Peter gallagher jblu pitchbook

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Investor & Airline Highlights Peter Gallagher

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Transcript of Peter gallagher jblu pitchbook

Page 1: Peter gallagher jblu pitchbook

Investor & Airline HighlightsPeter Gallagher

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Table of ContentsIntroduction

Corporate Communications & Journalism • 1. Corporate Messaging: Morgan Stanley, 2011 - 2012• 2. Generating Content: Dow Jones, 2010 - 2011

Research, Sales & Trading• 3. Commercializing Research: UBS Investment Bank, 2003 - 2004• 4. Making Research Actionable: Lehman Brothers, 2004 - 2005• 5. Monetizing Content: Barclays Capital / Lehman Brothers, 2006 - 2008

Conclusion

A. Appendix: Professional, Educational & Personal Background

Contact Information

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IntroductionObjective & Core Competencies

What do Investors Want? What Research can Offer

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Objective & Core Competencies

I am pursuing opportunities in Investor Relations

My greatest Strengths are being a good listener who can tease out high Conviction ideas on my own or with others due to my Analyst training and communicate them effectively

My skill sets include generating Thematic Content and leveraging dissemination into Multi-Product outcomes

Having been at the nexus of both Corporate Communications & Journalism as well as Research, Sales & Trading, I have well developed abilities which I can bring to bear on the Communications and Investment processes

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What do Investors Want?

Analysts must be willing to develop highly controversial, non-consensus positions on industries and stocks - and be right

Help portfolio managers Outperform: A couple of great ideas a year will put an Analyst far ahead of peers

Anticipating Change is worth a lot. Analyzing Change is worth much less

Have enthusiasm and communicate that excitement to clients

Being honest and admitting mistakes early increases credibility

Cover exciting smaller cap companies

Source: Morgan Stanley Equity Strategist Byron Wien, 4/26/93

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What Research can Offer

Good companies can be bad stocks and bad companies can be good stocks

Analysts are valuable when helping determine the attractiveness of a stock by providing insight about future reality and the market’s likely reaction

Analysts become indispensable because they provide the most insight, not because their stock picks are always right or their estimates are always perfect

Analysts who provide the most insightful and most proactive Research to institutional clients are the most valuable to issuers looking to raise Capital

Source: Piper Jaffray Director of Research Tom Schreier, 2000

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Corporate Communications & Journalism

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1. Corporate MessagingMorgan Stanley, 2011 - 2012

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1.1 Corporate MessagingMORGAN STANLEY, NEW YORK Executive Director & Corporate Communications Financial Writer, 2011 - 2012• Financial Writer of executive communications including speeches, talking points, internal memos, earnings releases, annual letter to shareholders and proxy materials• Also participated in earnings due diligence, draft Volcker Rule response, corporate Twitter launch, Firm values refresh• Series 24 Registered Principal compliance officer for communications with the public by Corporate Communications, Philanthropy and Global Sustainable Finance

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1.2 Writer Best PracticesClarity, written simply in plain English, at times highly personalized for executives

Proficient: Ability to grasp complex financial issues and translate into a narrative

Seasoned: Articulate in working one on one with members of senior management

Collaborative: Collegial in working with IR on time sensitive or longer lead items

Consistent: Corporate voice and messaging in terms of content, style and format

Manage: Move projects forward in a complex environment

Address potential issues or concerns of multiple stakeholders

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1.3 Earnings ReleasesMorgan Stanley Reports Third Quarter 2011• http://www.morganstanley.com/about/ir/shareholder/3q2011.pdf

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1.4 Corporate ActionsMorgan Stanley Reaches Comprehensive Settlement with MBIA• http://www.morganstanley.com/about/press/articles/de933308-080f-47af-b939-4e9cba3832b9.html

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1.5 Annual Shareholder Letter2012 Annual Letter To Shareholders• http://www.morganstanley.com/2012ams/Letter-Shareholders.pdf

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1.6 Proxy CD&A 2012 Proxy Statement Compensation Discussion and Analysis• http://www.morganstanley.com/2012ams/303252_018.htm#tx303252_28

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2. Generating ContentDow Jones, 2010 - 2011

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2.1 Generating Content DOW JONES & COMPANY, NEW YORK Columnist / Dow Jones Investment Banker, 2010 - 2011• Columnist primarily covering the TMT and Consumer/Retail sectors for a premium subscription service generating sophisticated financial and strategic commentary for an audience of investment bankers• Writing insightful, forward-looking columns and hard-hitting, in-depth analyses that are often accompanied by interactive spreadsheets covering topics such as M&A, capital raising, regulatory changes, venture capital and private equity• Coordinated production of the 2011 Deal Predictions representing the editorial team’s best ideas about which deals could shape or shake up the markets in 2011 and participated in both a virtual press conference and a webinar• Hewlett-Packard article generated the 1st client subscription for djibanker.com

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2.2 ColumnistIdea Generation

Product: A premium subscription service that leverages news and data with in-depth opinion and analysis

Audience: Investment Bankers, Management Consultants

Commentary: Exclusive analysis which is independent and forward-thinking

Distribution: Proprietary portals, FactSet, djibanker.com, mobile, Twitter

Recognition: Best Online Professional Financial Information Service at the Software and Information Industry Association’s 2010 Codie Awards

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2.3 Column Best PracticesColumnist, not a Reporter

