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UAB Green and Gold Fund

UAB Green and Gold Fund. Waddell & Reed Financial Inc. (WDR) Buy Presentation January 19, 2012. Asset Management. Highly competitive industry, but offers significant economic profits (ROIC > WACC) 3 Levers for Earnings Fund Flows Market Appreciation

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UAB Green and Gold Fund

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  1. UAB Green and Gold Fund Waddell & Reed Financial Inc. (WDR) Buy Presentation January 19, 2012

  2. Asset Management • Highly competitive industry, but offers significant economic profits (ROIC > WACC) • 3 Levers for Earnings • Fund Flows • Market Appreciation • Economies of Scale (Operating Leverage)

  3. Waddell & Reed • Asset management and financial planning • Ivy Funds and Waddell & Reed Advisors Funds • Consistently ranked in top decile for fund families • Historical focus in large cap growth equities • Distribute funds through Advisor, Wholesale, and Institutional Channels • Future growth catalysts – promote Ivy Funds brandand focus on diversification of product line

  4. Historical Fund Performance (2010)

  5. Growth relative to peers

  6. Fund Flows • Advisors channel was historically chief source of fund flows • Sticky AUMs with redemptions ~ 10% • Wholesale and institutional channels will drive future growth

  7. Fund Flows and AUM by Channel

  8. Valuation

  9. Historical P/Es

  10. Fundamental Data

  11. Key stats relative to peers

  12. Why is WDR undervalued relative to peers? • Ivy Asset Strategy – flagship product with 33% of WDR’s AUM • World Allocation strategy targets all asset classes • Sharp 19% drop in fund value from July – Oct. • Recently downgraded to 3 from 4 stars by Morningstar

  13. WASAX fund flows

  14. WASAX Top Holdings

  15. Long-term Outperformance

  16. Stock Price: Buy Low, Sell High

  17. Stock Price

  18. SWOT Analysis

  19. Investment Thesis • As one of the more attractively priced asset managers, WDR currently provides a discounted beta play on the broader U.S. equity market. Longer-term, the successful performance and growing name recognition of the Ivy Funds brand should contribute to above average growth in AUM.

  20. Portfolio Recommendation • BUY 500 shares of WDR at limit of ~$27 ($13,500) • Total position: 500 shares / 2.8% of portfolio (after purchase) Financials • Target Sector Allocation: 10.5%, • Current Sector Allocation: 11.1% • Allocation after purchase: 13.9%

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