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Haley Large Cap Fund Sector Captain Presentations.

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Presentation on theme: "Haley Large Cap Fund Sector Captain Presentations."— Presentation transcript:

1 Haley Large Cap Fund Sector Captain Presentations

2 SECTOR CAPTAIN PRESENTATION Real Estate Investment Trusts Consumer Durables Kevin Hylinski

3 Liberty Property Trust PS Business Park Annaly Capital Management Redwood Trust Hatteras Financial Boston Properties Digital Realty Duke Realty Corporation Highwoods Property Douglas Emmett Brandywine Realty Trust Biomed Realty Trust Franklin Street Equity Residential UDR Inc Apartment Investments BRE Properties Home Properties American Campus Equity Lifestyle Mid-America Apartments Simon Property Federal Realty Investments Regency Centers Realty Income Alexanders Inc Host Hotels & Real Estate Ventas Inc Health Care REIT Plum Creek Timber Real Estate Investment Trusts Consumer Durables Garmin LTD Whirlpool Corporation Tupperware Brand Homebuilders: Pulte Homes Inc DR Horton Inc Lennar Corporation

4 A few REITs do look attractive in the SMF model Time-line => Current Market Corporate Bankruptcies (69% 1Q 2009, 35% 2Q 2009) Extend and pretend - Capmark Vacancy (12.5% 2Q 2007 and 16.5% 3Q 2009) Rental Rates Cap Rates = NOI/Value (5% vs. 10%) Shorter Lease Terms Real Estate Investment Trusts

5 Home Builders –Cost of Goods Sold (95% - 115% of sales 2Q 2009) –Housing Market –Lending Garmin ($30.90) –Undervalued by almost 50% (SMF model) –S+P Fair Value $42.60 (37.86%) –Strong Balance Sheet No Debt $1 billion cash –Doubled R+D spending over the past 2 years ROIC of 20%+ over the past 10 years –Entered the smart phone business - Nuvifone - AT&T Consumer Durables

6 SECTOR PRESENTATION Energy and Internet

7 –Alpha Natural Resources –Chesapeake Energy –Consol –Patriot Coal –Southwest Energy –CVR Energy –Danbury Energy

8 Priceline Amazon Internet

9 Priceline Denbury What we went with

10 Increasing Sales International Exposure (2/3rds of gross profits) Low Capex Growth pipeline into emerging areas –Dubai –Singapore –Growth – USA online penetration is only 36% vs Europe 29% Priceline

11 Strong Sales growth ( ~30% ) Strong in the Gulf Coast Volatility might be a problem Projecting 10% growth still value of ~$19 as compared with $15 currently Denbury

12 Arch Coal Chesapeake Patriot Natural Resource Partners Companies that Failed


14 Model: Actual: Industry: Systems Software MSFT dominates the market and should continue to do so Windows 7 recently released, sales boost Microsoft (MSFT)

15 Model: Actual: Industry: Household Products Solid / stable company – even in downturn Demand for household products relatively static Colgate (CL)

16 Model: Actual: Industry: Steel Good prospects as economy turns around Specialty metals producer Closely tied to aerospace / energy / consumer industries Carpenter Tech (CRS)

17 Model: Actual: Industry: Steel Cyclical company Good growth prospects – largest US steelmaker, 20% of US mkt, relatively diverse product set Easing downward pressure on sale of steel products Nucor (NUE)

18 Model: Actual: Industry: Metals & Mining Good growth prospects, strength is in copper As economy picks up, so will global demand for copper – particularly in China Southern Copper (PCU)

19 Model: Actual: Industry: Construction and Engineering Low cost of D, conservative growth outlook, faring better than competitors Gradual rebound in energy projects as prices improve Increased infrastructure activity as result of stimulus packages Emcor (EME)

20 Model: Actual: Industry: Oil & Gas Drilling Primarily provides contract drilling 2 nd largest operator of land-based drilling rigs –3 rd most active rigs in industry Con: Sensitive to natural gas prices –80% of land drilled in US is for natural gas Patterson-UTI (PTEN)

21 Model: Actual: Industry: Oil & Gas Equipment and Services Segments: Well Sites, Offshore Products, Tubular Services Expectations of continued oil consumption + thin spare capacity = good business Oil States International (OIS)

22 COSTCO WHOLESALE CORP. Security Analysis Bob Goslin

23 Membership warehouse club –Similar to Sams Club and BJs Wholesale Product mix: –Fresh food –Packaged food –Sundries (candy, snack foods) –Hardlines (appliances, electronics, etc.) –Softlines (apparel, housewares, furnishings) Company Background

24 Annual sales growth (last ten years): –Average: 9.3% Historic sales growth: –2006: 13.63% –2007: 7.91% –2008: 11.67% –2009: -1.43% Performance

25 Superior supply-chain management High rate of asset turnover High membership renewal and sign-up rates Expected increase in market share Upside

26 Profitability highly dependent on diesel fuel prices Retail industry highly competitive –Entire industry engaged in pricing wars –Targets move to Low Value Everyday pricing model Downside

27 Appears to be accurately valued Only Costco is outperforming S&P 500 Last price –Costco –Wal-Mart –Target50.11 –BJs Evaluation

28 Cautious Buy: –Correlation to Walmarts Q3 earnings ?? –Expected release of Costcos next quarterly earnings on December 11 –Same-store sales returned to positive territory in September and October Recommendation

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