advisory board presentation (winter 2015) · sa – senior analyst; ja – junior analyst faculty...

All figures shown in $CAD millions except share price or otherwise noted

Advisory Board Presentation(Winter 2015)

April 8, 2015

Tiffany ChungDerek WanWilliam Ye

Agenda

Fund Overview

Macro Analysis

Historical Performance

Investment Decisions

Learning and Growth

Appendices

2


Fund Overview

Winter 2015

4

SAF Investment Fund Team

Team Picture

Spring 2012Inception

Fall 2013Course Credit & Enter into U.S.

Spring 2014New Analyst

Program

Fall 2014 Faculty Discussions & Assigned Marks

Spring 2013New Team Structure

L-R (Front): Brent Small, Adam Yan, Jonathan Chan, Wendy Cai, Tiffany Chung

L-R (Middle): Kobi Rasaratnam, Derek Wan, Sanjukta Sengupta, Tammy Ha, William Ye

L-R (Back): Vincent Chow, Ben Krever, Daniel Wang, David Xia, Kam Dhaliwal, Alan Cheung, Harsh Shah

Winter 2015

Team Structure

SPM – Senior Portfolio Manager; JPM – Junior Portfolio ManagerSA – Senior Analyst; JA – Junior Analyst

FacultyRanjini Jha (Consumer, Industrials)

Andrew Ecclestone (Financials, Healthcare, Materials)Craig Geoffrey (TMT, Energy, Utilities)

Frank Hayes (TMT)

Portfolio Manager

William Ye (JPM)

Healthcare

Alan Cheung (SA)

Utilities Materials

TMT

Kam Dhaliwal (JA)Kobi Rasaratnam (JA)

CIO

Derek Wan (SPM)

CEO

Tiffany Chung (SPM)

Financials

Ben Krever (SA)Adam Yan (SA)

ConsumerWendy Cai (SA)

Sanjukta Sengupta (JA)Brent Small (JA)

EnergyHarsh Shah (SA)Tammy Ha (JA)

Daniel Wang (JA)

IndustrialsJonathan Chan (SA)Vincent Chow (JA)

David Xia (JA)

5

Overview

1 Weight will change according to the portfolio allocation for the period

Purpose

Objective

“To provide students with an investment management experience in an institutional setting. Specifically, it will provide students hands-on-training in equity valuation and portfolio management with guidance from industry experts and with supervision by finance faculty.”

“To generate long-term growth of the Fund’s assets. The Fund will invest in a broadly diversified portfolio of Canadian and US equities that may provide capital gains and/or income.”

Benchmark 50% S&P/TSX Total Return Index and 50% S&P 500 Total Return Index1

6

Investment Philosophy

Restrictions Constraints

Asset Class Canadian & U.S. Equities

Market Capitalization Above $300 mm

Debt Rating Greater than B

Cash & Equiv Weight 0-15%

Total Securities 10-25

Sector Weight Maximum 25%

Stock Weight Maximum 10%

U.S. Weight Maximum 50%

Ownership of Shares

Less than 5% of average daily

trading volume over 10-day

period

7

Selling Discipline

We will review our holdings if…

Fundamental

Valuation

Material change in the business or in the industry

Reached 12 month target price

Price Movement

1) Exceed 25% capital gain from the time of purchase2) Exceed 15% capital loss from the time of purchase3) Exceed 25% decline in price from the highest price since initial purchase

8

Investment Process

1 Break down industries and further divide into sectors or sub-sectors

2 Remove any stocks within the universe that do not meet the Fund’s

restrictions

3 Select and apply relevant industry metrics for each stock

4 Rank all stocks and select the top four

5 Select one stock within the top four and conduct detailed research to

determine the recommendation (“Buy”, “Sell”, or “Hold”)

9


Macro Analysis

Winter 2015

Macro Outlook

Key Themes

Recovery in Europe slow Oil prices affecting all markets Stronger USD

Global Macro

Sectors

Canadian interest rate suppressed in short-term U.S. hike looming

Interest Rates

Slower growth in emerging economies a significant headwind to prices Low oil prices

Commodities

Energy Consumer Industrials

Overweight

Utilities Financials

Neutral

TMT Healthcare

Underweight

11

Global Macro Outlook

Emerging market concerns from last term continue– Disappointing China macro data last week

(factory production and retail sales)– Brazil growth has stalled and Lat Am has slowed

as well because of oil prices

Europe on Track for Long-Term Recovery Continued Emerging Market Weakness

Every major market has either slowed significantly or been hampered with the exception of the United States

Europe results are too early to tell; Germany is doing well, Eurozone has shown signs of early improvement with first month of QE about to finish– Weaker euro and lower oil prices expected to

help– We feel Europe is on pace for a longer term

recovery

Brazil GDP GrowthEU Retail Sales and Consumer Confidence

12

Interest Rates

1.00

1.25

1.50

1.75

2.00

2.25

2.50

2.75

3.00

Apr-2014 Jul-2014 Oct-2014 Jan-2015 Apr-2015

US 10 Year Canada 10 Year

US Rate hike: matter of when now– After last FOMC meeting, investors are still

being patient, as markets are still trekking higher with US 10-year yields at 8 week low

– View a market correction upcoming this year likely

Low Canadian Rates for Near Term U.S. Rate Hike on the Horizon Canadian rates will be low for foreseeable future

– Poloz has not ruled out another rate cut, but will take “wait-and-see approach”

– January GDP results shrank 0.1%, less than expected because of oil producers producing more than expected

– Annualized GDP growth of sub 1.0% likely– Haven’t seen the stronger USD boost Canadian

exports yet

10Y U.S. & Canadian RatesCanadian Exports

13

Commodity Prices

We are looking for US oil output decline, as well as oil inventories to dissipate– WTI in high $40s - mid $50s after no cut in

supply from OPEC– We are well-positioned to capture strengthening

in prices after glut in supply is cleared

Metals Driven by Emerging Markets Significant Oil Exposure in Portfolio Metals prices

– Portfolio exposure to copper, nickel and gold via First Quantum and Goldcorp

– Emerging markets a key determinant in base metals prices going forward

Weekly Cushing, OK Ending StocksU.S. Field Production of Crude Oil

14


Historical Performance

Winter 2015

Portfolio Returns Including Cash

Note: all figures in C$ unless otherwise specified.

