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University of Connecticut MBA SMF Presentation Dec-5-2013 George Cerwinski, Lead Manager Pornpong Lueang-A-Papong, Portfolio Manager Robert Shedrawy, Treasurer/Secretary.

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Presentation on theme: "University of Connecticut MBA SMF Presentation Dec-5-2013 George Cerwinski, Lead Manager Pornpong Lueang-A-Papong, Portfolio Manager Robert Shedrawy, Treasurer/Secretary."— Presentation transcript:

1 University of Connecticut MBA SMF Presentation Dec George Cerwinski, Lead Manager Pornpong Lueang-A-Papong, Portfolio Manager Robert Shedrawy, Treasurer/Secretary Xin Wang, Technology Manager Jonathan Coombes Murali Kuchipudi Yan Zhu

2 Agenda  Investment Philosophy and Style  Strategy  Investment Process  Processes and Procedures  Portfolio Analysis  Recap & Looking Ahead  Interesting Holdings

3 Investment Philosophy and Style  Value Investing  Hybrid: Top-down / Bottom-up  Mid to Large Cap Companies  Corporate Social Responsibility  3 – 5 years Investment Time Horizon  Both Short-term and Long-term Upside Potential

4 Strategy  At least 4 stock pitches per manager  stocks when fully invested  10 Sectors Diversified  100% Equity Investment

5 Investment Process I  Macro-Economic Analysis GDP Growth Rate Unemployment Rate / Labor Participation Rate Interest Rates Geopolitical Events

6 Investment Process II  Sector and Industry Analysis Corporate Earnings and Reports Consumer Confidence Credit Availability Government Regulation

7 Strong and sustainable business model Outstanding among its peers Intrinsic value higher than market value Corporate social responsibility Investment Process III: Individual Stock Analysis - Human Rights - Business Ethics Policy - ESG Disclosure - Equal Opportunity - Emission Reduction - Environmental Disclosure Score - ROA and ROE - P/E and PEG ratios - Operating margins - Leverage ratios Well-balanced/diversified business units Strong and predictable earnings

8 Processes and Procedures  Training and Development  Channels of Communications  Stock Pitches

9 Portfolio Analysis I  Benchmark and Portfolio Asset Allocation SectorCurrent %S&P 500 Weight Consumer Discretionary 7.5%12.4% Consumer Staples15.5%10.2% Energy8.5%10.5% Financials17.1%16.1% Health care15.2%13.0% Industrials13.5%10.9% IT7.7%17.9% Materials2.3%3.5% Telecom5.5%2.4% Utilities7.1%3.1% Total100.0%

10 Portfolio Analysis II  Benchmark and Portfolio Asset Allocation

11 Portfolio Analysis III  Holding Period Performance Review

12 Portfolio Analysis IV  Performance Analysis MBA SMFS&P 500 Mean Weekly Return 0.513%0.611% Geometric Weekly Return 0.510%0.608% S.D 0.763%0.896% Beta Sharpe Ratio Treynor Ratio Jensons Alpha 0.40%n/a

13 Portfolio Analysis V  Portfolio Snapshot as of 11/29/2013 SecuritySectorPrice/ShareShares Position Total WeightDiv. YieldCost/ShareGain/Loss Ford Motor Co Consumer Discretionary $17.083,232$55,2033.3%2.35%$ % PepsiCo IncConsumer Staples$ $57,4333.4%2.81%$ % CVS Caremark CorpConsumer Staples$ $58,2553.5%1.50%$ % Halliburton CompanyEnergy$52.681,116$58,7913.5%0.99%$ % JPMorgan Chase & Co Financials$ $56,6483.4%2.93%$ % Wells FargoFinancials$44.021,650$72,6334.3%2.51%$ % UnitedHealth Group Inc Health care$ $61,8183.7%1.50%$ % AmgenHealth care$ $52,4773.1%1.60%$ % General Electric CoIndustrials$26.662,150$57,3193.4%2.91%$ % United Parcel ServiceIndustrials$ $41,9762.5%2.40%$ % AlteraTechnology$32.251,750$56,4383.3%1.60%$ % AlcoaMaterial$9.611,858$17,8551.1%1.22%$ % American ElectricUtilities$47.061,088$51,2013.0%4.30%$ % VerizonTelecom$ $39,9942.4%4.20%$ % Total Equity Value$738, % Total Cash$102,0056.0% SPY ETF$846, % Total Account Value$1,686, %

