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UNIVERSITY OF CONNECTICUT Student Managed Fund

UNIVERSITY OF CONNECTICUT Student Managed Fund. November 14, 2003 Undergraduate Portfolio. Julia Yelevich George Kruglov. Portfolio Objectives. Outperform the S&P 500 index Develop a well-diversified portfolio within a fluctuating market environment

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UNIVERSITY OF CONNECTICUT Student Managed Fund

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  1. UNIVERSITY OF CONNECTICUT Student Managed Fund November 14, 2003 Undergraduate Portfolio Julia Yelevich George Kruglov

  2. Portfolio Objectives • Outperform the S&P 500 index • Develop a well-diversified portfolio within a fluctuating market environment • Select holdings with low-medium risk • Invest in companies with 15% required rate of return

  3. Mission • Employing a systematic approach that consists of both quantitative and qualitative elements in order to identify companies that possess an above average return potential.

  4. Asset Allocation • 100% Domestic Equities • Diversified portfolio • Starting fund sum: $200,577 • Holdings with Low-Medium Risk

  5. Equity Allocation

  6. Procedures for Allocation • Selection of companies based on potential growth and stability • Consolidated research efforts • Screening of equities based on future growth, qualitative and quantitative analysis within required constraints

  7. Portfolio Investment Process: A Disciplined Approach Company Selection Quantitative Analysis Qualitative Analysis Consensus Portfolio MonitoringRe-optimization Stop Loss/Review Analysis

  8. Equity Selection Criteria • Perform an intensive, inferential analysis of the historical and current information contained in disclosed financial statements • Footnotes, shareholder reports, other filings • Financial Strength • Companies who generate excess cash • Probability of future projections • Accounting Practices • Scrutinize accounting and reporting practices

  9. Begin analysis: Company’s Past Historical data Past performance Future Assumptions CF/Earnings Projections Growth Rate External forces Market Trend Downside Risk Worst case scenarios Competition Financial Statements Debts Cash Flows Sales/fixed asset ratio Value Required rate of return Intrinsic value Yield P/E Efficiency ROI, ROE, Operating Profit Margin Equity Analysis

  10. Annual Reports: Financial Statements Debt, Capital, CF Accounting Practices “front end” “purchase accounting” Unjust optimism Reversal of reserves to meet earning targets Different reporting methods Management Board of directors Insider Trading SEC Filings Sarbanes Oxley 404 302 Continue Analysis

  11. Financial Models • Value-line Model • Estimate of FV of equity in 10 years, discounted using our required rate of return to find buyprice • Discounted Cash Flow Model • Growth is analyzed to determine today’s stock price based on projected Cash Flows • ValuePro.com • Earnings Yield Model • Measures yield power with earnings’ growth • P/E Model • Measures the value of the stock price as determined by the market

  12. Monitor and Review • Review • 20% • Stop loss • 15% -25% • Earning Announcements • Headline News • Market factors • Daily portfolio Performance

  13. Portfolio Gains/Losses

  14. Portfolio Statistics Total Purchase: $99,471.25 Net Change: +$4,688.00 Percentage Change: +4.71%

  15. Portfolio Optimization • Earnings Reports • Industry Changes • Economic Reports • Major Company News • Continuously seek out new investments for changing market conditions • Eliminate Emotion and Speculation

  16. Conclusion • Stock Selection and Market Conditions • Stability and Confidence • Surpass the S & P 500

  17. SMF vs. S&P500

  18. Thank You • The Foundation • The Advisory Board • Faculty • Patrick Terrion, Professor Ghosh, Steering Committee, Advisory Board

  19. QUESTIONS?

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