Net Asset Value Including Cash

Total Returns

9.00

10.00

11.00

12.00

13.00

14.00

15.00

Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15

Fund NAV Benchmark

14.40

12.46

Fund NAV NAV Return TRI Benchmark Relative Return Avg. Cash % of PortfolioFiscal Year '12 10.49 4.90% 11.22% -6.32% 42.9%Fiscal Year '13 12.26 16.87% 18.75% -1.87% 21.7%

Fall '14 11.79 -6.28% -3.11% -3.17% 27.1%Winter '15 12.46 5.68% 4.89% 0.79% 19.8%

Since Inception 12.46 24.60% 44.01% -19.41% 33.4%

16

Portfolio Returns Excluding Cash

Note: all figures in C$ unless otherwise specified.

9.00

10.00

11.00

12.00

13.00

14.00

15.00

Jul-12 Nov-12 Mar-13 Jul-13 Nov-13 Mar-14 Jul-14 Nov-14 Mar-15

Fund NAV - excl cash Benchmark

14.40

13.26

Net Asset Value Excluding Cash

Total Returns

Fund NAV NAV Return TRI Benchmark Relative ReturnFiscal Year '12 10.69 6.90% 11.22% -4.32%Fiscal Year '13 13.08 22.36% 18.75% 3.61%

Fall '14 12.48 -8.37% -3.11% -5.26%Winter '15 13.26 6.26% 4.89% 1.37%

Since Inception 13.26 32.61% 44.01% -11.41%

17

Portfolio Characteristics

1 Monthly 5% VaR

All returns are listed on a monthly basis

Including Cash Excluding CashAverage Portfolio Return 0.70% 0.91%

Portfolio Standard Deviation 1.77% 2.27%

Average Benchmark Return 1.17% 1.17%

Benchmark Standard Deviation 2.05% 2.05%

Portfolio Beta 0.68 0.84

Portfolio Alpha (0.14%) (0.10%)

Sharpe Ratio 0.30 0.33

Value-at-Risk1 ($3,773) ($6,394)

Historical

18

Current Holdings by Value

Note: as of April 2, 2015; all figures in C$ unless otherwise specified19

Ticker Name Beta % ValueBNS Scotiabank 0.83 5.2% $11,997URI United Rentals 1.47 5.1% $11,777MYGN Myriad Genetics 0.65 5.1% $11,747CCA Cogeco Cable 0.63 4.6% $10,493SU Suncor Energy 1.61 4.4% $10,067SAFM Sanderson Farms 0.96 4.4% $10,023GIL Gildan Activewear 0.73 4.3% $9,961NA National Bank 0.72 4.2% $9,666RRX Raging River 1.71 4.0% $9,250VSI Vitamin Shoppe 0.69 3.8% $8,756CPX Capital Power 0.43 3.7% $8,551FOSL Fossil 1.74 3.7% $8,476PSI Pason Systems 1.33 3.3% $7,672AX.UN Artis REIT 0.93 3.3% $7,455FM First Quantum 1.82 3.2% $7,259BDI Black Diamond 1.05 3.0% $6,886MIC Genworth MI 1.20 2.7% $6,118WCP Whitecap 1.64 2.6% $5,956G Goldcorp 0.89 2.5% $5,782D.UN Dream Office REIT 0.76 2.1% $4,882Market Value 75.4% $172,771Cash 24.6% $56,284Portfolio Value 0.68 100.0% $229,055

BNS7%

URI7%

MYGN7%

CCA6%

SU6%

SAFM6%

GIL6%

NA6%

RRX5%

VSI5%

CPX5%

FOSL5%

PSI4%

AX.UN4%

FM4%

BDI4%

MIC4%

WCP3%

G3%

D.UN3%

Returns Breakdown


Ticker Name Initial Purchase

CurrentPrice

Target Price

Return Since Inception

Capital Gains vs. Dividends

Monthly5% VaR

BNS Scotiabank Mar-13 C$63.46 C$80.00 7.5% (7.1%)URI United Rentals Apr-15 US$90.65 US$115.00 0.0% (25.4%)MYGN Myriad Genetics Jul-14 US$35.10 US$46.50 (5.9%) (13.5%)CCA Cogeco Cable Dec-13 C$70.36 C$74.25 34.1% (14.0%)SU Suncor Energy Mar-13 C$38.65 C$40.96 27.9% (13.6%)SAFM Sanderson Farms Jul-14 US$83.48 US$97.00 (10.3%) (15.4%)GIL Gildan Activewear Apr-14 C$37.53 C$39.70 38.1% (12.9%)NA National Bank Aug-12 C$47.03 C$56.00 70.8% (8.5%)RRX Raging River Jul-14 C$9.21 C$9.83 13.7% (18.2%)VSI Vitamin Shoppe Jul-14 C$40.58 C$54.10 (9.2%) (11.5%)CPX Capital Power Dec-12 C$24.37 C$27.00 22.6% (6.8%)FOSL Fossil Dec-14 US$83.20 US$107.00 (24.2%) (18.5%)PSI Pason Systems Dec-14 C$20.25 C$23.29 (20.2%) (12.9%)AX.UN Artis REIT Aug-13 C$14.83 C$16.00 6.0% (8.8%)FM First Quantum Dec-14 C$16.12 C$14.41 (10.3%) (19.8%)BDI Black Diamond Apr-13 C$13.18 C$15.75 (29.1%) (19.5%)MIC Genworth MI Apr-15 C$28.47 C$35.00 0.0% (10.9%)WCP Whitecap Apr-15 C$14.64 C$16.56 0.0% (15.1%)G Goldcorp Dec-12 C$23.67 C$21.21 (31.7%) (17.7%)D.UN Dream Office REIT Dec-13 C$26.14 C$31.00 0.6% (9.0%)

