Student Managed Investment Portfolio Organization (SMIPO)

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<ul><li> 1. Radford University</li></ul> <p> 2. </p> <ul><li>After attending RISE II in 2002, SMIPO was formed with an initial $100,000 endowment.In 2004 SMIPO received an additional $150,000.Again, in 2006 we received another $100,000 endowment. </li></ul> <ul><li>SMIPO is a fully student-managed organization.None of our 29 members receive credit for participation in the organization. </li></ul> <ul><li>Since SMIPOs creation in 2002, the organization has been selected to present as finalists at RISE five out of six years. </li></ul> <p> 3. Board of Directors Info Tech Jr. Investment Sr. Investment VP of Investments VP of Operations VP of Finance President Chief Accountant Chief Economist Human Resources Economist Accountant Archivist Marketing 4. </p> <ul><li>To allow Radford University students the opportunity to gain practical experience in the management and decision-making activities of a corporate structured organization by participating in hands-on management of the funds of Radford University Foundation's endowment to a Student Managed Investment Portfolio Organization.</li></ul> <p> 5. </p> <ul><li>Top Down Portfolio Management </li></ul> <ul><li>Economic Analysis </li></ul> <ul><li>2008 strategy </li></ul> <ul><li>Sector Allocation </li></ul> <ul><li>Stock Selection Process</li></ul> <ul><li>Exit Strategy </li></ul> <ul><li>Benchmarking Our Performance</li></ul> <ul><li>SMIPOs Performance in 2008 </li></ul> <ul><li>Basic Portfolio Stats </li></ul> <ul><li>SMIPOs Direction in 2008-2009 </li></ul> <p> 6. </p> <ul><li>Develop economic forecasts. </li></ul> <ul><li>Asset allocations between equities and cash. </li></ul> <ul><li>Apply economic forecasts to the sector allocation decision. </li></ul> <ul><li>Choose beta exposure, style exposure </li></ul> <ul><li>Stock selection consistent with our economic views. </li></ul> <ul><li>Constant monitoring of sectors and holdings. </li></ul> <ul><li>Realization of Gains/Losses. </li></ul> <p> 7. </p> <ul><li>Identify Investment Opportunities</li></ul> <ul><li><ul><li><ul><li>Quarterly Sector Outlook </li></ul></li></ul></li></ul> <ul><li><ul><li><ul><li><ul><li>Broad macro-economic indicators </li></ul></li></ul></li></ul></li></ul> <ul><li><ul><li><ul><li><ul><li>Industry Trends </li></ul></li></ul></li></ul></li></ul> <ul><li><ul><li><ul><li><ul><li><ul><li>Sector Specific Indicators </li></ul></li></ul></li></ul></li></ul></li></ul> <ul><li><ul><li><ul><li><ul><li><ul><li>Sector Growth </li></ul></li></ul></li></ul></li></ul></li></ul> <ul><li><ul><li><ul><li><ul><li><ul><li>Analyst Coverage </li></ul></li></ul></li></ul></li></ul></li></ul> <ul><li>Convey data contained in these reports to investment analysts in a relevant and actionable manner. </li></ul> <p> 8. </p> <ul><li>Favorite Economic Indicators </li></ul> <ul><li><ul><li>CPI &amp; Core CPI </li></ul></li></ul> <ul><li><ul><li>Crude Oil </li></ul></li></ul> <ul><li><ul><li>Case-Shiller Housing Price Index </li></ul></li></ul> <ul><li><ul><li>Initial Job Claims and Unemployment rate </li></ul></li></ul> <ul><li><ul><li>Exchange Rates </li></ul></li></ul> <ul><li><ul><li><ul><li>Current account balance </li></ul></li></ul></li></ul> <ul><li><ul><li><ul><li>Fiscal Policy </li></ul></li></ul></li></ul> <ul><li><ul><li><ul><li>Monetary Policy </li></ul></li></ul></li></ul> <p> 9. </p> <ul><li>Presidential Election </li></ul> <ul><li><ul><li>Policies and regulations </li></ul></li></ul> <ul><li><ul><li>Fiscal Policy: Spending / Taxation </li></ul></li></ul> <p> 10. </p> <ul><li>Large Cap, low risk companies </li></ul> <ul><li>High Dividend yield </li></ul> <ul><li>Decrease portfolio beta </li></ul> <p> 11. </p> <ul><li>The economy will remain in a recession for the remainder of 2009.