WELCOME TO THE CORNELL INVESTMENT CLUB

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WELCOME TO THE CORNELL INVESTMENT CLUB

• Monday, February 06, 2006

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Introduction

• CIC is dedicated to learning about investing and
  finance through
• Active mutual fund management
• Educational and networking events
• History - founded in 1997
• Anyone can join by attending meetings
• Many members choose to purchase shares in the
  mutual fund for voting rights
• Team of analysts cover market sectors and
  macroeconomic effects

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Club Mutual Fund Performance
3-year CAGR 18.37
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UBS Opportunities

• Freshmen Frenzy
• 1 Day
• Deadline March 3, 2006
• GPA 3.4
• All majors welcome
• Discovery Days
• 4 Day, all expenses paid
• Deadline February 10, 2006
• GPA 3.2
• All majors welcome
• Additional details on UBS website and 203 Barnes
  Hall

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Macroeconomic Analysis

• George Bush
• Reduce Medicare and increase defense spending

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Candidate Analysis

• AAPL (Apple Computers)
• Price down to 67.30 (22 from high in
  mid-January) due to slowing growth (384 profit
  rise last yr)
• DIS (Disney)
• 25.52, after selling ABC radio to Citadal, up 53
  cents in after-hours
• COSI (Cosi Inc)
• 9.35, slowing growth projection, still forecasts
  positive earnings by 2006.

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Sector Analysis Technology

• Microsoft (MSFT)
• Exchange ActiveSync licensing agreement with Sony
  Ericcson
• Ensures more direct synchronization between MSFT
  Exchange Server 2003 and Sony phones.
• Exchange server has 20 five year compound annual
  growth rate
• Sector
• Apple down 22 in past month (Overvalued)
• Semiconductor Industry- robust outlook for 2006
  
• low inventory levels, capacity utilization at 91

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Sector Analysis Energy

• PrimeWest Energy Trust (PWI)
• No news, stock price was flat last week
• Trading near 52-week high
• Energy Sector
• Politics continue to play a critical role on oil
  prices
• Oil prices are still volatile with the situation
  in Iran. Today, oil prices fell has traders took
  profits and the cold-front in the NE was milder
  than expected.
• Sustained violence in Iraq and Nigeria continue
  to worry traders.
• Citigroup raised oil prices estimate by 18 to an
  average of 60 a barrel in 2006.

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Sector Analysis Financials/Health Care

• ETF assets grow 31 in 2005 to nearly 300
  billion. These products trade like stocks but
  allow a person to gain exposure to entire indices
  
• The FDA is getting funding for a program to spur
  drug development and make the approvals process
  easier

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Sector Analysis Consumer Goods

• Sector overview
• Rising commodity prices including energy
• Possibility for improvement in sector
• Blue Nile (NILE)
• Ebay (EBAY)
• Sold due to stop loss
• Coach (COH)
• Proctor and Gamble (PG)
• Effective diversification, innovation, leverage

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Sector Analysis Industrials/Materials

• Burlington Northern Santa Fe Corp. (BNI)
• Kansas City Southern quarterly net loss tripled
  attributed to hurricanes
• Oil prices jump on Iran fears UN-Iran Connection
• QDR report leads to more defensive spending
• Should we consider a sell on BNI?

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UnitedHealth Group

• Monday, February 6, 2006
• Matt Litwin
• Yi Zhang

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Profile

• UnitedHealth provides health insurance products
  in which the company accepts the risk related to
  medical costs
• UnitedHealths 4 Segments
• 1) Uniprise provide admin. services to large
  employers who self-insure
• 2) Health Care Services network-based
  health-care
  services
• 3) Specialized Care Services coverage for
  dental,
  behavioral, and vision
• 4) Ingenix sells data analysis and research

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Revenue Breakdown
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1-Year Chart
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5-Year Chart
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Industry
Another competitor privately-held Blue
Cross/Blue Shield with revenue of 240B
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Competitive Advantages

• Top-notch management
• Revenue is highly diversified
• Strong pricing power (premiumsinflation)
• Expenses are being minimized
• Size means a strong bargaining position
• Offerings can be cross-sold
• Medicare Plan D
• Industry consolidation

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Future Growth for UnitedHealth

• Acquisitions
• PacificCare
• Medicare Plan D
• Decreasing Expenses
• 15/year
• New Products
• Earnings Estimates
• 12/06 2.90 (17)
• 12/07 3.37 (16)
• 5 Yr. Average 37.8

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UnitedHealth Risks

• Higher than expected medical costs
• A weaker job market
• Unfavorable legislation or Medicare regulation
  changes
• Managers are the highest paid in America
• Face litigation that alleges physician claims
  were wrongly denied or delayed
• Managed care has a poor public image and congress
  could hurt the industry
• Potential pricing war

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Recommendation

• Purchase 40-45 shares (2300-2700)
• Target Price 72 (20)
• Limit Price 52 (14)