Recruitment Workshop

Desautels Capital Management

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I. What: Overview of HIM and DCM

II. Who: Type of Candidates We’re Looking for

III. How: Application and Interview Process

IV. Sample Stock Pitch

V. Q&A

DCM Strategists PresentationAgenda

Program Overview

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Two year program, 45 credits, graduate with an Honours in Investment

Management degree

Strict two year course structure. Limited ability to pursue minors or

concentrations unless you do an extra semester

No possibility for exchange

Two meetings per week in addition to regular meetings with sector & guest

speakers

Desautels Capital Management (DCM)

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Strategist

Senior Analyst

Junior Analyst

Junior Analyst

Senior Analyst

Junior Analyst

Global Equity Fund

Strategist

Senior Analyst

Junior Analyst

Senior Analyst

Junior Analyst

Fixed Income Fund

Risk Manager

Strategist Strategist

Risk Team

Desautels Capital Management Inc.

AUM ~ $3M Sector Verticals 10-11 Juniors

AUM ~ $0.5M Generalist 2-3 Juniors

Pillar of Defense (POD)

Add. Roles:- Business Dev. - Traders

Support Team: IS/Communications/Accounting

How We’re Set Up?

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Desautels Capital Management (DCM)How We’re Set Up?

Healthcare Industrials TMT Fixed Income

Energy Mining Financials Consumers

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Desautels Capital Management (DCM)How We’re Set Up?

Equity Strategist

Belal

EnergyJeremy &

Debra

TMTDaniel

ConsumersAlyssa, Colton

MiningJoe

FinancialsXavier

HealthcareAli &

Andrew

IndustrialsEdouard &

Eugene

Risk ManagerAndrew

EnergyChris & Phil

ConsumersSean & Ronald

TMTLuohan &

Henri

MiningAlexandre

FinancialsChristie &

Drew

HealthcareNaomie

HealthcareJordan

Seniors Juniors

Equity Fixed Income

Fixed Income Strategist

Daniel

Fixed IncomePeter & Laura

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Where is everyone going?Great Career Opportunities

Who?

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Type of Candidates We’re Looking for

Team Player

Intellectually Curious

Open-minded and Eager to Learn

Genuine Interest in Investing and Financial Markets

Hardworking and dedicated with a clear understanding of the work expectations

of the program

Global Equity Fund

9Note: Performance is as of Dec. 31, 2014, gross of fees. Benchmark is the MSCI World Index from inception to February 28, 2013 and a 60% S&P TSX, 40% S&P 500 (measured in CAD) blended benchmark thereafter. Fund inception date is January 20, 2010.

Performance Overview and Metrics

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Global Equity Fund

Benchmark

Global Equity Fund Returns Vlookup dates

Time Period Gross Return Net Return Benchmark

Most recent quarter (0.0%) (0.4%) 2.6%

Previous quarter 1.0% 0.7% 2.1%

6 month 1.0% 0.3% 4.7%

2014 11.5% 9.9% 16.0%

1 year 11.5% 9.9% 16.0%

2 year* 25.7% 23.8% 21.2%

Since Inception* 10.8% 9.1% 9.6%

*Returns are annualized.

Equity Performance Metrics Since Inception

Equity Fund Benchmark

Annualized Return 10.8% 9.6%

Annualized Std Dev 10.3% 11.7%

Annualized Sharpe Ratio 0.80 0.61

Beta 0.67

Annualized Alpha 3.5%

Performance metrics are calculated gross of fees.

Fixed Income Fund

10Benchmark is the Citi World Bond Index from inception to Feb. 8, 2011 and a 45% Barclays Aggregate Bond Index, 45% DEX UniverseBond Index, 10% Citi International Treasury Bond Index blended thereafter, measured in CAD. Fund inception date is January 20, 2010.

