THE DECISION-MAKING PROCESS: TOP DOWN AND BOTTOM-UP

Written by:

NATALIE YOHANA RAMIREZ RESTREPO

JOHANNA MONSALVE ESPINAL

MAURICIO ALONSO JARAMILLO ALVAREZ

TEACHER: SERGIO ANDRES GIRALDO BLANDON

SUBJECT: MERCADO INTERNACIONAL DE CAPITALES

DATE: 06 DE MARZO DE 2015

INSTITUCIÓN UNIVERSITARIA DE ENVIGADO

FACULTAD DE CIENCIAS EMPRESARIALES

ADMINISTRACIÓN DE NEGOCIOS INTERNACIONALES

CARRERA 27 B # 39 A SUR – 57

ENVIGADO

2015

INTRODUCTION

The goal of fundamental analysis is simply to get to provide investment advice on a particular value according to the confrontation between what the analyst understands that it is his fundamental valuation and the market said at the time, the price, etc., determining the INTRINSIC VALUE.

In undertaking the process of decision making, you can use two basic techniques of approaching the values will depend on the starting point for the recommendations.

The two approaches to which we are referring are the Top-Down and Bottom-Up, whose literal translation would be "Arriba-Abajo" and the "Abajo-Arriba"

 1) Top - Down

The method or Top-Down approach is one that takes investment decisions based on the most comprehensive to go down gradually to the more specific variables.

The process of decision making could follow this path:

 *The first analysis would be to analyze the situation of the international economic cycle influence face to see how that variable in estimates to be undertaken by the analyst on the company concerned.

*The second step is to analyze the prospects of the respective national or domestic economies.

Then, within each of the national economies, we pay attention to sectors with a view to see which of them will grow the economy as a whole and which less.

After making these phases, would the specific analysis of each company in which he would assess the fundamental aspects of it, among which are the following:

- Competitive position of the company:

- Market share

- Product quality

- Barriers to entry

- Profitability of each company

- In terms of cost efficiency

- Capital management

- Success of past investments

- Operating and Financial Leverage

- Sensitivity of the benefits to the level of activity and financial situation

- Earnings growth

- Rating. Determination of Price Target

- Investment recommendation and decision making

Therefore, it looks as part of overall at most particular.

Clearly, any movement in variable has a significant influence on the overall economy, but it will not be the same the influence of the economy to grow at a rate determined for a company whose business depends largely on international demand, because it operates using a standardized international product prices (what is commonly known as commodities) as may be the case of Ecopetrol, that the effect of that variable in companies that depend almost exclusively on the domestic demand (case of Exito, the result of the merger between Casino and El Grupo Empresarial Antioqueño) or maintain a system of regulated prices that varies slightly from year to year as in the case of the electricity sector or highways.

 2) Bottom – Up

In this second approach to analysis, the decision-making process is reversed.

This approach is said that companies not using them, but values are analyzed.Investment opportunities are analyzed, regardless of the prospects of economies (whether international or domestic) or sectors as a whole.

Three basic elements involved in decision-making with the use of this approach:

A. THE BUSINESSB. THE VALUATION C. THE RISK, where two types are distinguished:

1. Business or specific.

In which significantly influence the type of business, financial condition and ability to increase profits and dividends.

2. From action or market.

Here we should pay special attention to two variables:

a) Volatility of the action

b) Share liquidity

 The use of one method or another is largely determined by the type of company you are analyzing and tradition in making investment decisions by managers.

If it comes to countries or markets where price formation is not particularly efficient (circumstance that occurs in so-called emerging markets), the focus Top Down is much more useful in the sense that the macroeconomy are truly govern the fate of the market and almost no investor is to analyze the fundamentals of the companies if macroeconomic variables are not in favor of a market rally.

This we have seen in any of the recent crises that have plagued emerging countries and in most cases have been caused by macroeconomic factors. We refer to any of the Asian crisis of 1997-1998, the Mexico of 1994 or the latest in Brazil in 1998.

The Bottom-Up approach is much more common in developed countries and markets in which macroeconomic risks are usually well controlled, or at least not exhibit excessive variations in the short term.

