Team 4+1 Investment Strategy Entertainment and Leisure Sector

Team 4+1 Investment Strategy

Entertainment and Leisure Sector

Entertainment and Leisure SectorGeneral Idea

Including: Entertainment, Media, Hotel, Travel, etc.

Short-term opportunity:Strong economy, more bonus, expected strong growth in entertainment/leisure sector this summer

Long-term:Until the macro indicators show down turn it should show strong growth

Mutual funds investing in this SectorDZL (Leisure/Entertainment Index) PEJ (PowerShares), RYLIX (Rydex), FDLSX (Fidelity), FLISX (Invesco)

DZL (Index)

S&P500

PEJRYLIX

FDLSX

FLISX

Winner: PEJ (PowerShares)

• The Fund will normally invest at least 90% of its total assets in common stocks that comprise the DZL Index.

• Investment merit criteria including: price momentum, earnings momentum, quality, management action, and value.

PEJ: PowerShares

PEJ: PowerShares

Trading methodology 4+1

• Sectors:– Movie, gaming, tv (content makers and

distributors) – Casino, hotel, travel, cruise lines (no airlines, no

travel agencies)– Not restaurants and food sector (different from

PEJ)

Trading methodology 4+1

• Distribution:– Capital size does not matter– In short term allocate more in travel, hotel, casino

sector -- economy is recovering– Long term during economic down turn focus on

sectors that attract budget buyer, cheaper content distributor, movies etc.

– Value investment P/E lower than 20 in economic down turn go even lower to lower than 15.

– # of total holdings 10 maximum

• Finviz:– Sectors we are analyzing total (126)

• Entertainment Diversified (13)• Gaming Activities (10)• General Entertainment (6)• Lodging (14)• Movie Production theater (9)• Multimedia Graphics Software (20)• REIT hotel/motel (16)• Resort, Casino (23)• Broadcasting (15)

Parameters

Parameters Continued

• Finviz:– Low P/E (<20) value investing

• Currently 40 companies that meets this criteria

• News of mergers, new products, good or bad press, news related to expected box office sales– Our sector related general news– Sweeps and box office results– Evaluate growth strategies and general management– Name brand recognition (esp hotel, lodging sector)

• This year we will look at Q3 earning reports• Sell stock when they go above the P/E threshold or other

management issues makes it unattractive

Movies, TV, Games

• Movies: Box office• TV: Sweeps• Games: #units sold• Growth compared to last year• Competitive comparison• Franchising potential• Online review sites

Casinos, Hotels, Cruise lines

• Brand recognition• Expansion-new ventures

Companies we currently pick

• DIS (Disney Company)• STARZA(Starz)• BYI(Bally)• SIX (Six Flags)• IHG (Intercontinental)• LGF (Lions Gate)• IGT (International Game Technology)• CNTY (Century Casinos)