Performance Overview and Metrics

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Ind

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(G

ross

of

fees

)

Fixed Income Fund Benchmark

Fixed Income Fund Returns Vlookup dates

Time Period Gross Return Net Return Benchmark

Most recent quarter 2.1% 2.0% 3.4%

Previous quarter 2.0% 1.9% 2.3%

6 month 4.1% 3.9% 5.8%

2014 8.6% 8.0% 10.0%

2 year* 6.0% 5.5% 5.2%

Since Inception* 4.4% 3.9% 3.8%

*Returns are annualized.

Performance Metrics

Fixed Income Fund Benchmark

2014 Inception 2014 Inception

Annualized Return 8.6% 5.4% 10.0% 3.8%

Annualized Std Dev 2.8% 4.3% 4.0% 6.7%

Annualized Sharpe Ratio 2.48 0.70 2.07 0.36

Beta 0.63 0.47

Annualized Alpha 1.7% 1.9%

Tracking Error 0.3% 0.7%

Performance metrics are calculated gross of fees.

How?

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Application and Interview Process

Application Deadline: March 13th, 2015 at 5pm ; email a single file PDF of your applicationto tesfa.peterson@mcgill.ca

You must submit: the application cover pages, a cover letter (1 page, single space), acompleted program questionnaire, an updated copy of your CV and an unofficial copy of yourtranscript

You will be notified about interviews shortly after (with Ken & 2 HIM Students)

Part of the Interview Process is a 7-minute stock pitch + Q&A (next slide)

How?

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Stock Pitch

Select 1 among a pool of stocks and Bond

The stocks and bonds will be announced during the 1st week of March

Duration of the pitch should not exceed 7 minutes

The pitch should be done individually

You’ll be judged based on the quality of your analysis, insights and how you answer questions

Recommendation should be BUY, SELL or HOLD

Some Tips:

‒ Know the company well, understand the key drivers (READ, READ, READ!)

‒ Come with value-added analysis (instead of mentioning facts)

‒ Always ask WHY

‒ Don’t fake it

Sample SlidesSection IV

Sample Company Overview Slide

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Yume Inc. (NYSE:YUME)

Company Overview Market Capitalization

Price Chart

Yume, Inc. (NYSE: YUME) is a fast-growing, leading multi-screenvideo advertising company whose IPO occurred in Aug. 2013

The company’s platform and proprietary software enablesbrands to find the best placement for advertisements on aninternet connected device such as a smartphone, tablet, PC or TV

At the same time, it enables website and app owners tomonetize their content

The company recently launched a programmatic buying solutioncalled Video Reach

43% topline CAGR since 2010 and current CAGR at 15%+

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Shares Outstanding (MM) 33.01

Add: Dilutive Securities (MM) 2.80

FD S/O (MM) 35.8

Price (US$/Share) $5.20

Market Cap $186.2

Add: Total Debt $0.78

Add: Value of Preferred Shares –

Less: Cash & Cash Equivalent (32.6)

Less: St. & LT. Investments (24.9)

Less: Cash Proceeds from Options (12.2)

Enterprise Value $117.3

Valuation Summary

2012A 2013A 2014E 2015E

Revenue $116.7 $151.1 $177.0 $207.0

YOY Growth % 29.5% 17.1% 16.9%

EBITDA 11.8 9.0 1.3 6.6

Margin % 10.1% 5.9% 0.8% 3.2%

EV / Revenue 1.00x 0.78x 0.66x 0.57x

EV / EBITDA 9.92x 13.07x 88.20x 17.67x

Source: Bloomberg, Thomson One, Company FilingsAs of the close on Friday, January 16, 2015.

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Volu

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Sample Annotated Price Chart

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YuMe’s Share Price Declined by More Than 40% Since the IPO in August 2013

YuMe IPOs at $9 /share well below its target range

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DCM begins building a position in the stock4

Raises FY 2013 EBITDA guidance

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Releases Q4 Results and misses estimates

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- DCM Average Cost of ~ US$ 5.75 / share- A large number of Insider Purchases

Lowers sales guidance / reports US Margins5

Source: Bloomberg, Company FilingsAs of the close on Friday, January 16, 2015.