UNIVERSITY OF CONNECTICUT Student Managed Fund
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Transcript of 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