Entertaining, memorable

The Lead: Opinion of opportunities and pitfalls, without numbers

Nut Graf: Executive summary that sets the scene

Arguments: Compelling commentary written with “swagger”

Valuation: Comparable transactions, trading laterals

Content: PowerPoints, spreadsheets, PDFs, videos and graphics

Avoid unactionable think pieces

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2.4 Valuation SpreadsheetsOpodo Could Make A Good Fit ─ At The Right Price

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2.5 Annotated FilingsHow High Will Spirit Fly?http://sec.gov/Archives/edgar/data/1498710/000119312510212371/ds1.htm

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2.6 CEO Interviews

Why Tupperware Is Buyback-Prone And M&A-Shy - March 29, 2011 http://online.wsj.com/video/why-tupperware-is-buybackprone-and-mashy/20802514-CC67-4846-9E42-15D7B1C81FEC.html

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2.7 A View on GOOG Antitrust

We Said: November 10, 2010 - Google Opponents Should Put Up Or Shut Uphttp://www.google.com/press/ita/saying.html“A competitive threat is not the same thing as an antitrust violation… It is difficult to make out FairSearch’s precise antitrust arguments. There are alternatives to ITA’s software: both the GDSs but also upstarts such as the U.K.’s Everbread Ltd., which has relationships with 60 low-cost carriers, and Vayant Travel Technologies LLC of New York. It isn’t clear, therefore, that competition would be reduced even if Googled didn’t honor ITA’s contracts with other travel companies.” - Peter Gallagher

What Happened: April 8, 2011 - ITA Software acquisition cleared for takeoffhttp://googleblog.blogspot.com/2011/04/ita-software-acquisition-cleared-for.html“We're excited that the U.S. Department of Justice today approved our acquisition.”

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3. Commercializing ResearchUBS Investment Bank, 2003 - 2004

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3.1 Commercializing Research

UBS INVESTMENT BANK, STAMFORD Director & Transportation / Aerospace Defense Equity Sales, 2003 - 2004• Stamford Trading floor based specialized Research Salesperson / Desk Analyst providing high Impact Research calls & Trading opportunities of Industrials stocks to 25 of the firm's top institutional clients with sectorized responsibilities• Marketing Differentiated Research platform with geographically distributed Analysts, Breadth of coverage and Global representation by working with Global Airlines, Transport and Aerospace & Defense Equity Analysts• Maximizing the intraday Flow between Analysts, Trading and clients while protecting against Facilitation Costs; Leveraging Research into Convertibles and Fixed Income to derive relative value across the Capital Structure • #1 Block Trading volume of Airline stocks in 1Q04 with a 9% market share

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3.2 Specialist Sales

Staying on Message

Partners: A premium service that leverages geographically distributed Analysts as a Complementary overlay with Sales

Depth: Provides industry insights to company specific Research calls and maintains an ongoing dialogue as Themes unfold

Idea Generation: Draw upon Cash Equities, Derivatives, Converts, Fixed Income

Transactional: Corporate Access to maximize Capital raising for issuers and Performance opportunities for investors

Feedback: Timely, Consistent Feedback from non-deal roadshows, conferences

Risk: Idea Generation that loses money for the firm through Facilitation Costs

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3.3 Client Coverage

A Complementary overlay to Generalist Equity Sales, client coverage included:

• Andor • Alliance Capital • AmEx

• Balyasny • Citigroup • DeAM

• Fidelity • Galleon • GIC

• GSAM • ING • Jennison

• Lazard • Lord Abbett • Maverick

• MLIM • MSIM • Pequot

• Putnam • SAC • T Rowe Price

• TIAA/CREF • Wellington • ZBI

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3.4 Analyst Marketing

US Transport & Aerospace / Defense Analyst MarketingNY: Andor, Balyasny, Chilton, Citigroup, DeAM, Galleon, GIC, GSAM, Jennison, JPMorgan, Maverick, MSIM, Pequot, SAC, Schroders, TCW, TIAA/CREF, ZBIBoston: AmEx, Babson, Brookside, Columbia, DeAM, Evergreen, Fidelity, John Hancock, MFS, Pioneer, Putnam, State Street, Tudor, Wellington, WestfieldAtlantic: AmEx, Gartmore, Lord Abbett, MLIM, State of New Jersey, Sun America, T Rowe Price, WellingtonLondon: ABN AMRO, DeAM, MLIM, O’Connor, Sarasin

European Transport & Aerospace / Defense Analyst MarketingNY: Andor, Balyasny, Brown Brothers, GIC, Jennison, Mackay Shields, MSIM, SAC, Sierra Global, TIAA/CREF, Trident, ZBIBoston: Boston Co, Fidelity, PutnamAtlantic: Franklin, MLIM, T Rowe Price, Wellington

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3.5 Morning Call Best Practices

It’s a Sales pitch, not a speech

Attention spans are short

Preparation: Use a bullet point outline for Key selling points

Practice: Speak out loud, so you don’t end up reading

Express Conviction: Use your voice and body language to convey confidence in your recommendation; Speak slowly, enunciate and project your voice

Don’t give Sales a reason not to make your call: Minimize maintenance material to Sales, reiterating Research to Sales Traders; Avoid unfocused, lengthy Content providers

