University of ConnecticutMBA SMF Presentation

Dec-5-2013

George Cerwinski, Lead ManagerPornpong Lueang-A-Papong, Portfolio Manager

Robert Shedrawy, Treasurer/SecretaryXin Wang, Technology Manager

Jonathan CoombesMurali Kuchipudi

Yan Zhu

Agenda

Investment Philosophy and Style

Strategy

Investment Process

Processes and Procedures

Portfolio Analysis

Recap & Looking Ahead

Interesting Holdings

Investment Philosophy and Style

Value Investing

Hybrid: Top-down / Bottom-up

Mid to Large Cap Companies

Corporate Social Responsibility

3 – 5 years Investment Time Horizon

Both Short-term and Long-term Upside Potential

Strategy

At least 4 stock pitches per manager

25-30 stocks when fully invested

10 Sectors Diversified

100% Equity Investment

Investment Process I

Macro-Economic Analysis

• GDP Growth Rate

• Unemployment Rate / Labor Participation

Rate

• Interest Rates

• Geopolitical Events

Investment Process II

Sector and Industry Analysis

• Corporate Earnings and Reports

• Consumer Confidence

• Credit Availability

• Government Regulation

Strong and sustainable business model

Outstanding among its peers

Intrinsic value higher than market value

Corporate social responsibility

Investment Process III: Individual Stock Analysis

- Human Rights- Business Ethics Policy- ESG Disclosure- Equal Opportunity- Emission Reduction- Environmental Disclosure Score

- ROA and ROE- P/E and PEG ratios- Operating margins- Leverage ratios

•Well-balanced/diversified business units•Strong and predictable earnings

Processes and Procedures

Training and Development

Channels of Communications

Stock Pitches

Portfolio Analysis I

Benchmark and Portfolio Asset AllocationSector Current % S&P 500 Weight

Consumer Discretionary 7.5% 12.4%Consumer Staples 15.5% 10.2%

Energy 8.5% 10.5%

Financials 17.1% 16.1%

Health care 15.2% 13.0%

Industrials 13.5% 10.9%

IT 7.7% 17.9%

Materials 2.3% 3.5%

Telecom 5.5% 2.4%

Utilities 7.1% 3.1%

 Total 100.0% 100.0%

Portfolio Analysis II

Benchmark and Portfolio Asset Allocation

Portfolio Analysis III

Holding Period Performance Review

0.00%1.00%2.00%3.00%4.00%5.00%6.00%7.00%8.00%

5.76%

6.89%

Portfolio Growth

Port Return S&P return

Portfolio Analysis IV

Performance AnalysisMBA SMF S&P 500

Mean Weekly Return 0.513% 0.611%

Geometric Weekly Return 0.510% 0.608%

S.D 0.763% 0.896%

Beta 1.010 1.000

Sharpe Ratio 0.603 0.623

Treynor Ratio 0.005 0.006

Jensons Alpha 0.40% n/a 

Portfolio Analysis VPortfolio Snapshot as of 11/29/2013

Security Sector Price/Share Shares Position

Total Weight Div. Yield

Cost/Share

Gain/Loss

Ford Motor Co Consumer Discretionary $17.08 3,232 $55,203 3.3% 2.35% $18.00 -5.11%

PepsiCo Inc Consumer Staples $84.46 680 $57,433 3.4% 2.81% $83.36 1.32%

CVS Caremark Corp

Consumer Staples $66.96 870 $58,255 3.5% 1.50% $65.60 2.07%

Halliburton Company Energy $52.68 1,116 $58,791 3.5% 0.99% $50.85 3.60%

JPMorgan Chase & Co Financials $57.22 990 $56,648 3.4% 2.93% $52.82 8.33%

Wells Fargo Financials $44.02 1,650 $72,633 4.3% 2.51% $43.56 1.06%UnitedHealth Group Inc Health care $74.48 830 $61,818 3.7% 1.50% $68.02 9.50%

Amgen Health care $114.08 460 $52,477 3.1% 1.60% $116.50 -2.08%General Electric Co Industrials $26.66 2,150 $57,319 3.4% 2.91% $26.57 0.34%

United Parcel Service Industrials $102.38 410 $41,976 2.5% 2.40% $100.62 1.75%%

Altera Technology $32.25 1,750 $56,438 3.3% 1.60% $32.52 -0.83%Alcoa Material $9.61 1,858 $17,855 1.1% 1.22% $9.05 6.19%American Electric Utilities $47.06 1,088 $51,201 3.0% 4.30% $48.21 -2.39%