-50% 0% 50% 100%

Capital Gain Dividend

Portfolio Breakdown


Financials23%

Consumer21%

Industrials15%

Energy15%

Materials8%

Healthcare7%

TMT6%

Utilities5%

Canada71%

U.S.29%

Mid Cap53%

Small Cap25%

Large Cap22%

0%

5%

10%

15%

20%

25%

30%

35%

40%

Consumer Financials TMT Materials Energy Healthcare Industrials Utilities

SIF Portfolio S&P TSX S&P 500

Sector and Security Returns (Winter 2015)

Security Returns Sector Returns

-25% 0% 25% 50% 75% 100%

AGUAX.UN

BNSBDI

CPXCCA

D.UNFM

FOSLGIL

GMYGN

NAPSI

RRXSAFM

SUOLED

VSI

-25% 0% 25% 50% 75% 100%

Consumer Discretionary

Consumer Staples

Energy

Financials

Healthcare

Industrials

Information Technology

Materials

TelecommunicationsServices

Utilities

S&P 500 S&P/TSX Fund

22

Attribution Analysis

Fall 2014 Winter 2015

-0.5% 0.0% 0.5% 1.0% 1.5%


Consumer Staples

Energy

Financials

Healthcare

Industrials


Materials

Telecommunications…

Utilities

-0.5% 0.0% 0.5% 1.0%


Consumer Staples

Energy

Financials

Healthcare

Industrials


Materials

Telecommunications…

Utilities

Excess Performance (3.17%)

Security Selection (5.20%)

Sector Allocation 2.03%

Excess Performance 0.79%

Security Selection 0.09%

Sector Allocation 0.70%

23

Correlation Analysis

BNS NA MIC FM BDI URI FOSL SAFM VSI CPX SU WCP CCA GIL PSI AX-U RRX D-U MYGN G

BNS 1.00 0.71 0.67 0.61 0.55 0.54 0.26 0.24 0.20 0.17 0.15 0.14 0.14 0.07 0.04 0.03 -0.01 -0.06 -0.15 -0.18

NA 0.71 1.00 0.56 0.51 0.44 0.48 0.32 0.04 0.25 0.15 0.20 0.24 0.11 -0.13 0.26 0.07 0.01 -0.17 0.00 -0.26

MIC 0.67 0.56 1.00 0.27 0.31 0.57 0.58 0.34 0.30 0.25 0.16 0.01 0.43 0.19 0.06 0.08 -0.05 -0.07 -0.09 -0.09

FM 0.61 0.51 0.27 1.00 0.56 0.55 0.11 0.16 -0.06 0.20 0.17 0.11 0.04 0.04 0.26 -0.02 0.17 -0.07 -0.14 -0.03

BDI 0.55 0.44 0.31 0.56 1.00 0.41 -0.07 0.42 0.10 0.30 0.09 0.30 0.04 -0.12 0.46 0.06 0.16 -0.01 0.01 -0.06

URI 0.54 0.48 0.57 0.55 0.41 1.00 0.60 0.41 -0.01 0.44 0.23 0.30 0.40 0.36 0.10 0.18 0.28 -0.01 -0.02 -0.08

FOSL 0.26 0.32 0.58 0.11 -0.07 0.60 1.00 0.10 0.04 0.25 0.40 0.15 0.34 0.43 -0.18 0.16 0.14 -0.11 0.05 -0.02

SAFM 0.24 0.04 0.34 0.16 0.42 0.41 0.10 1.00 -0.15 0.31 -0.14 0.32 0.40 -0.09 0.25 -0.11 0.00 -0.20 0.07 0.09

VSI 0.20 0.25 0.30 -0.06 0.10 -0.01 0.04 -0.15 1.00 -0.13 -0.06 -0.21 -0.08 -0.16 -0.08 -0.03 -0.29 -0.09 0.15 -0.42

CPX 0.17 0.15 0.25 0.20 0.30 0.44 0.25 0.31 -0.13 1.00 0.07 -0.04 0.37 -0.03 0.14 0.20 -0.09 0.14 -0.15 0.10

SU 0.15 0.20 0.16 0.17 0.09 0.23 0.40 -0.14 -0.06 0.07 1.00 0.55 0.11 0.44 -0.02 0.24 0.48 0.16 0.15 0.23

WCP 0.14 0.24 0.01 0.11 0.30 0.30 0.15 0.32 -0.21 -0.04 0.55 1.00 0.03 0.10 0.30 0.21 0.58 0.09 0.24 0.07

CCA 0.14 0.11 0.43 0.04 0.04 0.40 0.34 0.40 -0.08 0.37 0.11 0.03 1.00 0.19 -0.05 -0.01 -0.02 -0.08 -0.01 0.23

GIL 0.07 -0.13 0.19 0.04 -0.12 0.36 0.43 -0.09 -0.16 -0.03 0.44 0.10 0.19 1.00 -0.42 0.44 0.13 0.45 -0.02 0.31

PSI 0.04 0.26 0.06 0.26 0.46 0.10 -0.18 0.25 -0.08 0.14 -0.02 0.30 -0.05 -0.42 1.00 -0.17 0.28 -0.20 0.12 0.03

AX-U 0.03 0.07 0.08 -0.02 0.06 0.18 0.16 -0.11 -0.03 0.20 0.24 0.21 -0.01 0.44 -0.17 1.00 -0.10 0.77 0.18 0.22

RRX -0.01 0.01 -0.05 0.17 0.16 0.28 0.14 0.00 -0.29 -0.09 0.48 0.58 -0.02 0.13 0.28 -0.10 1.00 -0.12 0.12 0.08

D-U -0.06 -0.17 -0.07 -0.07 -0.01 -0.01 -0.11 -0.20 -0.09 0.14 0.16 0.09 -0.08 0.45 -0.20 0.77 -0.12 1.00 0.04 0.21

MYGN -0.15 0.00 -0.09 -0.14 0.01 -0.02 0.05 0.07 0.15 -0.15 0.15 0.24 -0.01 -0.02 0.12 0.18 0.12 0.04 1.00 0.28

G -0.18 -0.26 -0.09 -0.03 -0.06 -0.08 -0.02 0.09 -0.42 0.10 0.23 0.07 0.23 0.31 0.03 0.22 0.08 0.21 0.28 1.00

24


Investment Decisions

Winter 2015

Buy – Genworth Canada (TSX:MIC)

