Undergraduate Student Managed Fund 2014 Fall Presentation December - PowerPoint PPT Presentation

Undergraduate Student Managed Fund 2014 Fall Presentation December 4, 2014 1 UConn Student Managed Fund, 2014 UConn Student Managed Fund, 2014

Agenda • Portfolio Overview • Investment Process • Economic / Market Environment • Portfolio Allocation & Performance • Interesting Holdings • Lessons Learned • Looking Forward 2 UConn Student Managed Fund, 2014

Portfolio Managers • Lead Manager : Alexander Thalassinos Portfolio Manager : Kelly McCourt Treasurer/Secretary : Mitesh Mistry Bloomberg Specialist : Stephen Vento Web Manager : Akanksha Singh Cinzia Alfano Michelle Filippi Andrew Novitski Louis Beck Samuel Gudeon Akanksha Singh Nicholas Chapman Kelly McCourt Alexander Thalassinos Ryan Conforti Mitesh Mistry Stephen Vento • Undergraduate Supervisor : Patrick Terrion Fund Director : Chinmoy Ghosh Student Managed Fund Fund Managers 3 UConn Student Managed Fund, 2014 Spring 2014 Presentation

Portfolio Overview Objective • Outperform the S&P 500 • Learn to analyze as value investors Philosophy • Search for undervalued securities based on estimation of intrinsic value compared to current market price Style • Focus on the business – Bottom Up Approach Student Managed Fund Fund Managers 4 UConn Student Managed Fund, 2014 Spring 2014 Presentation

Portfolio Overview Risk Management • Business Model Risk –sustainable or not easily duplicated business model • Balance Sheet Risk –companies with strong balance sheet • Management Risk –companies with great leadership and direction • Aggregation Risk –diversified portfolio and unique companies Stop Loss Orders – 20% on each investment Focus on long-term growth Corporate Social Responsibility Student Managed Fund Fund Managers 5 UConn Student Managed Fund, 2014 Spring 2014 Presentation

Investment Process Highlights Strong Business Model Shareholder Return Policy Competitive Position Sustainable Growth Return on Invested Capital Sustainable Barriers to Competition Student Managed Fund Fund Managers 6 UConn Student Managed Fund, 2014 Spring 2014 Presentation

Investment Process • Manager Researches Chosen Company Step 1 • Presents Research to Other Managers Step 2 • Thorough Discussion on Company Research Step 3 • Majority of Managers Vote for Approval Step 4 • If Yes  Vote on Allocation of Capital • If No  Conduct Further Research Step 5 Student Managed Fund Fund Managers 7 UConn Student Managed Fund, 2014 Spring 2014 Presentation

Investment Tools Student Managed Fund Fund Managers 8 UConn Student Managed Fund, 2014 Spring 2014 Presentation

Economic Outlook • End of Quantitative Easing • U.S. Economy • Falling Oil Prices Student Managed Fund Fund Managers 9 UConn Student Managed Fund, 2014 Spring 2014 Presentation

Results of QE • Record Highs, Record Lows • Inorganic vs. Organic Growth • ~$4.5B Fed Balance Sheet • Interest Rates Rising • Stabilizing Economy • Finding Undervalued Stocks Strengthening Equity Markets Falling Unemployment Rate Student Managed Fund Fund Managers 10 UConn Student Managed Fund, 2014 Spring 2014 Presentation

Oil at 5-Year Low • Supply > Demand • Producers • Consumers • Opportunity Student Managed Fund Fund Managers 11 UConn Student Managed Fund, 2014 Spring 2014 Presentation

Equity and Sector Allocation Basic Materials : Nicolas Chapman, Louis Beck Consumer Services : Cinzia Alfano, Akanksha Singh, Andrew Novitski Consumer Goods : Michelle Filippi, Ryan Conforti, Andrew Novitski Energy : Kelly McCourt, Nicolas Chapman, Ryan Conforti Financials : Alexander Thalassinos, Stephen Vento, Louis Beck Healthcare : Michelle Filippi, Cinzia Alfano, Kelly McCourt Industrials : Akanksha Singh, Mitesh Mistry Real Estate : Alexander Thalassinos, Samuel Gudeon Technology : Stephen Vento, Samuel Gudeon, Mitesh Mistry Student Managed Fund Fund Managers 12 UConn Student Managed Fund, 2014 Spring 2014 Presentation

Sector Allocation Student Managed Fund Fund Managers 13 UConn Student Managed Fund, 2014 Spring 2014 Presentation

Portfolio Performance Overview • Total Portfolio Performance: 1.6% • Equity Performance: 4.7% • S&P 500 Performance: 3.15% Student Managed Fund Fund Managers 14 UConn Student Managed Fund, 2014 Spring 2014 Presentation

Total Portfolio Performance Student Managed Fund Fund Managers 15 UConn Student Managed Fund, 2014 Spring 2014 Presentation

Equity Portfolio Performance Student Managed Fund Fund Managers 16 UConn Student Managed Fund, 2014 Spring 2014 Presentation

Portfolio Allocation General Allocation Portfolio Allocation (Current Market Value) • 85% - Equities • 12% - SPDR Cash ESRX NOV 3% 8% IBM PCP 5% • 3% - Cash PG 4% 6% CVX 6% 5% GILD MKL Average Position Size 7% 10% 8.3% DEO 6% UTX 7% Position Size Determined By Certainty MA 13% SPY 12% T 8% Student Managed Fund Fund Managers 17 UConn Student Managed Fund, 2014 Spring 2014 Presentation

Portfolio vs. S&P 500 30% 23.87% 25% 20% 17.13% 15% 10.46% 10% 8.10% 7.81% 6.35% 5.12% 5% 3.47% 0% -0.64% -3.43% -5% -10% -9.45% -9.04% -15% -15.33% -20% Student Managed Fund Fund Managers 18 UConn Student Managed Fund, 2014 Spring 2014 Presentation

Worst Performing Stocks: • Technology Sector • Unrealized loss of 15.33% • Disappointed on Q3 earnings o Stagnant/Decreasing revenues • Issues implementing the new cloud system Future Outlook • Established relationships with large corporations o Companies are already integrated with IBM, high switching costs • Ability to manage incredible amounts of data has IBM set up for future opportunities 19 UConn Student Managed Fund, 2014

Worst Performing Stocks: • Healthcare Sector • Unrealized loss of 9.45% • Disappointed on Q3 earnings: o $337 mm branded prescription drug fee imposed by the Affordable Care Act o Solvaldi sales decreased by approximately 20% because of anticipation of Harvoni Future Outlook • Implementation of Harvoni will increase revenues and continue rapid growth • Pricing pressure from AbbVie treatment release in 2015 20 UConn Student Managed Fund, 2014

Best Performing Stocks: • Financial Sector • Unrealized gain of 23.87% • Strong Q3 earnings, revised growth rate upwards • New opportunities in China to couple increased global presence 21 UConn Student Managed Fund, 2014

Best Performing Stocks: • Healthcare Sector • Unrealized gain of 17.13% • Strong Q3 earnings, EPS $1.29 represents 24% growth in EPS YoY • Affordable Care Act increases the overall market for prescriptions 22 UConn Student Managed Fund, 2014

Looking Forward • 2015 Spring Semester • Rest of Capital Allocation • Active Portfolio Management • Continuous Learning and Improvement 23 UConn Student Managed Fund, 2014

Lessons Learned • Investment Philosophy • Certainty of Investment • Thinking Process • Teamwork and Diversity of Ideas Student Managed Fund Fund Managers 24 UConn Student Managed Fund, 2014 Spring 2014 Presentation