Finance ClubThursday, January 26, 2012

What is a stock?

Why do we care?

Who invests in equities?

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The Many Faces of a Stock

• An ownership claim on net assets • (Assets – Liabilities)

• Investable asset• Common and Preferred shares• Various nomenclature

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From where do we get value?

• Financial assets are defined by their return and risk

• Holders of common stock make money in two ways

• Risk is based on the uncertainty of future cash flows

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Primary and Secondary Markets

• Who makes money when you sell a share of AAPL to somebody? Does Apple care?

• A primary market is when shares are issued by the company (e.g. LNKD IPO)

• A secondary market is an investor selling to another investor

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What is a equity investor trying to do?

• How do shares appreciate in value? How do I make money?

• In a general sense, what is the point of equity research?

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Why equities?

• Probably around 1/3 the size of the bond market, so there are fewer assets to invest in

• More intangibles to consider

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SMIF Mission Statement

• Give students relevant experience in equity research and portfolio management.

• We want you to get a job after graduation.

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Our Investing Philosophy

• We are a long-only equity fund. • We seek growth at a reasonable price.

– “GARP shop”

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Growth Versus Value

• Growth Stock– High reinvestment

in company– High EV/EBITDA– High EPS growth

e.g. Technology, Services

• Value Stock– High dividend

yield– Low P/E– Low P/B

e.g. Utilities, Financials

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Our Vision

• To see the SMIF operate as an asset management shop would in the real world.– Conduct research– Continuously follow targets and holdings– Make real time decisions– Execute

Sector Name Ticker QTY Last Price MKT Value

Basic Materials Noble Energy NE 95 34.92 3,317.40

Basic Materials Potash Corporation POT 89 45.24 4,026.36

Bonds Barclays’ Aggregate Bond Fund AGG 581 110.47 64,183.07

Consumer Goods Diageo plc DEO 55 89.11 4,901.05

Consumer Goods Altria Group MO 94 28.74 2,701.56

Finance Agency Holding Corp AGNC 300 29.26 8,778.00

Health Care Intuitive Surgical ISRG 3 455.022 1,365.06

Health Care Johnson & Johnson JNJ 61 65.75 4,010.75

Health Care Questcor Pharmaceuticals' QCOR 102 36 3,672.00

Industrial Select Sector SPDR Industrial Select Sector SPDR XLI 142 36.57 5,192.94

S&P 400 Value SPDR S&P 400 Value SPDR IJJ 62 81.43 5,048.66

Services McDonald’s Corporation MCD 79 99.01 7,821.79

Services Wal-Mart WMT 65 61.15 3,974.75

Tech Apple Inc. AAPL 36 44.64 16,007.04

Tech FactSet Research Systems FDS 54 90.61 4,892.94

Tech AT&T T 170 29.52 5,018.40

Tech Winstream WIN 388 12.21 4,737.48

Utilities Exelon Corp. EXC 80 40.11 3,208.80

Utilities First Energy FE 126 42.78 5,390.28

Vanguard Total Stock Market ETF Vanguard Total Stock Market ETF VTI 78 67.92 5,297.76

Total 163,546.10

SMIF Holdings as of 01/26/2012

Services

• Sector Leader: Emmett• Analysts: Miho Shima, Frank Disanti, Elson

Cheng, Jason Snook, Marisa Sylvester

Services MCD 79 99.01 7,821.79

Services WMT 65 61.15 3,974.75

Industrial

• Sector Leader: Zubair • Analysts: Tom Ricardi, Kyle Hagner,

Industrial Select Sector SPDR XLI 142 36.57 5,192.94

Health Care

• Sector Leader: Matt Winters• Analysts: Curt Becall, Robert Karpinski

Health Care ISRG 3 455.022 1,365.06

Health Care JNJ 61 65.75 4,010.75

Health Care QCOR 102 36 3,672.00

Basic Materials

• Sector Leader: Ryan Lumb• Analysts: Alex Torgorsen, Colin deJersey,

Corbin Rosmarin, Conor Doyle, Brandon Angoth

Basic Materials NE 95 34.92 3,317.40

Basic Materials POT 89 45.24 4,026.36

Financial

• Sector Leader: John Beiter• Analysts: Jenn O’neil, John Felix, Shane

Feldman, Bob Mascia, Donald Casadonte, Sam Kelly, Emily Saporito

Finance AGNC 300 29.26 8,778.00

Consumer Goods

• Sector Leader: Josh Kaplan• Analysts:Kendall Berman, Luke Taverne,

Will Koch, Nate Smith, Erik Edmonds

Consumer Goods DEO 55 89.11 4,901.05

Consumer Goods MO 94 28.74 2,701.56

Utilities

• Sector Leader: Lawrence Heath• Analysts: Evan Shea, Olivia Sluzar, Noah

Seifert

Utilities EXC 80 40.11 3,208.80

Utilities FE 126 42.78 5,390.28

Technology

• Sector Leader: Taylor • Analysts: Rajan Burathoki, Kim Krupski,

Chris Haigh, Matty Mungillo, Nam Vu

Tech AAPL 36 44.64 16,007.04

Tech FDS 54 90.61 4,892.94

Tech T 170 29.52 5,018.40

Tech WIN 388 12.21 4,737.48