The US case is the clearest in this regard, so that in this (the largest in the world by far in terms of market capitalization and especially the number of listed companies) may choose securities market and have more or less guarantee that your progress will not be particularly influenced by macroeconomic variables and can present a completely different market behavior, for better or for worse, as this statement is true in both directions.1

THE PROCESS OF DECISION BASED IN FUNDAMENTAL ANALYSIS COULD FOLLOW THESE STEPS:

1. FIRST STEP:

GLOBAL ECONOMY ANALYSIS: ¿WHAT´S HAPPENING AROUND THE WORLD?

The global economy will face a fight looking for gain momentum as many high-income countries continue to grapple with legacies of the global financial crisis and emerging economies are less dynamic than in the past.

Global growth in 2014 was lower than initially expected, continuing a pattern of disappointing outturns over the past several years. Growth picked up only marginally in 2014, to 2.6 percent, from 2.5 percent in 2013. Beneath these headline numbers, increasingly divergent trends are at work in major economies.

1 http://www.megabolsa.com/biblioteca/fundamental10.php

While activity in the United States and the United Kingdom has gathered momentum as labor markets heal and monetary policy remains extremely accommodative, the recovery has been sputtering in the Euro Area and Japan as legacies of the financial crisis linger, intertwined with structural bottlenecks. China, meanwhile, is undergoing a carefully managed slowdown. Disappointing growth in other developing countries in 2014 reflected weak external demand, but also domestic policy tightening, political uncertainties and supply-side constraints.

Several major forces are driving the global outlook: soft commodity prices; persistently low interest rates but increasingly divergent monetary policies across major economies; and weak world trade. In particular, the sharp decline in oil prices since mid-2014 will support global activity and help offset some of the headwinds to growth in oil-importing developing economies. However, it will dampen growth prospects for oil-exporting countries, with significant regional repercussions.

Overall, global growth is expected to rise moderately, to 3.0 percent in 2015, and average about 3.3 percent through 2017. High-income countries are likely to see growth of 2.2 percent in 2015-17, up from 1.8 percent in 2014, on the back of gradually recovering labor markets, ebbing fiscal consolidation, and still-low financing costs. In developing countries, as the domestic headwinds that held back growth in 2014 ease and the recovery in high-income countries slowly strengthens, growth is projected to gradually accelerate, rising from 4.4 percent in 2014 to 4.8 percent in 2015 and 5.4 percent by 2017. Lower oil prices will contribute to diverging prospects for oil-exporting and -importing countries, particularly in 2015.

2. SECOND STEP:

STUDYING THE REGIONAL ECONOMIC BEHAVIOR: ¿WHAT´S HAPPENING IN SOUTH AMERICA? 2

“Latin American economy moving at two speeds, although the region has weakened, the performance of the most open economies has been better.

The trajectory of the Economies of Latin America is bifurcating as countries like Peru, Colombia, Mexico and Chile grow faster than the global average, while Argentina and Brazil face debilitating downturns.

Although the region has weakened, the performance of the most open economies has been better.

2 http://www.americaeconomia.com/economia-mercados/finanzas/analisis-economia-de-america-latina-avanza-dos-velocidades

The growth is best kept in Latin American countries have emphasized policies of free market. The Chinese interest in natural resources has fueled a rise in raw material prices.

According to an analysis by The Wall Street Journal, Latin America's economy is growing at two speeds. Indicates that in general the region has tended to perform well over the last decade, thanks to Chinese interest in natural resources area, the economy is propelled with a rise in the prices of raw materials.

However, the global economic crisis in recent years has created a division between countries that promoted more vigorously free trade reforms and kept a tight control over public finances and exploited the wealth from the rise in prices commodities to expand the role of government in the economy.

Although the region has weakened, the performance of the most open economies has been better. Peru and Chile, for example, recorded growth of 6.5% and 5.7%, respectively, in the third quarter compared to the same period last year, according to latest information.

Colombia grew 4.9% in the second quarter and Mexico rose 4.2% in the first nine months of the year compared to the same period in 2011, which is almost triple the growth of Brazil. Argentina, however, grew just 2.4% in the first half, compared to the same period last year.

"This region of two speeds will remain," said Neil Shearing, emerging markets economist at Capital Economics Ltd. in London. "In a weaker global environment, some of these economies have a relatively good performance compared to those facing deep structural problems".

Peru, in particular, has had a remarkable career. He has averaged an annual growth of around 6% in the last 10 years, the largest in Latin America, which has allowed him to halve the poverty rate during that time to leave at 27%, according to government statistics. Chile is not far, averaging an annual growth of around 4.5% during the same period.