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3.6 Sales Commentary

Global Laterals Buy Long Haul, Sell Discount - and an Exception to the Rule- Ryanair Profit Warning / JBLU Earnings Preview- Buy Long Haul: US / Europe / Asia- Sell Discounters: US / Asia- An Exception to Every Rule: Europe / easyJet

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3.7 Cross Product Dinner Ideas

Airlines Cross Instrument Ideas Hedge Fund Dinner• Geared toward clients with a fundamental Equity role who were: long Airlines at a low cost basis, feared they had missed the move off the bottom looking for alternative ways to get long exposure and/or going back to shorting the group• Airline Analyst: Equity Fundamentals: Bankruptcies for this cycle are behind us• Head of Equity Derivatives: Best Idea AMR Stock Replacement: Sell stock and buy 1 x 2 Call Spread - Lock in gains while maintaining long exposure through the Call Spread position• Head of Credit Derivatives: Best Idea Buy Boeing Capital Protection / Sell Boeing Corp Protection - Capital will Underperform due to leases, more Liquid than Airline credits

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3.8 Equity Origination

GOL Linhas Aéreas- CFO Stamford Trading Floor Visit- Specialist Sales IPO Pitch Letter

XJT $137MM Convertible Underwriter- Deal Team Captain

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3.9 Research & Events

I identified ways to leverage Research & events to Capitalize on Change, establish myself, Differentiate our platform and Drive relationships & Revenue• Originated Branded CEO Dinner Series with JBLU, DAL, NWAC, CAL, LUV; Arranged and/or Executed Corporate Access with AMR, ACAI, EZJ, UPS• Arranged cross instrument dinner with Airline & Aero Analysts and Equity Derivatives, Converts & Credit Default• Arranged Trader dinner with Airline Analyst, Block Traders & Equity Derivatives and buyside Analysts & Traders; Executed cross sector dinner with Airline, Rail & Auto Analysts and buyside Analysts• Supported Aircraft & Transport Conferences and NBAA BizJet Field Trip

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3.10 Events & Clients

DinnersUBS Delta CEO Dinner Series: Andor, CSAM HY, Duquesne HY, Equinox, GLG, GSPS, Mackay Shields HY, Principaled, T Rowe Price, UBS Prop, Wellington, ZBIAirlines Cross Instrument Ideas Hedge Fund Dinner: Balyasny, Chilton, Derchin, Galleon, GSPS, Hunter Global, O’Connor, Pequot, Satellite, Soros

Non-Deal Roadshows & Field Trips ACAI CEO Boston NDR: Boston Co, Fidelity, Highfields, Putnam, WellingtonAMR New CEO Dallas Headquarters Field Trip: AmEx, Carlson, Fidelity, Lazard, Lord Abbett, Primecap, Tudor, Waddell & ReedAMR New CFO West Coast NDR: Brandes, Capital, Primecap

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3.11 Events Drive Relationships

I launched the Branded UBS CEO Dinner Series on an ad hoc basis. I solicited CEO participation either directly or through Investor Relations. Attendees would be primarily limited to ~10 sectorized Equity clients with large company holdings or large sector investors who could take/increase positions as well as~5 Convert/Fixed Income clients to maximize the Dinner Series’ value internally

A highlight of the UBS CEO Dinner Series was held with DAL where board member Gerald Grinstein was making his first appearance to investors as the company's new CEO. Feedback from the event included the following email from Sales: "Kenn just called to tell me how much he enjoyed the dinner you hosted with DAL this week. He was impressed by your insights and is eager to be kept in the loop on your thinking. He was gushing really”

In addition to building Strong client relationships, my Performance review acknowledged the CEO Dinner Series as being Innovative in sponsoring events and building internal relationships with Converts & Fixed Income

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3.12 Controversy Drives Trading

In late July, ACAI announced plans to Change its business model from being a contract carrier feeding legacy Airlines to being an independent low cost carrier. UBS Analyst Robert Ashcroft assumed coverage of ACAI in mid August with a Reduce rating due to his opinion that the company's existing assets where ill suited for their proposed Strategy. My relationship with the CFO resulted in the CEO agreeing to a non-deal roadshow visiting institutional accounts in Boston

When MESA launched a bid with a 25% premium in early October to acquire ACAI and maintain the contract model, Ashcroft reiterated his Reduce rating and recommended that investors reverse the spread. Cash Trading captured first day volumes following the hostile offer of 50% for the acquirer and 25% for the target. When the CEO reiterated his Strategy on the NDR, holders exited the stock while the firm Dominated market share until the bid was terminated in late December

ACAI launched its Strategy in June 2004. However, the controversial call proved correct when the carrier filed bankruptcy due to high costs in November 2005

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3.13 Conviction Drives Deals

In mid March with the invasion of Iraq underway and Cash Equity Trading volumes ~50% of normal, UBS Analyst Sam Buttrick made a high Conviction call on the Airlines that they weren't all going bankrupt and to "buy the casket". AMR which was seeking labor concessions was his top pick after trading as low as $1.25 on March 12

In late April following the fall of Baghdad, AMR promoted President Gerard Arpey to CEO after negotiations faltered ahead of a May 1 deadline. Buttrick stayed with his call based on his ongoing discussions with Arpey and his view that the CEO's investor focus would lead him to opt for bankruptcy only as the last resort. With a revamped proposal accepted by all unions within days, AMR proceeded to rally to $7.59 by May 7

Afterwards, Arpey agreed to host a Headquarters Field Trip as the means to reintroduce himself to the investor community in his new role. UBS later acted as Lead Manager of AMR's next Secondary Offering

