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Analysis of Current IT Holdings in the S&P 500: Opportunities and Recommendations

This presentation by Kyle Schneider and Patrick Symmonds focuses on the current holdings of major Information Technology companies in the S&P 500, highlighting key players like Akamai Technologies, Hewlett-Packard, Intel, Microsoft, and Google. It discusses an underweight class recommendation for IT, emphasizing intra-sector diversification and shedding light on emerging opportunities. Additionally, it reviews suggested changes in holdings, including recommendations to buy Google and reconsider Akamai due to market challenges. The insights provided aim to guide investment strategies in the technology sector.

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Analysis of Current IT Holdings in the S&P 500: Opportunities and Recommendations

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Presentation Transcript

  1. IT Sector Presentation Kyle Schneider Patrick Symmonds

  2. Information Technology in the S&P 500

  3. Current Holdings Akamai Technologies, Inc (AKAM) 1.03% Hewlett-Packard Company (HPQ) 3.68% Intel Corporation (INTC) 4.04% Microsoft Corporation  (MSFT) 5.02%

  4. Class Recommendation Current: Information Technology 1.38% Underweight Class Vote: Increase holdings up to 1% Overweight

  5. General Strategy • Intra-sector diversification • We like most current holdings • But see new opportunities • Industries: Communications Equipment Computer Hardware Computer Networks Computer Peripherals Computer Services Computer Storage Devices Electronic Instr. & Controls Office Equipment Scientific & Technical Instr. Semiconductors Software & Programming

  6. Proposed Holdings Akamai Technologies, Inc (AKAM) 0.00% Hewlett-Packard Company (HPQ) 3.00% Intel Corporation (INTC) 3.00% Microsoft Corporation (MSFT) 4.15% Research In Motion Limited USA (RIMM) 3.00% Google Inc. (GOOG) 3.00%

  7. Akamai • Recommendation • Sell our 103 basis points in Akamai • All CDN companies are facing uncertainty • Increased competition and alternatives taking away market share • Online video is currently increasing at a decreasing rate

  8. Akamai • Why the recent drop? • Lost three million in market capitalization in three weeks time • Second Quarter earnings, the company announced increased spending and lower margins • Market leader whose patents and early technological leads are wearing off • Increased CDN competition, price wars, video content growing online, but at slower rate • Priced very aggressively, such that any bad news would have caused the stock to slip

  9. Akamai

  10. Akamai

  11. Akamai

  12. Akamai

  13. Akamai

  14. Google • Recommendation • Purchase 300 basis points of SIM portfolio

  15. Google • Story • Had very good second quarter, but missed and was beaten up by market (over reaction) • Google phone in the works, expected release in 2008 or 2009 • Entering into battle for old analog distribution systems • Currently all earnings come from ads • Believes in investing in people, may harm short term, but good long term for long term growth

  16. Google

  17. Google

  18. Research in Motion • Manufacturer of BlackBerry communication device • Founded 1984, taken public • 40 Billion Dollar Market Cap • Canadian based company • Currently trading around $210-$215 • Price Target $265-$280 • Upside Potential 23%-33%

  19. Cons of Research in Motion • Trading close to all time high is price and many ratios • Competition from iPhone and other alternatives.

  20. Pros of Research in Motion • International Exposure large part of business and growing • Includes Europe and China • Recent decline presents good buying opportunity • Company is growing and has great upside potential

  21. Proposed Holdings Akamai Technologies, Inc (AKAM) 0.00% Hewlett-Packard Company (HPQ) 3.00% Intel Corporation (INTC) 3.00% Microsoft Corporation (MSFT) 4.15% Research In Motion Limited USA (RIMM) 3.00% Google Inc. (GOOG) 3.00%

  22. Questions?

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