In Venezuela, where President Nicolas Maduro has nationalized much of the private sector, the economy is headed for an expansion of 5% this year due to the boost provided by higher public spending in the face of recent elections in which Maduro was reelected. But many private economists predict that the country does not grow or even into recession next year as the government tightens its belt.

While countries like Peru and Chile embraced free trade, Brazil used his position as an exporter of raw materials to build and strengthen local industries to which it protected by regulations and high tariffs on importations. The model worked, roughly, when commodity prices soared after 2013. But these prices are now falling and Brazilian strategy would be low.

Example oil industry: The case of the oil industry is illustrative. One of the largest oil discoveries in the hemisphere in recent years generated optimism that a country that is already the world's largest exporter of iron ore and other raw materials soon become a global oil power.

But oil production this year may be lower than that of 2014. What happened? Brazil enacted laws requiring state oil company Petroleum Brasileiro do most of the exploration, and that local businesses get contracts to build ships and other equipment needed to extract the oil from the ocean depths. The local industry, however, is not large enough to take on a task of such magnitude

During the boom years of the raw materials, the leftist government swelled the ranks of workers and spent heavily on public wages. The president, Dilma Rousseff, has also implemented a series of stimulus measures to prop up the economy, including a plan of US $ 66,000 million in August to invest in roads and railways.

"Brazil should have recorded a higher surplus as a prosecutor for when growth decelerates protection," said Shearing of Capital Economics. "Essentially you removed all its raw materials from the earth to send to China and now needs more savings and less spending, restructuring of public spending and welfare reform ... which is not easy to implement."

Argentina, in turn, has recorded stellar growth in recent years that in 2011 reached 8.95%. But this has been accompanied by greater government intervention in the economy and trade controls, which have increased under the government of President Cristina Fernandez de Kirchner.

The government has initiated a series of controversial reforms, as an initiative to restrict imports unless they are matched by exports. The idea is that companies will use the dollars generated by exports to buy imported goods and, thus, reduce the outflow of dollars. He has not had that effect.

Protectionist measures damage the trade and industry in Argentina, economists say. "They create jobs and demand in the short term, but is not sustainable as companies develop only as a result of the regulations, rather than innovation," says Daniel Hoyos, an economist at the National University of Central Buenos Aires.

Mexico, the second largest economy in the region, it seems better positioned to grow in the coming years, with a strong manufacturing base, which means that its economy does not depend on the high price of raw materials to grow and that would benefit from rising of wages in China, economists point out. Mexico exports more manufactured than all other countries combined region.

For Mexico, further expansion would be a kind of vindication after years being compared negatively with Brazil. "Everything we heard in recent years was Brazil, Brazil, Brazil," said current Foreign Secretary Jose Antonio Meade in an interview. "But when you see everything from inflation to debt ... we had much better macroeconomic figures".”3

3. THIRD STEP:

STUDYING THE COUNTRY: ¿WHAT´S HAPPENING IN COLOMBIA?

In Colombia the expectations about the behavior of the BANCO DE LA REPUBLICA is to keep the interest rate into 4,5 percent all 2015, it perspective can change if the oil prices will fall deeply and the fiscal perspectives will gone bad , in this case probably the interest rate will be at 4 percent

The global economic grow is deteriorated more since the end of 2014 accordingly the el FMI took a look about 2015 global PIB expectations from 3,8% to 3,5%, a Little bit above of the 3,3% estimated the last year

In Colombia we expect a slow decrease of the PIB from 4,8 % in 2014 to 4% in 2015 but with high risks of decrease. This situation happens for the continuous reduction of oil prices because those prices lost 35 percent in the last 3 months.

The exchange terms of international negotiations are much damaged because the fall of the oil prices because the oil prices participation are high in the external accounts of Colombia. This damage will make a negative impact against the national incomes affecting the local demand.

We expect that the internal demand slow will concentrate in fixed investments, because we expect a negative impact but moderated, of the taxes reform of 2014, while the devaluation will affect the capital goods importations

The private consumption will slow less, but the devaluation will play an important role in his weakness because the families will lose dollars purchasing power, affecting the imported consumption goods. On the other hand, the unemployment rate could be near of the long term structural level, which will make issues to the profits associated with the employment levels growth

Finally we expect that the public consumption will be moderated in 2015 for an important reason: the government will face a stage with less revenues of the oil for the years to come even if the hugest impact will be felt just since 2016

3 http://www.americaeconomia.com/economia-mercados/finanzas/analisis-economia-de-america-latina-avanza-dos-velocidades

However, the internal demand brings a good behavior from several months ago and the new government projects helping the building sector will contribute to compensate part of the internal demand slow.