14 Recap & Looking Ahead I  Recap of Our First Three Months Affordable Care Act and The Debt Crisis Volatility in Market Emerging Markets Bubble Implication One position in: Consumer Discretionary, Energy, Technology, Materials, Telecommunication, and Utilities sectors

15 Recap & Looking Ahead II  Looking Ahead In the Winter Break Continue to monitor our positions In the Spring Semester Focus on the following attributes  Strong and fit business model  Steady revenue and earnings  Diversified and balanced operations  Great growth and value prospects Seeking out growth stocks

16 Most Interesting Holdings I  Alcoa Inc. (AA)  Investment Thesis Poised to be lowest cost fully integrated Aluminum Producer Strengths in downstream business insulates business from volatile Aluminum prices Improving economic climate indexes in Asia, EU, and NA bode well for metals demand  Factors Affecting Price Growth Upgrade from JP Morgan, among others, to overweight/over- perform citing predicted upswing in Aluminum prices Cost cutting initiatives and closing of burdensome smelting facilities Worldwide economic improvement is leading to increasing demand for Aluminum Domestically Auto and Airline manufacturers Sector: Materials Industry: Mining/Aluminum Market Cap: $12.61B 2/20/2014: $11.75 Purchase Price: $ Week Range: $ $12.32 Intrinsic Value: $16.27 Market Cap at Intrinsic Value: $17.43B Unrealized Gain: 29.83%

17 Most Interesting Holdings II  Ford Motor Co. (F)  Investment Thesis Only U.S automaker not to declare bankruptcy or accept a government bailout One Ford plan has allowed Ford to fix balance sheet, sell unprofitable brands, and improve the quality of vehicles Highest ROE 28.5% in the industry Strong sales and profits support our high intrinsic value  Possible Factors Affecting Price Decline Speculation and concern over CEO Alan Mulally’s possible departure Cyclical nature of industry and concern over a stalling recovery Some quality issues with SYNC product and Escape recall Sector: Consumer Disc Industry: Auto Makers Market Cap: $68.3B 11/29/2013: $17.08 Purchase Price: $ Week Range: $ $18.02 Intrinsic Value: $26.89 Market Cap at Intrinsic Value: $102.6B Unrealized Loss: (5.11%)

18 Acknowledgments Dr. Chinmoy Ghosh Dr. Michel Rakotomavo Patrick Terrion Cengiz Searfoss Peter Larson Keith LaRose Laurel Grisamer Investment Advisory Board UConn Foundation

19 Q & A

20 Appendix: Individual Stock Performance I AAAEP ALTRAMGN

21 Appendix: Individual Stock Performance II CVSF ALTRAMGN

22 Appendix: Individual Stock Performance III UNH UPS JPM PEP

23 Appendix: Individual Stock Performance IV VZ WFC

24 Appendix: Portfolio Beta

25 Appendix: Best Performing Holding  United Health Group(UNH) Our Plan for United Health Group: We continue to believe UNH is undervalued as a whole. The forward P/E ratio is with outstanding reward to shareholders via dividends and share buyback supports the increase in stock price We believe that UNH will generate decent profit from Obamacare. The company’s membership grew by 24% in the first nine months of 2013 We will continue to monitor UNH as its stock price approaches our calculated intrinsic value Sector: Health Care Industry: Managed Care Market Cap: $75.75B 11/29/2013: $74.48 Purchase Price: $ Week Range: $51.09-$75.88 Intrinsic Value: $ Market Cap at Intrinsic Value: $116.36B Unrealized Gain: 9.50%


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