university of connecticut student managed fund

UNIVERSITY OF UNIVERSITY OF CONNECTICUT Student CONNECTICUT Student

Managed FundManaged FundApril 22nd, 2005April 22nd, 2005

Undergraduate PortfolioUndergraduate PortfolioTimur

BrazilerJason Bliss Paul

DobryninGigi Gopalan Daniel Hey Ryan

MacNeilAdam

PoussardNick Prastos

Tanicka Ward

Trevor Russo

Mission

• To employ a systematic approach that consists of both quantitative and qualitative elements in order to identify companies in which to invest

Portfolio Objectives

• Outperform the S&P 500 index over a 5-10 yr. period

• Develop a well-diversified portfolio within a fluctuating market environment

• Select holdings with low-medium risk• Invest in companies with greater than

10% required rate of return over a 5-10 yr. period

Current Status

• Starting funds = $382,960 (9/24/04)

• Current balance= $902,292.00 (4/12/05)

• Return (as of 4/12/05): 2.53%

S&P 500 vs. SMF

5.11%2.53%

0123456789

10

S&P SMF

PHILOSOPHY

Quantitative Analysis

Monitor Portfolio

Investment Process: A Disciplined Bottom-Up Approach

Portfolio

Qualitative Analysis

Consensus

Company Analysis

Industry Overview

Procedures for Allocation

• Small team research efforts

• Select companies based on potential

growth and stability

• Screen equities based on qualitative

and quantitative analysis within the

required objectives

EquityAnalysis

HistoricalInformation

Annual Reports

FutureProjections

FinancialStatements

Competition

ManagementEfficiency

Ratio AnalysisValue

Analysis

Equity Analysis

Equity Selection Criteria

• Perform a historical and current analysis of information disclosed in financial statements and analyst reports

• Financial Strength– Companies who generate excess cash– Companies who are repurchasing stock– Companies that operate with low debt

• Accounting Practices– Scrutinize accounting and reporting practices

• Probability of future projections

Financial Models• Capital Growth Model

– Estimate of FV of equity in 10 years, discounted using our required rate of return to find our buy price

• Discounted Cash Flow Model– Growth is analyzed to determine today’s stock price based

upon projected Cash Flows

• Earnings Yield Model– Measures yield power with earnings’ growth

Monitor and Review

• Review

– (10%) , + 10%

• Stop loss

– (15%)

• Earnings Announcements

• Headline News

• Market factors

PERFORMANCE

Equity Allocation

AFRABXBRKB

AT

DEOBP

HD

HINKY

GLAD

WGO

CD

PHH FDC

LOW

KCPKOAMGN

MSFT

VIA

WMT

NOK

SJM

Company Name Shares Purchase

PriceCurrent Price

Total Return Total Gain Total Value

% of Portfolio

The Coca-Cola Company 500 39.86 $42.33 6.20% 1,235.00 21,165.00 2.59%

Viacom Inc 1460 35.44 $35.05 -1.10% (569.40) 51,173.00 6.26%

Microsoft Corporation 2550 25.89 $25.32 -2.20% (1,453.50) 64,566.00 7.90%

Lowes Co. 400 56.5 $55.31 -2.11% (476.00) 22,124.00 2.71%

Wal-Mart 350 56.58 $48.63 -14.05% (2,782.50) 17,020.50 2.08%

Amgen 810 59.04 $60.58 2.61% 1,247.40 49,069.80 6.00%

Kenneth Cole Production 870 28.68 $29.31 2.20% 548.10 25,499.70 3.12%

Smuckers 500 45.57 $50.07 9.87% 2,250.00 25,035.00 3.06%

Cendant 1000 22.64 $20.67 -8.70% (1,970.00) 20,670.00 2.53%

American Financial Realty 1500 15.22 $15.16 -0.39% (90.00) 22,740.00 2.78%

First Data 1380 40.08 $39.27 -2.02% (1,117.80) 54,192.60 6.63%

Berkshire Hathaway 23 2954.35 $2,917.99 -1.23% (836.28) 67,113.77 8.21%

NOKIA 2000 15.7 $15.33 -2.36% (740.00) 30,660.00 3.75%

PORTFOLIO STATISTICS

Barrick Gold 2025 22.03 $23.53 6.81% 3,037.50 47,648.25 5.83%

Alltel 725 55.41 $57.32 3.45% 1,384.75 41,557.00 5.08%

PHH Corp 50   $22.35   1,117.50 1,117.50 0.14%

Diageo 720 58.25 $60.50 3.86% 1,620.00 43,560.00 5.33%

Winnebago 1100 35.32 $31.67 -10.33% (4,015.00) 34,837.00 4.26%

Home Depot 1050 38.11 $38.55 1.15% 462.00 40,477.50 4.95%

Gladstone 2320 21.71 $22.46 3.45% 1,740.00 52,107.20 6.37%

British Petroleum 805 62.67 $62.64 -0.05% (24.15) 50,425.20 6.17%

Heinken 1015 34.65 $34.50 -0.43% (152.25) 35,017.50 4.28%

Totals           817,776.52 100%

Continued…….Company Name Shares

Purchase Price

Current Price

Total Return Total Gain Total Value

% of Portfolio

Portfolio Gains/Losses

-20

-15

-10

-5

0

5

10

15

0

5

10

15

20

25

S&PSMF

Industry Allocation

Values & ReturnsSeptember 24, 2004 April 12th, 2005

Total Portfolio $383,991.56 $902,292.00

Equity $327,131.56 $817,776.52

Money Market $56,860 $84,454.99

Period Return on SMF Return on S&P

(09/24/04-04/12/05) 2.53% 5.11%

Total trading costs= 13 basis points

Under Performers

• Wal-Mart– Struggle with same store sales growth– Labor problems

• Unions• Class action sexual discrimination suit

• Winnebago– Gas prices– Missed earnings by 1.5 million– Commodity prices have risen

Best Performers• Barrick Gold

– Commodities up due to falling dollar price– Expanding mining production– De-hedging policy to increase shareholder

value

• Smuckers– Acquisition of Multifoods– Growth of new products (Pillsbury, Hungry

Jack, etc.)

RECENT DEVELOPMENTS

New Positions

• Diversification– Added position in Energy with British

Petroleum– Added position in Telecom with Alltel– Reinforced investment in Financials with

Gladstone Capital and Berkshire Hathaway

• Reinvested in companies that we feel were even further undervalued

LESSONS LEARNED

Professional Development

• Acquired fundamental skills of equity valuation

• Enhanced skills in quantitative and qualitative analysis

• Gained knowledge of research techniques

Group Dynamics

• Team based research efforts

• Understand the sacrifices and compromises associated with a team effort

• “You’re only as strong as your weakest link”

• “Synergy”

Conclusion

• Our portfolio is positioned for a strong ten year outlook

• The Student Managed Fund has provided us with the essential business and social skills that will benefit our professional and personal development

Thank You

• The Foundation

• The Investment Advisory Board

• The Steering Committee

• Faculty – Patrick Terrion– Chinmoy Ghosh

QUESTIONS & COMMENTS