LOGOLead Analyst: Frank Balas
Student Investment FundSalisbury University
Fall 2010
Dr. Herman Manakyan
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SUSIF Investment Policy Statement
The investment goal of the portfolio is a strategic core-oriented allocation to the overall domestic equity market.
The investment objective of the portfolio is to achieve long-term capital growth by investing in marketable U.S. equities with a risk profile that is similar to our benchmark, (The S&P 500 Index).
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Investment Strategy
Where is the economy headed?
How does sector fit economic view?
Strength / Valuation of individual stock
Economic Analysis
Sector Analysis
Individual Equity Analysis
Top-Down Approach
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Investment Strategy
1
Dividend Discount
Model
2
Earnings Discount
Model
3
Justified P/E
Model
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Agenda
Economic Analysis1
Sector Allocation2
Individual Company Highlights3
4 Performance Analysis
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Economic Analysis
Frank Balas
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Unemployment
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Consumer Confidence & Volatility
VIX
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Consumer Spending
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Inflation
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Housing & real estate
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Housing & real estate
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Fiscal Policy
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Monetary Policy
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Interest rates vs. Unemployment
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GDP
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S&P 500
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Economic Outlook
GDP growth will be (3-4%)
Unemployment will remain high (8-10%)
Interest rates will stay low (Fed Funds 0 – 0.5%)
Inflation will remain subdued (2% - 3%)
6 -12 month projections
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Sector Allocation
Frank Balas
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Spring 2010 Allocation
Sector: S&P 500 SUSIF Target SUSIF Actual (12/1/2010)
Energy 10.90% 18.25% 20.28%
Materials 3.50% 2.62% 2.48%
Industrials 10.80% 15.55% 15.05%
Consumer Discretionary 10.50% 14.50% 14.79%
Consumer Staples 11.30% 7.70% 7.46%
Health Care 11.60% 9.50% 9.34%
Financials 15.70% 9.21% 5.80%
Information Technology 18.80% 20.65% 21.38%
Telecommunications 3.30% 3.00% 3.12%
Utilities 3.60% 0.00% 0.00%
Over-weighted: Energy, Industrials, Consumer Discretionary, IT,
Under-weighted: Consumer Staples, Health Care, Financials, Telecom., and Utilities
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Spring 2010 Sector Allocation
Energy15%
Materials3%
Industrials13%
Consumer Discre-tionary
9%
Consumer Staples5%Health Care
7%
Financials9%
Information Technology
21%
Cash/SPY20%
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Fall 2010 Sector Allocation
Energy20.28%
Materials2.48%
Industrials15.05%
Consumer Discretionary14.79%
Consumer Staples7.46%
Health Care9.34%
Financials5.80%
Information Technology
21.38%
Telecommunications3.12%
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MaterialsIndustrials
Kevin Ford
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Calgon Carbon (CCC)
Company Background Calgon Carbon is the world's largest manufacturer of
granular activated carbon The company has pioneered cutting-edge
environmental purification systems
Reasons for holding Valuations Environmental regulations Increase in global population
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1-Year & 5-Year Charts
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United Technologies (UTX)
Company Background United Technologies Corporation provides a broad
range of high-technology products and services to the global aerospace and commercial building industries.
Named No. 1 "Most Admired" aerospace and defense company (2010, Fortune)
Reasons for holding Valuations The increasing global defense spending
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1-Year & 5-Year Charts
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Energy
Andrew Kirchner
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Alliance Resources
The company operates the Illinois and Appalachian regions which have the most productive coal mines in the U.S.
Produced 25.8 million tons of coal in 2009 from which 25 million tons were sold
Why we held this stock Offers a dividend of $3.24 per share Has a 5-year growth rate of 10 percent As of December 1, 2010, the stock has achieved a return of 108.9
percent since we purchased it Continues to add and develop new coal mines
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Alliance Resources
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Concho Resources
The company is focused on the drilling and exploration of oil in the Permian Basin which is the largest onshore drilling site in the U.S.
