Waseda Financial Investment Team

7th November 2011

Market update Ugly week for stocks

Greece referendum G20 discussions unfavorable

Good ECB announced rate cut (25bp to 1.25%)–

SURPRISING! Jobless number below Nonfarm payrolls grow by 80k Bernanke’s assurance

Companies MF global file for bankruptcy Nomura net loss (-590M) J&J purchase of Synthes antitrust? Anglo American buy Oppenheimer’s stake in

Debeers

FX

BoJ intervene on Monday

Euro/USD Rate cut EURO fell initially EURO strengthened on

Greece cancelling referendum Continued fall on dollar on loosening policies

Options trading

Call

Short call

Put

Short put

Long butterfly

Buy one call x1, short two calls x2, long one call x3

Straddle

Buy put and call

Strangle

Put and call at different Strike px

Spread

Bear Spread

Net-net

How much will you pay? Furniture $100 Building $10,000 Land $50,000 Total $60,100

Loan $30,000

JP: 8066 MITANI CORP(billion JPY)

Cash and equivalent 33

Receivables and inventory 70

Factories, real estate 25

Note receivable 3

Total tangible assets 131

Less

Debt 86.5

TOTAL NET ASSET 44.5

If you are the owner of this business, how much will you sell?a) 33billion b) 44.5 bnc) >44.5 bn

Generated 0.8bn profit over last 10 yearsDividend of 0.4bn last year

Principles of net-net investing Assume company will be liquidated Net Net Working Capital = Cash and short-term investments + (0.75 *

accounts receivable) + (0.5 * inventory) – total liabilities

Risk Will markets correct?

Japan Activist investor

How long?