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General Body Meeting 02-22-12. Welcome. AIESEC Cornell. Spring 2010. AIESEC Cornell Spring Recruitment 2012. What is AIESEC?. World ’ s largest student-run organization International, non-political, non-profit, independent. AIESEC Global Partners. AIESEC Cornell. Spring 2010.

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aiesec cornell

AIESEC Cornell

Spring 2010

AIESEC Cornell

Spring Recruitment 2012

what is aiesec
What is AIESEC?

World’s largest student-run organization

International, non-political, non-profit, independent

aiesec cornell1

AIESEC Cornell

Spring 2010

Exchange Programme

exchange

Exchange

Global Internship Program

Global CommunityDevelopmentProgram

General Internships

Global Exchange Partners

Tata ConsultancyServices

Educational

Internships

Developmental

Internships

g lobal internship programme
Global Internship Programme
  • Corporate internships
  • Work nature
    • Management
    • Technical
    • Education (corporate)
  • Location:developed countries
  • Duration:Long-term (6-12 months)
  • Compensation:Paid
sample internship finance
Sample Internship – Finance
  • Company: Deutsche Post DHL
  • Location: Germany
  • Field: Finance and HR

Job Description:

  • Coordinating projects, quality assurance and decision-making processes
  • Independent development and implementation of reports for the processes
  • Cost-benefit-analysis for process proposals

Requirements: English, Experience with cost accounting, financial accounting and financial planning and budgeting

sample internship global exchange partner
Sample Internship– Global Exchange Partner
  • Company: UBS
  • Location: Switzerland
  • Field: Finance

Job Description:

  • Analyzing and mapping of the current processes to develop new strategies to increase efficiency
  • Utilizing various tools such as Excel and Access to develop applications to support new strategies
  • Attending training programs in credit risk control

Requirements: English, Background in statistics, banking and introductory finance

sample internship partnership
Sample Internship – Partnership
  • Company: Tata Consultancy Services
  • Location: India
  • Field: Management/Technical

Job Description:

    • Job descriptions can be modified to suit interns’ abilities
    • 100% acceptance rate in Spring 2011

Requirements:Graduating seniors, non-Indian descent

Interested? Information sessions:

  • January 31st: Rockefeller 128, 6:30PM
  • February 1st: Rockefeller 132, 6:30PM
application proces s
Application Process
  • Submit application on:

http://www.aieseconline.net

  • Application deadline: Sunday, February 26th, 23:59PM
  • Formal interviews: February 28-March 1
  • Notification of acceptance:March 4th
  • Questions? Email vpogx-cornell@aiesecus.org
dcf modeling workshop
DCF Modeling Workshop
  • March 3rd and 4th
    • 11:30 am – 6:00 pm
    • Martha van Rensselaer G71
  • Lunch Fee of $15
  • Applications released on website tomorrow
    • Deadline is February 28th, 11:59 pm
    • 130 spots open
oil prices
Oil Prices
  • Iran cuts off oil exports to France and Britain
  • Threatens premature cut to others in EU
greece last week
Greece: Last Week
  • Tuesday Feb 14: Bailout plan delayed
    • Warned Athens that needed to respect bailout terms
    • Did not receive the required political assurances from the leaders of the Greek coalition parties
  • $525 million for a fiscal gap: prerequisite for the bailout was missing
approved bailout package
Approved Bailout Package
  • Brussels, Tuesday February 21st: agree on a second bailout
  • Offer Greece €130 billion ($171.9 billion)
  • Greece agrees: reduce debt to 120.5% of GDP by 2020
  • Debt currently at 160% of GDP
    • Estimate: 129% of GDP in 2020
    • $66bn more from 2015-2020 to reach goal
    • If no bailout: 178% of GDP in 2015
  • Deal includes: 53.5% write down for investors in Greek bonds, from already having a 50% loss
    • Overall loss of 75%
bailout plan
Bailout Plan
  • Distribute profits (estimated €45 bn to €50 bn) from holdings of bonds
  • Plan designed to write off ~ €100 billion of Greek debt by mid march deadline
    • Exchange before March 20 to escape the full 14.5 billion-euro cost of the bond redemption
  • Further reduction in interest rates on the €53 billion in loans from the euro-zone
greece big spending cuts
Greece: Big Spending Cuts
  • Reducing pharmaceutical expenditures by $1.3 billion in 2012
  • Cut overtime pay for hospital doctors by $66 million
  • Save $396 million in military procurement
  • Save $40 million by reducing the number of deputy mayors and staff
  • Many protests, especially from public sector employees
uncertainties
Uncertainties
  • Long term questions ability to pay off debt
  • Greek economy: more competitive through wage cuts
    • Falling wages will deepen Greece's recession
  • Tension: bailout plan of reducing debt and improving competitiveness
    • The internal devaluation to restore Greece's competitiveness will lead to a higher debt-to-GDP ratio, in the short term
  • Elections in April
what s next
What’s Next?
  • Results of second aid program will come in months
  • European Stability Mechanism:
    • €500 billion to address firewall issue
  • Injection of liquidity into the banking sector by the ECB
    • Determination to save currency
    • Prevent chain reactions
    • To mark the beginning of the end and give euro zone momentum it needs!
extension of payroll tax cuts

