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S&P 500 Financials Stock Presentation

S&P 500 Financials Stock Presentation. Recap: Sector Weighting. Financials are underweighted by 610 BPs. Recommendation for Sector. Increase SIM Holdings by 400BPs But, still keep it underweight relative to S&P500 We are bullish for long run and bearish for short run

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S&P 500 Financials Stock Presentation

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  1. S&P 500 Financials Stock Presentation Skinner, Sureka, Yan

  2. Recap: Sector Weighting Financials are underweighted by 610 BPs Skinner, Sureka, Yan

  3. Recommendation for Sector • Increase SIM Holdings by 400BPs • But, still keep it underweight relative to S&P500 • We are bullish for long run and bearish for short run • Real Estate-Avoid; Regional Banks-trading at attractive multiples • Regional Banks will benefit from long term growth Skinner, Sureka, Yan

  4. Current Holdings in Financials Skinner, Sureka, Yan

  5. Recommendations • Purchase 250 bps of TCB • Purchase 250 bps of GS (provided price stays below 180) • Sell Visa • Hold position in BRK, HCBK and JPM • Should bring us underweighting of 200bps* * If we don’t sell V to fund Skinner, Sureka, Yan

  6. TCF Financial Corporation (NYSE:TCB) • Financial Holding Company • The Company’s businesses include retail and small business banking, commercial banking, consumer lending, leasing and equipment finance, and inventory finance. • TCF Bank operates bank branches in Minnesota, Illinois, Michigan, Colorado, Wisconsin, Indiana and Arizona. • The segments of the Company are banking, and leasing and equipment finance. • In August 2008, the Company announced the creation of a new subsidiary, TCF Inventory Finance, Inc. Skinner, Sureka, Yan

  7. Goldman Sachs Group, Inc.  (NYSE:GS) • Bank holding company and global investment banking, securities and investment management firm that provides services worldwide to corporations, financial institutions, governments and high-net-worth individuals. • Its activities are divided into three segments: Investment Banking, Trading and Principal Investments, and Asset Management and Securities Services. Skinner, Sureka, Yan

  8. Visa Inc. (NYSE:V) • Visa Inc. operates a retail electronic payments network. The Company facilitates global commerce through the transfer of value and information among financial institutions, merchants, consumers, businesses and government entities. • Primary customers are financial institutions, for which it provides product platforms encompassing consumer credit, debit, prepaid and commercial payments. • The Company owns a family of payment brands, including Visa, Visa Electron, PLUS and Interlink, which it licenses to its customers for use in their payment programs. It manages and promotes its brands through advertising, promotional and sponsorship initiatives, and by card usage and merchant acceptance. Skinner, Sureka, Yan

  9. TCB • Key driver of future profitability is credit loss provisions. • 2008-17.6% • Modeled at 25% in 2009 • Decreasing by 5% each year and reaches 5% steady state • Historically has been below 2% Skinner, Sureka, Yan

  10. Other Important Factors • Company operates in the Midwest • Poor lending environment exposure is in Michigan • Small exposure to Arizona • Price was depressed from 2008 financial crisis but didn’t experience the same increases in 2009 as large cap financials • Didn’t have a net loss in 2008 or 2009 Skinner, Sureka, Yan

  11. Skinner, Sureka, Yan

  12. % Upside Sensitivity Analysis Skinner, Sureka, Yan

  13. TCB Ratio Analysis Skinner, Sureka, Yan

  14. Goldman Sachs—Facts • Currently holding 1,000 shares • Last purchased at $146.01 • Current Price $ 176.10 • Target Price $ 218.82 Skinner, Sureka, Yan

  15. Goldman Sachs—Earnings Skinner, Sureka, Yan

  16. Goldman Sachs – Key Driver • Trading and Principal Investments $10.03 Billion FICC 5.99 Billion Equities 2.78 Billion Principle Investments 1.26 Billion Skinner, Sureka, Yan

  17. Goldman Sachs – Expenses • Operating Expenses $7.58 Billion • C & B 5.35 Billion • Non-Compensation 2.23 Billion • Provision for Taxes 32.2% Skinner, Sureka, Yan

  18. Goldman Sachs - Ratios Skinner, Sureka, Yan

  19. Skinner, Sureka, Yan

  20. VISA Inc. • Visa Inc. is currently 27.7% with respect to sector and 2.6% with respect to SIM portfolio. • We would like to sell VisaWhy?... Approaching its fair value of $81.40 Skinner, Sureka, Yan

  21. Visa Inc. DCFInc. DCF Skinner, Sureka, Yan

  22. Visa Inc. Ratios Skinner, Sureka, Yan

  23. Recommendations Summary * If needed to fund purchases otherwise Hold. Skinner, Sureka, Yan

  24. Questions? Skinner, Sureka, Yan

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