Senbet Fund Outperforms in Volatile Year

In a year like no other for the markets, a team of Maryland Smith undergraduates showed that they can succeed no matter what the circumstances.

Over a year, beginning in April 2020, 10 undergraduate students at the University of Maryland’s Robert H. Smith School of Business led the Lemma Senbet Fund to outperform the S&P 500 by 12%, growing it to just above $1.5 million.

Senbet Fund faculty advisor Sarah Kroncke says the students succeeded in weathering economic uncertainty over the last year and commends them for rising to the challenge.

“A major challenge this year was identifying what sectors and industries might do well and which ones may experience lasting effects of the pandemic on their performance,” says Kroncke. “The team needed to put those factors into context and make solid investment decisions based on them. This year’s team really dug in and worked together to succeed.”

Following the Growth at a Reasonable Price (GARP) investment model, fund members targeted assets that they sense are undervalued and offer long-term growth. It’s a strategy that was especially helpful in a year as unpredictable as this one, says Michael Lyons, portfolio manager of markets and external relations, ’21.

“We've kind of erred on the side of caution with a lot of the volatility and have been a bit more defensive with our allocation compared to previous fund teams,” says Lyons. “We might not have put as much into tech assets and certainly haven’t been as bullish in that area, but we still managed to seek out top performers in other sectors.”

One of those top performers was Livent, a lithium battery manufacturer who observed a strong year in the markets and provided the fund with a roughly 200% return on investment. Other notable assets included vehicle part manufacturer Dana, along with retailer Five Below, Micron and Select Medical Holdings, each of which yielded a return greater than 100%.

Performing especially well were materials holdings in chemicals and lithium, which provided a price return of over 90%, says Alexander Struntz, the fund’s portfolio manager of performance and financials analyst, ’22.

Struntz credits the team’s preparation week in and week out for picking out great investments and acknowledges the foundation laid by previous teams that enabled them to hit the ground running.

“They left us in a great position to have this incredible year and outperform the S&P the way we did,” says Struntz. “We came in and selectively removed previous investments, while adding our own, so it was definitely a combined effort from teams over the years and hopefully that level of collaboration continues.”