Operated in 361 drill wells with an average production rate of 30.6 million barrels of oil per day
Why we held this stock Has a 5-year growth rate of 41.4 percent As of December 1, 2010, the stock has achieved a return of
66.9 percent since we purchased it Continues to identify new drilling opportunities with undeveloped
reserves
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Concho Resources
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Consumer Discretionary Financials
Chris Bridner
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WMS Industries
Casino Equipment Supplier Supplies electronic slot machines to casinos all over
the world
Why we bought: Casino Industry has shown signs of recovery Supplier of #1 selling slot machine of all time, Lord Of
The Rings. Expansion into Macau leading to higher growth 5 year expected growth rate of close to 30% yet was
only trading at 15 times earnings
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What We Didn’t Invest In
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JP Morgan
Commercial and Investment Bank Second largest bank in the United States in terms of
deposits Purchased/acquired Bear Sterns and Washington
Mutual in 2008.
Why we bought Strongest bank in the industry CEO Jamie Dimon Previous acquisitions are becoming profitable Ability to pay a lucrative dividend when allowed to by
the FED
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Financials vs. S&P500
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HealthcareConsumer Staples
Domenica Prudenti
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Thermo Fisher Sci.World leader in providing analytical instruments,
equipment, reagents & consumables, software, & services for research, manufacture, analysis, discovery, and diagnostics
Two divisions:• Thermo Scientific
– Provides high-end analytical instruments ,laboratory equipment & software
• Fisher Scientific– Provides laboratory equipment, chemicals, supplies and
services used in healthcare, scientific research, safety and education
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TMO
Why we BOUGHT 15% growth this year and 12% over the next
five years aging baby-boomers will fuel growth and
provide an opportunity to increase both margins and market share
expand in emerging markets with the Chinese and Indian markets
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Colgate Palmolive
oral care, personal care, home care, and pet food markets
leading global market share of 45% in the toothpaste market
Why we HELD long history of steady and increasing dividend
payments projected to have steady growth over the next year Low debt
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CL
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TelecommunicationsInformation Technology
Dion Thomidis
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ABOVENET Inc.
Broadband Telecommunications Company Its private optical network delivers key
network and IP services in and among top U.S. metro markets and globally
Pleasant Surprise Special $5 dividend per share to be given on
December 27th
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ABOVENET (1 YEAR)
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Emerging Markets
Google Internet Search Engine
Largest Internet Search Engine in the U.S.
Why Hold Some Reported third quarter
earnings at 70% over previous quarter
Why Sell Some Ability to take advantage of
an emerging market while remaining diversified
Baidu Internet Search Engine
Known as the “Google of China”
