UNIVERSITY OF CONNECTICUT Student Managed Fund

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UNIVERSITY OF CONNECTICUT Student Managed Fund
April 22nd, 2005 Undergraduate Portfolio
Timur Braziler Jason Bliss Paul Dobrynin
Gigi Gopalan Daniel Hey Ryan MacNeil
Adam Poussard Nick Prastos Tanicka Ward Trevor Russo

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Mission

• To employ a systematic approach that consists of
  both quantitative and qualitative elements in
  order to identify companies in which to invest

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Portfolio Objectives

• Outperform the SP 500 index over a 5-10 yr.
  period
• Develop a well-diversified portfolio within a
  fluctuating market environment
• Select holdings with low-medium risk
• Invest in companies with greater than 10
  required rate of return over a 5-10 yr. period

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Current Status

• Starting funds 382,960 (9/24/04)
• Current balance 902,292.00 (4/12/05)
• Return (as of 4/12/05) 2.53

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SP 500 vs. SMF
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PHILOSOPHY
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Investment Process A Disciplined Bottom-Up
Approach
Monitor Portfolio
Consensus
Qualitative Analysis
Quantitative Analysis
Company Analysis
Industry Overview
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Procedures for Allocation

• Small team research efforts
• Select companies based on potential growth and
  stability
• Screen equities based on qualitative and
  quantitative analysis within the required
  objectives

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Equity Analysis
Historical Information
Annual Reports
Future Projections
Equity Analysis
Financial Statements
Competition
Ratio Analysis
Management Efficiency
Value Analysis
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Equity Selection Criteria

• Perform a historical and current analysis of
  information disclosed in financial statements and
  analyst reports
• Financial Strength
• Companies who generate excess cash
• Companies who are repurchasing stock
• Companies that operate with low debt
• Accounting Practices
• Scrutinize accounting and reporting practices
• Probability of future projections

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Financial Models

• Capital Growth Model
• Estimate of FV of equity in 10 years, discounted
  using our required rate of return to find our buy
  price
• Discounted Cash Flow Model
• Growth is analyzed to determine todays stock
  price based upon projected Cash Flows
• Earnings Yield Model
• Measures yield power with earnings growth

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Monitor and Review

• Review
• (10) , 10
• Stop loss
• (15)
• Earnings Announcements
• Headline News
• Market factors

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PERFORMANCE
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Equity Allocation
SJM
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PORTFOLIO STATISTICS
Company Name Shares Purchase Price Current Price Total Return Total Gain Total Value of Portfolio
               
The Coca-Cola Company 500 39.86 42.33 6.20 1,235.00 21,165.00 2.59
Viacom Inc 1460 35.44 35.05 -1.10 (569.40) 51,173.00 6.26
Microsoft Corporation 2550 25.89 25.32 -2.20 (1,453.50) 64,566.00 7.90
Lowes Co. 400 56.5 55.31 -2.11 (476.00) 22,124.00 2.71
Wal-Mart 350 56.58 48.63 -14.05 (2,782.50) 17,020.50 2.08
Amgen 810 59.04 60.58 2.61 1,247.40 49,069.80 6.00
Kenneth Cole Production 870 28.68 29.31 2.20 548.10 25,499.70 3.12
Smuckers 500 45.57 50.07 9.87 2,250.00 25,035.00 3.06
Cendant 1000 22.64 20.67 -8.70 (1,970.00) 20,670.00 2.53
American Financial Realty 1500 15.22 15.16 -0.39 (90.00) 22,740.00 2.78
First Data 1380 40.08 39.27 -2.02 (1,117.80) 54,192.60 6.63
Berkshire Hathaway 23 2954.35 2,917.99 -1.23 (836.28) 67,113.77 8.21
NOKIA 2000 15.7 15.33 -2.36 (740.00) 30,660.00 3.75
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Continued.
Company Name Shares Purchase Price Current Price Total Return Total Gain Total Value of Portfolio
Barrick Gold 2025 22.03 23.53 6.81 3,037.50 47,648.25 5.83
Alltel 725 55.41 57.32 3.45 1,384.75 41,557.00 5.08
PHH Corp 50   22.35   1,117.50 1,117.50 0.14
Diageo 720 58.25 60.50 3.86 1,620.00 43,560.00 5.33
Winnebago 1100 35.32 31.67 -10.33 (4,015.00) 34,837.00 4.26
Home Depot 1050 38.11 38.55 1.15 462.00 40,477.50 4.95
Gladstone 2320 21.71 22.46 3.45 1,740.00 52,107.20 6.37
British Petroleum 805 62.67 62.64 -0.05 (24.15) 50,425.20 6.17
Heinken 1015 34.65 34.50 -0.43 (152.25) 35,017.50 4.28
               
Totals           817,776.52 100
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Portfolio Gains/Losses
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Industry Allocation
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Values Returns
September 24, 2004 April 12th, 2005
Total Portfolio 383,991.56 902,292.00
Equity 327,131.56 817,776.52
Money Market 56,860 84,454.99

Period Return on SMF Return on SP
(09/24/04-04/12/05) 2.53 5.11
Total trading costs 13 basis points
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Under Performers

• Wal-Mart
• Struggle with same store sales growth
• Labor problems
• Unions
• Class action sexual discrimination suit
• Winnebago
• Gas prices
• Missed earnings by 1.5 million
• Commodity prices have risen

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Best Performers

• Barrick Gold
• Commodities up due to falling dollar price
• Expanding mining production
• De-hedging policy to increase shareholder value
• Smuckers
• Acquisition of Multifoods
• Growth of new products (Pillsbury, Hungry Jack,
  etc.)

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RECENT DEVELOPMENTS
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New Positions

• Diversification
• Added position in Energy with British Petroleum
• Added position in Telecom with Alltel
• Reinforced investment in Financials with
  Gladstone Capital and Berkshire Hathaway
• Reinvested in companies that we feel were even
  further undervalued

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LESSONS LEARNED
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Professional Development

• Acquired fundamental skills of equity valuation
• Enhanced skills in quantitative and qualitative
  analysis
• Gained knowledge of research techniques

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Group Dynamics

• Team based research efforts
• Understand the sacrifices and compromises
  associated with a team effort
• Youre only as strong as your weakest link
• Synergy

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Conclusion

• Our portfolio is positioned for a strong ten year
  outlook
• The Student Managed Fund has provided us with the
  essential business and social skills that will
  benefit our professional and personal development

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Thank You

• The Foundation
• The Investment Advisory Board
• The Steering Committee
• Faculty
• Patrick Terrion
• Chinmoy Ghosh

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QUESTIONS COMMENTS