About inflation, we still believe that will close the 2015 under the 2014 level, because the internal demand weakness and a less oil prices

We expect that the inflation will be above of 3, 5 % the first semester and will be close to 4 %, because of the devaluation, the inflation at the end of 2014 can be near of 3, 6%.

Taking a look around the Colombian´s neighbors we have to pay important attention to Venezuela situation, it is important because Venezuela has a very huge economy because the oil production and is the second commercial partner of Colombia after EEUU.

The political situation brought problems to Colombian exporters because the Venezuela government with their regulations (with (CADIVI) (Comisión de Administración de Divisas) for example) made a late payments structure for several years (almost since Chavez took the presidency) and this fact affect not only Colombia but also all the commercial partners of Venezuela

All that stuff is something that we can appreciate with the Venezuela lack of food into the supermarkets because nobody wants to sell their products because the fear of late payments.

The region have also Ecuador, Peru, Brazil and Panamá around Colombia but those countries aren’t a big commercial partners, maybe Ecuador sell good amounts of sea food to Colombia, those countries doesn’t have big troubles that affect the commerce with Colombia probably Ecuador that have some equal Venezuela thoughts but without the deeply internal conflict.

With Colombia we can appreciate some important things:

External investments are growing and the peace conversations with guerrilla can increase it because the fear of investors can disappear for good.

The inflation stability is symptom for macroeconomic health Colombia have good growing behavior for several years

Colombia have already exceed us$ 100.000 million (25,3% of annual PIB) but it isn’t bad if we compare this with European countries that are in crisis with the 100% or more of his PIB in external debt

Stock market trends for investments decision

Trends analysis

The investors can make qualitative and quantitative analysis of trends to have good information about the companies that stay in the Colombian stock market an according with their risk appetite make a right investment

