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Student Managed Fund

Student Managed Fund. MBA Interim Report November 30, 2007. Lindsay Castonguay Peter Gallo Vibhor Jindal Paul Luciano Craig Macchi Vu Mai. Magesh Nandagopal Aija Pilvere William Spatcher III Alexandra Stein Joshua Swift. MBA Managers. Acknowledgements.

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Student Managed Fund

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  1. Student Managed Fund MBA Interim Report November 30, 2007

  2. Lindsay Castonguay Peter Gallo Vibhor Jindal Paul Luciano Craig Macchi Vu Mai Magesh Nandagopal Aija Pilvere William Spatcher III Alexandra Stein Joshua Swift MBA Managers

  3. Acknowledgements • The University of Connecticut Foundation, Inc. • Investment Advisory Board • Bradley, Foster & Sargent • Christopher Wilkos • Dr. Chinmoy Ghosh

  4. Agenda • Investment Philosophy • Investment Process • Portfolio Performance • Firm Activity • Forward Expectations • Q & A

  5. Investment Philosophy • Fundamental bottom-up approach • Managers act as sector specialists • Sector diversification to emulate the S&P 500 • Focus on mid to large market cap companies • Target stocks trading at a minimum 15% perceived discount to their intrinsic value • Strive outperform the S&P 500 Index

  6. Seek high quality US Equities that exhibit strong growth potential within their industry Screeners: Value Line ThomsonOne ValuePro S&P NetAdvantage Yahoo! Finance MSN Money Central Rank stocks based on: Earnings/Sales growth Net/Operating margins ROE, ROA, ROI P/E, PEG Stock Selection

  7. Fundamental Analysis Narrow search by emphasizing the following value drivers • Business Model • Operating Margins • Revenue and Earnings ramp-up • Capital Expenditure • R&D Investment • Free Cash Flow Growth • Discounted Cash Flow / DDM Analysis • Real Return Value

  8. Sell Discipline • Stop loss • 15% stop loss on all positions • Protect down-side risk • Re-evaluation of positions • More than 15% gain • More than 10% loss • Change in firm activity or major activity

  9. Portfolio Performance

  10. Individual Holding Performance

  11. Comparison with S&P 500

  12. Comparison with S&P 500

  13. Sector Allocation Asset Allocation Con. Staples 4.58% Con. Disc. 10.77% Energy 10.33% SPY 43.62% Financials 4.07% Materials 3.32% Technology 3.66% Industrial 6.23% SWMXX 5.89% Cash 1.43% Healthcare 2.60% Utilities 3.50%

  14. Portfolio Efficiency Statistics • Beta: 0.965 (equity) 0.930 (total portfolio) • Alpha: 0.18 • Sharpe Ratio: -0.014 • Standard Deviation: 2.37%

  15. Firm Activity • Noble Corp. (NE) • Net income increased by 40% • Colgate-Palmolive (CL) • Initiated campaign with healthcare provider Aetna • Airgas (ARG) • Acquired Central Welding Supply and Texas Industrial Gas Companies • Marathon Oil (MRO) • Restarts LNG production in Equatorial Guinea • Goldman Sachs Group (GS) • Appointed senior exec. to head of southeast Asian operations • Procter & Gamble (PG) • Launched new online marketing research program

  16. Firm Activity • Dr. Reddy’s Laboratories (RDY) • In 10 year supply deal with Sygns, Germany • Garmin (GRMN) • Rescinded bid for Tele Atlas and acquired Synergy • Nike (NKE) • Acquired Umbro and divested Starter • Energy Transfer Partners (ETP) • Regulatory nod for pipeline expansion • Coach (COH) • Plans to expand first European store • United Technologies (UTX) • Appointed S.V.P. for H.R.

  17. One year Forward Expectations • Monetary Policy • Expansionary • Fiscal Policy • Neutral pending outcome of presidential elections • Economic Growth • Slow for next 8 months • Corporate Earnings Growth • Continued pressure on earnings

  18. One year Forward Expectations • Exogenous Events • Economic weakness • Iraq and Iran • Energy prices • China relations • Foreign Trade Policy • Housing market • Summary • Interest rates will remain low • Earnings growth will slow down due to weak economy • Stocks in transition • Expect returns for 2007/2008 to be close to 0 or negative until market recovers

  19. Learning Experience • Strength in Numbers • 11 Managers – 11 Different Styles • Benefit From Industry Expertise • Learn from Peer Discussions • New Technologies • CAMRA • Antares • Thomson

  20. Going Forward Look for Strong Business Stories Company’s Competitive Advantage Positive Stock Performance Compared to Market Success Strategies in Weak Economy Add Value Through Event-Driven Returns Look for Opportunities that Will Unlock Value

  21. Questions

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