Buy Presentation: BlackRock Inc.

1. Buy Presentation: BlackRock Inc. Presentation Prepared By: Matt Harvey, MatenaBabrikova, JackelynBranco, KhjawaJahad, Kristen Klocko, Will McDermott April 16, 2013

2. Investment Thesis Thesis Stock Price (One Year) BlackRock Inc. would make a strong addition to the Ithaca College Investment Club’s portfolio because of its exposure to secular growth in the ETF market. Recent developments in ETFs have given it an advantageous position in the near-term, while the climbing share of ETFs as a percentage of total fund assets (1% of mutual fund market in January 2001 compared with 12% in January 2013) should buoy the stock in the long term. Though the domestic US market is competitive, the company is increasing its exposure in Europe (where ETFs are 11% of total market) which—despite being smaller—has significant growth opportunities with fewer competitive barriers. The company’s efforts to increase their fixed income ETF offerings through innovative product launches should help diversify away some of the economic risk tied to their sensitivity to global stock markets, making the potential downside smaller than it otherwise would be. Revenue 2007-2011

3. Industry Overview and Recent Trends • Overview — Stock prices of asset managers reflect three primary factors: • Relative fund performance, • Net inflows of assets under management • Fees. • Passive ETFs (exchange-traded fund) gaining popularity among investors seeking low cost, index-tracking assets. • July 2012: 1,228 ETFs w/ $1.2 trillion in AUM • Trends — Mutual fund industry has experienced huge growth in AUM during past several decades driven by market appreciation & net inflows • Equities: Recent outflows not as bad as 2008-2011 period • Bonds: Major shift toward bond funds in recent years; risk avoidance strategies • ETFs: Highly robust growth; 1,228 ETFs as of July 2012

4. Company Overview and Operations Company Overview Revenue Stream Breakdown BlackRock is an independent investment management firm. Clients include pension funds, endowments, insurance companies, corporations, financial institutions, central banks and sovereign wealth funds, as well as retail investors and high net worth individuals It offers its products directly and through intermediaries in a range of vehicles, including open-end and closed-end mutual funds, iShares exchange-traded funds (ETFs) and other exchange-traded products ( ETPs), collective investment funds and separate accounts The Company also offers its BlackRock Solutions (BRS) investment systems, risk management and advisory services to institutional investors. Assets Under Management Breakdown

5. Recent News • BlackRock & Fidelity ink new deal • Commission-free ETF count increases to 65 from 30; total ETF count at 280 • BlackRock agrees to create passive ETFs that track performance of Fidelity’s actively managed mutual funds • BlackRock makes acquisition of Credit Suisse’ ETF operations in Europe • Deal will give 44% market share after completion • European ETF flows share of 68% thru Feb’13 compared with 57% in 2012 • Vanguard drops 22 of its funds from MSCI in an effort to cut costs • Allows BLK to gain share thru its EEM product; $8.9B inflow in Q4’12 compared with $3.9B in Q4’11 • January 2013: UK completes Retail Distribution Review (RDR) • Incentivizes financial advisors to save their clients’ money, a big plus for BlackRock

6. Valuation Model

7. Ratio Analysis

8. Competitors Legg Mason (LM) State Street (STT) Strengths One of the largest domestic asset managers with $648 billion in AUM Western Asset Management, LM’s main manager is a top player in the fixed income market Weaknesses No improvement in AUM over the past few years, which hinders revenue growth and profitability Recorded more than $140billion in new outflows from the fixed income division over the last 4 years More than $60 billion in outflows in equity operations since 2009 Institutional clients have pulled out more than $100 billion from its investment portfolios over the last 3 years Strengths Big player in ETF market Acquisition of Investors Financial will strengthen its footprint in the asset servicing market Weaknesses High degree of exposure in foreign markets, concerns with movements in exchange & interest rates Plans for several acquisitions could distract management from maximizing internal growth Majority of revenue comes from fee-based businesses

9. Competitors T. Rowe Price (TROW) Alliance Bernstein (AB) Franklin (BEN) Invesco (IVZ) Strengths 60% of AUM comes from retirement accounts in 2011 At Q3 2012, 77% of its mutual funds were beating peers on a 1 year basis Weaknesses Not as diverse as it should be (3/4 of AUM tied to equity and balanced strategies) Increase in overseas asset managers (cultural, political, and economic risks) Strengths One of the most globally oriented asset managers (50% AUM) Weaknesses High exposure to foreign interest and exchange rates Increase of new outflows by $3 billion in 2011 Sold off cash management operations & now unable to offer investors the option of swapping from fixed-income or equity strategies into money market funds during volatile markets Strengths Company has raised its dividend every year since 1981 Well- balanced mix of investment in terms of asset class & geographic focus Weaknesses Large portion of AUM comes from retail investors, who prefer short term performance more than institutional clients Very small banking & finance business that is much more capital intensive, diluting returns on invested capital Strengths AUM has increased by more than $350 billion since 2009 Van Kampen deal created stronger relative fund performance Weaknesses Van Kampen deal increase exposure to retail channel Trails peers like BLK & LM on a profitability basis Operating margins of 21%, well below industry average of 28%

10. SWOT Analysis Strengths Weaknesses Opportunities Threats Sound financial performance (13% increase in net income from 2010) 5.45% increase in revenue from 2011 High dividend payout ratio of 43% Broad portfolio, global leader in index & ETFs i-Shares (product leader in ETF) has a market share of 43% AUM worth $3.51 trillion Equity products 44% Fixed income 36% Cash, multi-asset, advisory & alternatives make up 20% Decline in revenue from Cash Management Product (25% since 2010) Decrease in CMP revenue affects overall financial performance Acquisition of Claymore Canada – enhances competitive position in the Canadian market Product development in Asia Business alliance with Mizuho Financial Group Global wealth market projected to grow 60% due to emerging economies Growth in demand for retirement products Growth of private equity in emerging markets Lower interest rates reduce investment yields and customer base Intense competition: highly competitive industry Global Economic Concerns: Overall GDP growth has decreased in 2012 to 3% from 4% in 2011 Forecasted decrease in US economic growth

11. Analyst Recommendations • Analyst Recommendations and Fair Value Estimates • Consensus Rating • Buys: 64% (16) • Holds: 36% (9) • Sells: 0% (0) • Credit Ratings • S&P Rating: A+ • Moody's Rating: A1

12. Recommendation • We recommend that Ithaca College Investment Club purchase 4 shares of BlackRock Inc. around $250.00, making the position around 5% of our portfolio, and maintain this position for 2-3 years. In the case of major economic downturn or another variable causing serious change in the stock’s value in the future, we should reevaluate as necessary.