Investing With Your Alma Mater: U Penn

For some Foolish readers, college may be long past. For others, it may be more recent history, while for a handful, it may still be part of current events. But regardless of how long ago it was, I'm willing to bet that college was a darn good time. Despite the fact that I now live nearly 3,000 miles from my alma mater, I've still been known to sport the blue and red of the University of Pennsylvania, and I won't deny occasionally reminiscing.

As of 2003, there were 2,474 four-year universities in the U.S. with a combined student population of more than 10 million. While there are some very notable examples of people who dropped out of college and went on to do great things -- including Bill Gates of Microsoft, Michael Dell of Dell, and Steve Jobs of Apple -- most of the top execs out there have come out of one of the many great colleges across the United States.

I knew that Penn has its share of famous grads, such as Ezra Pound, Maury Povich, Noam Chomsky, Donny Deutsch, and Michael Moritz. (Warren Buffett didn't graduate from Penn, although he did spend two years there before transferring to the University of Nebraska.)

Using data from Capital IQ and cross-referencing with The Motley Fool's new community-investing service, CAPS, I pulled up a list of some of the top-rated companies that have a University of Pennsylvania grad in a key executive or board position (sure, I chose my own alma mater this time -- but don't worry, there will be more to come!).

Meet Robert at Met
Insurance giant MetLife is not, in fact, led by Snoopy. Robert Benmosche was the CEO and chairman until March of 2006, when Penn alumnus (and the company's former president and COO) Robert Henrikson took over at the helm. Along with a B.A. from Penn, Henrikson also has a J.D. from Emory and is a graduate of the Advanced Management Program at Penn's Wharton School. Though Henrikson just recently took over at the CEO spot, he has been with MetLife for more than 30 years, starting his career with the company as a sales representative.

It has been a good run for MetLife over the past few years, as revenue growth has been accelerating and margins have been expanding. The company's net income margin was up to 10.5% as of the 2005 fiscal year from 1.5% in 2001, and return on equity went from 2.3% to 12.1%. MetLife also became the U.S.'s largest life insurance company with the 2005 purchase of The Travelers Insurance Company from Citigroup, but since then has started to face the squeeze from a tightening interest rate environment.

MetLife's $1.6 billion decline in net income for the first nine months of 2006 vs. 2005 was primarily due to the $1.2 billion gain in 2005 from the sale of the company's One Madison Avenue and 200 Park Avenue properties, but shrinking interest rate spreads have also affected MetLife's bottom line. Though interest rates could still pose a threat going forward, MetLife is very well positioned to cash in on the wave of retiring baby boomers who will be prime candidates for income protection and savings products. The company could also stand to benefit from increased sales of products like variable annuities and mutual funds if the equity markets continue to perform as they have recently.

Four of CAPS' top-rated Wall Street analysts have rated MetLife an outperform, and so have 24 other CAPS all-stars. Check out MetLife on CAPS to see what they have to say.

Then there's the rest
Of course, the group that I singled out above only includes the companies that CAPS players have smiled on. That's not to say there aren't other interesting companies out there that CAPS players have overlooked or gone cold on. For instance, Mothers Work, a maternity apparel retailer, has a Penn grad, Rebecca Matthias, as its COO. The stock is up more than 200% in the last year, but CAPS players have stuck the company with a one-star rating. Bio-Reference Laboratories has Marc Grodman as its chairman and CEO. The company provides lab testing services in the New York metro area, and the stock is up 50% over the past 12 months, but it holds only a middling three-star rating in CAPS.

Are you still reading this? Go ahead and click on over to CAPS to let the other 20,000 registered CAPS players know what you think about these stocks -- or any of the 3,400 others available for rating. CAPS is completely free and more fun than a PlayStation 3. Really!

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Fool contributor Matt Koppenheffer would love to keep writing about his own alma mater, but encourages suggestions on which school to explore next. He owns shares of Dell but does not own shares of any of the other companies mentioned. Microsoft and Dell are Motley Fool Inside Value picks. Vail is a Hidden Gems choice. Dell is also a Stock Advisor selection. Knot.com is a Rule Breakers choice. Take a 30-day free trial to the newsletter of your choice. You don't need any advanced degrees to know the Fool's disclosure policy is airtight.