Student Managed Fund

1
Student Managed Fund

• MBA Interim Report
• November 30, 2007

2
MBA Managers

• Lindsay Castonguay
• Peter Gallo
• Vibhor Jindal
• Paul Luciano
• Craig Macchi
• Vu Mai

• Magesh Nandagopal
• Aija Pilvere
• William Spatcher III
• Alexandra Stein
• Joshua Swift

3
Acknowledgements

• The University of Connecticut Foundation, Inc.
• Investment Advisory Board
• Bradley, Foster Sargent
• Christopher Wilkos
• Dr. Chinmoy Ghosh

4
Agenda

• Investment Philosophy
• Investment Process
• Portfolio Performance
• Firm Activity
• Forward Expectations
• Q A

5
Investment Philosophy

• Fundamental bottom-up approach
• Managers act as sector specialists
• Sector diversification to emulate the SP 500
• Focus on mid to large market cap companies
• Target stocks trading at a minimum 15 perceived
  discount to their intrinsic value
• Strive outperform the SP 500 Index

6
Stock Selection

• Seek high quality US Equities that exhibit strong
  growth potential within their industry
• Screeners
• Value Line
• ThomsonOne
• ValuePro
• SP NetAdvantage
• Yahoo! Finance
• MSN Money Central

• Rank stocks based on
• Earnings/Sales growth
• Net/Operating margins
• ROE, ROA, ROI
• P/E, PEG

7
Fundamental Analysis

• Narrow search by emphasizing the following value
  drivers
• Business Model
• Operating Margins
• Revenue and Earnings ramp-up
• Capital Expenditure
• RD Investment
• Free Cash Flow Growth
• Discounted Cash Flow / DDM Analysis
• Real Return Value

8
Sell Discipline

• Stop loss
• 15 stop loss on all positions
• Protect down-side risk
• Re-evaluation of positions
• More than 15 gain
• More than 10 loss
• Change in firm activity or major activity

9
Portfolio Performance
10
Individual Holding Performance
11
Comparison with SP 500
12
Comparison with SP 500
13
Sector Allocation
14
SMF vs. SP 500 Allocations
Hidden
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Portfolio Efficiency Statistics

• Beta 0.965 (equity) 0.930 (total portfolio)
• Alpha 0.18
• Sharpe Ratio -0.014
• Standard Deviation 2.37

16
Firm Activity

• Noble Corp. (NE)
• Net income increased by 40
• Colgate-Palmolive (CL)
• Initiated campaign with healthcare provider Aetna
• Airgas (ARG)
• Acquired Central Welding Supply and Texas
  Industrial Gas Companies
• Marathon Oil (MRO)
• Restarts LNG production in Equatorial Guinea
• Goldman Sachs Group (GS)
• Appointed senior exec. to head of southeast Asian
  operations
• Procter Gamble (PG)
• Launched new online marketing research program

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Firm Activity

• Dr. Reddys Laboratories (RDY)
• In 10 year supply deal with Sygns, Germany
• Garmin (GRMN)
• Rescinded bid for Tele Atlas and acquired Synergy
  
• Nike (NKE)
• Acquired Umbro and divested Starter
• Energy Transfer Partners (ETP)
• Regulatory nod for pipeline expansion
• Coach (COH)
• Plans to expand first European store
• United Technologies (UTX)
• Appointed S.V.P. for H.R.

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One year Forward Expectations

• Monetary Policy
• Expansionary
• Fiscal Policy
• Neutral pending outcome of presidential elections
• Economic Growth
• Slow for next 8 months
• Corporate Earnings Growth
• Continued pressure on earnings

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One year Forward Expectations

• Exogenous Events
• Economic weakness
• Iraq and Iran
• Energy prices
• China relations
• Foreign Trade Policy
• Housing market
• Summary
• Interest rates will remain low
• Earnings growth will slow down due to weak
  economy
• Stocks in transition
• Expect returns for 2007/2008 to be close to 0 or
  negative until market recovers

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Learning Experience

• Strength in Numbers
• 11 Managers 11 Different Styles
• Benefit From Industry Expertise
• Learn from Peer Discussions
• New Technologies
• CAMRA
• Antares
• Thomson

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Going Forward

• Look for Strong Business Stories
• Companys Competitive Advantage
• Positive Stock Performance Compared to Market
• Success Strategies in Weak Economy
• Add Value Through Event-Driven Returns
• Look for Opportunities that Will Unlock Value

22
Questions