1. The Anatomy of a Stock Pitch September 29, 2002 How to get through the Interview...

2. 2 Agenda Overview and Context Why is this important? How to prepare Two Approaches What to include Putting it all together Q&A

3. 3 Why is this Important to You? In a few weeks or a few months you will be sitting beside across the table from... You will be asked “So, what stocks do you like?” What will be your answer?

4. 4 How to prepare  Watch the market (WSJ, Bloomberg, CNBC)  Pick a sector you really like (Automotive, Financial Services, Tech, Consumer Products)  Find out what the experts are saying (4 th floor Kresge trading room - Merrill Lynch/UBS Warburg research etc.) BUY STOCKS $

5. 5 Once you have your stock - Two Approaches 1.Top down approach General to specific Start with the macroeconomic, move to sector, then stock specifics Example: Stock I like is: “Revlon: Cosmetic companies are defensive in the current economic environment, the sector is generally trading at a discount and Revlon is the best managed firm in the industry with a low multiple and high earnings quality” “Dell: Technology companies were the hardest hit in the recession, but I believe the sector will rebound in the next few quarters. Economic data indicates that commercial spending has increased and recent announcements have suggested a turnaround. Dell is currently best positioned to take advantage of the rebound as it has shifted its business in the past year to the corporate customer. The company’s negative cash conversion cycles...”

6. 6 Once you have your stock - Two Approaches 2. Bottom up approach Start with Stock fundamentals Example : $ Please note: these stock picks are fictitious

7. 7 What to include Valuation  Consensus earnings estimates, current price  Determine relevant earnings multiples, DCF with caution, technical screens $

8. 8 What to include  Be brief 3 minutes is about all you want to talk  Have your facts straight Memorize details about the firm – book value, current price, 52-week range  Earnings/EBITDA Quality Accruals, goodwill impairment, off-balance sheet financing, recurring revenue, cash flow as % of earnings, charges, interest

9. 9 Putting it all together Organization:

10. 10 1)Name of Stock 2) Ticker 3) Latest Closing Price 4) 52-week High and Low General Organization $$ $

11. 11 4 Sentences: Paint a vivid color to bring your stock to life Its your job to SELL… Give them reasons to BUY Business Summary or Strategy $ BUY STOCKS

12. 12 Financial Summary - 2-3 Sentences - Highlight trends e.g. Recently announced record 4th qtr earnings of $X, which beat Street expectations by y%. - No Accounting minutiae (lose the sale) Catalyst - The hook! - The core why someone should buy the stock NOW! - Should be something catchy, sexy and compelling $

13. 13 Supporting Data P/E, EPS, Dividend Yield Only – RELEVANT metrics (NO P/E for a Startup) $ $

14. 14 Stick to your story, Defend it. Don't let them get you rattled Use data, evidence, catalysts, enthusiasm to win them over Prepare to Defend! - Ideally 3 reasons to buy stock (just in case asked) $

15. 15 Questions and Answers