Extension of Payroll Tax Cuts

MICC General Body Meeting 2/22/2012

payroll tax background
Payroll Tax: Background
  • Resolved payroll tax stalemate in December
  • $143 billion economic package passed, includes:
    • Extension of payroll tax holiday
    • Tax benefits for unemployed
    • Reimburse doctor’s Medicare compensation
    • Support “work sharing” program
  • Extends lowered payroll tax of 4.2% from original 6.2% for 160 million workers.
specifics
Specifics
  • Passed in House 293-132, Senate 60-36 with bipartisan support
  • Republicans originally antagonized package due to cost/spending
    • Dropped resistance to avoid public backlash during election year
  • No spending cuts to pay for cost
specifics1
Specifics
  • Goal of payroll tax cut:
    • Help recovery by giving consumers more money
    • Not just help jobless– help stay in jobs
  • Concessions by Democrats:
    • Cuts to other Federal programs, ie. preventative healthcare, to pay cost
    • Limit on unemployment benefit
    • Drug test program for unemployment benefit candidates
discussion
Discussion
  • Prevents 0.4% reduction in GDP, half million jobs, and 0.3% increase in unemployment.
  • Improvement in GDP improves chances of Obama’s reelection.
  • Rising stock prices
criticism
Criticism
  • What about social security?
    • Payroll tax = money taken from paycheck to pay for social security
    • Iconic program for Democrats
  • No spending cuts to offset cost of package
    • Added to deficit of over $1 trillion
  • Re-progamming payroll systems with 2 month lead time
two minute drill
Two Minute Drill

Guest Lecturer:

SiddhantTrivedi

Topic:

Venture Capital

slide31

MCD

QuanTeam

slide32

“MCD is a business you can own forever. As long as people need to eat, McDonald's offers good quality food and service, and the company keeps growing every year.“

-Bill Ackerman

mcd at a glance
MCD at a Glance

MCD has risen from a share price of $12.8 in March 2003 to now $100. Annualized return of 25.7% over last nine years with a 35% return in 2011.

trading multiples and key statistics
Trading Multiples and Key Statistics
  • Stock Price: $100.67
  • 52-week range: $72.89-$102.22
  • Beta: 0.31
  • Market cap: $102.99 billion
  • Dividend: $2.80
  • Dividend Yield: 2.80%
  • Operating margin: 30.71%
pays a great dividend
Pays a Great Dividend
  • Current Div Payout is 2.53%, back to where it was before 2008
  • Payout is constantly increasing
trading multiples and key statistics1
Trading Multiples and Key Statistics
  • 2011 Global Sales Growth: 6.7%
    • Analyst expectations: 5.7&
    • US Sales growth: 7.8%
    • Asia Sales growth: 7.3%
  • P/E (ttm): 19.10
  • P/E (fwd): 15.93
  • P/BV (ttm): 7.71
  • Lower Multiples than those for competitive companies Yum and Wendy’s even given its impressive performance:
    • Yum P/E of 23x and P/BV of 15x
    • Wendy’s fwd P/E 21.6x
business model
Business Model
  • Earns revenue as a franchiser and operator of restaurants
  • 15% owned and operated directly – “models”
  • Remainder through JV / franchise agreements
industry overview
Industry Overview
  • Competitors
    • WEN, YUM, JACK
    • YUM includes KFC, Pizza Hut, LJS, and A&W
    • Burger King Holdings (Private)
    • Internationally, MCD competes with YUM
performance
Performance

