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UNIVERSITY OF CONNECTICUT Student Managed Fund

UNIVERSITY OF CONNECTICUT Student Managed Fund. April 22nd, 2005 Undergraduate Portfolio. Mission. To employ a systematic approach that consists of both quantitative and qualitative elements in order to identify companies in which to invest. Portfolio Objectives.

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UNIVERSITY OF CONNECTICUT Student Managed Fund

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  1. UNIVERSITY OF CONNECTICUT Student Managed Fund April 22nd, 2005 Undergraduate Portfolio

  2. Mission • To employ a systematic approach that consists of both quantitative and qualitative elements in order to identify companies in which to invest

  3. Portfolio Objectives • Outperform the S&P 500 index over a 5-10 yr. period • Develop a well-diversified portfolio within a fluctuating market environment • Select holdings with low-medium risk • Invest in companies with greater than 10% required rate of return over a 5-10 yr. period

  4. Current Status • Starting funds = $382,960 (9/24/04) • Current balance= $902,292.00 (4/12/05) • Return (as of 4/12/05): 2.53%

  5. S&P 500 vs. SMF

  6. PHILOSOPHY

  7. Investment Process: A Disciplined Bottom-Up Approach Portfolio MonitorPortfolio Consensus Qualitative Analysis QuantitativeAnalysis Company Analysis IndustryOverview

  8. Procedures for Allocation • Small team research efforts • Select companies based on potential growth and stability • Screen equities based on qualitative and quantitative analysis within the required objectives

  9. Equity Analysis Historical Information Annual Reports Future Projections Equity Analysis Competition Financial Statements Ratio Analysis Management Efficiency Value Analysis

  10. Equity Selection Criteria • Perform a historical and current analysis of information disclosed in financial statements and analyst reports • Financial Strength • Companies who generate excess cash • Companies who are repurchasing stock • Companies that operate with low debt • Accounting Practices • Scrutinize accounting and reporting practices • Probability of future projections

  11. Financial Models • Capital Growth Model • Estimate of FV of equity in 10 years, discounted using our required rate of return to find our buyprice • Discounted Cash Flow Model • Growth is analyzed to determine today’s stock price based upon projected Cash Flows • Earnings Yield Model • Measures yield power with earnings’ growth

  12. Monitor and Review • Review • (10%) , + 10% • Stop loss • (15%) • Earnings Announcements • Headline News • Market factors

  13. PERFORMANCE

  14. Equity Allocation SJM

  15. PORTFOLIO STATISTICS

  16. Continued…….

  17. Portfolio Gains/Losses

  18. Industry Allocation

  19. Values & Returns Total trading costs= 13 basis points

  20. Under Performers • Wal-Mart • Struggle with same store sales growth • Labor problems • Unions • Class action sexual discrimination suit • Winnebago • Gas prices • Missed earnings by 1.5 million • Commodity prices have risen

  21. Best Performers • Barrick Gold • Commodities up due to falling dollar price • Expanding mining production • De-hedging policy to increase shareholder value • Smuckers • Acquisition of Multifoods • Growth of new products (Pillsbury, Hungry Jack, etc.)

  22. RECENT DEVELOPMENTS

  23. New Positions • Diversification • Added position in Energy with British Petroleum • Added position in Telecom with Alltel • Reinforced investment in Financials with Gladstone Capital and Berkshire Hathaway • Reinvested in companies that we feel were even further undervalued

  24. LESSONS LEARNED

  25. Professional Development • Acquired fundamental skills of equity valuation • Enhanced skills in quantitative and qualitative analysis • Gained knowledge of research techniques

  26. Group Dynamics • Team based research efforts • Understand the sacrifices and compromises associated with a team effort • “You’re only as strong as your weakest link” • “Synergy”

  27. Conclusion • Our portfolio is positioned for a strong ten year outlook • The Student Managed Fund has provided us with the essential business and social skills that will benefit our professional and personal development

  28. Thank You • The Foundation • The Investment Advisory Board • The Steering Committee • Faculty • Patrick Terrion • Chinmoy Ghosh

  29. QUESTIONS & COMMENTS

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