Investment Thesis, Industry Competitive Advantage,

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Investment Thesis, Industry Competitive
Advantage, Investment Risks Sections Seminar

• October 13, 2009

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TSTY Key Issue 1

• Investment Thesis
• Three valuation methods indicate TSTY is
  significantly overvalued.
• Investment Risk
• TSTY could be acquired at a premium price by a
  larger more efficient manufacturer, a private
  equity firm, or a hedge fund for strategic
  reasons.
• However, the lack of brand equity makes TSTY an
  unattractive acquisition target.

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TSTY Key Issue 2

• Investment Thesis
• TSTY has limited long-term growth potential.
• Poor market outlook for non-nutritious bakery
  goods among increasingly health-conscious
  consumers.
• TSTY cannot generate sufficient cash to finance
  its Strategic Growth Initiative.
• Investment Risk
• TSTY might experience a highly successful
  marketing campaign.
• TSTY might develop new products which appeal to
  new trends in consumer tastes.
• TSTY could uncover new ways to enhance
  productivity
• However, achieving these benefits and
  implementing these changes may take several years.

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TSTY Key Issue 3

• Investment Thesis
• TSTY is in a cash-poor financial condition
• Gross profit margins far below peers.
• TSTY operates in a very competitive and mature
  industry forecasted to experience low growth
  during the next 5 years.
• Positive cash flows from operations are being
  offset by negative cash flows from investing and
  financing..
• Investment Risk
• The stock market is inefficient and some
  investors find TSTYs low relative valuation
  attractive.
• However, the catalysts required to drive the
  price of the stock higher over the next 12 months
  will not be present.

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TSTY Key Issues 4 5

• Investment Thesis 4
• The rising health consciousness of consumers is a
  major challenge facing TSTY and its industry.
• Random sample of over 3000 consumers in TSTYs
  core distribution area found that 76.5 of them
  classified the companys products as junk.
• A face-to-face interview with a long-time
  independent sales distributor confirmed TSTYs
  brand equity problems and demand challenges
• Investment Thesis 4
• The occupiers of the top four positions in the
  company own only a minimum number of shares and
  thus the interests of top management may conflict
  with those of TSTYs shareholders.

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SYM Key Issue 1

• Investment Thesis
• SYMs should be valued as a soon to be liquidated
  REIT rather than as a retailer.
• Stock performance has been more correlated with a
  real estate index than with its closest retail
  competitors.
• Investment Risk
• Family control makes liquidation catalyst
  indeterminable.
• However, if liquidation is deferred there is a
  low downside risk of 3.71 annually over the next
  5 years.
• Real estate market could correct.
• However, the fundamental value of the real estate
  provides a downside floor.
• Control shareholders could take the company
  private
• However, this is unlikely because of the
  appreciation that has occurred in the price of
  SYMs shares and the large amount of debt that
  would have to be assumed.

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SYM Key Issue 2 3

• Investment Thesis 2
• The sale of the Dallas store suggests
  liquidation.
• The store was profitable.
• SYMs was made an enticing offer which was
  confirmed by the CFO
• Investment Thesis 3
• There is hedge fund interest in SYMs
• Dimensional Advisors recently purchased 8.34 of
  outstanding shares.

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WPC

• Investment Thesis 1
• Buy recommendation supported by valuation
  approaches.
• Investment Thesis 2
• WPC has stable sources of income
• Investment Thesis 3
• WPC has maintained their conservative borrowing
  standards.
• Investment Thesis 4
• WPC managements impeccable track record will
  help the company navigate the challenging credit
  markets that currently exist.

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WPC

• Investment Risk 1
• WPCs investment team not so independent.
• However, WPC has achieved high returns with this
  structure.
• Investment Risk 2
• Investors in WPC managed REITs experience a 10
  haircut.
• However, WPC REITs have been successfully sold
  in the past.
• Investment Risk 3
• Performance fees now based on operating cash
  flows rather than assets under management.
• However, long-term leases usually experience
  highly stable cash flows.
• Investment Risk 4
• WPC may have trouble raising capital for its
  CPA17 REIT and maintaining historic returns.
• Default risk is substantial risk to WPCs
  revenues and asset values.
• However, analysis revealed an average risk of BBB
  on directly owned leased properties and an
  average risk of BB in the REITs managed by WPC.

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PVH

• Investment Thesis 1
• PVH is cheap
• Investment Thesis 2
• International licensing will continue to be the
  driver for the company
• Investment Thesis 3
• PVHs retail and wholesale businesses will not
  hurt them that much in the current business
  downturn
• Investment Thesis 4
• PVH has a strong balance sheet and cash position

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PVH

• Investment Risk 1
• Major retailers/licensees bankruptcy and/or
  consolidation
• However, consolidation will improve the
  efficiency of the industry and not reduce in the
  long run the number of retail doors and PVH can
  find replacement licensee partners
• Investment Risk 2
• Extended recession PVH will be negatively
  impacted
• Investment Risk 3
• International licensing revenue grows slower than
  expected
• However, business interests of licensees are
  aligned with PVH which will mitigate this risk
• Investment Risk 4
• Currency translation loss
• However, PVHs diversified portfolio of licensees
  will mitigate this risk.
• Investment Risk 5
• Larger wholesale discounts and returns than
  expected
• However, dont worry because tested in scenario
  analysis.