student managed fund

Student Managed Fund

MBA Performance ReportMarch 8, 2007

MBA Managers

• Mike Amodeo• Devika

Chirayilparambu• Matt Cordeiro• Vasilios Diakogeorgiou• Samara Hollander

• Daniela Ionescu• Adam Macko• Puru Patnekar• John Salemi• Amanda Wallace

Agenda

• Investment Philosophy• Investment Process • Portfolio Performance• Firm Activity• Forward Expectations• Q & A

Investment Philosophy

• Follow a fundamental bottom-up approach

• Focus on companies with a market cap of at least $1Billion

• Target stocks that trade at a minimum 15% perceived discount to their intrinsic value

• Benchmark is to outperform the S&P 500 Index by 5% annually

• Invest across a diversified group of sectors to emulate the S&P 500 Index

Investment Process

Stock SelectionStock Selection

Fundamental Fundamental AnalysisAnalysis

Sell DisciplineSell Discipline

Stock Selection

• Seek high quality US Equities that exhibit strong growth potential within their industry

• Screeners: Yahoo! Finance MSN Money Central Reuters MagicFormulaInvesting.com

• Rank stocks based on: Earnings/Sales

growthNet/Operating

marginsROE, ROAP/E, PEG

Fundamental Analysis• Narrow down the range by

emphasizing on the following value drivers

Operating MarginsRevenue and Earnings ramp-upCapital ExpenditureR&D IntensityFree Cash Flow Growth

• Discounted Cash Flow Analysis• Relative P/E analysis• EVA analysis

Sell Discipline

• Stop loss15% stop loss on all positionsProtect down-side riskPrevent market volatility from stopping out

positions

• Re-evaluation of positionsMore than 15% gainMore than 10% lossChange in business model or expectations

Portfolio Performance

Performance Highlights

Total equity positions 1,127,166.34 $ Total cash position 808.93 $ Value (2/16/2007) 1,127,975.27 $

Allocation and Management

Performance Highlights S&P 500 SMFBeginning value (9/01/2006) 1,303.82 $ 990,089.88 $ Ending Value (2/16/2007) 1,455.53 $ 1,127,975.27 $

Returns 11.636% 13.927%

Individual Holding Performance

Ticker Company ReturnsANF Abercrombie and Fitch 23.35%LH Laboratory Corp. 18.14%HRS Harris Corp. 16.87%SHW Sherwin Williams 16.45%JEC Jacobs Engineering 14.52%SCSS Select Comfort 12.20%ADTN Adtran Inc. 12.09%GD General Dynamics 10.79%FPL Florida Power and Light 9.66%MO Altria 9.59%HRL Hormel Foods 6.22%AEOS American Eagle Outfitters 4.39%TXN Texas Instruments 3.67%AXP American Express 2.48%OXY Occidental Petroleum 1.82%NVS Novartis 1.79%BAC Bank of America 1.58%VRGY Verigy Ltd. 0.27%BTU Peabody Energy Corp. -0.70%PEP Pepsi Co. -0.87%NFX Newfield Exploration -1.35%ARJ Arch Chemicals -2.37%BER Berkeley -3.94%ORCL Oracle -7.94%

0.000%

2.000%

4.000%

6.000%

8.000%

10.000%

12.000%

14.000%9

/29

/20

06

10

/13

/20

06

10

/27

/20

06

11

/10

/20

06

11

/24

/20

06

12

/8/2

00

6

12

/22

/20

06

1/5

/20

07

1/1

9/2

00

7

2/2

/20

07

2/1

6/2

00

7

SMF

S&P 500

Comparison with S&P 500

Sector Allocation

SMF Sector Allocation (2/16/2007)

Health Care9%

Financials12%

Energy12% Materials

8%Industrials

8%

Consumer Discretionary

13%Consumer

Staples13%

Utilities4%Telecom

5%IT16%

Portfolio Efficiency Statistics• Beta : 0.872• Alpha : 0.014• M2 : 1.85%• Modified Dietz Return (Bi-weekly)

SMF: 0.67%S&P 500: 0.5%

Rp 0.53% Rp 0.44%

Rf 0.09% Rf 0.09%

σp 1.65% σp 0.96%

Sharpe 0.267 Sharpe 0.365

SMF Sharpe Ratio S&P 500 Sharpe Ratio

S(X) = Rp - Rf / σp

Performance Attribution Analysis

Portfolio Excess Return 2.291%Contribution from stock selection 1.423%Contribution from sector allocation 0.867%Contribution from cash allocation -0.008%

Contribution from SPYDR 0.010%

Firm Activity• Verigy (VRGY)

Guidance Adjusted Upwards

• Jacobs Engineering (JEC) Guidance Adjusted Upwards

• Altria (MO) Kraft spin-off

• Novartis (NVS) FDA approval for Exforge FDA delay for Galvus

• Oracle (ORCL) Analyst Downgrade and License Sales Hyperion Acquisition

POSITIVE

POSITIVE

POSITIVE

CAUTION

CAUTION

Forward ExpectationsInterest rates remain stable

Earnings growth slows towards historical average

Stocks currently are fairly valued

Expect 2007 returns to mirror long-run average (8%-12%)

Forward Expectations

• Monetary Policy

• Fiscal Policy

• Economic Growth

• Corporate Earnings Growth

• Inflation

• Market Valuation

NEUTRAL

NEUTRAL

NEUTRAL/POSITIVE

NEUTRAL

NEUTRAL

NEUTRAL

Learning Experience

Strength in Numbers10 Managers – 10 Different Styles to Learn FromExpertise Across Different IndustriesStand Up to the Scrutiny of Peers

Look for Compelling Business StoriesWhat is the Company’s Competitive Advantage?Why Will Your Stock Outperform the Market?

Add Value Through Event-Driven ReturnsLook for Opportunities that Will Unlock Value

Acknowledgements

The University of Connecticut Foundation, Inc.

Investment Advisory Board

Dr. Chinmoy Ghosh

Questions