NEW ORLEANS – With all of the ups and downs of the stock markets over the past decade, the average investor might wonder who’s watching over his mutual funds.

In the case of the Burkenroad Fund, it’s a group of students at Tulane University’s Freeman School of Business who spend hours combing through the financial reports of companies that a lot of retail investors haven’t heard of and analysts don’t follow — and eventually find many of the stocks the fund buys.

The results over a decade of student involvement aren’t anything to sneeze at. According to Burkenroad’s prospectus, the no-load version of the fund, which started Dec. 31, 2001, had returned 11.9 percent since inception through March 31, 2011. The fund, managed by Biloxi, Miss.-based banker Hancock Holding Co., has current assets of about $70 million. The fund licenses its name from the university, but is managed independently from the school.

The Russell 2000 index, a benchmark barometer of small- and mid-cap companies, returned an overall 7.5 percent over the same time.

In the recessionary year of 2008, when many 401(k) plans lost much of their value, the Burkenroad fund suffered a loss of just under 25 percent compared to 33.8 percent for the Russell 2000 index. But both rebounded the following year. And for the three years ending March 31, the Burkenroad fund returned 10.72 percent compared to 8.6 percent for the Russell 2000 index.

Peter Ricchiuti, who teaches the stock analysis course, said he picks most of the companies, and students come up with others. He said the Burkenroad fund’s reliance on student reports is unique, although other business schools put their students to the task of researching investments for university endowments.

About 200 students over the current school year have been evaluating 40 companies across the South. Considering the region, it’s not surprising that 15 of the companies have some sort of involvement in the petroleum industry. The others include regional banks, as well as insurance, consumer goods, chicken- and egg- processing and retail companies.

All of their final analyses — known as Burkenroad Reports — are available to the public.

“At the Freeman school, we do our due diligence and take a more long-term look at investing,” said Anthony Elia, a 25-year-old graduate student in finance from Pasadena, Calif.

The companies are generally in the $100 million to $1.5 billion market cap range and located in Texas, Louisiana, Mississippi, Alabama, Georgia, or Florida.

The group looks for profitable companies — and those that don’t have many financial analysts following them.

“One of the things is that we can clearly understand what they do,” Ricchiuti said. “No wild high-tech companies. Just meat-and-potato companies.”

Elia first reported on oilfield services company Key Energy Inc. and now heads a team of students studying Carbo Ceramics Inc., an oilfield services company, and consumer services specialist Rollins Inc.

Alexandra Thurber, a graduate student from Bethesda, Md., first reported on oilfield service company Willbros Group Inc. and now is team leader of a group analyzing egg producer Cal-Maine Foods Inc. and Pool Corp., which provides swimming pool products. She’s not sure yet whether she’ll be doing the same task for a living.

“My background is in math and this is an extension of that,” Thurber, 25, said. “The dynamic nature of the markets is interesting. I think I will wind up working in a financial career, but not necessarily investing.”

In keeping with standard investment house rules, the students are forbidden from investing personally in companies they have researched. They can buy the Burkenroad Fund.

These students, from their perspective in life, have grown up around a lot of cynicism concerning investing — the dot-com bust, the scandals of Enron and Tyco International and, last but not least, the collapse of Lehman Brothers and the ensuing retirement savings wipeout of the 2008 financial collapse.

“There’s always been some cynicism,” said Arnaba Dasqupta, a 29-year-old graduate student with a previous job at a New York hedge firm and who is now hoping for a banking career. “It doesn’t have to come from a corporate scandal. It can be management being too optimistic. It’s not lying, but it’s misleading to investors.”

What would the student stock-pickers tell a potential investor?

“I suggest you find a company whose products and values you like and stick with it,” said Tray McCurdy, a 24-year-old graduate student in finance from Baltimore.

Elia is against momentum investing — or “jumping on the bandwagon.”

“Invest in companies you know and understand,” said Dori Brown, a 21-year-old undergraduate student from Houston.

