Model Club Agenda9:30 Call to Order

9:30 Welcome Guests

9:35 Minutes of Previous Meeting

9:40 Treasurer’s Report

9:45 Old Business

Registering with NAIC

10:00 New Business

10:10 Education Segment

Investigating Red Flags

10:30 Stock Selection Guide review

Dollar General

Family Dollar

99 Cents Only

Dollar Tree

11:25 Portfolio Review

11:25 Review investments for the month

11:30 Adjourn

INVESTIGATING RED FLAGS

Education SegmentCincinnati Investment Model

Club

The Problem (Red Flag) on the SSG

Dollar General

The Red Flag in the Visual Analysis Section of the SSG is also reflected in Section 2A.

When this type of Red Flag appears

• Don’t ignore the issue!• Don’t second guess or assume you

know what happened!• Do Investigate and find out what

happened• Do decide if it is a short term problem

that can be fixed, or a long term problem which makes it a company that you want to avoid

Where do you go to find the information you need?

• The Management Discussion and Analysis section of the Annual Report or 10K should tell you what happened. This section is often referred to as the MD&A section.

Getting the information you need• There are several places you may

have to check to find out how management intends to fix the problem.

• Some places to look are:– The President’s letter to the Shareholders

in the Annual Report– Press Releases– Call Investor Relations and ask them

Dollar General (from 2000 Annual Report)

Dollar General (from 2000 Annual Report)

Dollar General -President’s Message

Judgment

• In each case you must decide

– How serious is the problem?– Is it a short term or long term

problem?– Is management addressing the

problem?– Will their solution fix the problem?

DOLLAR TREE

The Problem

Dollar Tree What happened?

Dollar Tree (from the MD & A section)

The Solution- (from the MD & A Section)

Solutions - ( from the MD & A Section)

What the President had to say