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General Body Meeting 02.17.11

General Body Meeting 02.17.11. Agenda. Announcements News Updates Real Estate Sector Pitch. External Relations Committee. Managing relationships with companies Marketing events to campus Work directly with Director of PR & President Applications open until Saturday at 8:00pm.

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General Body Meeting 02.17.11

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  1. General Body Meeting 02.17.11

  2. Agenda Announcements News Updates Real Estate Sector Pitch
  3. External Relations Committee Managing relationships with companies Marketing events to campus Work directly with Director of PR & President Applications open until Saturday at 8:00pm
  4. Wall St. Training M&A and LBO Modeling on Excel Saturday, 3/6: 12pm-6pmSunday, 3/7: 12pm-8pm No Previous WST experience necessary www.wallst-training.com/cornell
  5. African Stock Competition Virtual Trading Competition on Johannesburg Stock Exchange Time frame: February-September Prizes: $$$ MICC Teams of 3-4 http://www.africanstockcompetition.com/

  6. News Updates

  7. Boardwalk Pipeline Partners (NYSE: BWP) Earnings of $0.45 > Analyst expectation of $.0.35 Net Income increased 60% compared to previous two quarters. Operating Income 37% higher. Income pattern may be seasonal – High for the 1st and 4th quarters; Low for the 2nd and 3rd quarters. PE Ratio – 23.92 – One of the highest among the industry.
  8. Philip Morris
  9. 2010 in Review Reported diluted earnings per share of $3.92, up by 21.0% Repurchased 97.1 million shares of its common stock for $5.0 billion Increased the regular quarterly dividend during 2010 by 10.3% In Asia, net revenues increased by 21.6% to $7.9 billion
  10. 2010 4Q and 2011 Reported diluted earnings per share of $0.96, up by 20.0% In the EU, net revenues decreased by 7.3% to $2.2 billion In EEMA, net revenues increased by 0.3% to $1.9 billion In Asia, net revenues increased by 22.9% to $2.1 billion In Latin America & Canada, net revenues increased by 12.6% to $860 million Announces planned share repurchases in 2011 of approximately $5.0 billion

  11. Reallocation Pitch

    Real Estate Sector
  12. Overview Sell off: General Growth Properties: $2963.34 Howard Hughes Corporation: $1006.5 Invest in: SCANA Corporation Otter Tail Corporation
  13. Rationale for GGP Taking profits Bought GGP ~4.50 Lessening Risk Beta of 4.00 Extreme Volatility with rapid price movements Underperforming the market Stabilized No news or growth to look forward to
  14. GGP
  15. Rationale for HHC Over-speculation 80% rise in stock price over past months No news Headquarters in Dallas
  16. Portfolio Maintenance Decrease Volatility Risk adverse Choose positions that will provide stability Market Tracking High Yielding Dividends
  17. Stability and Tracking
  18. Stability SCANA Beta: 0.59 4.50% Forward Dividend Yield
  19. Tracking OTTR Five year arbitrage
  20. Portfolio Allocation Achieve a balance in tracking market growth OTTR Achieve stability and solid growth SCG

  21. Otter Tail

  22. Thesis “Strong foundation, bright future” Foundation Monopoly Growth Potential Renewable Energy Manufacturing
  23. Otter Tail Electrical Power Provider Minnesota, North Dakota, South Dakota Dominant in market
  24. Growth Potential
  25. Otter Tail Wind Power
  26. Otter Tail Wind Infrastructure Flatbed Hauling Electrical Contractor Energy Service
  27. Otter Tail Health Services dms Imaging Imaging Services dms Health Technologies Sales and service of medical equipment Food Processing Idaho Pacific Fourth Largest Potato Provider
  28. Otter Tail Dividends since 1938
  29. Financials Price/Earnings Ratio P/E (ttm): 34.96 P/E (five year average): 13.8-42.8; 17.8 average Enterprise Value to Free Cash Flow EV/FCF (ttm): -79.45 EV/FCF (ttm): not significant (negative)
  30. Financials Stock Price 52 week high: $25.39 5 year high: $46.20 Other: Quarterly growth revenue: 9.00% Gross margin: stable over past 5 years Current ratio: 1.5
  31. Competitors Allete: Energy services in upper midwest, primarily Minnesota Caterpillar: Industrial power systems and generation, engine/turbine production Cleco: Energy services company situated in Louisiana
  32. Otter Tail Valuation Discounted Cash Flow Using 22% Growth rate for Earnings per Share Zack’s Investment Conservative 7% Perpetual Growth afterwards Traditional 11% Benchmark Rate Valuation: $27.48

  33. SCANA Corporation

  34. Industry Overview Electrical Energy Provider South Carolina- SCE&G North Carolina- PSNC Georgia- SEGA SCANA umbrella Economies to Scale Low Corporate Overhead
  35. Operations North Carolina Raleigh/Durham Asheville South Carolina Columbia Charleston Myrtle Beach Georgia Savannah
  36. Operations
  37. Earnings
  38. Estimation
  39. Estimation General Upward Consensus in all circles Price Earnings at 14.07; Middle of the road
  40. Competitors
  41. Risks Nuclear Plant 37% Milestone Completion
  42. Past Share Performance
  43. Thesis Stable with Solid Growth Estimations all tend upwards Low Beta Dividend Yield 4.5% Yield Opportune Buying Time Below Bollinger Band
  44. Proposal OTTR: 68.33% SCG: 31.67% Portfolio 9.8% OTTR 4.54% SCG

  45. Questions?

  46. Thanks for coming by! You have two fuses, each which burns in exactly one hour. How can you time exactly 45 minutes?
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