2011 Performance: 35% increase

Volatility: 60% less than market

growth in asia
Growth in Asia
  • YUM:
    • 14% EPS growth in 2011
    • 19% sales growth in China
    • 50% of revenue from Asia
    • Operating margin: 15.81%
  • MCD:
    • 7.3% sales growth in Asia
    • 22% of revenue from Asia
    • Operating margin: 30.71%
  • Reasons for growth:
    • Huge capital expenditures in China (opened record 200 restaurants in 2011)
    • Margins down 80 bps due to stores opening, will rise in future
    • $2.9 billion in CapEx in 2012: 1300 new restaurants, 250 in China
reinvestment and menu growth
Reinvestment and Menu Growth
  • Menu expansions:
    • Premium coffee drinks
    • Breakfast items
    • Salads
    • Value menu
  • Reinvestment:
    • 2012: $2.9 billion in CapEx
    • 1,150 new stores
    • 2,500 reimaged stores (45% of interiors and 25% exteriors)
  • Returning money to shareholders:
    • 2011: $6 billion returned to shareholders
benjamin graham analysis
Benjamin Graham Analysis

8 Hurdles:

  • Hurdle #1: Earnings/Price > 2×(10 Year Treasury Yield)
  • Hurdle #2: Current P/E Ratio < [½ × (5-Year P/E Ratio)]
  • Hurdle #3: Dividend Yield > [1/2 ×(10 Year-Treasury Yield)]
  • Hurdle #4: Stock Price < [1.5 × Book Value/Share]
  • Hurdle #5: Total Debt < Book Value
  • Hurdle #6: Current Ratio > 2.00
  • Hurdle #7: Earnings Growth > 7% over past 5 years
  • Hurdle #8: Stability in Growth of Earnings
benjamin graham analysis1
Benjamin Graham Analysis

Hurdle #1

    • Earnings/Price > 2×(10 Year Treasury Yield)
  • McDonald’s Earnings/Price
    • EPS: $5.27
    • Price: $100.61
    • Earnings/Price: 5.24%
  • 10 Year Treasury Yield (×2)
    • 4.02%

Hurdle: Passed

benjamin graham analysis2
Benjamin Graham Analysis

Hurdle #2

    • Current P/E Ratio < [½ × (5-Year P/E Ratio)]
  • Forward Price/Earnings: 15.8%
  • Highest 5-Year Price/Earning: 32.2%

Hurdle: Passed

benjamin graham analysis3
Benjamin Graham Analysis

Hurdle #3

    • Dividend Yield > [1/2 ×(10 Year-Treasury Yield)]
  • McDonald’s Dividend Yield: 2.8%
  • 10-Year Treasury Yield: 2.01%

Hurdle: Passed

benjamin graham analysis4
Benjamin Graham Analysis

Hurdle #4

    • Stock Price < [1.5 × Book Value/Share]
  • McDonald’s Book Value/Share: $13.04
  • Stock Price: $100.61

Reason: Much of McDonald’s Operations are owned by Franchisees, thus not showing up on Balance Sheet

Hurdle: Failed

benjamin graham analysis5
Benjamin Graham Analysis

Hurdle #5

    • Total Debt < Book Value
  • McDonald’s Total Debt: $12.54 billion
  • McDonald’s Book Value: $13.3 billion

Hurdle: Passed

benjamin graham analysis6
Benjamin Graham Analysis

Hurdle #6

    • Current Ratio > 2.00
  • McDonald’s Current Ratio: 0.9
    • Current Ratio: Current Assets/Current Liabilities