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3.14 Client Penetration

Fidelity Vote • Peter Gallagher: 5 votes total from 3 different voters- Transports Equity PM/Analyst (Oct ’03): “Great help on the Airlines. Thanks”- High Yield Analyst (Aug ’03): “Thanks for the special attention”- Transports/Defense Sector Analyst• US Airlines Analyst: 11 votes from 3 voters (incl new Transports Nov ’03)• US Transports Analyst: 8 votes from 4 voters (incl new Transports Oct ’03)• European Airlines Analyst: 2 votes from 1 voter (1st Fidelity Boston votes)• Asian Airlines Analyst: 2 votes from 1 voter (1st Fidelity Boston votes)• Australian Airlines Analyst: 2 votes from 1 voter (1st Fidelity Boston votes)

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3.15 Recommendation

Robert Ashcroft, former UBS Airline Equity Analyst“I was the Airline Equity Analyst -- Peter was Transportation Sector Sales, in which role he was excellent, as attested to not only by the sell-side Analysts he supported but also the buy-sider clients. He fully understood my calls and worked hard to understand buy-side client requirements and how to marry the two. Several prominent buy-siders told me Peter was the Best Salesperson who covered them. From my standpoint, Peter made my life significantly easier. He was also outstanding at understanding what I should be doing to effectively communicate my message and coaching me to do so”

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3.16 Positive Feedback

“Distribute this commentary out of London and include in tomorrow’s Daily”UBS Head of European Transportation Research

“Making progress with [Institutional Investor Best of the Buy Side] Wellington PM” UBS US Regional Airline Analyst

“Client originally said didn’t need Specialist Sales complimented you on DAL call”UBS Generalist Sales

“You are Transportation”, UBS Generalist Sales

“Thanks for arranging NDR & taking good care of us”, AMR Investor Relations

“My Best sales guy buy a mile”, Fidelity PM/Analyst

“Good on communication so give him my kudos”, T Rowe Price PM/Analyst

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4. Making Research ActionableLehman Brothers, 2004 - 2005

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4.1 Making Research Actionable

LEHMAN BROTHERS, NEW YORK VP & Product Manager, Industrials & Materials Equity Research 2004 - 2005• Responsible for management & distribution of Industrials, Materials & Services Research across Lehman’s Equity business and into buy side accounts. Present daily summary of Key ‘calls’ and breaking news to Sales Traders. Partner with Trading to quickly interpret Information for clients• Partner with Industrials, Materials & Services Equity Research Analysts - act as a sounding board in developing Impact calls; Drive Content creation; participate in Investment Policy Committee meetings for initiations & ratings Changes; provide Feedback to Analysts; provide Trading color; encourage quick response to events

Industrials, Materials & Services represented 36% of 2004 US Equity and Equity related issuance, including $9.2B in IPO’s and $42B in follow-ons

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4.2 Product Management

Content is King: Trusted Advisor responsible for shaping more Actionable calls

Foster Idea Generation and Drive Themes within & across sectors that can be Expressed across asset classes & product types

Increase Consistency of high Conviction, Differentiated fundamental Research

Commercialize Actionable Research, minimize maintenance noise

Maximize Information Flow between Analysts, Sales, Trading, investors & issuers

Develop Key franchise stocks with Dominant market shares

Think Strategically, Act Tactically = Think Globally, Transact Locally

Risk: Too closely Aligned with Research rather than independent judgement

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4.3 Sector Coverage

As the Industrials & Materials Product Manager, sector coverage included:

• Aerospace & Defense #3 ranked II Analyst

• Airlines #2 ranked II Analyst

• Autos & Auto Parts R/U ranked II Analyst

• Business Services • Chemicals/Commodity #2 ranked II Analyst

• Chemicals/Specialty R/U ranked II Analyst

• Diversified Industrials • Educational Services #2 ranked II Analyst

• Environmental Services #3 ranked II Analyst

• Homebuilders • Machinery #2 ranked II Analyst

Metals & Mining #1 ranked II Analyst

• Multi-Industry #2 ranked II Analyst

• Paper & Packaging #3 ranked II Analyst

• Small Cap Industrials

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4.4 Daily Routine

Lehman Brothers Before the Bell (“BTB”) - Sales Trader ‘talking points’ of 2-3 most Actionable Research calls by sector

Lehman Industrials & Materials Catalist (“Catalist”) - Product Manager commentary- Technology solution aggregates bullets from Research notes published overnight- Calendar of Data Points, earnings, conferences and proprietary events

Product Managers speak in Sales Trader Morning Call

Product Management runs Research Morning Call

Idea Generation Bloombergs

Visit Analyst floors regarding Research pipeline

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4.5 Research Morning Call

Convince Sales why they NEED to actively call clients to Transact

Recognize Sales may not have read your report or remember your prior stance

Hook Sales: A headline to remember

Lead with Conclusion: Ground Research with what to do with the stock

Key Selling Points: ‘3 reasons’ in short, punchy sentences; Context with preexisting facts/view; Why call worthy and how Differentiated from consensus

Be Brief: Don’t let your message get lost in too many details; “Less is More” allows Sales to follow up with questions when their interest is peaked

