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General Body Meeting

5 / 3 / 2010. General Body Meeting. Agenda. Announcements Quant Group AMX earnings report GGP update Headlines iGo pitch by TMT junior analysts What to do with our excess cash? Conclusion. Announcements. Social event May 11 th in Collegetown . . Quant Group. Analysts: Ali Yazdi

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General Body Meeting

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  1. 5/3/2010 General Body Meeting

  2. Agenda • Announcements • Quant Group • AMX earnings report • GGP update • Headlines • iGo pitch by TMT junior analysts • What to do with our excess cash? • Conclusion

  3. Announcements • Social event May 11th in Collegetown.

  4. Quant Group Analysts: Ali Yazdi Jimmy Zhou Armando Acosta

  5. History The Theory of Speculation (1900) Brownian motion to evaluate Options? Modern Portfolio Theory (1952) Maximize returns & minimize risk. Black-Scholes (1973) The absolute gold standard for valuing options.

  6. Objective Set up with the primary aim of: Risk Management: Perform quantitative analysis of our investments, and successfully hedge for Equity, Interest Rate, Currency, and Commodity Risk. Quantitative Investment Strategies: Complement the club's fundamental approach by proposing pitches based on Quantitative models and Technical Analysis.

  7. Quantitative Hedging 7 • Some Tools… • Calls • Puts • Methods • Spreads • Straddle • Bull • Greeks • Delta Hedging

  8. Simple Delta Hedging Example 8 Objective: Find the amount of call to long or short to create a delta neutral portfolio that reduces the risk of price movements in the underlying stock

  9. Technical Analysis Z-score= -2.66812 AUD/NZ Z-score= -2.66812 Doji Candle Substantial Reversal

  10. AméricaMóvil Earnings • Beats estimates on subscriber growth • Revenue, Net Income, EBITDA all increasing yoy • Below estimates • Data Growth • Telmex Merger to still go through in May

  11. Thesis Revisited • Three factors to drive company performance • Fundamental strength of prepaid operations • Integration with Telmex • Data use growth

  12. Decision • Some thesis points still hold • Uncertainty of the future Sell 50% of our Position

  13. General Growth Properties • Bankrupty Court Exit Plan hearing extended to May 4 • More time to talk to Simon Property Group Inc and other potential investors • Bankruptcy Court has confirmed plans of reorganization to restructure the final two major secured mortgage loans in its portfolio • Bankruptcy Court has now confirmed plans of reorganization for the debtor subsidiaries associated with 107 of the Company's 108 secured mortgage loans, aggregating a total of $14.8 billion.

  14. General Growth Properties • Bankrupty Court Exit Plan hearing extended to May 4 • More time to talk to Simon Property Group Inc and other potential investors • Bankruptcy Court has confirmed plans of reorganization to restructure the final two major secured mortgage loans in its portfolio • Bankruptcy Court has now confirmed plans of reorganization for the debtor subsidiaries associated with 107 of the Company's 108 secured mortgage loans, aggregating a total of $14.8 billion.

  15. Macro Update part 1 • GDP grew at 3.2% (annualized) for Q1 • Businesses increased inventories by $31b • Expectation of continued growth • Still no sign of improved unemployment numbers • Increased consumer spending from savings not increased hirings

  16. Macro Update part 2 • Panic spreading from Greece • Spain-downgraded to AA from AAA+ • Portugal-downgraded to A- • Greece-currently at JUNK status • Portugal-recover full GDP in 2013 • Spain- recover in 2015 • Greece- recover in 2020

  17. HP Acquires Palm • @$5.70/share (Total value =$1.2B) • HP Slate killed • Implications for Google, Apple, RIM, Microsoft “Doubling Down on WebOS”

  18. Energy and Industrials • First U.S. offshore wind farm • Approved by Federal Government after years of controversy and court battles • Green energy and reduced dependence on fossil fuels • Opponents continue to fight • Cite destruction of scenery • Could spark creation of hundreds of new wind farms

  19. Emerging Markets - Baidu • Baidu’s Q1 Profit more than doubles YoY • New advertising system • Thanks to Google • 64% of search market • Expecting 30% advertising dollars from Google • Planning on 10-for-1 ADS split

  20. Financials Update-Goldman Sachs • The Justice Department opened a criminal investigation over mortgage securities deals • GS officials called before Congress to testify • Analysts downgrades on Friday • GS shares drop 9.5% to $145 • $21 Billion in market cap erased since being accused of fraud two weeks ago