Monthly 5% VaR: (10.9%)Monthly 10% VaR: (8.3%)

Strong borrower fundamentals Market share gains from the CMHC Growth from pricing power and adj. opportunities

Drivers

Risks Condition of US parent Genworth Financial Increased regulation in Canada Canadian housing crash threat

Canada’s Largest Private Mortgage Insurer

Market Statistics Revenue by Geography

Company Overview

Valuation

1 Year Share Performance

Investment ConsiderationsBase

$35.00Bull

$43.00Bear

$26.00

44%

39%

13%4%

Ontario West

Quebec Atlantic

(40%)

(20%)

0%

20%


MIC Financials TSX

$0.00 $20.00 $40.00 $60.00 $80.00

Historic - P / B

Historic - P / E

Comps - P / B

Comps - P / E

DDM

Share Price (C$) $28.47Market Cap ($M) $2,652EV ($M) $2,894P / E 7.2xEV / EBITDA 5.3xP / B 0.8xDividend Yield 5.5%D / E 13.2%Debt Rating BBB+Beta 1.20

26

Share Price (C$) $14.64Market Cap ($M) $3,712EV ($M) $4,466P / E 7.5xEV / EBITDA 6.3xP / B 1.5xDividend Yield 5.1%D / E 30.2%Debt Rating NRBeta 1.64

(40%)

(20%)

0%

20%

40%

60%


WCP Energy TSX

Buy – Whitecap Resources (TSX:WCP)


Management team with a proven track record Quality assets developed through acquisitions Strong balance sheet and hedging positions

Drivers

Risks OPEC unlikely to cut production Slowdown in emerging market economies Buildup in U.S. oil inventories and lack of storage

Canadian light oil weighted E&P Company

Market Statistics Oil Weighting

Company Overview

Valuation



$16.56Bull

$17.43Bear

$12.46

69%

31%

Oil Natural Gas

$0.00 $5.00 $10.00 $15.00 $20.00

Comps

NAV

27

Share Price (US$) $90.65Market Cap ($M) $8,786EV ($M) $16,680P / E 17.6xEV / EBITDA 9.8xP / B 4.9xDividend Yield 0.0%D / E 89.8%Debt Rating BB-Beta 1.47

(20%)

0%

20%

40%


URI Industrials S&P 500

Buy – United Rentals (NYSE:URI)

Growth of North American Rental Industry Recovery of Non-Residential Construction Sector Economies of Scale from RSC Holdings Acquisition

Drivers

Risks U.S. Highway Trust Fund Uncertainty Lower Capex Spending by O&G Companies Increased Competition from Regional Players

North America’s Largest Equipment Rentals Company

Market Statistics Revenue by Segment

Company Overview

Valuation



$115.00Bull

$153.00Bear

$86.00

Monthly 5% VaR: (25.4%)Monthly 10% VaR: (17.8%) 28

Other Pitches

HLF – North American Frozen Seafood Provider

Clear leader in Canadian frozen seafood market with expansion plans into the U.S. Concern about lack of incremental growth potential

that has not yet been priced in

CYNO – Laser Aesthetic Equipment Manufacturer

Global demand growth is laser aesthetics market as households have higher disposable incomes Limited upside given material price appreciation

since initial pitch

HCP – U.S. Healthcare REIT

Well-diversified portfolio with strong growth prospects on the back of aging U.S. population Substantial risk surrounding resolution of lawsuit

against largest tenant

Hea

lthca

reC

onsu

mer

Fina

ncia

ls

29

(60%)

(40%)

(20%)

0%

20%

40%

60%

Dec-12 Jun-13 Dec-13 Jun-14 Dec-14

AGU Materials TSX

Sell Rationale

A

B Frequent cost overruns and facility outages, thus unable to fully realize demand in fertilizers

Decreasing realized prices for Potash and Nitrogen

ValueAct announces a 5.7% stake in Agrium, citing an undervaluation thesis

Increased dividend payout from $0.75 to $0.78 per share and 5% repurchase program

AB

Limited upside remaining after recent run-un in share price

Sell – Agrium (TSX:AGU)

Recent Events

Market Statistics

Return Profile

Stock PerformanceShare Price (C$) $131.72Market Cap ($M) $18,933EV ($M) $23,721P / E 20.7xEV / EBITDA 12.5xBeta 1.60

Purchase Date 12/21/12Purchase Price (C$) $101.99Current Price (C$) $131.72Capital Gains 29.2%Dividend Yield 5.5%Total Return 34.6%

30

(40%)

(20%)

0%

20%

40%

60%

Jul-14 Sep-14 Nov-14 Jan-15 Mar-15

OLED Information Technology S&P 500

Sell Rationale

A

B Possible introduction of a new technology (TADF), which can compete with OLED’s technology

Catalysts identified to be success factors for the company have mostly materialized

New licensing contract and supply agreement with LG

Mixed Q4 results, beat on revenue and missed on earnings; guidance indicates uncertainty

A

B

Significant run-up in share price ahead of factual improvement in revenue generation

Sell – Universal Display Corporation (NASDAQ:OLED)

Recent Events

Market Statistics

Return Profile

Stock PerformanceShare Price (US$) $47.16Market Cap ($M) $2,158EV ($M) $1,869P / E 52.4xEV / EBITDA 26.1xBeta 1.53

Purchase Date 07/30/14Purchase Price (US$) $28.86Current Price (US$) $47.16Capital Gains 63.4%Dividend Yield 0.0%Total Return 63.4%

31

Other Holdings

Healthcare Utilities

MaterialsTMTFinancials

Consumer

Energy

Industrials

32


Learning and Growth

Winter 2015

Initiatives

Annual Report Report to Industry Mentors

Advisory Board Presentation

Meet and Greet with Industry Mentors

Communication to Stakeholders

Investment Boot Camp

Guest and Faculty

Speakers

Weekly Meetings with

Faculty

Bloomberg / Capital IQ Training Sessions

SAF Student-run Investment

Fund Panel

Professional Development

34

Lessons Learned

Kobi Rasaratnam, Junior Analyst

I learned to look behind the numbers and at the story of the company – how defensible is the company’s market position and would their economic moat last in the next five to ten years.

