Presentation Transcript

1. General Body Meeting 02.03.11

2. Agenda Announcements Portfolio Overview by Terence Portfolio Review
3. Junior Analyst Applications Description Work closely with senior analysts in covering a sector Pitches to enhance our portfolio Pay close attention to news within your sector Apply online: cornell-micc.com/jobs/ Notifications will be made early next week
4. Future Events MICC Newsletter MS GCM Information Session MS FX Dinner Trading Competition Wall St. Training Social Event

5. Portfolio Overview

   Terence Hu
6. Overview
7. Portfolio Composition
8. Portfolio with Cash
9. Portfolio without Cash

10. Technology Sector Update

    Josh Lyons
11. Cisco Designs and sells IP-based networking products and communication devices, for corporate clients and individual consumers Primary revenue generators come from sales of switches, advanced technologies, and services $120B Market Cap, $94B EV after deduction of net cash, $15B Debt, $23B net cash CSCO Currently trading at $21.62, 15.86P/E
12. Cisco Defensive Posturing Stable share price performance Degree of maturity, difficult to move top line Growth Areas Mobile internet traffic growth Increased IT sales and corporate upgrades Other products (umi, videoconferencing, etc) Innovation and Acquisition $20B in acquisitions over past decade Focus on flexibility with market changes
13. Cisco Announcement of first dividend September 2010 announcement, 1-2% dividend expected beginning in fiscal 2011 (ends July) Broker recommendations Oppenheimer: upgrade to outperform (Dec 2010), $23 target price Goldman Sachs: buy before earnings announcement (Feb 9) Upcoming catalyst Earnings call scheduled 4:30PM EST, Feb 9
14. Cisco Current Share Price - $21.62
15. HP Diversified technology company, leader in personal computer systems, imaging, and printing
16. HP Earnings Expectations Company believes earnings will exceed analyst projections Forecasting EPS through October 2011 to range from $5.05-$5.15, 14% YoY growth Market Position Declining PC market share (-1% YoY) in the face of growth by Lenovo, Acer, others Netbook sales hurt by tablet (ex: iPad) sales growth
17. HP WebOS Tablet Event Expected announcement of WebOS-based tablet on Feb 9 Challenger to iPad, Motorola tablets Earnings Call Q1 2011 earnings conference call, 5PM EST, Feb 22 Broker Recommendations Kaufman Brothers: raised earnings estimates for Q1 from 33.03B to $33.11B (Jan 25)
18. HP Current Share Price - $46.89
19. iGo Provider of products for the electronics industry, including energy-efficient AC adapters, DC adapters, and surge protectors Sells products through retailers including RadioShack, and resellers such as Superior Communications and Ingram Micro 117.40M Market Cap
20. iGo Entry to new product areas CES 2011: introduced iGo Pocket Projector, iGo KeyJuice for Apple Devices, iGo Laptop Cooling Pad, iGo noise-cancelling headphones Products that will grow with mobile device sales Partnership with Cisco September 2010 announced “Designed for Flip” accessory program iGo to design and create accessories for Cisco’s Flip Video cameras
21. iGo Earnings Projections 2010, iGo lost $0.03 per share 2011, expects earnings of $0.03 per share Earnings Call Scheduled for March 10, 5PM EST
22. iGo Current Share Price: $3.57
23. TSYS Develops and applies secure mobile technology, cloud computing services, local search, telematics TCS infrastructure essential for E911 call routing Two primary customer segments: commercial, government
24. TSYS Growth Areas Domestic demand forecasted to grow at an average annual rate of 3.5% for the next 5 years
25. TSYS Broker Consensus 4 x ‘Strong Buy’, 1 x ‘Moderate Buy’, 4 ‘Hold’ Valuation Low P/E (9.88) compared to competitors (ex: Globecomm - 23.72, Comtech Telecomm - 11.52, ViaSat - 71.35) Earnings Announcement Reported on Jan 25, results in-line with consensus EPS estimates (-10.7%) 2011 Guidance: 9-11% EPS growth
26. TSYS Current Share Price: $4.16

