(FORTUNE Magazine) – Warren Buffett didn't earn his reputation by ignoring great investment ideas, no matter what the source. So when a group of University of Tennessee students visiting Berkshire Hathaway in February gave him a copy of the autobiography of Jim Clayton and suggested that Knoxville's Clayton Homes was a company he might want to acquire, Buffett took the tip seriously. In April, Buffett made a $1.7 billion offer for the manufactured-home maker. After a legal battle with shareholders who thought the bid was too low, the deal closed in August.

In a visit to the university in October, Buffet rewarded each of the 40 students with a single Berkshire Hathaway Class B share (worth about $2,500), and gave a Class A share (worth over $76,000) to their professor, Al Auxier. "This class gave me a $1.7 billion idea, and I'm hoping that next year's class tops that," says Buffett.

As Wall Street cuts back on research, the nation's universities may be a good place for investors to look for fresh ideas. And there's a trend of business schools offering practical experience. A survey this year by the University of Dayton found that the number of schools that allow students to manage real portfolios had grown to 185 from 48 in 1995.

Business students at Tulane University in New Orleans have the chance to be part of a full-fledged equity research house. The program, called Burkenroad Reports, was started ten years ago by Peter Ricchiuti, a professor who spent seven years managing pension money for the state of Louisiana. Each year a mix of about 160 undergrad and MBA students produce research reports on roughly 40 small-cap companies around the South that get little attention from investment banks. The coverage universe is generally confined to the range of a cheap Southwest flight. "I have the lowest payroll on Wall Street," says Ricchiuti. "A couple of Dr. Peppers and some Fritos and we're rolling."

The students have built quite a record. A mutual fund based on their research, Hancock Horizon Burkenroad (HHBUX), which invests the majority of its money in the students' picks, is up 23% since its inception on Dec. 31, 2001, compared with the S&P 500's 9% drop.

The free reports are available on the program's website (www.burkenroad.org). The usual feedback? The pros know the research probably isn't perfect, says Ricchiuti, "but at least it's honest."