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4.6 Event Commentary

LMT Georgia Field Trip: Aero Facility Tour & F/A-22 Raptor Program UpdateIs there a case to shut the line building the F/A-22 Raptor fighter? • Judging from enthusiasm, threats and aircraft’s progress, there might be upside - Company Overview - Aircraft Operational Requirements - Current Contract - Investor Concerns - Alternatives - R&D Funding - Potential Enemy Threat Requirements - Upcoming Program Milestones/Catalysts - Sense of Growing Support for Production Increases

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4.7 Trade Idea Performance

Trading Ideas Performance Review

Ticker Call Open Price Status Date Last Δ% SPX Last SPX Δ% Over/Under

BA Long 5/11/05 $61.04 Closed 12/30/05 $70.24 15.1% 1166.22 1248.29 7.0% 8.0%

CAT Long 5/11/05 $44.83 Closed 12/30/05 $57.77 28.9% 1166.22 1248.29 7.0% 21.8%

TRW Long 5/11/05 $19.96 Closed 12/30/05 $26.35 32.0% 1166.22 1248.29 7.0% 25.0%

GM Short 5/11/05 $31.53 Closed 12/30/05 $19.42 38.4% 1166.22 1248.29 7.0% 45.4%

GM Short 10/6/05 $28.63 Closed 12/30/05 $19.42 32.2% 1196.39 1248.29 4.3% 36.5%

BA Long 9/21/05 $63.45 Closed 12/30/05 $70.24 10.7% 1221.34 1248.29 2.2% 8.5%

UTX Long 10/19/05 $49.95 Closed 12/30/05 $55.91 11.9% 1178.14 1248.29 6.0% 6.0%

UTX Long 10/27/05 $50.90 Closed 12/30/05 $55.91 9.8% 1191.38 1248.29 4.8% 5.1%

BA Long 10/27/05 $65.10 Closed 12/30/05 $70.24 7.9% 1191.38 1248.29 4.8% 3.1%

LMT Short 10/27/05 $60.07 Closed 12/30/05 $63.63 (5.9%) 1191.38 1248.29 4.8% (1.1%)

CD Short 10/24/05 $20.09 Closed 12/30/05 $17.25 14.1% 1179.59 1248.29 5.8% 20.0%

PCAR Short 10/4/05 $68.34 Closed 12/30/05 $69.23 (1.3%) 1226.7 1248.29 1.8% 0.5%

ARM Short 11/15/05 $17.28 Closed 12/30/05 $14.39 16.7% 1233.76 1248.29 1.2% 17.9%

AMR Long 10/20/05 $12.40 Closed 12/30/05 $22.23 79.3% 1195.76 1248.29 4.4% 74.9%

LUV Short 10/20/05 $15.58 Closed 12/30/05 $16.43 (5.5%) 1195.76 1248.29 4.4% (1.1%)

PNR Short 10/25/05 $36.26 Closed 12/30/05 $34.52 4.8% 1199.38 1248.29 4.1% 8.9%

BOW Short 10/4/05 $28.15 Closed 12/30/05 $30.72 (9.1%) 1226.7 1248.29 1.8% (7.4%)

SBL Long 10/28/05 $8.20 Closed 12/30/05 $12.82 56.3% 1178.9 1248.29 5.9% 50.5%

BXC Short 10/28/05 $12.10 Closed 12/30/05 $11.25 7.0% 1178.9 1248.29 5.9% 12.9%

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4.8 Performance Review

Peter has done a very good job at developing several Themes in conjunction with his sector Analysts

Peter does an exceptional job Expressing himself verbally in the 7:05AM Sales Trader meeting

Feedback on the GM Equity/Debt/Convert coordination was very Strong across the organization

His thoughts are well organized and well written

Peter has developed additional product industry knowledge by doing joint marketing with senior Analysts and senior management teams

Global cross border Content has been managed effectively

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5. Monetizing ContentBarclays Capital / Lehman Brothers, 2006 - 2008

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5.1 Monetizing Content

BARCLAYS CAPITAL / LEHMAN BROTHERS, NEW YORK VP & Content Manager, Equity Trading Desk Analyst, 2006 - 2008• Manage market Driven morning Sales Trader meeting, seeking to generate Content Complementary to published Research based on breaking news and position Trader insights Expressed through Cash and non-Cash Equity products• Review Content for Prop opportunities, monitor Risk positions and track Performance as well as managing Thematic Investing process, evaluating Best Execution, recommending Trades and monitoring the FID JV portfolio• The success of Lehman's Desk Analytics model increased Commissions+8% ($50MM annualized), reduced Facilitation Costs from 30% to 15%($90MM annualized) and doubled Prop Revenues on the US Cash Trading desk ($80MM annualized)

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5.2 Desk Based Analytics

Going to Market Together

Content Driven Revenue model with greater mind/market share & Commissions

Lowers Facilitation Costs through enhanced Risk Taking

Monetizes Idea Generation through customer Trades & Prop positions

Seeks Origination opportunities through Block Trades, Reverse Inquiries, Secondary Offerings and New Issuance

“Star Alignment”: Shared Research and Trading high Conviction

Risk: Overly focused on Trading P&L rather than selling ideas; Who you sit with is how you are Aligned and how you are compensated

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5.3 Idea Generation

A good Analyst has a top down approach that focuses on major fundamental Themes, identifies what's incremental to their thesis then selects outlier stocks that haven't moved yet ahead of specific Catalysts. This includes seeing Laterals across sub-sectors. Analysts also gain Conviction from sentiment, Flows and technicals

