Undergraduate Student Managed Fund

UndergraduateStudent Managed Fund Presentation to the University of Connecticut Foundation March 2011 School of Business Student Managed Fund

Undergraduate Team School of Business Student Managed Fund Student Managed Fund Spring Officers Joseph Santoro– Lead Manager Benjamin Hochron – Portfolio Manager Emily Donohue - Secretary Managers Eric Barnhart Gregory Fabso Michael Ford Alexander Hul Jonathan Jenson Geoffrey Jou Brandon Singer

Investment Philosophy and Process Allocation Performance Analysis Expectations & Positioning School of Business Student Managed Fund Student Managed Fund

Objective & Philosophy • Objective: To outperform our benchmark, the S&P 500. • Philosophy: Bottom-up approach looking for value stocks to invest in for a three to five year time horizon School of Business Student Managed Fund Student Managed Fund

Investment Strategy School of Business Student Managed Fund Student Managed Fund Identify companies with: • Strong business models • Quality of management • Solid financials • Growth potential • Undervalued stock price (30%)

Investment Process • We cover 10 sectors, with each manager assigned to 2-3 sectors • Stocks are brought to weekly meetings for presentation and peer evaluation • A 70% vote in favor of the position is required for approval School of Business Student Managed Fund Student Managed Fund

Investment Process Allocation Performance Analysis Expectations & Positioning School of Business Student Managed Fund Student Managed Fund

Portfolio Allocation Undergraduate Student Managed Fund

Sector Allocation Undergraduate Student Managed Fund

Portfolio Performance vs. S&P 500 as of 2/25/2011 Undergraduate Student Managed Fund

Individual Equity Returns as of 2/25/2011 Undergraduate Student Managed Fund

Individual Equity Returns Versus S&P 500 for Same Holding Period Undergraduate Student Managed Fund

Attribution Analysis School of Business Student Managed Fund Our goal in conducting attribution is to understand how we generated excess value Various moving parts and factors affect the portfolio performance Measuring performance against the S&P 500

Portfolio Overview School of Business Student Managed Fund Asset allocation is irrelevant when 100% of capital is mandated for equities Performance benchmarked against the S&P 500 can be quantified by three variables What does this snapshot imply about our investment decisions?

Sector Breakdown Undergraduate Student Managed Fund What criteria do we consider when allocating among sectors? Why were we considerably underweight in two sectors?

Equity Selection Breakdown Undergraduate Student Managed Fund How important is equity selection for our investment strategy? Does our investment philosophy complement the realized excess returns?

Risk Management School of Business Student Managed Fund Student Managed Fund • Informal Risk Management Systems • Weekly presentation as outlined in our Investment Process • Stop-loss Orders • Routinely reset at the greater of 30% of purchase or market price • Aggregation Risk • Avoiding interest rate sensitive companies

Risk Management School of Business Student Managed Fund • Portfolio Beta of 0.84 • Stable companies with a foreseeable future means taking less risk than the market • Areas of Risk Concentration • Medical Industry (MDT, ABT, SIAL) • Defense Spending (LMT, NOC)

Economic Considerations • Government Deficit • Unrest in the Middle East • Eurozoneuncertainty School of Business Student Managed Fund

Economic Outlook Pros • Improvements in labor market and Consumer Confidence Index • Continued recovery of M&A and capital expenditures Cons • Growing budget deficits Uncertainty • Rising commodity prices • Healthcare and Financial reforms School of Business Student Managed Fund

Positioning • Strong and sustainable business models limit long-term risk • Comfortable holding positions long-term • Exposure to companies with positive economic outlooks • Bottom Line: Purchasing excellent businesses at favorable prices will allow for long-term outperformance of market School of Business Student Managed Fund

Future Investments • Further Equity Selections following same philosophy • Take advantage of dividend payments • Explore Merger-Arbitrage opportunities • Continue attention to minimizing risk School of Business Student Managed Fund

Lessons Learned • Importance of cash management and trade timing decisions • Balance of patience and aggressiveness • Value of due diligence in research • Success of picking one strategy and sticking to it Student Managed Fund

Acknowledgements • University of Connecticut Foundation • Dr. Ghosh • Pat Terrion • Investment Advisory Board • Mentors • University of Connecticut School of Business School of Business Student Managed Fund Student Managed Fund

Q&A School of Business Student Managed Fund Student Managed Fund

Undergraduate Student Managed Fund