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University of Connecticut MBA SMF Presentation Dec-5-2013

University of Connecticut MBA SMF Presentation Dec-5-2013. George Cerwinski, Lead Manager Pornpong Lueang-A-Papong, Portfolio Manager Robert Shedrawy, Treasurer/Secretary Xin Wang, Technology Manager Jonathan Coombes Murali Kuchipudi Yan Zhu. Agenda. Investment Philosophy and Style

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University of Connecticut MBA SMF Presentation Dec-5-2013

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  1. University of ConnecticutMBA SMF PresentationDec-5-2013 George Cerwinski, Lead Manager Pornpong Lueang-A-Papong, Portfolio Manager Robert Shedrawy, Treasurer/Secretary Xin Wang, Technology Manager Jonathan Coombes Murali Kuchipudi Yan Zhu

  2. Agenda • Investment Philosophy and Style • Strategy • Investment Process • Processes and Procedures • Portfolio Analysis • Recap & Looking Ahead • Interesting Holdings

  3. Investment Philosophy and Style • Value Investing • Hybrid: Top-down / Bottom-up • Mid to Large Cap Companies • Corporate Social Responsibility • 3 – 5 years Investment Time Horizon • Both Short-term and Long-term Upside Potential

  4. Strategy • At least 4 stock pitches per manager • 25-30 stocks when fully invested • 10 Sectors Diversified • 100%Equity Investment

  5. Investment Process I • Macro-Economic Analysis • GDP Growth Rate • Unemployment Rate / Labor Participation Rate • Interest Rates • Geopolitical Events

  6. Investment Process II • Sector and Industry Analysis • Corporate Earnings and Reports • Consumer Confidence • Credit Availability • Government Regulation

  7. Investment Process III: Individual Stock Analysis • Strong and sustainable business model • Well-balanced/diversified business units • Strong and predictable earnings - ROA and ROE - P/E and PEG ratios - Operating margins - Leverage ratios • Outstanding among its peers • Intrinsic value higher than market value - Human Rights - Business Ethics Policy - ESG Disclosure - Equal Opportunity - Emission Reduction - Environmental Disclosure Score • Corporate social responsibility

  8. Processes and Procedures • Training and Development • Channels of Communications • Stock Pitches

  9. Portfolio Analysis I • Benchmark and Portfolio Asset Allocation

  10. Portfolio Analysis II • Benchmark and Portfolio Asset Allocation

  11. Portfolio Analysis III • Holding Period Performance Review

  12. Portfolio Analysis IV • Performance Analysis

  13. Portfolio Analysis V • Portfolio Snapshot as of 11/29/2013

  14. Recap & Looking Ahead I • Recap of Our First Three Months • Affordable Care Act and The Debt Crisis • Volatility in Market • Emerging Markets • Bubble Implication • One position in: • Consumer Discretionary, Energy, Technology, Materials, Telecommunication, and Utilities sectors

  15. Recap & Looking Ahead II • Looking Ahead • In the Winter Break • Continue to monitor our positions • In the Spring Semester • Focus on the following attributes • Strong and fit business model • Steady revenue and earnings • Diversified and balanced operations • Great growth and value prospects • Seeking out growth stocks

  16. Most Interesting Holdings I • Alcoa Inc. (AA) • Investment Thesis • Poised to be lowest cost fully integrated Aluminum Producer • Strengths in downstream business insulates business from volatile Aluminum prices • Improving economic climate indexes in Asia, EU, and NA bode well for metals demand • Factors Affecting Price Growth • Upgrade from JP Morgan, among others, to overweight/over-perform citing predicted upswing in Aluminum prices • Cost cutting initiatives and closing of burdensome smelting facilities • Worldwide economic improvement is leading to increasing demand for Aluminum • Domestically Auto and Airline manufacturers

  17. Most Interesting Holdings II • Ford Motor Co. (F) • Investment Thesis • Only U.S automaker not to declare bankruptcy or accept a government bailout • One Ford plan has allowed Ford to fix balance sheet, sell unprofitable brands, and improve the quality of vehicles • Highest ROE 28.5% in the industry • Strong sales and profits support our high intrinsic value • Possible Factors Affecting Price Decline • Speculation and concern over CEO Alan Mulally’s possible departure • Cyclical nature of industry and concern over a stalling recovery • Some quality issues with SYNC product and Escape recall

  18. Acknowledgments • Dr. Chinmoy Ghosh • Dr. Michel Rakotomavo • Patrick Terrion • CengizSearfoss • Peter Larson • Keith LaRose • Laurel Grisamer • Investment Advisory Board • UConn Foundation

  19. Q & A

  20. Appendix: Individual Stock Performance I AA AEP ALTR AMGN

  21. Appendix: Individual Stock Performance II CVS F ALTR AMGN

  22. Appendix: Individual Stock Performance III UNH UPS JPM PEP

  23. Appendix: Individual Stock Performance IV VZ WFC

  24. Appendix: Portfolio Beta

  25. Appendix: Best Performing Holding • United Health Group(UNH) • Our Plan for United Health Group: • We continue to believe UNH is undervalued as a whole. The forward P/E ratio is 12.85 with outstanding reward to shareholders via dividends and share buyback supports the increase in stock price • We believe that UNH will generate decent profit from Obamacare. The company’s membership grew by 24% in the first nine months of 2013 • We will continue to monitor UNH as its stock price approaches our calculated intrinsic value

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