stock Very Short term Short term Middle term Long term

COLOMBIA COLCAP INDEX

ÉXITO

PFDAVVNDA

PFBCOLOM

BVC

CNEC

CEMARGOS

CORFICOLCF

ECOPETROL

ETB

PFAVAL

GRUPOSURA

NUTRESA

ISA

ISAGEN

PREC

TABLEMAC

PFAVH

CLH

EEB

PFHELMBANK

PFGRUPSURA

BCOLOMBIA

stock Very Short term Short term Middle term Long term

BOGOTA

CELSIA

CONCONCRET

ELCONDOR

ENKA

MINEROS

ODINSA

PFCARPAK

PFCORFICOL

VALOREM

OCCIDENTE

PFCEMARGOS

SDCORFIC

SDPFCORF

GRUPOAVAL

GRUPO ARGOS SA

GRUPO ARGOS-PRF

COLOMBIA COLEQTY INDEX

COLOMBIA COLSC INDEX

COLOMBIA COLIR INDEX

ICOLCAP

Profits and risks analysis

stock1 day

profitability1 month

profitability3 months

profitability1 year

profitabilityShort

term riskMiddle

term riskLong

term risk

COLOMBIA COLCAP INDEX

1,93% -2,76% -11,79% -16,36% 1,67% 1,63% 1,58%

ÉXITO 1,20% 2,43% -12,15% -8,07% 3,36% 3,05% 2,73%

PFDAVVNDA 2,21% -2,05% -6,98% 5,90% 3,41% 3,24% 3,07%

PFBCOLOM 2,36% 0,78% -8,39% -1,44% 2,70% 2,41% 2,11%

BVC 1,14% -8,29% -10,61% -19,55% 3,33% 3,16% 2,99%

CNEC 5,75% 13,22% 22,55% -50,79% 7,27% 7,73% 8,20%

CEMARGOS 0,70% -4,13% -14,95% -12,35% 3,22% 3,14% 3,05%

CORFICOLCF 1,74% -3,20% -7,40% 1,34% 2,76% 2,33% 1,90%

ECOPETROL 1,27% -4,08% -2,44% -44,44% 3,59% 3,59% 3,60%

ETB -0,18% -2,16% 5,03% 33,42% 1,82% 2,23% 2,64%

PFAVAL 2,15% -2,86% -6,67% -4,03% 2,22% 2,07% 1,91%

GRUPOSURA 1,91% -2,40% -14,11% -1,44% 2,51% 2,43% 2,36%

NUTRESA 0,26% -5,20% -20,83% -12,37% 1,99% 1,92% 1,86%

ISA 3,10% -1,92% -7,26% -6,01% 1,91% 2,33% 2,74%

ISAGEN 1,64% 6,16% 5,08% -1,90% 1,69% 2,18% 2,67%

PREC 8,87% -9,76% -55,77% -78,96% 7,30% 7,94% 8,57%

TABLEMAC 0,00% 8,00% 7,14% -25,00% 9,08% 6,72% 4,37%

PFAVH 0,95% -3,14% 7,40% -7,50% 2,94% 2,72% 2,49%

CLH -0,74% -10,67% -16,15% -16,46% 2,55% 3,02% 3,49%

EEB 1,25% -0,61% -5,52% 11,30% 1,63% 1,94% 2,24%

PFHELMBANK 0,19% 1,51% 4,47% 7,60% 0,26% 1,05% 1,85%

PFGRUPSURA 1,49% -2,58% -12,19% -5,03% 2,81% 2,53% 2,25%

BCOLOMBIA 0,51% -3,56% -2,06% 17,62% 3,15% 2,75% 2,35%

BOGOTA 2,32% -8,73% -13,11% -18,05% 2,51% 2,19% 1,87%

CELSIA 0,00% -5,29% -17,86% -13,13% 2,62% 2,47% 2,33%

CONCONCRET 1,69% 0,67% -3,54% 16,28% 2,84% 2,53% 2,23%

ELCONDOR 0,00% -3,57% 16,55% 8,00% 1,94% 2,39% 2,85%

ENKA 0,00% -3,94% 10,91% 35,56% 2,81% 3,79% 4,78%

MINEROS 2,01% -2,96% -0,54% -24,73% 3,13% 3,34% 3,56%

ODINSA -0,94% 2,69% 7,69% -7,69% 1,23% 1,92% 2,61%

PFCARPAK 2,50% -1,40% -26,68% -44,09% 5,58% 4,91% 4,24%

PFCORFICOL 0,00% 1,22% 7,60% 19,80% 2,84% 2,63% 2,42%

VALOREM 0,27% 5,68% 18,10% 16,98% 3,01% 3,38% 3,75%

OCCIDENTE 0,00% 3,19% 5,53% 35,48% 0,86% 1,11% 1,36%

PFCEMARGOS -3,50% 6,75% -8,10% 8,67% 3,57% 2,97% 2,38%

SDCORFIC 0,00% 0,00% 0,00% 0,00% 2,92% 2,92% 2,92%

SDPFCORF 4,00% 0,00% 0,00% 0,00% 6,27% 6,27% 6,27%

GRUPOAVAL 2,57% 5,28% -1,06% 0,72% 2,49% 2,14% 1,79%

GRUPO ARGOS SA

-0,92% -6,32% -13,74% -11,34% 3,40% 3,09% 2,77%

GRUPO ARGOS-PRF

-0,35% 0,53% -0,18% 0,98% 2,92% 2,87% 2,82%

COLOMBIA COLEQTY INDEX

0,96% -4,94% -10,26% -12,16% 1,50% 1,48% 1,45%

COLOMBIA COLSC INDEX

0,12% -1,80% -2,15% -6,79% 1,50% 1,37% 1,24%

COLOMBIA COLIR INDEX

0,98% -4,93% -10,10% -11,52% 1,53% 1,51% 1,49%

ICOLCAP -0,62% -2,56% -4,87% -7,18% 1,68% 1,52% 1,36%

4. THE FIRMS

ARGOS GROUP

Argos Group makes equity investments in companies that convert resources into products and services with high added value for the development of the basic sectors of the economy. Its subordinate companies have a presence in several countries of the American continent, with active participation in the cement business, energy, urban and housing and port development. Argos Group Inc. is the controlling shareholder of Cementos Argos SA, Celsia SA E.S.P., Sator H.S.H. and Situm S.A.S .; also owns 50% of Compas Inc.

Strategic Investments

The value of strategic investments Argos Group at the end of 2012 was distributed in 54% BUSINESS cement, 18% in energy, 22% in real estate, 3% for coal and 3% in the port.