“

”

It is important to understand more than just the fundamentals of the company you are researching. There may be important events or political action going on in the world, and it is necessary to break them down, and consider the significance with relation to your company.

“

”

Ben Krever, Senior Analyst

William Ye, Junior Portfolio Manager

Having the opportunity to mentor other students has taught me things about research and analysis that I never knew; it’s interesting to see how everyone has different ways of approaching the same problem.

“

”

Although the Fund places a large emphasis on stock selection, most of our excess returns are actually made from effective sector allocation. Therefore, I learned that it’s important to have your own view about where the economy is at and where it’s going and make investment decisions based on that.

“

”

Derek Wan, Senior Portfolio Manager

35

Sample Co-op Placements

Analyst, Investment

Banking

Analyst, Investment

Banking

Analyst, Investment

Banking

Analyst, Private Equity

Analyst, Public Markets

Analyst, Investment

Banking


Analyst, Structured Products

Associate, Equity Research

Analyst, Alternative

Assets


Analyst, Investment

Banking

36

Sample Full-Time Placements 2014

Andrew George-Parkin

Bond Analyst (2014)

Michael Liu

IB Analyst (2014)

Sunny Guo

Trading Analyst (2014)

Michael Wang

IB Analyst (2014)

Anqi Wang

IB Analyst (2014)

Linda Teng

Research Analyst (2014)

Nitish Sharma

Consultant (2014)

Dustin Fader

IT Analyst (2014)

Jing Xu

Public Markets Analyst (2014)

Joanne Toporowski

IB Analyst (2014)

William Li

Infrastructure Advisory (2014)

Jiatong Ma

Analyst (2014)

Jonathan Chu

IB Analyst (2014)

Kelvin Chun

Planning and Reporting Analyst

(2014)

37

Jacky Lam

IB Analyst (2014)

Sun Life Financial

Sample Full-Time Placements 2014-2015

Chi Liu

Associate, Treasury Finance

(2014)

Judith Ma

Analyst, M&A Transactions

(2014)

Alex Wang

Equity Research Associate

(2014)

Louis Hong

Analyst (2015)

38

Krishna Murali

IB Analyst (2015)

Manulife Financial Deloitte

Competition Successes 2015

39

TMX CDS Finance Case Competition,Ottawa

CFA Investment Research Challenge,Toronto

Industry Mentors

Lu JiangNiall Glynn Pawel Rajszel David Middleton Dorena Tu

Mike Williams Jin Li Nader AhmedIan Gutwinski Derek Chu

Aly Hadibhai Kevin Huynh Meng Wang Ray Wan David Lee

Simon Kwan Michael LiuNick Gill Jonathan Sue

40

Partners

Craig Geoffrey Ranjini Jha Andrew Ecclestone

John Gort(Chair) Jeffrey Stacey Thomas Scott Dennis HuberAazar Zafar Dan Lavric Alan Douglas

Lynn Graham

Faculty

Advisory Board

Student Relations

41


Appendices

Winter 2015

Table of Contents

Current Holdings Suncor Energy (TSX:SU) Raging River Exploration (TSX:RRX) Black Diamond Group (TSX:BDI) Pason Systems (TSX:PSI) Artis REIT (TSX:AX.UN) Dream Office REIT (TSX:D.UN) National Bank (TSX:NA) Scotiabank (TSX:BNS) Vitamin Shoppe (NYSE:VSI) Gildan Activewear (TSX:GIL) Fossil Group (NASDAQ:FOSL) Sanderson Farms (NASDAQ:SAFM) Cogeco Cable (TSX:CCA) Myriad Genetics (NASDAQ:MYGN) Goldcorp (TSX:G) First Quantum Minerals (TSX:FM) Capital Power (TSX:CPX)

Stock Pitches Cynosure (NASDAQ:CYNO) High Liner Foods (TSX:HLF) HCP REIT (NYSE:HCP)

43

Stock Pitch – Cynosure (NASDAQ:CYNO)


Global demand growth Strategically positioned Product innovation and expansion

Drivers

Risks Global economic performance Consumer preferences and evolution of

technology

Makes and sells laser aesthetic equipment

Market Statistics Revenue by Geography

Company Overview

Valuation



$33.00Bull

$44.40Bear

$25.50

Share Price (US$) $31.11Market Cap ($M) $676EV ($M) $585P / E 22.1xEV / EBITDA 14.5xP / B 1.9xDividend Yield 0.0%D / E 4.5%Debt Rating NRBeta 1.78

(40%)

(20%)

0%

20%

40%


CYNO Healthcare S&P 500

44

Stock Pitch – High Liner Foods (TSX:HLF)

Clear market leader in Canada with 51% market share Promising expansion plan into the U.S.

