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Friday September 20 th, 2013. LAFAYETTE COLLEGE INVESTMENT CLUB. Meeting Agenda. 1) Market News – Chairman, Chris Busuttil 2) Portfolio Restructure – Analysts, Peter Oberender and Angel Stoychev. Market News. CHRIS BUSUTTIL. Big Events. “Fed Stays the Course on Easy Money”

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Friday september 20 th 2013

Friday September 20th, 2013

LAFAYETTE COLLEGE INVESTMENT CLUB


Meeting agenda
Meeting Agenda

  • 1) Market News – Chairman, Chris Busuttil

  • 2) Portfolio Restructure – Analysts, Peter Oberender and Angel Stoychev


Market news

Market News

CHRIS BUSUTTIL


Big events
Big Events

  • “Fed Stays the Course on Easy Money”

    • Fed officials got cold feet Wednesday and decided to keep QE program in place

      • “The tightening of financial conditions observed in recent months, if sustained, could slow the pace of improvement in the economy and labor market.” –Fed Statement

      • “A government shutdown, and perhaps even more so a failure to raise the debt limit, could have serious consequences for the financial markets and for the economy.” –Bernake


Big events1
Big Events

  • “Summers Withdraws Name for Fed Chairmanship”

    • Former Treasury secretary who was one of the president’s top advisers, withdrew leaving Janet Yellen as leading candidate for the job

      • “I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interest of the nation’s ongoing economic recovery.” -Summers

    • Democrats want Yellen, 54 Senate Democrats signed a letter to the president urging him to pick Yellen


Market update
Market Update

  • “Fed’s Surprise Powers Market Surge”

    • Stocks soared to new highs, U.S. Treasury bonds prices rose and MBS prices gained significantly

      • Dow Jones went to an all-time high, closing at 15676.94

      • S&P 500 index rose to a new record of 1725.52

        • With Wednesday’s rally, the S&P is up 21% YTD

    • “Syria, that’s gone. Who’s going to replace Bernake? That’s gone,” he said. “And what’s tapering going to look like? We don’t have to worry about that right now.” –A.C. Morgan, MD at UBS


Market update1
Market Update

  • “Syria Widening WTI-Brent Spread”

    • The conflict in Syria has driven a wedge between Domestic and European oil prices.

      • Domestic oil futures were roughly $3.50 a barrel cheaper than Brent, the European benchmark.

      • Money managers have entered into exotic oil-market bets trying to predict the spread.

  • “Banks Say Capital Ratios Can Weather Economic Crisis”

    • Company-run reviews show that minimum capital levels would remain well above regulatory requirements.

    • Results are based off of Tier 1 common ratio calculations

    • 5% minimum level is required by regulators, most banks reported levels near 10%.


Companies in the news
Companies in the News

  • “Microsoft Boosts Dividend by 22%, Sets $40 Billion Buyback”

  • “Walgreen to Shift Health Plan for 160,000 Workers”

    • Due to pending healthcare regulation, the firm will pay a fixed amount for employees to select coverage options in a private insurance exchange run by a third party

  • “GM Developing Car to Rival Tesla”

    • Electric car that can go 200 miles on a charge, price ~$30,000.

  • “Priceline’s Share Price Crosses $1,000 Mark”

    • First company listed in the S&P 500 to trade at $1,000 in S&P 56-year history.


Talking points
Talking Points

  • “Home-Sales Frenzy Eases”

    • The inventory of existing homes for sale has plunged

  • “Household Incomes Level Off”

    • Income of the typical U.S. family stabilized last year for the first time since the recession

    • However, incomes remain 8.3% lower than 2007 levels

  • “Women’s Wage Gap Stays Stuck in Place”

    • Women earned 76.5 cents for every dollar that men did last year.


Analysts
Analysts

  • Angel Stoychev – stoychea@Laf.edu

    • Financial, Industrial, and Materials

  • Peter Oberrender – Oberrenp@laf.edu

    • Healthcare, Utilities, and Energy

  • Sean O’Toole – Otooles@laf.edu

    • Services, Technology, Consumer


Reasons for selling
Reasons for Selling

  • Single Stock Portfolio

  • You can not learn from ETF’s

  • Bonds are bad


T rowe price emerging markets bond fund premx
T Rowe Price Emerging Markets Bond Fund: PREMX

  • The Fund seeks to invest at least 80% of its assets in bonds and 65% of its assets in high-quality foreign bonds. The Fund may invest up to 20% of its assets in below investment-grade, high-risk bonds, including those in default or with the lowest rating.

  • Price $12.69

  • YTD Return -7.31


Vanguard high yield corporate fund vwehx
Vanguard High Yield Corporate Fund: VWEHX

  • The Fund seeks a high level of current income by investing in a diversified portfolio of high-yielding, higher-risk corporate bonds, with medium and lower range credit quality ratings

  • Price $5.93

  • Most recent Dividend $0.0289

  • YTD Return 1.14


Vanguard bond index longterm bond index vbltx
Vanguard Bond Index Longterm Bond Index: VBLTX

  • The Fund seeks to match the investment performance of the Barclays Capital Mutual Fund Long Government/Corporate Index

  • Price $12.49

  • Recent dividend $0.0471

  • YTD Return -9.7


Etf s to dump
ETF’s to dump

  • iShares MSCI Brazil Capped ETF: EWZ

  • iShares iBoxx $ Invt Grade Corp Bond: LQD

  • Barclays IPATH DJ UBS AGRIC: JJA

  • IPATH DJ-AIG TIN: JJT


Equities under 2
Equities under 2%

  • With the size of our portfolio and the new direction we decided to operate we decided it benefits the club if we only have holdings that are worth more than 2% of our Portfolio

  • We are here to learn and with this new guideline we can gauge our stocks better, whether they do well or not so well, we will be able to see and learn from our pitches


Consumer
Consumer

  • The Coca-Cola Company: KO

  • JAKKS Pacific INC.: JAKK

  • Boise Inc.: BZ


Services
Services

  • Dollar Tree Inc.: DLTR

  • Family Dollar Stores Inc.: FDO


Energy
Energy

  • Vesta Wind: VWDRY


Technology
Technology

  • Baidu Inc.: BIDU

  • China Mobile Limited: CHL

  • Cisco Systems Inc.: CSCO

  • Hewlett Packard Co.: HPQ


Financial
Financial

  • Bank of America: BAC

  • The Bank of New York Mellon Corp:BK

  • CYS Investments: CYS (REIT)

  • Goldman Sachs Group Inc.: GS

  • Manulife Financial Corp: MFC


Industrial
Industrial

  • The Eastern Company: EML

  • Nuverra Environmental Solutions Inc. (Recently Heckmann Corp):NES


Materials
Materials

  • Southern Copper Corp.: SCCO