Investment Portfolio

Argos Group has investments in the finance portfolio through Sura and Bancolombia Group, and food, through Nutresa Group. At December 31, 2012, portfolio investments amounted to 7.1 billion pesos.

Creating shareholder value is given from diversifying their investments, with a solid portfolio and strategic investments in diversified sectors where mature businesses are combined and structured NEW BUSINESS, which show great potential for growth. This, framed within the Argos Group imprint that puts all companies in which it invests: commitment to sustainability in its three dimensions - economic, environmental and social - and applying the highest standards of corporate governance.

By investing in Argos Group, shareholders enjoy the opportunity to participate in the growth and profitability of businesses with high potential and dynamism as the port and the housing, in which could not invest directly in the stock market of Colombia. In addition, perceived risk mitigation and volatility of these business developments through security clearance and deliver mature business that invests in the Group (the cement and energy).

Ownership Structure

Argos Group is a publicly traded company whose capital is divided into shares that are listed on the Bolsa de Valores de Colombia.

It has an authorized capital of COP $ 75,000,000,000 divided into 1,200,000,000 shares of nominal value of COP $ 62.50. The paid-in capital is USD $ 49,869,058,187.50 represented in 651,102,432 ordinary shares of which there are 5.702.432 shares repurchased, so the total number of ordinary shares outstanding is 645,400,000.

Additionally, the Company has 146,802,499 preferred shares, par value USD $ 62.50, for a total of 792,202,499 shares outstanding.The following graphs show the corporate structure of the Company as at September 30, 2014:

ACCIÓN ORDINARIA

 

ACCIÓN PREFERENCIAL

ACCIÓN ORDINARIA

ACCIONISTA ACCIONES POSEIDAS PARTICIPACIÓN

Grupo de Inversiones Suramericana S.A.

229.384.477 35,54%

Grupo Nutresa S.A. 79.804.628 12,37%

Fondo de Pensiones Obligatorias Porvenir Moderado

35.972.181 5,57%

Fondo de Pensiones Obligatorias Protección Moderado

30.047.320 4,66%

Amalfi S.A. 25.413.923 3,94%

Fondo Bursátil Ishares COLCAP

14.435.460 2,24%

Inversiones El Yarumo S.A.

14.003.382 2,17%

Fondo de Pensiones Obligatorias Colfondos

13.809.566 2,14%

Fundación para el Beneficio

13.598.775 2,11%

ACCIÓN ORDINARIA

ACCIONISTA ACCIONES POSEIDAS PARTICIPACIÓN

JMRV & Cía. Sociedad en Comandita por Acciones

6.050.000 0,94%

Fundación Fraternidad Medellín

5.060.000 0,78%

Fondo de Pensiones Obligatorias Skandia

4.510.139 0,70%

Uribe de Arango María Cristina

4.005.503 0,62%

Abu Dhabi Investment Authority

2.900.505 0,45%

Arango Uribe María Mercedes

2.756.924 0,43%

Arango Uribe Olga Isabel 2.750.628 0,43%

Ishares MSCI Emerging Markets Index Fund

2.696.058 0,42%

Arango Uribe Ana Cristina 2.671.752 0,41%

Subfondo Barclays Global Investors Services N.A.

2.400.072 0,37%

Fondo Fidelity Investment Trust Latin America Fund

2.259.082 0,35%

Information September 30 de 2014

 

ACCIÓN PREFERENCIAL

ACCIONISTA ACCIONES POSEIDAS PARTICIPACIÓN

Fondo de Pensiones Obligatorias Protección Moderado

35.707.112 24,32%

Fondo de Pensiones Obligatorias Porvenir Moderado

22.594.111 15,39%

Amalfi S.A. 12.984.184 8,84%

Fondo de Pensiones Obligatorias Colfondos Moderado

7.930.722 5,40%

Fondo de Pensiones Obligatorias Skandia

2.784.932 1,90%

Porvenir S.A. 2.738.383 1,87%

Fondo de Pensiones Voluntarias Protección

2.644.771 1,80%

Azurita S.A. 1.761.926 1,20%

Conscar & Cía. S.C.A. 1.678.481 1,14%

Inversiones Gloscar S.A.S. 1.427.663 0,97%

Lipu & Cía. S.C.A 1.423.039 0,97%

JMRV & Cía. Sociedad en Comandita por Acciones

1.393.765 0,95%

Fondo de Pensiones Obligatorias Protección Retiro

1.135.954 0,77%

Norges Bank 1.124.396 0,77%

Ishares MSCI Emerging 1.084.452 0,74%

ACCIÓN PREFERENCIAL

ACCIONISTA ACCIONES POSEIDAS PARTICIPACIÓN

Markets Index Fund

Fondo de Cesantías Protección

1.055.103 0,72%

Fondo de Pensiones Obligatorias Protección Mayor RI

1.049.039 0,71%

Abu Dhabi Investment Authority

1.005.413 0,68%

Subfondo Barclays Global Investors Services N.A.