27. Health Care Sector Update

    Eric Hoffman
28. Emdeon Thesis and Key Debates (as of 10/27/10) Buy 90 shares at $13.93 and hold for 1 to 2 years Healthcare Reform is good for HIT Acquisitions are predicted positive synergies Valuation supports undervaluation thesis
29. What is Emdeon? Leading provider of medical revenue and payment cycle solutions (Revenue cycle management) Connects payers and providers Improves efficiency of the US healthcare system Take advantage of governments movement towards a digital, computer run system
30. Stock Price over past 6 months
31. State of Healthcare Industry HC expenditures are a significant component of the US economy 16.2% of GDP in 2008; expected to grow to $4.4 trillion, or 20% of GDP, in 2018 HC administrative costs totaled $360 billion in 2008 Healthcare is provided through a fragmented industry that has historically underinvested in HIT
32. Recent Legislation American Recovery and Reinvestment Act Stimulus intends to create job, promote investment, and increase consumer spending Cost of $787 billion Patient Protection and Affordable Care Act New federal law mandating that at least 80 percent of premium revenue must be spent on medical services, not retained as profits or used to pay overhead
33. HC Current Events No current need to worry about a repeal of Healthcare Reform Law Unconstitutional? Senate to vote on healthcare repeal amendment Sufficient votes?
34. Conclusion HOLD Thesis still intact Need to keep watch on what Congress will do in the upcoming months Earning to be announced March 8th

35. Energy Sector Update

    Mihir Patel
36. Boardwalk Pipeline Partners Acquires and develops natural gas pipelines and storage facilities 14,200 miles of pipelines between 12 states 11 underground natural gas storage facilities Principal sources of supply are regional supply hubs and market centers in the Gulf Coast region Provides infrastructure solutions to natural gas producers in the Eagle Ford Shale production area
37. Boardwalk Pipeline Partners Stable Cash Flows Raise distribution every quarter since their IPO in ’05 Power Generation Market/Environmental Factors Move from coal powered to natural gas powered electricity generation will drive future gas volume growth Diverse Customers Serves a mix of customers including marketers, local distribution companies (LDCs), producers, electric power generators, interstate and intrastate pipelines, and direct industrial users.
38. Boardwalk Pipeline Partners - Updates Boardwalk Announces $325 Million Offering of Senior Notes by Its Texas Gas Subsidiary Primary purpose to repay borrowings outstanding under its revolving credit facility Remainder of net proceeds distributed to BWP to retirement of outstanding revolving credit and long term debt Earnings Call – February 7th, 2011
39. Boardwalk Pipeline Partners – BWP Current Share Price - $ 31.84
40. Occidental Petroleum Corp. Energy company specializing in the exploration and production of crude oil and natural gas through enhanced oil recovery, primarily in the United States, Latin America, and the Middle East Company also manufactures chemicals and operates midstream assets including pipelines and carbon dioxide processing plants
41. Occidental Petroleum Corp. – Transactions Divest its Argentine oil and gas operations for after-tax proceeds of approximately $2.5 billion to purchase new U.S. assets Executed agreements to purchase oil and gas properties in TX and ND for about $3.2 billion Acquire the remaining 50% joint venture interest in the Elk Hills Power Plant Expects transactions to be completed no later than the end of the first quarter of 2011
42. Occidental Petroleum Corp. Q4 Earnings Net income up 55% year-over-year Cash flow from operations up 60% year-over-year Oil & Gas production up 5% MENA Unrest - >25% of oil & gas production Tunisia & Egypt Joint venture opportunity with Abu Dhabi Gas Development Company Emerging Markets Strong upscale within emerging markets given the expected increase in demand for oil
43. Occidental Petroleum Corp. – OXY Current Share Price - $ 93.81

