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Goizueta Investors

Goizueta Investors . February 28, 2008. Agenda. Market Recaps Domestic International Stock Market Game Update Book Review: Liar’s Poker GI Challenge Guess the Dow Contest Winner M&Ms Contest Winner Upcoming Events. Weekly Newsletter. Your one-stop shop for all things financial

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Goizueta Investors

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  1. Goizueta Investors February 28, 2008

  2. Agenda • Market Recaps • Domestic • International • Stock Market Game Update • Book Review: Liar’s Poker • GI Challenge • Guess the Dow Contest Winner • M&Ms Contest Winner • Upcoming Events

  3. Weekly Newsletter • Your one-stop shop for all things financial • Published every Monday • Located at select GBS classes, all GI events • Features Weekly Market Recaps and Special Interest Articles • Available at www.GoizuetaInvestors.com

  4. B C D E A Domestic Market RecapFebruary 2008 Dow 198.29, 1.6% 12,582.18 Nasdaq 18.34, 0.78% 2,331.57 S&P 13.71, 1.01% 1,367.68 DJIA: January - February 2008 A: UBS write-down (1/30) B: ISM disappoints (2/5) C: Buffett offer to bond insurers (2/12) D: Fed minutes (2/20) E: Bernanke testimony (2/28)

  5. Economy • Crude oil at record prices • Weak economic data across the board • Stagflation back in investors’ vocabulary

  6. Interesting News • Microsoft offers $44.6 billion for Yahoo (2/1) • Research in Motion sells more BlackBerries to consumers (2/21) • Delta and Northwest discuss merger, held back by disagreements (2/26)

  7. Market Recap: International1/30/08– 2/27/08

  8. Market Recap: International US Dollar Index

  9. Market Recap: International • Commodities surge continues • Gold: $973.40 per troy oz. • Crude Oil: $102.49 per barrel • MGE Wheat: $24 per bushel • Inflationary pressures felt throughout the world • PPI: +7.4% year over year

  10. Market Recap: International • Sovereign Wealth Funds • $3 trillion in total assets • ADIA: $900B • Govt. Investment Corp. of Singapore: $300B • Nearly $40B invested in US financials • Very little disclosure • No regulation, no disclosure requirements • IMF working on “best practices” code

  11. Private Equity • What is it and what do they do? • Who are the big names? • How does a private equity fund make money? • What does a private equity deal look like? • Why has private equity been all over the news? • I want to work in private equity, what should I do?

  12. What Private Equity Does • Buys private firms, or buys publicly traded companies and takes them private. • Leveraged buyouts (LBO’s) • Uses money from institutional or wealthy individual investors. • Borrows money against these investments for more capital. • Industry has $2 trillion under management (est.) • $782 billion of PE deals in 2007 (down 53% YTD 2008) • Largest PE transaction is the $45 billion buyout of TXU lead by KKR ($8b equity) • First PE buyout of a public company was done by KKR in 1979 in a deal totaling $355 million

  13. How Private Equity Makes Money ($k) Effect of Leverage: Return w/o leverage: 66.7% Return w/ leverage: 300.0%

  14. The Big Players • First firm to take a public company private • Henry Kravis made $51,369/hr last year • First PE firm to offer an IPO • Founder Steven Schwarzman richest man in private equity

  15. Berkshire Hathaway • While not strictly considered a PE firm, Berkshire Hathaway is very similar • This makes it the largest PE firm, worth over $200 billion • A shares go for $140k, B for $4,675 • The Big Players won’t talk to you unless you have at least $10 million • Smaller middle market firms will want at least $500k • Warren Buffet is the only PE fund manager who will reveal his strategy • You can read his investor letters • Or go meet him next year, but still read the letters, there’s great stuff there

  16. Fantasy Stock Market Rankings 11

  17. Fantasy Stock Market Game

  18. Book Review Liar’s Poker By Michael Lewis VS

  19. GI Market Challenge DJIA on 2/22: 12,381.02 Max Ogienko 12,171.00 -210.02 M&Ms in the Bottle: 432 Rebecca Dodson 448 +16

  20. GI Market Challenge • At what level will the Dow close on 3/21? • Email guesses to dow@learnlink.emory.edu • Check it at: Blog.GoizuetaInvestors.com • Deadline: 11:59pm on Thursday, 3/6 • Winner announced at next meeting

  21. Resume Drop Box

  22. Upcoming Events • 3/6: Bowling Night • 3/10: Spring Break • 3/18: GI Day • 3/26: Movie Night: Boiler Room • Private Equity Seminar • Third General Body Meeting

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