  21. Financials-Berkshire Hathaway • Buffet gives GS a strong vote of confidence • Q1 earnings up to $3.5 B from ($1.5) B

  22. iGo, Inc. (IGOI) Miles MoenArmando AcostaZack ZarankaHoward Yu

  23. The Company • Based in Scottsdale, Arizona • 52 employees • Market Cap: 55M • Make ‘power solutions’

  24. Products • Chargers for various devices • “Tips” for gadget compatibility • One charger for all devices

  25. Products • Portable Computer Market • Low-Power Mobile Electronic Devices • Phones, PDAs, iPods, etc. • Green Technologies • iGo Green chargers reduce vampire power

  26. Customers • Retailers: RadioShack • Private Label Resellers: OEMs, Microcel • Resellers: Superior Communications Inc. • End users: Through ww.igo.com

  27. Thesis • Undervalued at current price • New Vampire technology with patents pending • No debt, strong cash position • Large growth potential with Walmart and other retailers

  28. Growth

  29. Consumer Sales Growth • September 2009 – Verizon Stores • October 2009 – Office Max, Best Buy Airport Kiosks • November 2009 – Staples (Canada) • December 2009 – Wal-mart trial period in US and Canada • European outlets grew from 500 to 3,000 last year

  30. Recent News • 4/6/2010 – Board of Directors announces intention to continue current business plan • 3/29/2010 – Rick Welts (former NBA chief marketing officer) placed on Board of Directors

  31. The Future? • Expansion to other major retailers • Q1 2010 Earnings – 5/6/2010 • iGo Green Technology patent-pending, fastracked for possible approval by US Gov’t • Large cash reserves, stock repurchase?

  32. Financials

  33. iGo Financials Current Ratio:

  34. iGo Financials (Continued) Operating Cash Flow Ratios: Return on Equity Ratios (ROE):

  35. Why History Won’t be Repeated • The net incomes of 2006-2007 are large negative values, affecting the ROE ratio. • Attributed to: • Declining interest rates  Loss of interest income • Gain on disposal of assets (i.e. sale of patents) decreased • Sold handheld hardware business (Large part of Total Returns) • Great mark down of inventories • Targus not a client anymore • ROE stabilized in 2008-09

  36. Valuation

  37. Future Different than Past • Loss of Targus drops revenue 42% • Major economic downturn unlikely to happen again • Now with vampire technology

  38. Income Statement

  39. iGo Value

  40. Risks • Large dependence on a few customers • Narrow Range of customers • Patents Pending • Delisting from NASDAQ

  41. Key Points: Summary • iGo is a strong company with no debt and a large amount of cash • Price very low compared to historical values • Strong growth potential with larger retailers such as Walmart • New Vampire technology means unique power saving, licensing deals • Possible acquisition target

  42. Buy Proposition • 525 shares at ~$1.71 for a total of ~$900 • 12 month price target: $2.50 (46% increase) • Re-evaluate in 12 months

  43. What to do with our excess cash? Andrew Verri

  44. LQD – Investment Grade Corp Bond ETF • 5.25% yield @ $3,000 ≈ $160 • Disregarding crisis of 2008-2009, price has been incredibly stable • Relatively riskless vehicle for cash that yields more than a money market account

  45. Consumer Staples ETF (XLP) • Dividend: 0.473 • Yield: 1.7119 • Beta: 0.65 • $3,000/27.63 • 109 shares

  46. Dynamic Food and Beverage (PBJ) • Yield:1.65% • Holdings include: Coca-Cola, Yum! Brands, Starbucks, McDonald’s, ConAgra Foods, etc. • Recommendation: $3,000/16.04=187 shares

  47. Utilities Select ETF (XLU) • Dividend: 1.06628 • Yield: 3.5029% • $3,000/30.44 • 98 shares

  48. Interview question • You have someone working for you for seven days and a gold bar to pay them. The gold bar is segmented into seven connected pieces. You must give them a piece of gold at the end of every day. If you are only allowed to make two breaks in the gold bar, how do you pay your worker?

  49. Interview Answer • Day 1: break off one piece and give it to him • Day 2: take back the one piece, break off two pieces and give him that block • Day 3: give him back the original one piece so he has three in total • Day 4: Take back everything you’ve given him and exchange the remaining block of four • Day 5: Have him keep the block of four and give him the one • Day 6: Have him keep the block of four but take back the one, and give him the block of two. • Day 7: Give him everything

  50. Conclusion • Have a great summer! • Come to the social event!

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