While having a Strategic framework, a good Analyst is also willing to act Tactically in Changing his pecking order of top recommendations based on price movements, to Change ratings when a price target has been achieved and fundamentals are Unchanged and to move on when circumstances Change

Underlying this top down approach is an Analyst's ability to generate a better Revenue forecast than consensus on a sector/company basis, as this involves the most guesswork by the sell side whereas costs are relatively predictable. An ability to add Alpha can also be enhanced by understanding what Options are pricing in ahead of events in order to the determine the best way to Express an idea

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5.4 Trading Morning Call

Flows have Themes, Beget more Flows

Thresholds: High Conviction ideas, Block names, high volumes/market shares

Axes/Flows: Focus on Naturals where they are axed and how they are set up; Why they are involved and what’s Driving the stock

Themes/Differentiated Data Points: 1 or 2 Thematic reasons regarding a stock/sector; Data Points that Impact a Global sector value chain; levels where Trading would provide Liquidity and Laterals which haven’t reacted

Ahead of the Market: Proactive so clients can position ahead of Catalysts rather than reporting yesterday’s event Driven trade

Broadened Sources: In addition to Research Driven Cash Equity Strategies, include Vol, Converts, Programs, Fixed Income as alternative ways to Express

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5.5 JV Portfolio Performance

LBO Candidates Thematic Investment JV Portfolio Performance

Ticker Sector Call Open Basis Price Δ% Floor Risk Ceiling Return SPX Δ vs. SPX Comments Shares Cost P&L

ABC Industrial Long 3/14/07 $29.78 $36.99 24.2% $27.00 -27.0% $40.00 8.1% 11.3% 12.9% Adding on Correction 150,000 $4,467,000 $1,081,500.00

DEF TMT Long 3/15/07 $43.40 $49.70 14.5% $38.00 -23.5% $50.00 0.6% 10.6% 3.9% Scaling Out on Spin 95,000 $4,123,000 $598,500.00

GHI Financial Long 4/10/07 $27.95 $30.25 8.2% $26.00 -14.0% $36.00 19.0% 6.2% 2.0% Built on Pullback 450,000 $12,577,500 $1,035,000.00

JKL TMT Long 2/28/07 $5.24 $5.59 6.7% $5.00 -10.6% $8.00 43.1% 9.7% -3.0% Lower Cost on Fall 2,375,000 $12,445,000 $831,250.00

MNO TMT Long 3/28/07 $36.29 $38.36 5.7% $33.25 -13.3% $42.50 10.8% 7.4% -1.7% Adding on Pullback 284,380 $10,320,150 $588,666.60

PQR Industrial Long 5/3/07 $48.46 $50.05 3.3% $45.00 -10.1% $60.00 19.9% 2.5% 0.8% Built on EPS Decline 250,000 $12,115,000 $397,500.00

STU Retail Long 5/10/07 $46.10 $47.58 3.2% $40.00 -15.9% $52.00 9.3% 1.4% 1.8% Profit Taking in CDS 100,000 $4,610,000 $148,000.00

VWX Financial Long 2/5/07 $22.10 $22.45 1.6% $20.00 -10.9% $27.75 23.6% 5.9% -4.3% Lower Cost on Fall 805,000 $17,790,500 $281,750.00

YZA Industrial Long 1/25/07 $33.14 $33.63 1.5% $30.00 -10.8% $40.00 18.9% 6.5% -5.0% Built on EPS Decline 375,000 $12,427,500 $183,750.00

BCD Retail Long 5/25/07 $31.97 $32.10 0.4% $30.50 -5.0% $40.00 24.6% 1.8% -1.4% Adding before BTS 250,000 $7,992,500 $32,500.00

EFG TMT Long 2/13/07 $15.70 $15.57 -0.8% $14.00 -10.1% $25.00 60.6% 7.0% -7.8% Lowered Basis 800,000 $12,560,000 ($104,000.00)

HIJ Retail Long 3/12/07 $33.42 $31.96 -4.4% $29.00 -9.3% $38.00 18.9% 9.4% -13.8% Adding on Correction 350,000 $11,697,000 ($511,000.00)

$123,125,150 $4,563,416.60

Ticker Sector Maturity Open Basis Price Δ% FV + / - FV Horizon Return CDX.IG7 Δ vs. IG7 Comments Call Notional MTM

ABC Retail 7 yr 2/12/07 94 bps 89 bps -5.3% 81 bps 8 bps 203 bps 128.1% 3 bps -7 bps >FV, Consider Equity Long $40,000,000 -$116,000.00

DEF Retail 5 yr 1/29/07 24 bps 13 bps -46.4% 203 bps 1,461.5% 2 bps -13 bps Consider Steepener Long $55,000,000 -$266,062.50

DEF Retail 7 yr 1/19/07 38 bps 20 bps -46.7% 39 bps -19 bps 203 bps 915.0% 1 bps -20 bps Consider Steepener Long $15,000,000 -$152,250.00

DEF Retail 10 yr 1/29/07 47 bps 31 bps -33.3% 203 bps 554.8% 2 bps -18 bps Consider Steepener Long $13,000,000 -$151,125.00

GHI Retail 10 yr 1/24/07 39 bps 41 bps 5.1% 36 bps 5 bps 203 bps 395.1% 2 bps 0 bps Consider Scale Out Long $50,000,000 $93,750.00