Verizon Telecom $49.62 806 $39,994 2.4% 4.20% $50.35 -1.45%

     Total Equity Value$738,040 43.8%      

     Total Cash $102,005 6.0%           SPY ETF $846,175 50.2%      

   Total Account Value $1,686,220 100.0%     

Recap & Looking Ahead I

Recap of Our First Three Months

• Affordable Care Act and The Debt Crisis

• Volatility in Market

• Emerging Markets

• Bubble Implication

• One position in:• Consumer Discretionary, Energy, Technology,

Materials, Telecommunication, and Utilities sectors

Recap & Looking Ahead II

Looking Ahead• In the Winter Break

Continue to monitor our positions

• In the Spring SemesterFocus on the following attributes

Strong and fit business model Steady revenue and earnings Diversified and balanced operations Great growth and value prospects

Seeking out growth stocks

Most Interesting Holdings I Alcoa Inc. (AA)

Investment ThesisPoised to be lowest cost fully integrated Aluminum Producer Strengths in downstream business insulates business from volatile

Aluminum prices Improving economic climate indexes in Asia, EU, and NA bode well

for metals demand Factors Affecting Price Growth

Upgrade from JP Morgan, among others, to overweight/over-perform citing predicted upswing in Aluminum prices

Cost cutting initiatives and closing of burdensome smelting facilities Worldwide economic improvement is leading to increasing demand

for Aluminum Domestically Auto and Airline manufacturers

Sector: MaterialsIndustry: Mining/AluminumMarket Cap: $12.61B

Price @ 2/20/2014: $11.75Purchase Price: $9.0552 Week Range: $7.63

- $12.32

Intrinsic Value: $16.27Market Cap at Intrinsic

Value: $17.43BUnrealized Gain: 29.83%

Most Interesting Holdings II Ford Motor Co. (F)

Investment ThesisOnly U.S automaker not to declare bankruptcy or accept a

government bailoutOne Ford plan has allowed Ford to fix balance sheet, sell

unprofitable brands, and improve the quality of vehiclesHighest ROE 28.5% in the industryStrong sales and profits support our high intrinsic value

Possible Factors Affecting Price Decline Speculation and concern over CEO Alan Mulally’s possible

departure Cyclical nature of industry and concern over a stalling recoverySome quality issues with SYNC product and Escape recall

Sector: Consumer DiscIndustry: Auto MakersMarket Cap: $68.3B

Price @ 11/29/2013: $17.08Purchase Price:

$18.0052 Week Range: $9.71

- $18.02

Intrinsic Value: $26.89Market Cap at Intrinsic

Value: $102.6BUnrealized Loss: (5.11%)

Acknowledgments

• Dr. Chinmoy Ghosh

• Dr. Michel Rakotomavo

• Patrick Terrion

• Cengiz Searfoss

• Peter Larson

• Keith LaRose

• Laurel Grisamer

• Investment Advisory Board

• UConn Foundation

Q & A

Appendix: Individual Stock Performance I

AA AEP

ALTR AMGN

Appendix: Individual Stock Performance II

CVS F

ALTR AMGN

Appendix: Individual Stock Performance III

UNH

UPS

JPM PEP

Appendix: Individual Stock Performance IV

VZ WFC

Appendix: Portfolio Beta

AEP

PepsiCo Inc

Verizon

Amgen

CVS

UnitedHealth Group Inc

UPS

General Electric Co

Wells Fargo

Ford

Alcoa

JPMorgan Chase & Co

Altera Corp.

Halliburton Company

0 0.2 0.4 0.6 0.8 1 1.2 1.4 1.6

Beta

Portfolio Beta = 1.01

Appendix: Best Performing Holding

United Health Group(UNH)• Our Plan for United Health Group:

We continue to believe UNH is undervalued as a whole. The forward

P/E ratio is 12.85 with outstanding reward to shareholders via

dividends and share buyback supports the increase in stock price

We believe that UNH will generate decent profit from Obamacare. The

company’s membership grew by 24% in the first nine months of 2013

We will continue to monitor UNH as its stock price approaches our

calculated intrinsic value

Sector: Health CareIndustry: Managed Care Market Cap: $75.75B

Price @ 11/29/2013: $74.48Purchase Price:

$68.0252 Week Range:

$51.09-$75.88

Intrinsic Value: $114.42Market Cap at Intrinsic

Value: $116.36BUnrealized Gain: 9.50%