Drivers

Risks Commodity prices and input costs Failure to penetrate competitive U.S. seafood

market

North American Leading Frozen Seafood Provider

Market Statistics Revenue by Segment

Company Overview

Valuation



$33.00Bull

$36.53Bear

$22.58

Share Price (C$) $24.27Market Cap ($M) $745EV ($M) $1,170P / E 21.3xEV / EBITDA 12.5xP / B 3.2xDividend Yield 1.7%D / E 184.5%Debt Rating B+Beta 0.29

66%

33%

Foodservice Retail

(20%)

0%

20%

40%

60%

Apr-14 Jul-14 Oct-14 Jan-15 Apr-15HLF Consumer Staples TSX

$0.00 $20.00 $40.00 $60.00

TEV / RevenueTEV / UFCF

TEV / EBITDAP / E

DCF - Perpetual Growth

Monthly 5% VaR: (6.6%)Monthly 10% VaR: (5.3%) 45

$0.00 $25.00 $50.00 $75.00 $100.00

Projected AFFO

Historic P/AFFO

Historic P/FFO

LTM P/AFFO

LTM P/FFO

Stock Pitch – HCP REIT (NYSE:HCP)


Aging American population & Affordable Care Act Strong geographic diversification Property and rental growth

Drivers

Risks Increase in interest rates Possible Affordable Care Act repeal Largest tenant, HCRMC’s legal troubles

U.S. based fully integrated healthcare REITMarket Statistics

Company Overview

Valuation



$54.05Bull

$74.23Bear

$35.10

(10%)

0%

10%

20%

30%


HCP Financials S&P 500

Share Price (US$) $43.99Market Cap ($M) $20,269EV ($M) $30,114P / E 22.7xEV / EBITDA 16.4xP / B 1.9xDividend Yield 5.1%D / E 88.8%Debt Rating BBB+Beta 1.10

37%

31%

14%

13%5%

Senior Housing Post‐AcuteLife Science Medical OfficeHospital

Revenue by Property

46

$53.56

$40.96

$7.09 $19.69

$0.00

$10.00

$20.00

$30.00

$40.00

$50.00

$60.00

$70.00

PV ofReserves

Assets Liabilities NAV

(20%)

0%

20%

40%

60%

Mar-13 Sep-13 Mar-14 Sep-14SU Energy TSX

Current Holding – Suncor Energy (TSX:SU)

Note: VaRs are calculated on a monthly basis.

Suspended share repurchase program

$1B reduction in 2015 capex spending to $6.2 –$6.8B

First oil at Golden Eagle project in U.K. North Sea

Issued $750M in U.S.- and Canadian-denominated debt

Investment Thesis Integration allows capture

of price differentialsInvestment Risks High cost of in-situ projects Upside reliant on reserve

development

Stock Rec.Portfolio Rec.Previous Target PriceUpdated Target Price

BuyHold

$42.50$40.96

Market Statistics Recent Events

Investment OutlookReturn Profile

Performance Since Inception

Valuation

Share Price (C$) $38.65Market Cap ($M) $55,851EV ($M) $63,685P / LTM E 21.0xP / NTM E 42.3xEV / LTM EBITDA 5.4xEV / NTM EBITDA 9.1xP / B 1.3xROE 6.5%Dividend Yield 2.9%D / E 32.0%Beta 1.61

Purchase Date 03/27/13Purchase Price (C$) $31.46Current Price (C$) $38.65Shares Owned 260Market Value $10,049

Return - Inception 27.9%Return - TTM 0.5%Return - YTD 4.7%

5% VaR (13.6%)10% VaR (9.6%)

47

(40%)

(20%)

0%

20%

40%

Apr-14 Oct-14RRX Energy TSX

$8.03

$9.83$2.05 $0.25

$0.00

$2.00

$4.00

$6.00

$8.00

$10.00

$12.00

PV ofReserves

Assets Liabilities NAV

Purchase Date 07/28/14Purchase Price (C$) $8.10Current Price (C$) $9.21Shares Owned 1,000Market Value $9,210

Return - Inception 13.7%Return - TTM N/AReturn - YTD 25.5%

5% VaR (18.2%)10% VaR (12.5%)


Current Holding – Raging River Exploration (TSX:RRX)


$36M Dodsland Viking acquisition

Revised capex budget to $210 to reflect acquisition

Investment Thesis Very low cash operating

costsInvestment Risks Valuation dependent on

continued acquisition and development of reserves


HoldHold

$8.50$9.83



1 Year Performance

Valuation

48

$0.00 $5.00 $10.00 $15.00 $20.00 $25.00

EV / Revenue

EV / EBITDA

P / E

DCF

(60%)(40%)(20%)

0%20%40%60%80%

100%

Apr-13 Oct-13 Apr-14 Oct-14BDI Industrials TSX


Return - Inception (29.1%)Return - TTM (60.9%)Return - YTD 3.5%

5% VaR (19.5%)10% VaR (12.8%)

Share Price (C$) $13.18Market Cap ($M) $541EV ($M) $722P / LTM E 16.3xP / NTM E 23.4xEV / LTM EBITDA 5.4xEV / NTM EBITDA 7.0xP / B 1.5xROE 10.6%Dividend Yield 7.3%D / E 52.8%Beta 1.05

Current Holding – Black Diamond Group (TSX:BDI)


Utilization down to 70% in 2014 (vs. 85% in 2013)

36% decrease in contracted revenue outstanding and slight reduction in average length of term from 2013

Reduction in 2015 capex from $85M to $50M

$8M asset writedown on Australia operations

Investment Thesis Industry-leading efficiencyInvestment Risks Slowing growth trajectory

from oversupply Prolonged environment of

weak energy prices


HoldHold

$26.92$15.75




Valuation

49

$0.00 $10.00 $20.00 $30.00 $40.00

EV / Revenue

EV / EBITDA

P / E

DCF

(60%)

(40%)

(20%)

0%

20%

40%

Apr-14 Oct-14PSI Industrials TSX


Return - Inception (20.2%)Return - TTM N/AReturn - YTD (7.5%)

5% VaR (12.9%)10% VaR (10.7%)


Current Holding – Pason Systems (TSX:PSI)


2015 capex guidance lowered to $65M

Named in a patent infringement lawsuit along with several other defendants

Investment Thesis Leader in instrumentation Opportunity to cross-sell

complementary productsInvestment Risks Dependent on international

operations to drive growth


HoldHold

$30.52$23.29



1 Year Performance

Valuation

50

Current Holding – Artis REIT (TSX:AX.UN)