JKL Health 10 yr 2/6/07 76 bps 72 bps -5.0% 56 bps 16 bps 203 bps 181.9% 3 bps -6 bps Maintain CDS Long $50,000,000 -$84,375.00

MNO Retail 7 yr 2/8/07 52 bps 62 bps 19.2% 50 bps 12 bps 203 bps 227.4% 4 bps 8 bps Profit Taking in CDS Long $25,000,000 $145,000.00

PQR Industrial 7 yr 1/31/07 82 bps 58 bps -29.5% 68 bps -10 bps 203 bps 250.0% 2 bps -26 bps Consider Steepener Long $40,000,000 -$533,600.00

PQR Industrial 10 yr 2/5/07 105 bps 82 bps -21.9% 203 bps 147.6% 3 bps -25 bps Consider Steepener Long $10,000,000 -$172,500.00

STU Retail 7 yr 2/5/07 83 bps 66 bps -20.0% 66 bps 0 bps 203 bps 207.6% 3 bps -19 bps Consider Exit on B/B Long $50,000,000 -$442,250.00

$348,000,000 -$1,679,412.50

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5.6 Performance Review

You have taken both the Content captain and idea capture roles to a new and great level for the Trading and Desk Analyst teams

Morning meeting Content has improved dramatically including topical speakers from off the floor. Continue to follow your gut on the structure

You have owned the ideas, improved Execution and even raised the P&L Impact through better structuring

Your role in organizing, filtering ideas and combing two organizations (FID and EQ) for ideas has been positively noted by members of FID management

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Conclusion

Themes

Conviction, Conviction, Conviction!

Quality, Innovation, Branding

Dissemination, Alignment, Feedback

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Appendix Professional, Educational & Personal Background

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A.1 Professional Background

Mr. Gallagher has an extensive Investment Banking career servicing both Corporate & Government entities including Global experience providing Equity Research & Offerings, Privatization Advisory, Debt Raising and Structured Products. He has been responsible for 1) making recommendations to institutional investors, 2) marketing Global Financial Services including Capital Markets, Risk Management & Credit Products and 3) structuring Corporate Finance solutions by combining industry expertise with geographic client coverage & product capabilities

As an Equity Analyst, Mr. Gallagher’s insights & client service were recognized in Research votes by firms as diverse as Fidelity and Tiger Management. As a Corporate Finance Officer, he provided risk/return analysis for new transactions and negotiated Credit Facilities, Structured Financings and Derivative transactions. Mr. Gallagher also supervised junior staff and sought to identify potentially deteriorating situations in order to reduce holdings or improve collateral

His activities have involved advising government entities or their applicants including the Republic of France, the Government of Sri Lanka, The Export-Import Bank of the United States and regulators from the Federal Reserve

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A.2 Equity Research

U.S. BANCORP PIPER JAFFRAY, NEW YORK Research Analyst, IT Services Technology Equity Research, 2000 - 2001• Forecast slowing IT spending as consulting engagement sales cycle lengthened• Developed long term IT Services valuation framework

LAZARD FRERES & CO. LLC, NEW YORK Vice President & Research Analyst, Airline Equity Research, 1998 - 1999• Initiated coverage of domestic growth Airlines (“LCC’s”) in Fall 1998• Provided analysis of pilot contracts for Air France Advisory prior to 1999 IPO• Provided analytical support for #1 Institutional Investor Distressed Debt team

PAINEWEBBER INCORPORATED, NEW YORK Associate Analyst, Airline Equity Research, 1996 - 1998• Associate Analyst to #1 Institutional Investor Airline Equity Research Analyst• Published notes, maintained earnings models and updated statistical databases• Conducted due diligence of China Southern Airlines prior to 1997 IPO

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A.3 Corporate Finance

THE CHASE MANHATTAN BANK, NEW YORK Associate, Global Aerospace Group/Global Transportation Group, 1992 - 1996• Corporate Finance Officer with Airline & Aerospace/Defense client relationships• Structured, negotiated, and documented Privatization Advisory, Aircraft Finance & Derivative transactions• Advised Air Lanka’s privatization, Mexican industrialist’s CAL Ch 11 investment• Financed aircraft for VARIG Brazil, Royal Air Maroc and Cathay Pacific• Restructured USAir credit in exchange for collateral after 1991 Gulf WarAssociate, US Corporate Markets, 1987 - 1991• Previously as a generalist, coverage included Airlines & Shipping, Real Estate & REITS, Retail, Home Builders & Building Products, Financials, Pharmaceuticals, Technology & Telecommunications and HLT’s/LBO’s• Completed credit training program, prepared new credit approvals and supervised annual reviews of existing loans

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A.4 Equity Recommendations

Reno AirMr. Gallagher initiated coverage of Reno Air with a Speculative Buy recommendation just prior to the company’s acquisition by American Airlines. Mr. Gallagher had also been quoted in BusinessWeek and his firm named a share buyback participant

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A.5 Advisory

Republic of France/Air France Advisor to the Republic of France for the privatization of Air France and Underwriter of Air France’s IPO. Mr. Gallagher provided analysis of U.S. Airline concessionary contracts as a benchmark for seeking labor cost savings during a pilot strike prior to Air France’s partial privatization. Mr. Gallagher recommended methods of capital markets distribution and marketed the shares to investors

