Student Managed Fund

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Student Managed Fund
2005-2006 Undergraduates
Allocation, Selection, Performance
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2005 2006 Managers

• Rasha Ayoub
• Diksha Gagrani
• Suzanne Galasso
• Frederick Karrat
• Anna Kawa
• Ryan Krueger
• Lead Manager

• Yegor Makhiboroda
• Lead Manager
• Sarin Mathur
• Steven McCarthy
• Ryan Pape
• Gregory Rozolsky
• Michael Russell
• Nathan Speicher

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Mission Statement

• To use techniques learned in the classroom and
  apply them to real world investments in order to
  achieve superior returns

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Portfolio Objectives

• Outperform the SP 500 Index
• Develop a well-diversified portfolio
• Select companies with proven track records
• Invest in companies with greater than 10 annual
  required rate of return over a 5-10 year period
• Invest assets quickly, prudently, and efficiently

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Investment Process Focused Approach

• Select Industries that meet our investment
  criteria ROIC, consistency and growth
• Follow Industry trends
• Identify best of breed companies that we
  believe will outperform peers
• Perform analysis of best of breed to determine
  which securities are financially sound
  investments
• Identify companies that will provide growth that
  can be purchased at a reasonable price

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Equity Selection Criteria

• Review financial statements
• Annual Reports, 10k, Press Releases
• Financial Strength
• Cash flow
• Strong credit rating
• Safe leverage ratios
• Probability of companies success
• Proven track record
• Consistent cash flow and ROE
• Strong management
• Accounting Practices
• Consistent auditors
• Earnings released on time

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Equity Analysis

• Companys Past
• Future - Trends, Earnings
• Risks - Industry, Macro, Company
• Fundamental Analysis
• Ratio Analysis - D/E, Profit
• Value - Yield, P/E
• Efficiency - ROE, Margins

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Financial Models

• Capital Growth Model
• Calculates FV of capital in 10 years discounts
  using required rate of return to obtain buy
  price with a greater than 10 return
• Discounted Cash Flow
• Analyzes growth using projected future cash
  flows to obtain a current purchase price
• FCF Yield per Share
• Calculates free cash flow yield per share with
  a target of return greater than the Risk Free
  Rate

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Portfolio Return
September 30, 2005 February 17, 2006
Total Portfolio 929,882.74 966,920.49
Equity 928,336.80 862,312.75
Money Market 1,545.00 104,607.74

Period Return on SMF Return on SP
(09/30/05-02/17/06) 3.98 4.83
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Industry Allocation