44. Consumer Sector Update

    David Shim
45. Procter & Gamble (PG) The Procter & Gamble Company manufactures and markets consumer products in countries throughout the world. The Company provides products in the laundry and cleaning, paper, beauty care, food and beverage, and health care segments. Procter & Gamble's products are sold primarily through mass merchandisers, grocery stores, membership club stores, drug stores, and neighborhood stores.
46. Original Thesis Portfolio of strong billion dollar brands Consumer preference for quality and strong value in tough economic environment Consistent strong performance throughout all markets Trading at a discount due to fearful market sentiment despite stronger fundamentals Low risk play on economic recovery
47. Flat Performance
48. Updates Q2 earnings fell 28% due to higher higher costs Costs of goods sold rose 6%; earnings of $1.11 a share, down from $1.49 last year; PG reported core earnings of $1.13 a share (profit from continuing operations) However, P&G reaffirmed expected organic sales growth of 4-6% P&G investing $1 billion over 5 years in China to develop research and manufacturing centers closer to consumers Focusing on core product areas and divesting non-core businesses such as pharmaceuticals Look for PG to beat analyst estimates and for the stock price to climb
49. Philip Morris International (PM) International tobacco company spun off from the Altria Group in March 2008 World’s largest producer of tobacco products, holding 15.7% of global market share excluding the United States Sells tobacco products in international markets, while Altria operates in the US Brands include 7 of the world’s 10 largest: Marlboro, Philip Morris, Bond Street, Chesterfield, Parliament, Lark A, etc.
50. International Markets While the US market is stagnant, strong emerging market growth will be a driver for growth as PM operates mainly in South America, Asia and Europe Newly affluent customers in developing countries provide a growing customer base for the upscale product brands that PM offers, although PM also maintains three value brands (Bond Street, Red & White, Next) Tobacco products provide steady cash flows
51. Risks:Global economic environment and Health issues Health risk litigation hurts tobacco companies’ ability to advertise and sell products easily Economic downturns could easily adversely affect sales in all of PM’s markets Raised dividends three times since the spinoff from Altria
52. Current Share Price = $56.60

53. Industrials Sector Update

    David Wong
54. Union Pacific Corp (UNP) Recommendation: Hold Thesis: Expect demand of carriage to continue to increase with growth in US economy Efficient method of transportation Great business with a durable competitive advantage Concern: Huge rise in price (50%) over the past year
55. Q4 Results Strengths 44% increase in EPS, yoy 31% increase in operating income, yoy Increased consumer satisfaction (90%) Weaknesses Q4 operating ratio rose 2% from Q3 Lack of management forecast of 2011 Business volume growth slowed to 9% compared to 14% in Q3 and 18% in Q2
56. MICC Position Currently own 36 shares ~ $3350 Largest position in the portfolio ~ 12.5% of stock

57. Media Sector Update

    Chirag Shah
58. TEF Performance
59. Events Recent rally Recent deals Eased tensions in sovereign debt crisis Expansion into mobile market in developing countries JV with China UNICOM Awarded spectrum space in Costa Rica JV with MasterCard for mobile financial solutions in LatAm
60. Pros and Cons
61. Portfolio Recommdations Hold stock, buy out-of-money calls if stock continues rally

62. Real Estate Sector Update

    Ali Yazdi
63. Homex November 30th Guidance: Revenue growth from 13 to 16% in 2011 EBITDA at 21-22% margin Continued reliance on low income housing in Mexico RSI: Multi-year low
64. General Growth Properties January 25th Dividend: 38 cents per share (2.6% return) 2010 dividend, similar dividend for 2011 Dividend Plays RYN: 3.7% Beta 1.1 OTTR: 5.3% Beta 1.18 MO: 6.3% Beta 0.46 Beta: 4.00
65. Howard Hughes Corporation Pershing Square William Ackman Dividend focus Wonderful website Absolutely no news Insider buying triggering rapid rise

66. Macro Sector Update

    Zach Peskin
67. Brinks Company (BCO) Business Areas: Secure Transportation Cash Handling Security Services NOT Home Security Operates in 50 Countries Roughly break even investment
68. 4Q 2010 Earnings 8% organic growth and acquisitions Strong performance in Latin America, Europe & Asia Lagging performance in North Ameirca Margin rates up to 9.7% from 6.6% Acquisitions in Latin America and Canada
69. Brinks Company (BCO) Still stands to improve from a growing global economy Exposure to Eurozone countries is troubling Still somewhat vulnerable to currency fluctuations Recommend holding position
70. BCO 1yr Performance
71. SPDR Gold Trust (GLD) As economies rebound, and markets become less volatile, Gold will decrease from its recent highs Technicals suggest further drop Better opportunities with other metals regardless of how the economy trends (i.e. silver) Future inflation could send Gold higher Recommend selling full position, and the macro team will look into whether silver (or other metals) make sense
72. GLD 1yr Performance
73. Proshares Short 20+ Year Treasury (TBF) Treasury prices have hit their peak and are trending downward In 2011, speculation of rate increases by the Fed, will send Treasury yields higher No QE3 ETF tracks daily changes; not efficient in the long run Recommend no action on the position Look into interest rate options
74. TBF 1yr performance
75. Thanks for coming by! Junior Analyst Apps Next Week: Financials Pitch