Most analysts agree that a current ratio of 1.0 is the normal amount for stocks

Hurdle: Failed

benjamin graham analysis7
Benjamin Graham Analysis

Hurdle #7

    • Earnings Growth > 7% over past 5 years
  • Earnings Growth: 9.1%

Hurdle: Passed

benjamin graham analysis8
Benjamin Graham Analysis

Hurdle #8

  • Stability in Growth of Earnings

December 2007: 1.07

December 2008: 0.86

December 2009: 1.11

December 2010: 1.16

December 2011: 1.33

Hurdle: Passed

benjamin graham analysis9
Benjamin Graham Analysis

8 Hurdles:

  • Hurdle #1: Earnings/Price > 2×(10 Year Treasury Yield)
  • Hurdle #2: Current P/E Ratio < [½ × (5-Year P/E Ratio)]
  • Hurdle #3: Dividend Yield > [1/2 ×(10 Year-Treasury Yield)]
  • Hurdle #4: Stock Price < [1.5 × Book Value/Share]
  • Hurdle #5: Total Debt < Book Value
  • Hurdle #6: Current Ratio > 2.00
  • Hurdle #7: Earnings Growth > 7% over past 5 years
  • Hurdle #8: Stability in Growth of Earnings
strong and stable growth
Strong and Stable Growth
  • Strong Performance and Future Growth
    • Six of Eight Hurdles Passed
    • EPS Growth Forecast
      • 8.7% in 2012
      • 10.3% in 2013
      • 10.4% in 2014
    • Long term EPS growth: 9.8%
    • Lasting upward trend, stable during downturn
valuation range
Valuation Range
  • DCF :
    • DR = 8.72%: $118. 59
    • DR = 7.72%: $155.62
  • Market comps:
    • P/E (ttm): $126.75 (P)
    • P/E (fwd): $111.02 (P)
    • EV/EBITDA: 119.06 (EV)
  • Target price: $125
technical indicators
Technical Indicators
  • Williams %R (WLPR)
    • Oscillator (between -100 to 0), shows whether stock is trading high, low, or somewhere in between recent trading range
    • Measure of current price in relation to high and low of past n days
      • %R = close(today) – high (n days)x100 high(n days) – low (n days)
    • Indicators:
      • %R = Five trading days since -100% reached; %R < -90%  strong buy
      • %R < -80%  buy
      • %R > -20%  sell
      • %R= Five trading days since 0% reached; %R > -10%  strong sell
technical indicators1
Technical Indicators
  • Bollinger Bands (BOLL)
    • Shows two standard deviations below and above moving stock price
      • Lower bound = mean[close, n] – 2*stdev[close, n]

Upper bound = mean[close, n] + 2*stdev[close, n]

    • Indicators:
      • Stock price < lower band  buy
      • Stock price > upper bound sell
technical indicators2
Technical Indicators
  • Relative Strength Index (RSI)
    • Momentum oscillator (between 0 and 100)
      • Momentum = rate of the rise or fall in price
    • Calculates as ratio of average higher closes to average lower closes
      • Positive trading period: U = close(now) – close(previous)
      • Negative trading period: D = close(previous) – close(now)
      • RS = EMA(U,n) EMA(D,n)

RSI = 100 – [100/ (1+ RS) ]

    • Indicators:
      • RSI < 30 strong buy
      • RSI < 40  buy
      • RSI > 60  sell
      • RSI > 70  strong sell
technical indicators3
Technical Indicators
  • Moving Average Convergence/Divergence (MACD)
    • Charts fast versus slow moving average to spot changes in strength, direction, momentum, and duration of stock price
      • 12 day exponential moving average (fast)
      • 26 day exponential moving average (slow)
      • MACD = 12 day EMA – 26 day EMA
    • Indicators
      • MACD crosses over 0 (12 crosses over 26) strong buy
      • MACD crosses below 0 (12 crosses below 26)  strong sell
slide71
MCD
  • Conclusion:
    • Strong Growth history and projections
    • Low beta, low risk
    • Not effected by crisis in Europe
    • Strong dividend
    • Undervalued versus competitors
    • High growth potential in China and Asia
    • Lowering margins
    • Overall analysis: strong buy
    • Target price: $125
    • Duration: Long term
stock competition
Stock Competition
  • Investopedia Trading Simulator
    • $100,000 in Virtual Money
    • Full Trading Platform (Short Selling, Options)
    • Weekly Leaderboard Update
  • Game Name: MICC Stock Competition
  • Password: Cornell
stock competition2
Stock Competition
  • Mitch: 3.43%
brainteaser
Brainteaser

You wake up early one morning and find the light in your bedroom is broken!

You get dressed in the dark. Your sock drawer has socks of three different colors: red, whiteand blue. How many socks do you have to take out to be certain of having a matching pair?