977.950 0,67%

Fondo de Pensiones Obligatorias Porvenir

886.527 0,60%

 Information September 30 de 2014

• AVAL GROUP

Grupo Aval is the largest in Colombia and one of the leading banking groups in Central America, which offers a wide range of financial services from a platform based on seven distinct brands in Colombia and Central America Financial Group.

Source: Grupo Aval. Participation rates correspond to political rights at December 31, 2013.

(1) Corficolombiana maintains an additional 0.4% in the West Bank December 31, 2013 due to the merger of Leasing de Occidente with the West Bank in June 2010. It is expected that this participation is sold in open market operations. (2) Porvenir, Corficolombiana and BAC are subsidiaries of Banco de Bogotá. The results of these entities are consolidated in the financial statements of Banco de Bogotá. Includes direct and indirect interest

Mission

Grupo Aval's mission is to provide our customers socially responsible, safe, easy financial solutions to access, understand and manage at any place and time required, through legal vehicles available in each of our markets; These solutions should be also profitable for our customers and for our companies and thus lead to creating value for our shareholders.

View

Become one of the three leading financial groups in Latin America, offering portfolios of products and services that enable our customers to manage all your finances with us and integrated manner while maximizing the value of your investment to our shareholders from the trust our strength and consistent profitability.

Values

• Our focus and duty is to our customers, which will protect your assets as our own and help them to have the right financial solution according to their needs.

• The well-balanced risk where the risk / return equation maintain the Group for safekeeping and level of robustness that customers expect from him is optimized.

• We never compromise our integrity obeying and respecting the laws of each geography in which we operate.

• As a representative financial entity in each market where we operate, we will be an exemplary contributor to the community mainly through financial education programs.

• Our greatest asset is our people, and we are committed to attracting, retaining and developing the best talent. We are focused on meritocracy.

• Cultivate teamwork, give incentive for continuous improvement of our operations and share best practices developed in every corner of the Group to improve our efficiency.

• We seek continuous innovation to be the first to present creative solutions and good technological support to meet the financial needs of our customers.

Why Grupo Aval action in the US rose and fell in Colombia?

A Colombian company's enlisted in the flagship of the world stock market, as the Aval Group announced Tuesday successfully completed its public offering of preferred shares offered in the form of American Depositary Receipts (ADR) listed on the NYSE.

Also, according to a document released by the conglomerate to the Financial Superintendence of Colombia, "as a result of the offer the company approved the placement of 1,874,074,000 preferred shares for US $ 1,265 million." The Group also explained that each ADR, a portfolio comprised of 20 preferred shares were subscribed at a price of $ 13.50, and it began to be traded Tuesday on the floor under the symbol AVAL.

The first day of action in New York Grupo Aval was stable up since it closed at a price of US $ 13.58, i.e. it grew 0.58%. This Cesar Cuervo analyst Credicorp is because "the Colombian company has investment potential in the US, so there is no reason to believe that the title shows a laggard behavior."

For David Seconi, Alliance Securities analyst, "the entry of Grupo Aval the US stock market is positive for shareholders, as the regulatory laws are stricter in the US than in Colombia, so it should be more enjoyable with investors ".

However in Colombia is another story, as the preferential action of Grupo Aval Monday fell 1.7% and 4.2% Tuesday. Also, your ordinary title also presented devaluations in the past two days as decreased from 0.70% and 3.5%, respectively. So that is relevant should ask what this behavior so different in both stock markets should.

According to Seconi: "Given that the price at which opened the ADR, that New York was $ 13.5, and if this value is transformed by the exchange rate that prevailed on Monday it can be concluded that the value of degree is lower in the US than in Colombia. So the fall of the BVC active in the past two days due for a correction in prices between the two countries stock markets ".