</li></ul> <ul><li>GDP growth will continue to be sluggish.</li></ul> <ul><li>Factors driving economic outlook </li></ul> <ul><li><ul><li>Bailout concerns </li></ul></li></ul> <ul><li><ul><li>Stimulus package </li></ul></li></ul> <ul><li><ul><li>Financial sector </li></ul></li></ul> <ul><li><ul><li>Housing Market </li></ul></li></ul> <p> 12. </p> <ul><li>Requirements: </li></ul> <ul><li><ul><li>Sector allocations are set relative to our benchmark (S&amp;P 500) </li></ul></li></ul> <ul><li><ul><li>Each sectors analysts are responsible for a sector allocation strategy. </li></ul></li></ul> <ul><li><ul><li>Deviations from benchmark weights are explained in a written sector allocation report. </li></ul></li></ul> <ul><li><ul><li>Sector allocations must be re-evaluated each quarter. </li></ul></li></ul> <ul><li><ul><li>ETFs may be used as temporary holdings and provide quick execution of sector reallocation. </li></ul></li></ul> <p> 13. </p> <ul><li>Financials: Underweight </li></ul> <ul><li><ul><li>Uncertainty in Sub-prime lending </li></ul></li></ul> <ul><li><ul><li><ul><li>Goldman Sachs Group Inc. </li></ul></li></ul></li></ul> <ul><li><ul><li><ul><li>Charles Schwab Corp. </li></ul></li></ul></li></ul> <ul><li>Energy: Underweight </li></ul> <ul><li><ul><li>Good growth, but high volatility </li></ul></li></ul> <ul><li><ul><li><ul><li>Transocean </li></ul></li></ul></li></ul> <ul><li>Utilities: Market weight</li></ul> <ul><li><ul><li>Defensive, above average dividend yields </li></ul></li></ul> <ul><li><ul><li><ul><li>Exelon </li></ul></li></ul></li></ul> <p> 14. </p> <ul><li>Health Care: Overweight </li></ul> <ul><li><ul><li>Defensive and strong growth </li></ul></li></ul> <ul><li><ul><li><ul><li>Johnson &amp; Johnson </li></ul></li></ul></li></ul> <ul><li><ul><li><ul><li>Gilead Sciences </li></ul></li></ul></li></ul> <ul><li>Technology: Underweight </li></ul> <ul><li><ul><li>Weakened consumer demand </li></ul></li></ul> <ul><li><ul><li><ul><li>IBM </li></ul></li></ul></li></ul> <ul><li>Telecom: Underweight </li></ul> <ul><li><ul><li>Below average growth and hypercompetitive environment </li></ul></li></ul> <ul><li><ul><li><ul><li>Comtech Telecommunications</li></ul></li></ul></li></ul> <p> 15. </p> <ul><li>Basic Materials: Slight overweight </li></ul> <ul><li><ul><li>Low volatility and good performance excluding home materials </li></ul></li></ul> <ul><li><ul><li><ul><li>Sigma Aldrich </li></ul></li></ul></li></ul> <ul><li>Industrials: Underweight </li></ul> <ul><li><ul><li>Weak global economic conditions</li></ul></li></ul> <ul><li><ul><li><ul><li>Ametek </li></ul></li></ul></li></ul> <ul><li>Consumer Discretionary: Underweight </li></ul> <ul><li><ul><li>Economic Concerns on Consumer Spending </li></ul></li></ul> <ul><li><ul><li><ul><li>McDonalds </li></ul></li></ul></li></ul> <ul><li>Consumer Staples: Overweight </li></ul> <ul><li><ul><li>Defensive balance and strong dividends </li></ul></li></ul> <ul><li><ul><li><ul><li>Colgate Palmolive </li></ul></li></ul></li></ul> <ul><li><ul><li><ul><li>Phillip Morris </li></ul></li></ul></li></ul> <p> 16. 