Market Statistics Recent Events Performance Since Inception

Return Profile ValuationInvestment Outlook


Q42014 on February 27th. 2015

Relatively poor earnings release

External acquisitions for the year were $200 mn, lowest in years

More focused on development and internal growth recently

Good hedge with 25% of Portfolio in US

Investment Thesis Large lease expiries in

Alberta and Manitoba

Investment Risks Slower growth with less

property acquisitions

RecommendationPrevious Target PriceUpdated Target Price

Hold$17.00$16.00



Return - Inception 6.0%Return - TTM (2.0%)Return - YTD 4.6%

5% VaR (8.8%)10% VaR (7.1%)

(20%)

0%

20%

40%

Aug-13 Apr-14 Dec-14AX.UN Financials TSX

$0.00 $10.00 $20.00 $30.00

NAV

Comps (LTM P/AFFO)

Comps (LTM P/FFO)

51

Current Holding – Dream Office REIT (TSX:D.UN)




Q4 2014 February 20th, 2015

Price dropped after earnings, due to Calgary effect

Strong tenant retention rates for 2015 and 2016

Investment Thesis Exposure to high quality

portfolio in office space

Investment Risks Declining occupancy in

office property sector


Hold$30.00$31.00



Return - Inception 0.6%Return - TTM (2.3%)Return - YTD 3.9%

5% VaR (9.0%)10% VaR (6.1%)

(20%)

0%

20%

Dec-13 Aug-14D.UN Financials TSX

$0.00 $20.00 $40.00 $60.00

NAV

Comps (LTM P/AFFO)

Comps (LTM P/FFO)

52

Current Holding – National Bank (TSX:NA)




Q1 2015 February 25, 2015

Least oil exposure

Growing outside of Quebec

Taking a view on CM business to do well next year, continue to buyback stock

Investment Thesis Expansion outside of

Quebec and Eastern Canada focused

Investment Risks Reliant on capital markets


Hold$65.00$56.00

Share Price (C$) $47.03Market Cap ($M) $15,478EV ($M) $0P / LTM E 10.9xP / NTM E 10.1xEV / LTM EBITDA nmfEV / NTM EBITDA nmfP / B 1.8xROE 15.7%Dividend Yield 4.3%D / E 0.0%Beta 0.72


Return - Inception 70.8%Return - TTM 9.2%Return - YTD (4.9%)

5% VaR (8.5%)10% VaR (5.0%)

(20%)

0%

20%

40%

60%

Aug-12 Apr-13 Dec-13 Aug-14NA Financials TSX

$0.00 $30.00 $60.00 $90.00

DDM

Multiples (LTM P/BK)

Multiples (LTM P/E)

Multiples

53

Current Holding – Scotiabank (TSX:BNS)




Q1 2015 on March 3rd, 2015

International segment struggling

Oil exposure is 50-50 investment grade and non-investment grade

Investment Thesis International exposure,

potentially “higher growth”

Investment Risks Restructuring


Hold$80.00$80.00

Share Price (C$) $63.46Market Cap ($M) $76,791EV ($M) $0P / LTM E 11.1xP / NTM E 11.1xEV / LTM EBITDA nmfEV / NTM EBITDA nmfP / B 1.6xROE 14.8%Dividend Yield 4.3%D / E 0.0%Beta 0.83


Return - Inception 7.5%Return - TTM (0.1%)Return - YTD (4.3%)

5% VaR (7.1%)10% VaR (5.3%)

(20%)

0%

20%

40%

Mar-13 Sep-13 Mar-14 Sep-14BNS Financials TSX

$0.00 $50.00 $100.00

DDM

Comps (LTM P/E)

Comps (NTM P/E)

Comps (P/BV)

54

Current Holding – Vitamin Shoppe (NYSE:VSI)

Market Statistics Recent Events 1 Year Performance



New CEO from Weightwatchers International and Walgreen

Poor Q4 (2.1% SSS growth) not as robust as before

Investigation continues

GNC taken private in 2007 with 11-12x multiple

Investment Thesis M&A Potential with

increasing retail presence

Investment Risks Negative Media exposure

can cause stock price volatility


Hold$55.00$54.10

Share Price (US$) $40.58Market Cap ($M) $1,253EV ($M) $1,249P / LTM E 20.3xP / NTM E 16.9xEV / LTM EBITDA 8.5xEV / NTM EBITDA 7.8xP / B 2.2xROE 11.3%Dividend Yield 0.0%D / E 1.5%Beta 0.69

Purchase Date 07/30/14Purchase Price (US$) $44.70Current Price (US$) $40.58Shares Owned 170Market Value $6,899


5% VaR (11.5%)10% VaR (10.3%)

(20%)

0%

20%

Mar-14 Jun-14 Sep-14 Dec-14VSI Consumer Discretionary S&P 500

$0.00 $25.00 $50.00 $75.00

Comps (EV/EBITDA)

Historical (P/E)

Historical (EV/EBITDA)

DCF Exit Multiple

55

Current Holding – Gildan Activewear (TSX:GIL)

Note: VaRs are calculated on a monthly basis.56

Market Statistics Commentary 1 Year Performance


Strong growth still in Branded

Recently acquired Comfort Colours (fashion basics)

Valuation concerns going forward, need to be carefully monitored

Investment Thesis Strong positioning Tuck-in Acquisitions also

fueling growth

Investment Risks Continued growth in

branded segment


(20%)

0%

20%

40%

60%

Mar-14 Jun-14 Sep-14 Dec-14GIL Consumer Discretionary TSX

$0.00 $25.00 $50.00 $75.00

DCF - Perpetuity

DCF - Exit Multiple


Historical (P/E)

Comps (EV/EBITDA)

Comps (P/E)Purchase Date 04/02/14Purchase Price (C$) $27.34Current Price (C$) $37.53Shares Owned 130Market Value $4,879

Return - Inception 38.1%Return - TTM N/AReturn - YTD 14.2%

5% VaR (12.9%)10% VaR (8.8%)

