Interim Report Student Managed Fund MBA class of 2004 November 14, 2003.
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Transcript of Interim Report Student Managed Fund MBA class of 2004 November 14, 2003.
![Page 1: Interim Report Student Managed Fund MBA class of 2004 November 14, 2003.](https://reader035.fdocuments.us/reader035/viewer/2022062408/56649f225503460f94c3b1a9/html5/thumbnails/1.jpg)
Interim Report
Student Managed Fund MBA class of 2004
November 14, 2003
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Agenda
Investment Philosophy & Approach
Investment Process
Sector Allocation
MBA Fund Holdings & Investment Criteria
Future Outlook
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Investment Philosophy
Strive to outperform the S&P500 Selecting stocks with strong growth potential Closely monitoring the portfolio
Rely on fundamental analysis Historical performance Business models Economic outlook for the industry
Equal sector allocation Subject to re-evaluation due to economic
changes and the increased experience of the group
Long-term (5 year) investment horizon
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Stock Market Universe
Sector Allocation and Industry
Selection
Traded Stocks
Business Model Analysis
Competitors and Market Share
Products and Customers
Industry Outlook
Economic Situations
Risk vs. Return
Investment Approach
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Stock Selection Criteria
We look for:
Solid financials
Strong management
Earnings growth
Attractive valuation relative to the index
Higher return/risk relative to industry
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Stock Selection Criteria (continued)
Buy Criteria:
Steady growth rates
Intrinsic value > market value
Above average yields
Upside-downside ratio of at least 2
Sell Criteria:
Stock reaches its price objective
Industry-sector weighting exceeds
predetermined limits
Risk/reward profile deteriorates
Earnings figures lower than estimates
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Investment Process
Sector Allocation/Equity Identification Sector Assignments Filtering Equal Allocation
Fundamental Analysis Financial Statements Analysis Trend Analysis
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Investment Process (continued)
Valuation Business Model Analysis Intrinsic Value PEG Ratio NAICS CAPM Risk Factors (Internal & External)
Performance Monitoring Stop Loss Measures (20%) Appreciation Reevaluation (30%) Continuous Monitoring & Dynamic Response
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S&P 500 Sector Allocation
Big Four:
• Financials
• Information Technology
• Consumer Discretionary
• Health Care
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SMF Sector Allocation
As of 11/12/03
Budget not yet
fully allocated
Materials, 15%
Financials, 23%
Consumer Discretionary
, 20%
Information Technology,
17%
Healthcare, 24%
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SMF Holdings
Equal
weightings
of sectors
and initial
investments
($10,000 to
$15,000)
TickerDate of
PurchaseQuant
ityPurchase
PricePrice
(11/13/03)
Market Value
(11/12/03)
% Basic Gain
ALV 10/29/03 300 $32.43 $33.68 $10,104 3.54%
CD 11/12/03 700 $21.03 $21.40 $14,980 1.65%
COGN 10/31/03 300 $34.80 $35.58 $10,674 1.95%
GILD 11/12/03 300 $53.30 $55.04 $16,512 3.23%
FDC 11/04/03 280 $35.90 $37.08 $10,382.40 2.81%
HOTT 11/12/03 550 $27.43 $27.53 $15,141.50 0.09%
JEC 10/24/03 200 $47.86 $43.57 $8,714 -9.25%
OCR 11/05/03 350 $36.93 $38.36 $13,426 3.63%
TOL10/14/0311/04/03
100150
$34.96$38.01
$38.79 $9,697.50 4.75%
WFC 11/05/03 250 $55.23 $57.16 $14,290 3.27%
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SMF Holdings
Amount Invested in Individual Equities = $121,537.8
Market Value = $123,921.40
% Basic Gain/Loss = 1.96%
Initial Holdings on 9/4/03 = $251,741.00
Market Value on 11/12/03 = $ 261,250.76*
Total % Basic Gain/Loss = 3.78%*
S&P 500 Return (9/4/03-11/13/03) = 2.96%
(*Market value of SMF holdings at close on 11/13/03)