17. </p> <ul><li>Investment Process </li></ul> <ul><li><ul><li>Screening &amp; Research</li></ul></li></ul> <ul><li><ul><li>Spreadsheets and Workbook </li></ul></li></ul> <ul><li><ul><li>Presentation with Q&amp;A </li></ul></li></ul> <ul><li>Voting Process </li></ul> <ul><li><ul><li>Majority is needed for BUY or SELL </li></ul></li></ul> <ul><li>After BUY </li></ul> <ul><li><ul><li>Constant monitoring to Identify fundamental changes </li></ul></li></ul> <p> 18. </p> <ul><li>Sources of Information: </li></ul> <ul><li><ul><li>Thomson One Student Research Edition </li></ul></li></ul> <ul><li><ul><li>ValueLine </li></ul></li></ul> <ul><li><ul><li> </li></ul></li></ul> <ul><li><ul><li>Yahoo! Finance </li></ul></li></ul> <ul><li><ul><li> </li></ul></li></ul> <p> 19. </p> <ul><li>10-K </li></ul> <ul><li>10-Q </li></ul> <ul><li>Positives/Negatives </li></ul> <ul><li>Risks/Exposures </li></ul> <ul><li>Competitor Comparison</li></ul> <ul><li>Analyst Estimates/Price Targets </li></ul> <ul><li>Valuations </li></ul> <p> 20. 21. 22. 23. </p> <ul><li>Dividend Current = $2.00 </li></ul> <ul><li>Value Line Estimated Growth Rate = 8.87% </li></ul> <ul><li>CAPM = 10.53% </li></ul> <ul><li>DDM: ($2.00*(1+.0887))/(.1053-.0887) </li></ul> <ul><li>= $131.00 </li></ul> <ul><li>Highly undervalued (Optimistic?)</li></ul> <ul><li>Bargain Purchase </li></ul> <ul><li>Strong earnings and dividends. </li></ul> <p> 24. </p> <ul><li>Investment Analysts Constantly Monitor Sectors for unexpected variations in stock value</li></ul> <ul><li>Weekly Updates on Stock Positions </li></ul> <ul><li>Changes to sector allocations </li></ul> <ul><li><ul><li>Reassess holdings </li></ul></li></ul> <p> 25. </p> <ul><li>Automatic Reevaluation Trigger </li></ul> <ul><li><ul><li>If a security drops or gains in market value by 10% within a rolling five trading day period or 20% within a rolling twenty trading day period </li></ul></li></ul> <ul><li><ul><li>Does Not Mean SELL </li></ul></li></ul> <ul><li>Examples: </li></ul> <ul><li><ul><li>MEMC </li></ul></li></ul> <ul><li><ul><li>Aflac </li></ul></li></ul> <p> 26. </p> <ul><li>S&amp;P 500 is benchmark for SMIPO </li></ul> <ul><li>Investment Analyst performance is compared to sector returns from S&amp;P </li></ul> <ul><li>Analysts expected to meet or exceed returns for given sector </li></ul> <p> 27. 28. 29. SMIPO S&amp;P 500 2008 Return: (34.99) (39.84) Dividend Yield: 2.16% 3.66% PE (TTM): 10.54 10.75 Beta : (Historical) 0.913 1.0 EPS Growth: (5 Year) 11.98% 10.32% ROE:30.44% 22.05% 30. SMIPO S&amp;P 500 Alpha: 5.20% Annualized --- Treynor: (0.153) (0.177) Sharpe: (0.033) (0.037) Beta (2008): 1.04 1.00 Standard Deviation: 0.226 0.210 31. </p> <ul><li>Organization </li></ul> <ul><li><ul><li>Continuous Improvement of Investment Techniques </li></ul></li></ul> <ul><li><ul><li>Develop valuation methods for each sector </li></ul></li></ul> <ul><li>Portfolio </li></ul> <ul><li><ul><li>Sector Allocations </li></ul></li></ul> <ul><li><ul><li>Beta Timing</li></ul></li></ul> <ul><li><ul><li>Style Timing </li></ul></li></ul> <p> 32. </p>


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