Current Holding – Fossil (NASDAQ:FOSL)




Poor earnings release

Revenue below analysts’ estimates

Currency headwind of $1.20 on EPS of $5.46-6.05

Investment Thesis Attractive valuation with

increasing growth in retail presence

Investment Risks Dependence on licensed

products


Hold$121.0$107.0




5% VaR (18.5%)10% VaR (10.4%)

(40%)

(20%)

0%

20%

Mar-14 Jun-14 Sep-14 Dec-14FOSL Consumer Discretionary S&P 500

$0.00 $50.00 $100.00 $150.00

DCF - Perpetuity

DCF - Exit Multiple


Historical (EV/EBIT)

Comps

0

57

Current Holding – Sanderson Farms (NASDAQ:SAFM)




February 24th earnings beat

Bird flu cases in March lead to import restrictions from Mexico, Canada and EU

Stronger margins with increased chicken prices

Investment Thesis Capture the trend of big

bird deboning and added capacity

Investment Risks Pricing and profit pressure

with crops and overall chicken prices


Hold$95.00$97.00




5% VaR (15.4%)10% VaR (11.7%)

(20%)

0%

20%

40%

Mar-14 Jun-14 Sep-14 Dec-14SAFM Consumer Staples S&P 500

$0.00 $40.00 $80.00 $120.00

Comps (EV/EBITDA)

Comps (P/E)

Historical (P/E)


DCF Exit Multiple

58

Current Holding – Cogeco Cable (TSX:CCA)


Introduction of TiVo service to cable customers

Positive Q1 results Beat on both earnings and

revenue CRTC decision to require

cable providers to offer pick-and-pay channels

Investment Thesis Organic growth in high

speed internet offering

Investment Risks Phase out of cable services

with introduction of IPTV and other OTT services


HoldHold

$68.00$74.25




Valuation




5% VaR (14.0%)10% VaR (9.2%)

(20%)

0%

20%

40%

60%

80%

Dec-13 Apr-14 Aug-14 Dec-14 Apr-15CCA Consumer Discretionary TSX

$50 $70 $90 $110

DCF - EM

DCF - PG

Comp. EV/EBITDA

52W Range

59

Current Holding – Myriad Genetics (NASDAQ:MYGN)


Q4 results beat expectations

Lowered guidance based on delays for new product reimbursement

Lag in obtaining private reimbursement due to timing of certain contracts

Investment Thesis Economic moat Industry growth

Investment Risks Entrance of competitors Legal risk


HoldHold

$44.00$46.50



1 Year Performance

Valuation



Return - Inception (5.9%)Return - TTM N/AReturn - YTD 3.1%

5% VaR (13.5%)10% VaR (12.2%)

(30%)

(20%)

(10%)

0%

10%

20%

30%

Apr-14 Aug-14 Dec-14 Apr-15MYGN Healthcare S&P 500

$20 $30 $40 $50 $60

DCF - EM

DCF - PG

Comp. EV/EBITDA

Hist. EV/EBITDA

Hist. P/E

52W Range

60

Current Holding – Goldcorp (TSX:G)


Q4 results were below expectations

Impairment charge of $2.3 billion from Cerro Negro mine in Argentina

Record Q4 production Acquired Probe Mines

Limited for C$526 million

Investment Thesis Protects against economic

downturns Stronger senior miner

Investment Risks Further decrease in gold


HoldHold

$24.20$21.21




Valuation

Share Price (C$) $23.67Market Cap ($M) $19,267EV ($M) $23,040P / LTM E NMP / NTM E 27.0xEV / LTM EBITDA 15.3xEV / NTM EBITDA 9.4xP / B 1.0xROE (11.7%)Dividend Yield 3.2%D / E 20.9%Beta 0.89

Purchase Date 12/05/12Purchase Price (C$ $36.50Current Price (C$) $23.67Shares Owned 240Market Value $5,681

Return - Inception (31.7%)Return - TTM (12.5%)Return - YTD 10.0%

5% VaR (17.7%)10% VaR (13.5%)

(60%)

(40%)

(20%)

0%

20%

40%

Dec-12 Jun-13 Dec-13 Jun-14 Dec-14G Materials TSX

$0 $10 $20 $30 $40

NAVPS Range

EV/Production

EV/2P Reserve

52W Range

61

Current Holding – First Quantum Minerals (TSX:FM)


Negative Q4 results Drop in both earnings and

revenue Fall in copper production

and realized price Change in Zambian

government regulations Covenant issue

surrounding Debt / EBITDA ratio

Investment Thesis Low cost producer Emerging market growth

Investment Risks Oversupply in copper Political risks


SellHold

$22.35$14.41



1 Year Performance

Valuation


Purchase Date 12/04/14Purchase Price (C$ $17.97Current Price (C$) $16.12Shares Owned 450Market Value $7,254


5% VaR (19.8%)10% VaR (13.3%)

(60%)

(40%)

(20%)

0%

20%

40%

60%

Apr-14 Jul-14 Oct-14 Jan-15 Apr-15FM Materials TSX

$0 $10 $20 $30 $40 $50

Comp EV/EBIT

Comp P/E LTM

Comp P/E NTM

Comp PBV

Nav Share Range

52W Range

62

Current Holding – Capital Power (TSX:CPX)




Weaker Alberta prices going forward projected

96% hedge in 2015 in mid $50 range

Contracted cash flows

Long lead time of oil projects reduces sensitivity to price volatility

Investment Thesis Utility company with high

quality of portfolio of power generation assets

Investment Risks Alberta power prices and

construction delays


Hold$29.00$27.00




5% VaR (6.8%)10% VaR (6.1%)

(20%)

0%

20%

40%

Dec-12 Jun-13 Dec-13 Jun-14 Dec-14CPX Utilities TSX

$0.00 $25.00 $50.00

DCF - Exit Multiple

Comps

63

advisory board presentation (winter 2015) · sa – senior analyst; ja – junior analyst faculty...

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