It is a position that shares Cuervo because he believes "that the correction in prices between the two markets is what explains the disparities recovery. Furthermore, although the exchange rate should be monitored, it is likely that it is closing, because the last day falls are sufficient to level the two quotes and because the asset's performance of Grupo Aval US was constant and even positive in its first day. "

That is why the behavior of local asset and internment of Grupo Aval have a close relationship in terms of recovery, so that the future of the action that is listed on the BVC depends on the behavior that this has on the NYSE.

Also, consider that a Colombian actor best you reach the NYSE could increase competition among local companies. Based on this Cuervo recognizes that "due to regulation there about investment quotas in the US stock market, there may be some movement between Bancolombia and Grupo Aval, but usually foreign funds have large amounts of capital to spend, so the struggle for participation levels of the other national corporations would not be a constant thing. "

• SOUTH AMERICAN INVESTMENT GROUP S.A

It is a multilatine holding company with about 70 years of experience and strategic investments in the banking, insurance, pensions, savings and investment.

They also have portfolio investments in the sectors of processed foods, cement, energy, real estate, mining and ports.

Grupo Sura has twice awarded international investment grade by Standard and Poor's and Fitch Ratings.Shareholding structure (ord. + Pre.) September 2014South American Investment Group as a company, does not produce goods or services, but invests in shares of companies if they do. Their "product" is a solid investment portfolio represented in the action of South American Investment

Group, which is traded on the stock exchange under the symbol GRUPOSURA's Colombia and offers its shareholders dividends and profitability.

Financial Summary

Alcance de la cobertura

2009 2010 2011 2012 2013

Ingresos Operacionales (COP$ MM)

516,918 800,523 461,929 668,879 924,511

Utilidad Neta (COP$ MM)

446,050 696,266 332,735 546,100 781,794

Activos (COP$ MM)

14,695,316 18,168,610 21,590,398 21,680,178 21,050,300

Patrimonio (COP$ MM)

14,338,307 17,561,191 18,864,467 20,791,860 20,287,518

Utilidad por Acción (COP$)

951 1,484 578 949 1,358.8

Precio de Cierre Ord. (COP$)

24,540 37,480 31,100 38,000 33,700

Precio de Cierre Pref. (COP$)

- - 33,000 39,000 34,980

Valor Intrínseco (COP$)

30,570 37,441 32,787 36,136 35,260

Capitalización Bursatil (COP$ MM)

11,510,174 17,579,517 18,547,059 21,970,479 19,526,153

Acciones en Circulación

469,037,260

457,037,260

575,372,223

575,372,223

575,372,223

Número de Accionistas

8,147 7,651 31,713 25,455 21,898

Número de Empleados

19 19 32 42 45

Why invest in GRUPOSURA's?

Because it has a strong financial position to together with its strategic vision continuously generate value for shareholders.

Because we seek that all companies belonging to our portfolio are profitable and enjoy a leading position in their markets, and to invest in them, contribute to the development of business in Colombia and the region, reaching more than 35 countries.

• Because we are always looking to innovate, we are the first company in Colombia to issue bonds to 40 years, first to sell options on your own PORTFOLIO INVESTMENT, and the only issue domestic and international bonds, shares and securities in the last three years.

• Because we have presence in the domestic market, Colombia Stock Exchange and in international markets, ADR Level I in the United States and LATIBEX, Latin MARKET VALUES in the Madrid Stock Exchange.

• Because it has a Code of Good Governance in line with international practices to protect the interest of minority shareholders

• Because we have a policy of responsibility and corporate citizenship that enables us to meet the highest standards in relation to social, environmental, economic and governance areas, this has allowed us to enter the Dow Jones Sustainability Index.

Report GRUPOSURA's Action

DividendsThe General Shareholders' Meeting of Grupo de Inversiones Suramericana held last March 27, 2014, decided to increase the annual dividend per share of COP COP $ 339 to $ 390, payable in four installments of COP $ 91.50 each. Also the preferred share dividend is COP $ 682.50, payable quarterly.

.

REFERENCES

Banco mundial ( web site)

Bolsa de valores de Colombia (web site)

Porfolio magazine

http://inversionistas.grupoargos.com/perfil-corporativo/quienes-somos

https://www.grupoaval.com/wps/portal/grupo-aval/bienvenido/investor-relations/

24 de septiembre de 2014, Camilo Vega Barbosa. http://www.elespectador.com/noticias/economia/accion-del-grupo-aval-subio-eeuu-y-cayo-colombia-articulo-518447