998 when W.A. Krause, founder and chairman of West Des Moines, Iowa-based Kum & Go, provided a one-time gift of $400,000 divided equally among the University of Northern Iowa, Drake University, Iowa State University and the University of Iowa.

The money was used to create a program for finance students to personally experience stock market fluctuations and portfolio management, with each school competing to deliver the highest return on their portfolio and win the title of Krause Challenge winner.

Each year, the finance class or club at each university learns about the stock market, reviews individual company stocks and then invests the program money into the stock market. The Krause Challenge is an ongoing program that allows classes to re-invest the money from year to year, the only guideline being that 10% of the total portfolio has to be invested in Iowa-based companies.

The results for the four schools from Aug. 1, 2007 through April 30, 2008 are as follows:

  • Iowa: 8.1% return on investment; portfolio performance went from $211,674.54 to $228,802.77.
  • Northern Iowa: 7.06% return; portfolio performance went from $122,365.62 to $131,004.43.
  • Iowa State: (.33%) return; portfolio performance went from $195,110.48 to $194,468.70.
  • Drake: (15.88%) return; portfolio performance went from $277,115.98 to $233,105.85.

    During a year marked with turbulent and unreliable markets, students at all four schools were presented with a great learning opportunity as they were exposed to investing and the stock market.

    “The housing and subprime meltdown provided an interesting backdrop for class discussions over the past year. To have generated an 8.1% return over the contest period was amazing given the turmoil in the market,” said Todd Houge, Ph.D., CFA, assistant professor of finance at the University of Iowa’s Henry B. Tippie College of Business.

    “It is inspiring to see the collegiate spirit and competition between our state schools transcending from the athletic fields to the finance classrooms,” said Kyle Krause, president and CEO of Kum & Go. “We are honored that the students take such pride in their contributions – this is a tremendous opportunity for students because they can take theory to a higher level of application.”

    “The Krause Challenge class is just that – challenging. But, at the same time very rewarding,” said Adam McCullough, a Krause Fund student at the University of Iowa. “The class gave me a chance to dig into financial statements, analyze the numbers, and create a working model that could be used to value a company. Now, I have a much deeper understanding of financial theory and the way it’s applied by professionals around the world.”

    Kum & Go is a family-owned company that operates more than 430 convenience stores in 12 states.

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