Why Buy 2011 expected growth of
60.80% 2010 stock growth of
186.5%
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Google vs. Baidu (1 Yr)
Google Baidu
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Check Point Tech. Sol.
Information Technology Security Firm Provides affordable technology software
solutions to large companies as well as individuals
Among Leaders in Server Security Technology
More Good News UBS has upgraded Checkpoint stock and had
raised its price target from $47 to $50
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CHKP (1 YR)
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Performance Analysis
Frank Balas
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Return vs. Indices
9/15
/200
0
3/15
/200
1
9/15
/200
1
3/15
/200
2
9/15
/200
2
3/15
/200
3
9/15
/200
3
3/15
/200
4
9/15
/200
4
3/15
/200
5
9/15
/200
5
3/15
/200
6
9/15
/200
6
3/15
/200
7
9/15
/200
7
3/15
/200
8
9/15
/200
8
3/15
/200
9
9/15
/200
9
3/15
/201
0
9/15
/201
00.20000
0.30000
0.40000
0.50000
0.60000
0.70000
0.80000
0.90000
1.00000
1.10000
1.20000
1.30000
Portfolio Performance Since Inception
SU Fund
S&P 500
NASDAQ
DJIA
Dates
Wea
lth
Rel
ativ
es
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Return vs. Indices11
/30/
2005
3/2/
2006
6/2/
2006
9/2/
2006
12/2
/200
6
3/2/
2007
6/2/
2007
9/2/
2007
12/2
/200
7
3/2/
2008
6/2/
2008
9/2/
2008
12/2
/200
8
3/2/
2009
6/2/
2009
9/2/
2009
12/2
/200
9
3/2/
2010
6/2/
2010
9/2/
2010
0.55
0.65
0.75
0.85
0.95
1.05
1.15
1.25
1.355-Year Portfolio
Performance
SU Fund
S&P 500
NASDAQ
DJIA
Dates
Wea
lth
Rel
ativ
es
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Return vs. Indices
Nov-0
7
Jan-
08
Mar
-08
May
-08
Jul-0
8
Sep-0
8
Nov-0
8
Jan-
09
Mar
-09
May
-09
Jul-0
9
Sep-0
9
Nov-0
9
Jan-
10
Mar
-10
May
-10
Jul-1
0
Sep-1
0
Nov-1
00.4
0.5
0.6
0.7
0.8
0.9
1
1.1
3-Year Portfolio Performance
SU Fund
S&P 500
NASDAQ
DJIA
Dates
Wea
lth
Rel
ativ
es
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Return vs. Indices
Nov-0
9
Dec-0
9
Jan-
10
Feb-1
0
Mar
-10
Apr-1
0
May
-10
Jun-
10
Jul-1
0
Aug-1
0
Sep-1
0
Oct-1
0
Nov-1
00.9
1
1.1
1.2
1-Year Portfolio Performance
SU Fund
S&P 500
NASDAQ
DJIA
Dates
Wea
lth
Rel
ativ
es
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Return vs. Indices
Jun-
10
Jul-1
0
Aug
-10
Sep
-10
Oct
-10
Nov
-10
0.950000000000001
1
1.05
1.1
1.15
1.2
Fiscal YTD Performance SU Fund S&P 500
NASDAQ DJIA
Date
Wea
lth
Rel
ativ
es
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Return vs. Indices
Dec
-09
Jan-
10
Feb
-10
Mar
-10
Apr
-10
0.9
0.95
1
1.05
1.1
1.15
1.2
YTD Performance 2010SU Fund S&P 500
NASDAQ DJIA
Date
Wea
lth
Rel
ativ
es
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Return vs. Indices7/
31/2
002
12/1
/200
2
4/1/
2003
8/1/
2003
12/1
/200
3
4/1/
2004
8/1/
2004
12/1
/200
4
4/1/
2005
8/1/
2005
12/1
/200
5
4/1/
2006
8/1/
2006
12/1
/200
6
4/1/
2007
8/1/
2007
12/1
/200
7
4/1/
2008
8/1/
2008
12/1
/200
8
4/1/
2009
8/1/
2009
12/1
/200
9
4/1/
2010
0.5
0.7
0.9
1.1
1.3
1.5
Rolling 12-month Returns
SU Fund
S&P 500
NASDAQ
DJIA
Date
Wea
lth
rel
ativ
es
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Return vs. Indices11
/30/
2000
6/2/
2001
12/2
/200
1
6/2/
2002
12/2
/200
2
6/2/
2003
12/2
/200
3
6/2/
2004
12/2
/200
4
6/2/
2005
12/2
/200
5
6/2/
2006
12/2
/200
6
6/2/
2007
12/2
/200
7
6/2/
2008
12/2
/200
8
6/2/
2009
12/2
/200
9
6/2/
2010
0.4
0.5
0.6
0.7
0.8
0.9
1
1.1
1.2
1.3
1.4
10-Year Portfolio Performance
SU Fund
S&P 500
NASDAQ
DJIA
Dates
Wea
lth
Rel
ativ
es
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Return vs. Indices(3 Month)