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Investment Criteria
Quantitative Qualitative
ROA Industry Growth
ROE Company Market Share
ROIC Corporate Governance
Growth in EPS Institutional Ownership
Free Cash Flow/Net Income Insider Trading
Gross Margin (%) Market PowerProduct Differentiation Low-cost ProducerCustomer Relationship
Retention Ratio
Economic Profit
Debt/Equity
Beta
Quantitative
& qualitative
factors
checked
across
industries
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Qualitative Investment Criteria - PortfolioALV COGN FDC JEC OCR TOL WFC
Industry Growth
23.23% 6.80% 10.81% -5.0% 6.12% 20.34% 6.90%
Company Market Share
31% airbags33% sidebags15% steering wheel14% safety electronics
0.40%
75% money transfer40% merchant processing25% card-issuing services
12.58% 1.4% 4.78% 17.71%
Market Power
Product Differentiation
Low-cost Producer
Customer Relationship
High
High
High
High
High
High
High
High
High
Medium
Medium
High
Medium
High
High
High
High
High
Medium
Medium
High
Corporate Governance
8/11 7/8 5/9 6/9 6/12 7/11Data not available
Institutional Ownership
99.05% 66.60% 95% 77.80% 95.6% 60.30% 67%
Insider Trading
0.07% 0% 1.13% 2.70% 25% 5.5% 0.11%
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ALV COGN FDC JEC OCR TOL WFC
ROA 3.72% 9.13% 5.00% 5.30% 3.50% 7.67% 1.41%
ROE 7.30% 15.80% 26.93% 13.67% 7.00% 20.83% 15.53%
ROIC 10.12% 16.93% 18.17% 23.93%19.93
%13.04% 10.54%
Cost of Capital 7.29% 8.94% 8.00% 7.87% 6.80% 7.02% 6.68%
Economic Profit 3.89M 40.4M 718M 73.05M 19.08M 90.29M 2.091B
EPS Growth 63.70% 6.96% 23.51% 34.53%44.77
%29.43% 16.29%
FCF/NI 68.30% 152% 129.46% 71.20% 46.3% -109% n/a
Gross Margin 17.91% n/a 42.17% 13.73%29.64
%8.95% n/a
Ret. Ratio 51% 100% 96% 100%90.67
%100% 61%
Debt/Equity 0.54 0 0.71 0 0.65 0.69 1.45
Beta 1 1.2 1.13 0.95 0.78 1.1 1.05
Quantitative Investment Criteria - Portfolio
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Qualitative Investment Criteria - PortfolioALV COGN FDC JEC OCR TOL WFC
Industry Growth
23.23% 6.80% 10.81% -5.0% 6.12% 20.34% 6.90%
Company Market Share
31% airbags33% sidebags15% steering wheel14% safety electronics
0.40%
75% money transfer40% merchant processing25% card-issuing services
12.58% 1.4% 4.78% 17.71%
Market Power
Product Differentiation
Low-cost Producer
Customer Relationship
High
High
High
High
High
High
High
High
High
Medium
Medium
High
Medium
High
High
High
High
High
Medium
Medium
High
Corporate Governance
8/11 7/8 5/9 6/9 6/12 7/11Data not available
Institutional Ownership
99.05% 66.60% 95% 77.80% 95.6% 60.30% 67%
Insider Trading
0.07% 0% 1.13% 2.70% 25% 5.5% 0.11%
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ALV COGN FDC JEC OCR TOL WFC
ROA 3.72% 9.13% 5.00% 5.30% 3.50% 7.67% 1.41%
ROE 7.30% 15.80% 26.93% 13.67% 7.00% 20.83% 15.53%
ROIC 10.12% 16.93% 18.17% 23.93%19.93
%13.04% 10.54%
Cost of Capital 7.29% 8.94% 8.00% 7.87% 6.80% 7.02% 6.68%
Economic Profit 3.89M 40.4M 718M 73.05M 19.08M 90.29M 2.091B
EPS Growth 63.70% 6.96% 23.51% 34.53%44.77
%29.43% 16.29%
FCF/NI 68.30% 152% 129.46% 71.20% 46.3% -109% n/a
Gross Margin 17.91% n/a 42.17% 13.73%29.64
%8.95% n/a
Ret. Ratio 51% 100% 96% 100%90.67
%100% 61%
Debt/Equity 0.54 0 0.71 0 0.65 0.69 1.45
Beta 1 1.2 1.13 0.95 0.78 1.1 1.05
Quantitative Investment Criteria - Portfolio
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Outlook
Strong economic growth likely
Adjust sector allocation to economic outlook
Monitor portfolio to maximize value
Invest funds quickly, but wisely
Beat benchmark
Positive market returns expected
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MBA Fund Managers
Michael Appell
Jessie LeBlanc
Tanzhuo Liu
Saipriya Menon
Geoffrey Munger
Ganesh Padmanabhan
Anjana Radhakrishnan
Heather Utter
Wiebke Wanner-Borchardt
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Thank you
University of Connecticut Foundation Inc.
Investment Advisory Board
Steering Committee
Dr. Chinmoy Ghosh
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Questions