General Body Meeting

1. 9/1/2010 General Body Meeting

2. Agenda • Welcome back • Introduction to the team • Club operations • Previous investment pitches • Opportunities to get involved • Conclusion

3. The executive board • Jeffrey Hau • Daniel Sherry • AkshayNagia • Chirag Shah • Melody Chu • John Yoshida • Jai Reddy • Samantha Dong • Terence Hu • Derek Creadore • Andrew Verri • David Wong • David Shim • Scott Deuschle

4. What does our club do? • Manage money • ~$50,000 portfolio • Value orientation • Long/short equity • Educate • Semester-long training program designed by Dan Sherry • Great for new members • Teaches fundamental principles

5. Analyst teams • Senior Analyst • Have strong knowledge of industry • Generate investment ideas • Approve additions to conviction list • Manage pitch process Senior Analyst Junior Analyst Junior Analyst Junior Analyst • Junior Analyst • Compile weekly industry news • Propose new companies to add to conviction list • Do fundamental research to put investment pitches together • Help monitor current holdings

6. Other ways to get involved • Newsletter • Monthly editions • Three types of articles: investment pitches, new club initiatives, opinions on the economy • Writing for the website (blogging) • More flexibility than newsletter • More opinionated • Research reports • Opportunity to produce investment theses

7. So how do we choose our investments?

8. TBFShort 20+ Year Treasury Daniel Sherry

9. Original Thesis X X - X X • 10 year treasury rate at purchase: 3.42% • 10 year rate now: 2.47%

10. Monetary & Fiscal Policy • Monetary Policy: Never really as loose as we thought it was. • Interest on reserves – 0.25% • Monetary aggregates • No tightening anytime soon – possible loosening • Fiscal Policy: you don’t have to outrun the bear… • Euro trouble

11. M0 Money Supply

12. M1 Money Supply

13. M2 Money Supply

14. Saving, Capex, and Inflation • Personal saving: not exciting. • Capital investment: not picking up like we thought. • Inflation expectations: subdued, to say the least. 5-year market inflation expectations

15. Looking Forward • Fed’s options • Explicit medium-term inflation target • Lower the interest on reserves • Additional quantitative easing • Do nothing – continue promising to keep rates low “for an extended period” • None of these will increase rates, at least in the short term.

16. HXMHomex Jai Reddy

17. Original Pitch • Thesis: Improvement in macroeconomic variables coupled with Homex’s competitive position makes for a substantial growth opportunity • Macro variables: • GDP, employment, wages • Important for earnings acceleration and mortgage origination • Competitive position • Leader in low income/entry level housing • Geographically diverse • Efficient building processes

18. 2010 Market Expectations and Implications • Economic growth to swing from -7% to 3% in 2010 • Employment to expand 2.3% after drop of 3.9% in 2009 • Demand side • Growing salaries improve mortgage affordability • Employment growth increases potential size of homebuyers market • Supply side • Infonavit’s funding comes from taxes on salaries

19. What changed? • Q4: Weak quarterly sales • Change to a more conservative strategy • No geographic expansion during Q4 • Downgrades by analysts • Though these may sound like too many negatives, they are all effects of a strategy to improve working capital management and free cash flow generation

20. Recent events & looking forward • Strong revenues and margins in Q210 • Due to strategically focusing in more profitable areas/demographics • Increases in FCF as planned part of their strategy • Increase in EBITDA • Potential Catalysts • Surprises in economic growth expectations • Problems with technologies and leadership control • Changes in targets for mortgage origination

21. CSCOCisco John Yoshida

22. Cisco Systems, Inc. • Designs and sells technology and service for electronics, networking and communications • Founded in 1984 developing and selling routers

23. Original Thesis (February 2010) • Next-generation technologies are poised to take advantage of both existing and new markets • Strong cash equivalents will lead to key strategic acquisitions

24. Performance

25. Earnings Update • EPS slightly beats expectations but… • Sales forecast miss expectations • “Unusual uncertainty” and “Mixed Signals” • Company hiring employees NO CHANGE IN THESIS

26. TEVATeva Pharmaceuticals Samantha Dong

27. TEVA- Overview • Originally pitched Nov 3, 2008 • World’s largest generic drug maker • Market Cap: $47.37 BN • Generic and branded pharmaceuticals, active pharmaceutical ingredients (APIs) • Principal Products: Copaxone • Original thesis: • Upside: Recession proof, industry leader, diversified pipeline, political environment, patent expiration • Downside: Growing competition

28. TEVA- Performance • Since pitched: • Purchased: $43.02; sold half position @ ~$60 • Current price: $50.621 • Since summer: 1 As of market close on 8/31/2010

29. TEVA- Recent News • Growth • Licensed branded cancer drugs • Acquisition with Ratiopharm: Europe footprint • Q2 Earning • up 53%, boosted by Copaxone sales • FDA approved the first generic version of Lovenox • Sanofi-Aventis’ blood clot treatment • Concern about generic version of Copaxone

30. Applications • Junior analyst applications will be accepted until September 10th • Apply online at www.cornell-micc.com • Please speak with me if you’d like to get involved in other ways

31. Brain teaser • Three players enter a room and a red or blue hat is placed on each person’s head. The color of each hat is determined by a coin toss, with the outcome of one coin toss having no effect on the others. Each person can see the other players’ hats but not his own. • No communication of any sort is allowed, except for an initial strategy session before the game begins. Once they have had a chance to look at the other hats, the players must simultaneously guess the color of their own hats or pass. The group shares a hypothetical $3 million prize if at least one player guesses correctly and no players guess incorrectly. • The general problem is to find a strategy for the group that maximizes its chances of winning the prize.

32. Answer • Come to the next meeting to find out…

33. Conclusion • Next general body meeting will be Sept 15thwhere we will announce our junior analysts • First training session will be Sept 8th • Thanks for stopping by!