Government of Sri Lanka/Air Lanka Advisor to the Government of Sri Lanka’s Public Enterprise Reform Commission to privatize the national carrier Air Lanka in the midst of an ongoing religious/ethnic civil war. Mr. Gallagher prepared the Technical Proposal and negotiated the Contract of assignment milestones & associated fee payments

Continental Airlines/Houston Air Advisor to Houston Air’s bid for Continental during bankruptcy. Mr. Gallagher conducted due diligence and provided industry expertise to the M&A deal team

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A.6 Ex-Im Bank

VARIG BrazilAs Arranger, underwrote Ex-Im Bank guaranteed notes to finance a VARIG Brazil McDonnell Douglas MD-11 aircraft. The transaction utilized a trust structure through which the loan notes were securitized and sold into the public capital markets to institutional investors. Mr. Gallagher’s analysis of VARIG’s credit risks led to obtaining credit enhancement from the export manufacturers McDonnell Douglas & General Electric in the form of a subordinated loan tranche to assure that the purchase obtained Ex-Im Bank’s guarantee commitment. The manufacturers’ subordinated notes were later sold to international banks

Royal Air Maroc As Trustee, arranged the private placement of Ex-Im Bank guaranteed notes to finance two Royal Air Maroc Boeing 737-400 aircraft. Mr. Gallagher negotiated the mandate letter, term sheet & fee structure and proposed Ex-Im Bank guaranteed alternatives when the transaction was at risk of failing to close

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A.7 Aircraft Finance

Cathay Pacific Airways/Wilmington Trust as TrusteeAs Agent and Underwriter, provided financing for a U.S. Ownership Foreign Sales Corporation (FSC) lease financing of a Cathay Pacific Airways Boeing 747-400 aircraft. The borrower was a special purpose grantor trust whose principal asset consisted of the stock of a foreign sales corporation (FSC lessor) which was pledged to the lenders as security for the loan. The FSC lessor invested the loan proceeds by purchasing the aircraft. The aircraft was leased to a special purpose Bermuda trust and subleased to Cathay Pacific. Mr. Gallagher conducted due diligence, prepared credit approvals & negotiated documentation and marketed the loan to international banks

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A.8 Structured Products

Cathay Pacific AirwaysConcurrent with the FSC financing, lenders entered into an interest rate swap to pay Cathay Pacific fixed payments and receive Libor based floating payments. Mr. Gallagher analyzed credit, cross default, intercreditor & indemnification risks / mitigants, prepared credit approvals and negotiated documentation

HK TelecomChase participated in the sale and leaseback of an aircraft portfolio that resulted in the acceleration of foreign source income and the utilization of associated tax credits. Mr. Gallagher provided industry expertise to accounting & tax deal team members, conducted due diligence on the structure & related cash flows and participated in preparing the transaction approval memo

Interest Rate & Fuel Price Hybrid Hedging Strategies Mr. Gallagher marketed Strategies to lower costs up to 30% through the correlation benefits of hedging aggregate exposures

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A.9 Credit

Delta Air Lines As a Lead Bank, provided a commitment for a bank letter of credit after assessing that the risk profile would remain Unchanged under an existing credit agreement. The commitment was required to credit enhance outstanding ESOP notes guaranteed by Delta pursuant to a trust indenture upon Moody's action downgrading the credit rating of Delta's long-term senior unsecured debt. Mr. Gallagher evaluated intercreditor risks and negotiated the commitment letter, term sheet & credit agreement amendment for a $1 million fee

USAir As Agent, advised management of the necessity to provide security for its revolving credit in order to gain covenant relief & financing flexibility in the aftermath of the 1991 Gulf War. Mr. Gallagher modeled the financial covenants, evaluated collateral values & indemnification risks, negotiated the amendment & fleet mortgage and successfully sought the approval of a majority of bank participants for transaction fees totaling $1.2 million

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A.10 Risk Management

USAir / Shared National Credit Program As Agent, Mr. Gallagher met with Federal Reserve Bank examiners to assess USAir’s creditworthiness, probability of default, collateral as a secondary means of repayment and the risk of loss during the annual review of syndicated loans

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A.11 Academic Background

BOSTON COLLEGE, CHESTNUT HILL Bachelor of Arts Degrees in Economics & History, 1983 - 1987- Gasson Scholar: The 30 most distinguished members of Freshman class- Ignatian Scholar: Cited for Academic Excellence- Educational Policy Committee: One of 4 Student Representatives- University Relations Office: Administrative Assistant writing fundraising speeches

REGIS HIGH SCHOOL, NEW YORK Jesuit high school which all students attend on full scholarship, 1979 - 1983

Chase Manhattan Bank Corporate Credit TrainingFour month program of Financial Risk Analysis & Cash Flow Lending, 1987 - 1988

Boeing Airplane Evaluation Seminar, July 1993

Series 24, 7 & 63, passed Level II CFA

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A.12 Personal Background

Matrimony, 1993 - Barbara (nee Bucher)- William born ‘98, Mary Anne born ’01

Citizenship- US by Birth - EU via Marriage

Volunteering- The Leukemia & Lymphoma Society Westchester/Hudson Valley Chapter

Larchmont Shore Club, Member

Tennis, Biking, Skiing

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Contact Information

Peter Gallagher

(914) 833-1427

(914) 391-0498 Cell

[email protected]

AOL IM: TopGunGallagher