Most summers, members of the Blyth Fund investment club take a break from their academic year discussions about portfolio monitoring and buying securities. This year, due to the market’s turbulence over the past three months, a flurry of correspondence among the Fund’s nine voting members led to several summer sales of the $200,000 Fund’s riskier positions.

“The volatility this summer has been unprecedented since I’ve been with Blyth Fund,” Connie Yu ‘09, co-president of the group, wrote in an email to The Daily. “Historically, we’ve never made transactions over the summer. We carefully evaluate our portfolio at the end of spring quarter and adjust our positions to match our risk tolerance and expectations.”

Yu added that the Blyth Fund usually sells riskier, unstable stock that could generate losses if left unattended before summer quarter begins. Fund managers can then sleep soundly over the summer and return to portfolio management in the fall.

This summer, however, the Fund did not take its usual hiatus and instead made a few necessary transactions. As the Dow Jones Industrial Average regularly experienced dramatic 100-point swings this past August, Blyth Fund directors determined that the market was too volatile, creating unpredictability for equities and the retail sector and making a summer meeting critical.

“The market is going through a much more severe correction than many were anticipating,” wrote Hin Leung ‘08, one of the Fund’s directors, in an August email to other group members. “The overwhelming consensus is that the worst is still to come.”

Over the summer, the group’s directors voted by email to sell shares of several exchange tracking funds, baskets of stock which reflect the prices of indexes such as the Dow Jones, NASDAQ and the Standard and Poor 500.

“We felt they were vulnerable,” Yu said.

She added that the Blyth Fund also sold its stock in the organic food retailer Whole Foods after its acquisition of rival Wild Oats was approved.

The club has not escaped losses from the recent subprime mortgage crisis. The Blyth Fund holds shares of Delta Financial Corporation, a company that deals in high-risk mortgages and has lost 50 percent of its value over the past three months.

“We made quite a bit of gains and sold off half our position during the school year,” Yu said. “But the half we held on to has been hit hard.”

Despite these losses, Blyth Fund managers maintain that the group invests in fundamentally strong companies that will eventually produce a profit in the long term.

“We’re a fundamentally driven fund,” said Max Rounds ‘08, the Fund’s other co-president. “We invest in companies that have strong business models and companies that make good financial decisions. They can be established companies or small ones that we believe have the potential to grow.”

Rounds said he remains confident that, despite recent volatility, Delta’s shares may be due for a rebound.

“We still believe the [Delta Financial Corporation] stocks are a good buy,” Rounds said. “We will reevaluate the company once third quarter numbers come out.”

The Blyth Fund was established in 1978 when Stanford received a donation from Charles R. Blyth, a well-known California financier. The Fund has kept consistent financial reports since 2003. In the 12-month period ending April 30, 2007, the Fund beat the gains of the S&P 500 average by 8.18 percent.

Most of the Fund’s capital gains and dividends go toward operating costs and reinvestment, but Rounds said the group also donates 25 percent of its earnings to the University.

Contact Daisy Chen at dchen1@stanford.edu.