Thirteen young men and one woman meet in a drafty medieval-style room in a campus residence hall at Yale University. Thick exposed beams cross the ceiling above a large fireplace. A stained-glass panel in the heavy wooden door is decorated with a cobalt "Y." "Anyone interested in finance wants to join the Globalfund," says Philip Uhde, 22, the group's founder and president. "And the smartest of those people are here."
A cross between Yale's secretive Skull & Bones society and a young tycoons club, the Globalfund is one of a growing number of exclusive business groups cropping up at elite colleges across the country. The organizations, fueled by a mix of youthful ambition and careerist anxiety, have become an increasingly important part of the competition for the most lucrative jobs at investment banks, hedge funds, and consulting firms. For many students, it's a race for money and prestige that's starting earlier and earlier. The slumping economy and tens of thousands of layoffs on Wall Street have only aggravated the angst.
Launched in 2006, the invitation-only Globalfund calls its undergraduate members "partners" and evaluates candidates based on their investment ideas. Even among hand-picked aspirants, the partners reject three out of four. Partners pool earnings from summer internships at financial firms to make real, if modest, investments backed by research the students do themselves. One Monday evening in March, Harry Greene (video of Greene), another founding partner, rattles off statistics about China Natural Gas (CHNG), a small distribution company based in the city of Xi'an that trades over the counter. Glancing periodically at his BlackBerry, Greene, a 23-year-old senior majoring in economics and mathematics, describes to his colleagues how he called a company investor-relations representative from his dorm room and grilled her—in Mandarin, which he mastered after extensive classroom study and a year off from college spent in Beijing.
Most Globalfund partners speak a second language, Greene explains later. "We can often do more-thorough due diligence than Wall Street analysts because we can interview management in their native language." The fund's initial $800 stake in the gas company nearly tripled over four months last year, and the students sold their shares for a profit. A more recent $2,300 position in China Natural Gas has slipped slightly in value, but Greene assures the group it will bounce back soon. After graduation in May, he plans a short stint with a software company before heading to an investment banking job.
Once, merely graduating from an Ivy League college or similarly prestigious rival like Stanford or Swarthmore qualified students for a choice entry-level perch on Wall Street. No longer. "The whole idea of smart people just falling into banking is becoming rarer," says Lance LaVergne, a vice-president and global head of diversity recruiting at Goldman Sachs (GS). "Clubs are essential to preparation, especially for students who are not majoring in traditional disciplines like finance or accounting."
Blue-chip employers are looking for substantive experience and signs of early commitment. Wall Street internship programs that used to seek out students after their junior year now invite motivated freshmen and sophomores. Students feed the frenzy themselves, some showing up at college having already attended summer business-prep camps while still in high school.
DESPERATELY SEEKING DISTINCTION
Now the credit crunch is chewing up many of the jobs hyper-directed undergraduates yearn for. As the contest for junior analyst and novice trader slots intensifies, unlikely rumors keep some awake at night. "I have been hearing that a lot of these banks are only taking one student from Harvard," says Anthony Genello, a 21-year-old junior and president of operations of the Harvard Financial Analysts Club. "It definitely hit home and makes everyone more crazed." Desperate to distinguish themselves, students on at least two dozen top campuses have lately formed or expanded high-powered clubs, some of which offer eye-popping opportunities to invest and network. "As markets become more difficult and hiring needs are reduced, it will likely become more difficult for students to just wind up in our business," Goldman's LaVergne says.
Some veterans in business and finance worry that increasing student fascination with pre-professional clubs bespeaks a lack of appreciation for the perspective afforded by a liberal arts education. Etched high on the stone wall of the grand room where Yale's Globalfund holds its weekly meetings, a quote from poet Edgar A. Guest urges the precocious partners to value life's intangible joys:
The thing that we call living isn't gold or fame at all,
It is laughter and contentment and the struggle for a goal,
It is everything that's needful to the shaping of a soul.
But these words seem lost on the Yale students, most of whom look elsewhere for inspiration. "We are followers of Warren Buffett," explains Greene, who says he studies the famed Omaha investor's letters to shareholders as if they were sacred texts.
In dollar terms, the Globalfund is relatively small. At any given time, it has about $25,000 from students' pockets to deploy. The partners liquidate it at the end of the school year and distribute the proceeds on a pro-rata basis. Their counterparts at a cross-campus competitor, the Yale College Student Investment Group, manage no less than $280,000. That money remains within the university's endowment, having grown from seed funds donated by alumni such as investment guru James B. Rogers Jr., who earmarked cash years ago to improve undergraduate investment acumen at the New Haven campus.
As students sense tougher times setting in, many seek to "front-run the process," says Chris Borrero, president of the Yale College Student Investment Group. "People are taking a step back and trying to get a [Wall Street] internship earlier so they have a better rsum for the junior internship." Membership in a finance club is seen as a boost up the career ladder. Borrero, a 21-year-old junior from Westford, Mass., says he began reading The Wall Street Journal aloud to his father in the second grade. He notes that 40% of the investment group's 250 members are freshmen, far more than in the past.
High-revving students scoff at advice they sometimes hear about intellectually browsing before settling on a narrow employment path. "Many of my fellow classmates have been planning out their college choices since middle school, so to tell them not to plan for a future career during freshman year is illogical," says Janet Xu, 22, a senior at Yale and editor of the undergraduate magazine Yale Entrepreneur. She is heading off soon to be an analyst for Sears Holdings (SHLD) in Chicago.
Driving some of the credentials-mania is the impression that campus clubs open doors to summer internships many firms are relying on more heavily for full-time hiring. JPMorgan Chase (JPM), for example, says 90% of its entry-level hires last year were former interns, up from 60% five years ago. At the big consulting firm Accenture (ACN), "these clubs help us identify the best people for our internship program," says John Campagnino, global recruiting director.
Some of the organizations aim to broaden opportunities for women and minority students. At Columbia University, sophomore Anastasia Alt (video of Alt), 19, helped raise nearly $30,000 from Fidelity, Goldman,
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