Financial SectorStock Presentation

Colin SmithKaushal Shah

August 5, 2008

Agenda

•Recap of Sector Presentation•Stock Recommendation / Portfolio

Weights•Bank of America•Merrill Lynch•Summary

Sector Recommendation

Underweight Financials by 50 basis points

•Sector highly correlated to the overall market

•High risks due to uncertainties – not all losses have been realized as yet

Sector Analysis•Current Financial Sector Weighting

(as of July 31, 2008)

SIM 12.93%S&P 500 15.34%------------------------------Underweight 2.41%

Overall: Bring the SIM Portfolio underweight by 291 basis points relative to the S&P

Current CompositionCompany Ticker Current Weight*

Bank of America BAC 3.31%

Berkshire Hathaway BRKA 3.51%

Goldman Sachs GS 4.44%

Merrill Lynch MER 1.67%

TOTAL 12.93%

* Weightings according to SIM-July Appraisal Report

RecommendationCompany Current

WeightBuy / Sell Proposed

Weight

Bank of America 3.31% Sell – 1.81% 1.50%

Berkshire Hathaway

3.51% Hold 3.51%

Goldman Sachs 4.44% Hold 4.44%

Merrill Lynch 1.67% Buy – 1.31% 2.98%

TOTAL 12.93% 12.43%

Target PricesCompany Target

PriceCurrent Price*

Upside

Bank of America (BAC) 31.44 32.62 -3.62%

Berkshire Hathaway (BRKA)

113,667.00 114,500.00 -0.73%

Goldman Sachs (GS) 205.25 177.86 15.40%

Merrill Lynch (MER) 37.88 26.39 43.54%

*as of August 4, 2008

Bank of America (BAC): SELL•Current Weight: 3.31% •Current Price (as of close 8/4/08): $32.62•Target Price: $31.44•Downside: 3.62%•Proposed weight: 1.50%

Business Analysis - BAC•Founded 1874•Based in Charlotte, North Carolina•Market Capitalization : $145.26 Billion•CEO & Chairman: Kenneth D. Lewis• Industry : M0ney Center Banks•Principal Areas of Business:

▫Global Consumer and Small Business Banking

▫Global Corporate and Investment Banking▫Global Wealth and Investment Management

Positives - BAC•Large and diverse deposit base gives BAC

plenty of capital with which it can pursue investments

•Largest Consumer bank in U.S.•Brings diversity to SIM Financial portfolio•Top performing stock in July appraisal

report▫$206,787 gain

Negatives - BAC• 2nd Quarter Net Income: $3.41B

▫Down 41% y.o.y.• Exposure to irrelevant credit risk associated

with auto financiers▫Loans for leases and to dealerships▫GMAC, Chrysler Financial

• Poorly rated holdings▫Write-downs from CDOs in 08Q2: $645M▫S&P expects chargeoffs and write-downs to

continue throughout the rest of 2008• Countrywide acquisition poses a lot of risk

P/B & P/E: Soon to Hit Low Points

Merrill Lynch (MER): BUY•Current Weight: 1.67% •Current Price (as of close 8/4/08): $26.39•Target Price: $37.88•Upside: 43.54%•Proposed weight: 2.98%

Year to Date

Business Analysis•Founded 1914•Market Capitalization : $26.5 Billion•Industry : Investment Brokerage•Principal Areas of Business :

▫Global Markets and Investment Banking 3rd Largest Investment Bank

▫Global Wealth Management Largest in the world

Positives•Wealth Management remains a cash cow•Has been able to raise substantial capital

despite write-downs/losses•Recently shed off $30 billion in CDO’s at

22 cents on the dollar•CEO Thain is putting his money where his

mouth is : Buys 500,000 shares for over $11 million

Price/Book : Ten Year Low

Valuation remains positive

  High Low MeanCurren

t

Target Multipl

e

 Target B,EBITDA/Share

Target Price

Price / Book 4 0.8 2.1 0.8 2.1  35.36 $74.26 Price /

EBITDA 4.7 0.3 2 0.3  2 54.49

$108.97 DCF Model           $40.38

Analyst Target           $37.88

Negatives•4 straight quarterly losses

▫Write downs exceeding $40 billion▫Still has $9 billion in asset backed

securities•Significant recent dilution of shares•Still tied to risk on sale of CDO’s

▫As much as another $4.5 billion•Will core assets remain safe?

▫50% stake in Blackrock

Recommendation•Decrease sector weight 50 bps•Stock Recommendation

▫Sell: Bank Of America (BAC) – 181 bps

▫Buy: Merrill Lynch (MER) – 131 bps

Thank You

Questions ??