Portfolio allocation includes SPY
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Individual Stock Performance
returns adjusted to include dividends
includes closed positions
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Current Holdings
Portfolio Value (2/17/06) 966,920.49
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Current Holdings
Company Name (Ticker) Shrs. Purchase Price Current Price Div. Total Return Gain/Loss Current Value
BARRICK GOLD CORP. (ABX) 1470 27.09 28.65 0.00 5.76 2,293.20 42,115.50
AMGEN INC. (AMGN) 535 74.52 74.89 0.00 0.50 197.95 40,066.15
BERKSHIRE HATH HLD B (BRK-B) 17 2885 2900.00 0.00 0.52 255.00 49,300.00
ANHEUSER-BUSCH COMPANIES INC. (BUD) 1235 40.7 41.50 0.00 1.97 988.00 51,252.50
CBS CORP CL B (CBS) 450 25.6 25.85 0.00 0.98 112.50 11,632.50
CDW CORP. (CDWC) 720 55.5685 57.16 0.00 2.86 1,145.88 41,155.20
COMCAST CORP. (CMCSA) 1135 26.25 26.31 0.00 0.23 68.10 29,861.85
CHEVRON CORP. (CVX) 700 57.82 57.17 0.00 -1.12 (455.00) 40,019.00
EL DUPONT DE NEMOURS CO. (DD) 1160 43.6399 41.51 0.00 -4.88 (2,470.68) 48,151.60
HOME DEPOT INC. (HD) 940 42.58 41.86 0.00 -1.69 (676.80) 39,348.40
INTEL CORP. (INTC) 1940 20.61 20.61 0.00 0.00 0.00 39,983.40
COCA-COLA CO. (KO) 975 41.63 41.79 0.00 0.38 156.00 40,745.25
MICROSOFT CORP. (MSFT) 1030 24.339 26.70 82.40 10.03 2,514.23 27,501.00
MYLAN LABORATORIES INC. (MYL) 1500 19.91 22.58 90.00 13.71 4,095.00 33,870.00
NEWS CORP. (NWS-A) 2080 14.45 16.01 0.00 10.80 3,244.80 33,300.80
CONSTELLATION BRANDS INC. (STZ) 1300 23.5 25.34 0.00 7.83 2,392.00 32,942.00
STRYKER CORP (SYK) 630 47.57 48.42 0.00 1.79 535.50 30,504.60
TYCO INTERNATIONAL LTD (TYC) 1985 25.845 25.85 120.00 0.25 129.93 51,312.25
VIACOM INC. (VIA-B) 450 38.88 42.92 63.00 10.75 1,881.00 19,314.00
ZIMMER HOLDINGS INC. (ZMH) 450 67.2 69.80   3.87 1,170.00 31,410.00
              733,786.00
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Performance Value vs. Growth
Value
Growth
Does not include SPY
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Current Allocation Value vs. Growth
Does not include SPY
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Current Allocation Value vs. Growth
Value Positions Ticker of Equity Positions Growth Positions Ticker of Equity Positions
BARRICK GOLD CORP. ABX 5.55 AMGEN INC. AMGN 5.28
BERKSHIRE HATH HLD B BRK-B 6.49 CDW CORP. CDWC 5.42
ANHEUSER-BUSCH BUD 6.75 HOME DEPOT INC. HD 5.18
CBS CORP CL B CBS 1.53 STRYKER CORP SYK 4.02
COMCAST CORP. CMCSA 3.93 VIACOM INC. VIA-B 2.54
CHEVRON CORP. CVX 5.27 ZIMMER HOLDINGS INC. ZMH 4.14
EL DUPONT DE NEMOURS CO. DD 6.34
INTEL CORP. INTC 5.27      
COCA-COLA CO. KO 5.37      
MICROSOFT CORP. MSFT 3.62      
MYLAN LABORATORIES INC. MYL 4.46      
NEWS CORP. NWS-A 4.39      
CONSTELLATION BRANDS INC. STZ 4.34      
TYCO INTERNATIONAL TYC 6.76      
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Risk Adjusted Performance
Return on Portfolio (Rp) Return on SP (Rsp) Risk Free Rate (Rfr)
Annualized Return 10.61 12.87 4.34 10-yr T-Bond (09/30/05)
Excess Return (Rp-Rfr) 6.27 8.53 4.34 10-yr T-Bond (09/30/05)
Risk (Weighted Average Beta) 0.71 1.00 4.34 10-yr T-Bond (09/30/05)
Treynor Index T(Rp-Rfr)/B 0.088 0.085 4.34 10-yr T-Bond (09/30/05)
Sharpe S(Rp-Rfr)/Std Dev 0.59 0.79 4.34 10-yr T-Bond (09/30/05)
Portfolio Attribution Portfolio Attribution Portfolio Attribution Portfolio Attribution
Portfolio Excess Return Allocation Effect Selection Effect
-0.717 -0.128 -0.589
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Performers

• Whole Foods Market Inc. (-6.11)
• El DuPont de Nemours Co. (-4.88)
• Mylan Laboratories Inc. (13.71)
• News Corp. Inc. (10.80)

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Recent News

• Sale of WFMI
• Trailing Stop Loss order triggered on February
  9th at 66.00
• Stop Loss prevented further losses, WFMI closed
  at 63.60 on February 17, 2006
• Currently Researching
• United Health Group
• Deutsche Bank
• Cameco Corporation
• Lawson Products

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Economic Outlook

• Cautious outlook due to the current economic
  environment
• High energy prices, slowing housing market and
  rising interest rates
• Moderate growth in the economy
• Continue disciplined investment approach
• Companies with a margin of safety

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Conclusions

• Continue disciplined approach
• Track emerging commodity and interest rate trends
• Continue to invest in blend of value and growth
• Monitor portfolio
• Confident that portfolio will perform over 5-10
  years investment horizon

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Thank You

• The Foundation
• The Advisory Board
• Steering Committee
• Professor Ghosh
• Patrick Terrion

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Questions?