7.500000
8.000000
8.500000
9.000000
9.500000
10.000000
10.500000
SUSIF
DJIA
S&P 500
NASDAQ
+18.8%
+9.8%
+15.5%
+12.4%
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Risk Adjusted Data
Time Period Beta
Standard Deviation Sharpe Ratio Treynor Ratio
AlphaR-
SquaredPortfolio S&P500 Portfolio S&P500 Portfolio S&P500
1 year 0.95265 0.05246 0.05319 0.11338 0.09243 0.00624 0.00516 0.00111 0.00126 93.16%
3 year 0.87022 0.05699 0.06293 (0.09540) (0.11214) (0.00625) (0.00811) 0.00105 0.00070 92.26%
5 year 0.88010 0.04702 0.05081 (0.02467) (0.05557) (0.00132) (0.00321) 0.00157 0.00132 90.39%
Inception 1.01178 0.05155 0.04690 (0.04435) (0.08675) (0.00226) (0.00402) 0.00199 0.00183 84.70%
3 Month 0.77860 0.03570 0.04504 1.33875 0.85536 0.06139 0.04948 0.02177 0.01780 96.41%
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1 Year, and 3 Month Returns
1 Year Return S&P 500 = (1180.55/1095.63)-1 = 7.75% SUSIF = (9.743585/8.929894)-1 = 9.11% Difference = + 1.36%
3 Month Return S&P 500 = (1180.55/1049.33)-1 = 12.51% SUSIF = (9.743585/8.427149)-1 = 15.62% Difference = + 3.11%
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Return/Risk(Since Inception)
Re t u r n
0.000000 0.010000 0.020000 0.030000 0.040000 0.050000 0.060000
(0.001000)
(0.000500)
0.000000
0.000500
0.001000
0.001500
SUSIF
S&P 500
Risk
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Return/Risk(5 Year)
Re t u r n
Risk0 0.01 0.02 0.03 0.04 0.05 0.06
0
0.0005
0.001
0.0015
0.002
0.0025
SUSIF
S&P 500
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Return/Risk(3 Year)
Re t u r n
Risk
0 0.01 0.02 0.03 0.04 0.05 0.06 0.07
-0.005
-0.0045
-0.004
-0.0035
-0.003
-0.0025
-0.002
-0.0015
-0.000999999999999999
-0.0005
0
SUSIF
S&P 500
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Return/Risk(1 Year)
Re t u r n
Risk
0 0.01 0.02 0.03 0.04 0.05 0.060.007
0.0072
0.0074
0.0076
0.0078
0.008
0.0082
0.0084
0.0086
0.0088
SUSIF
S&P 500
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Return/Risk(3 Month)
Re t u r n
Risk
0.03 0.04 0.050
0.01
0.02
0.03
0.04
0.05
0.06
SUSIF
S&P 500
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Summer OrdersCompany Ticker Shares Limit Buy Limit Sell Stop Order Executed
Apple Inc. AAPL 50 $ 300.00
Oracle Corp. ORCL 360 $ 32.00
Research in Motion RIMM 150 $ 57.75 Yes +6.3%
Skyworks Solutions SWKS 650 $ 13.50
Aon Corp. AON 300 $ 39.75 Yes +9.7%
Bank of America BAC 250 $ 13.75 Yes -15%
First Financial BanK FFBC 250 $ 32.00 $ 13.75
Goldman Sachs GS 60 $ 110.00 $ 124.75
Calgon Carbon Corp. CCC 600 $ 10.00
China Green Agriculture CGA 450 $ 9.75 Yes -13%
Baxter International BAX 220 $ 39.75
Concho Resources CXO 275 $ 72.00 $ 41.00
National Oilwell Varco NOV 320 $ 36.00 Yes +73%
Urban Outfitters URBN 375 $ 45.00 $ 32.75 Yes +16.5%
Trina Solar TSL 500 $ 16.75 Yes +43.8%
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Winter OrdersCompany Ticker Shares Limit Buy Limit Sell Stop Order
Alliance Resources ARLP 250 $ 50.00
Noble Corp. NE 300 $ 27.50
Southwestern Energy SWN 260 $ 30.00
Diageo Plc. DEO 160 $ 104.00
Thermo Fisher Sci. TMO 200 $ 66.00
Republic Services Inc. RSG 400 $ 20.00
United Tech. Corp. UTX 150 $ 100.00
Foster Wheeler AG. FWLT 400 $ 45.00 $ 20.00
Goldman Sachs GS 60 $ 195.00 $ 145.00
Target TGT 235 $ 68.00 $ 49.50
Gamestop GME 500 $ 15.50
WMS Industries WMS 250 $ 65.00
Apple AAPL 50 $ 270.00
Google GOOG 10 $ 520.00
Check Point Solutions CHKP 250 $ 50.00 $ 39.00
Hewlett Packard HPQ 200 $ 38.00
Abovenet Inc. ABVT 180 $ 45.00
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