Buffett wannabes gaining fame at schools

College investment clubs trying to act like professionals

By Kim Da-ye

Drizzle and the summer vacation period don’t stand in the way of 12 Korea University students as they gather in a lecture room with no air conditioning on a hot and humid Thursday evening.

Chun Jung-hoon, a 27-year-old computer engineering major, stands by the podium and presents Silicon Works, a semi-conductor design company that provides parts to Apple. Chun emphasized the firm has core technologies that he believes will be useful for its long-term growth. He holds rolled-up notes in his hand but hardly looks at them while he articulates his points.

The other 11 students listen closely to Chun, and some browse the Internet on their laptops, reading Naver’s stock section or analysts’ reports.

The 12 students are members of Korea University Value Investment Community (KUVIC), a student organization set up to study how to invest in stocks. KUVIC is among the well-known “investment clubs” that have become a fixture in most prestigious universities in Korea and are increasingly popular as Koreans seek alternative investment options other than saving through banks.

Other notable clubs include the Midas Investment Club at Seoul National University, Korea University’s Real Investment Society of Korea and Global Valuation Investment at Hankuk University of Foreign Studies.

In the recent years, investment clubs have emerged as highly-organized, competitive bodies. Many of them have their own research center with analysts, a fund management team and even office hierarchy.

KUVIC also divides its activities into training, research, fund management and external works.

The club recruits only those who can spend at least two semesters as a member since they learn the basics of value investing as junior members in the first semester, then research companies and write reports as seniors in the second semester. The members are assigned to three to four teams to write reports, and on completion, they make a presentation.

The members study various related subjects including accounting and finance, attend lectures by the KUVIC alumni that work in the finance industry and visit companies that are the topics for reports.

KUVIC also runs its own fund that is as large as 12 million won. Its president, Kim Jin-sung says that the 10 million won principal was donated two years ago by an entrepreneur who studied at Korea University.

While many other investment clubs focus on actually investing in stocks, Kim says that KUVIC prioritizes learning. “I believe we will do a lot of investing when we work in the future, so we now want to study investment and companies with potential. And that also suits the principles of value investing that we are pursuing.”

Value investing is buying stocks at less than their "real" value and holding them long enough to make big profits. The most famous "value investor" is Berkshire Hathaway’s Warren Buffett. With Buffett as their role model, the KUVIC members say they study and analyze companies in depth to find a firms’ intrinsic value.

KUVIC is highly organized, and getting in isn’t an easy task. Applicants are required to write an essay after reading a book on value investing and a report about a firm from a value investor’s perspective. The successful candidates will sit two interviews before a final decision is made.

Kim Dong-gyun, a management studies major, says, “The better the stock market is doing, the more competitive it is to join the club.” When Kim joined in 2008 ― the good days of the stock market ― he was competing against three students.

The members come from all sorts of backgrounds with different purposes. Many students who talked to The Korea Times say that they initially wanted to learn how to invest in stocks with others because they were afraid to go it alone.

After some time with KUVIC, most of them hope to have a career in the finance industry ― well-known foreign investment banks, if possible.

“I have long been interested in stocks, and when I finished my military service, I became more proactive. When I heard there was an investment club in the university, I chose to join it to learn about stock investment with other students,” says Kim. “And I now want to work for the finance industry.”

And of course, the students invest in stocks on their own as they become more confident. Ju Jae-hyoun, a former KUVIC president, is known among his peers as the most profitable investor. The 22-year-old environmental science and ecological engineering major doubled his stake, turning 5 into 10 million won in the last two years - a good return, but one must not forget that the stock market in general has soared during this period after the crash of 2008.

“I made the principal by teaching and even skipping lunch,” says Ju. He has invested in EO Technics and Koh Young Technology which were both researched and analyzed by KUVIC. He says that the stock price of the former went up as much as 250 percent.

As part of his portfolio Ju is proud of is his shares in Daewoo Motors Sale. “The stock price had plummeted for Daewoo Motors Sale. But when I heard General Motors would survive, I thought Daewoo Motors Sale’s would, too,” says Ju. “I also knew that they have a large piece of land in Songdo, Incheon. After I invested in the stocks, the stock price skyrocketed by 158 percent within a month.”

Ju made enough money to take half of his savings and go backpacking in Europe.

Many other members have invested in stocks and made a profit. The biggest player in the club is Chun Jung-hoon who invests a total of 90 million won in stocks. He says that he joined the club last semester, so he hasn’t reaped big gains yet.

But the hard work and subsequent financial success do not necessarily lead to respect from many members’ parents. Investing in stocks is still regarded as a risky action in Korea where many compare it to gambling. Chun Jung-hoon and Kim Dong-gyun both say that their parents aren’t too happy with them joining the investment club and wishing to work in the finance industry.

“My parents still have this prejudice that a household goes bankrupt when they invest in stocks,” says Kim.

Disapproval from parents, however, isn’t as disappointing as not being understood by their peers, says Kang Hyung-seok, a 24-year-old economics major.

“People in their 40s and 50s are afraid of investing in stocks. Sadly, people at my age ― the generation that is supposed to be forward-looking and adventurous ― also have a prejudice against investing in shares,” says Kang.

“In their eyes, we are dreaming of making a fortune in one stroke. In order to make money, however, one needs to make an effort and study.”