“Don’t focus on one aspect of a company,” Thurber said. “Look at the entire picture and not just one thing that excites you.”

Arnab said that if an investor is confident of his knowledge, he should seek an adviser who can be trusted.

“Do your own homework,” he said. “Investing is a system with a lot of people with a lot of different opinions. The markets owe you nothing.”

NEW YORK (Reuters) – Raj Rajaratnam did not pick stocks alone. He had a team of researchers at his Galleon Group hedge fund to grind through the rumor mill and anticipate a good bet.

This is the thrust of every cross-examination of government witnesses at Rajaratnam’s insider trading trial in New York.

Similarly on Thursday, former Galleon portfolio manager Adam Smith acknowledged under questioning that “there were a number of rumors” about a possible merger of chipmakers Advanced Micro Devices Inc and ATI Technologies months before the announcement of a $5.4 billion deal on July 24, 2006.

But Smith also said: “The speculation was public. The fact that it was happening was not public.”

Smith, 39, on his third day on the witness stand in Manhattan federal court, has testified that he was tipped in May 2006 by a Morgan Stanley banker, Kamal Ahmed, who gave confidential details of AMD’s interest in buying ATI.

Smith said he then told Rajaratnam, who is charged with 14 counts of conspiracy and securities fraud in making $45 million in illicit profit between 2003 and March 2009, mostly on tech stocks. His lawyers contend that research and market speculation, not material company secrets, guided his trades.

Smith is among 19 people who have pleaded guilty in the sweeping Galleon case, which is described by prosecutors as the biggest probe of hedge funds in history.

The trial began on March 8 and will resume on Monday.

Defense lawyer Terence Lynam showed emails to the jury and Smith to argue that AMD’s potential acquisition of ATI was so widely known by early July 2006 that shareholders were writing to top AMD executives about the possible deal.

But in additional questioning after the cross-examination, the government sought to reinforce its allegation that Galleon and Rajaratnam relied on inside information. Smith was asked by prosecutor Andrew Michaelson about a conference call on July 5, 2006, between ATI chief executive David Orton and Galleon technology researchers.

“What did he tell you about the possible acquisition by AMD?” Michaelson asked Smith. “Nothing,” he replied.

No charges have been announced against Ahmed, who has been put on leave by the investment bank.

On Thursday, the jurors also heard that alleged tips by Ahmed on a 2005 merger announcement between Integrated Device Technology IDT and Integrated Circuit Systems Inc (ICST) led to $2 million in trading profits for Rajaratnam.

The defense said Rajaratnam’s trades were based on internal Galleon research. Smith told the jury he would periodically check in with Ahmed in the months leading up to the deal’s announcement and would send Rajaratnam emails about its status.

Prosecutors pointed to internal Galleon trading records indicating that Rajaratnam bought $3 million worth of ICST stock days after an email on March 17, 2005, from Smith to Rajaratnam about the deal that said “game on.” Prosecutors said Rajaratnam dumped the stock after the June 15 announcement of IDT buying ICST.

The trial is notable for dozens of recordings of FBI taps on Rajaratnam’s mobile phone that have been played for jurors.

On Wednesday, the jury heard on a phone tap that Rajaratnam had advance knowledge from a Goldman Sachs Group Inc director that in October 2008, the Wall Street bank was on its way to its first quarterly loss as a public company.

“I just heard from somebody who’s on the board of Goldman Sachs, they are gonna lose $2 per share,” Rajaratnam was heard telling David Lau, who ran Galleon’s office in Singapore, on October 24, 2008. “So what he was telling me was that, uh, Goldman, the quarter’s pretty bad.”

The director was Rajat Gupta, who has since left the Goldman board. Indian-born Gupta, 62, is also the former worldwide head of elite McKinsey & Co management consultancy. Prosecutors describe him as an unindicted co-conspirator in the case and he is facing civil charges by U.S. market regulators.

The case is USA v Raj Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-01184.

(Additional reporting by Basil Katz; Editing by Ted Kerr, Gary Hill)