1

Undergraduate Student Managed Fund

Fall 2013 ReportDecember 5, 2013

2Student Managed FundFund ManagersFall 2013 Presentation

Fund Managers

Officers:Lead Manager: Alexander AnisimovPortfolio Manager: Eric BourassaSecretary: Lina Posada

Managers:Robert Bailey Thomas BlankemeierDavid BoudreauMichael Cox

Joseph GriecoDuston HodgkinsMatthew Mastrogiorgio

3

Agenda

1) Investment Objective and Philosophy2) Investment Process3) Economic Outlook4) Portfolio Overview

Student Managed FundAgendaFall 2013 Presentation

4Student Managed FundInvestment Objective & PhilosophyFall 2013 Presentation

Investment Objective & PhilosophyObjective• Outperform the S&P 500• Learn to analyze as value investors

Philosophy• Search for undervalued securities based on estimation of

intrinsic value compared to current market price

Style• Bottom-up approach

5Student Managed FundIndustry ManagersFall 2013 Presentation

Industry Managers• Basic Materials: Matthew Mastrogiorgio• Consumer Discretionary: Robert Bailey, David Boudreau• Consumer Staples: Thomas Blankemeier, Duston Hodgkins• Energy: Alexander Anisimov, Michael Cox• Financials: Thomas Blankemeier, David Boudreau, Joseph Grieco• Healthcare: Eric Bourassa, Robert Bailey, Alexander Anisimov• Industrials: Matthew Mastrogiorgio, Lina Posada• Real Estate: Eric Bourassa, Michael Cox• Transportation: Michael Cox• Technology: Joseph Grieco, Duston Hodgkins

6Student Managed FundInvestment StrategyFall 2013 Presentation

Investment Strategy

Search for companies with:• High ROE & ROIC• i.e. BBBY

• Sustainable Barriers to Competition• i.e. AXP

• Consistent Return to Shareholders• i.e. XOM

• Strong Business Models• i.e. DIS

7Student Managed FundInvestment ToolsFall 2013 Presentation

Investment Tools

8Student Managed FundInvestment ProcessFall 2013 Presentation

Investment Process

Step 1

• Manager Researches Chosen Company

Step 2

• Presents Research to Other Managers

Step 3

• Thorough Discussion on Company Research

Step 4

• Majority of Managers Vote for Approval

Step 5

• If Yes Vote on Allocation of Capital• If No Conduct Further Research

9Student Managed FundInvestment ToolsFall 2013 Presentation

Sector Allocation

10Student Managed FundEconomic OutlookFall 2013 Presentation

• With the Dow Jones and S&P at record highs, and interest rates low – Are we really as strong as we appear?

• Participation Rate seems to be dropping in lockstep with Unemployment Rate – Economic recovery may not be as strong as we think

Strength of the US Economy

61626364656667

456789

10

Parti

cipa

tion

rate

(%)

Une

mpl

oym

ent (

%)

Unemployment Rate Participation Rate

The Unemployment rate 2007 – 2013 YTD

Source: Bloomberg LP

11Student Managed FundEconomic OutlookFall 2013 Presentation

Federal Reserve’s Balance Sheet

The growth of the Fed’s Balance Sheet

• Fed has grown its balance sheet from $1 trillion to $3.5 trillion

The economy is slowly recovering, but is not at a self-sustaining level where the Fed can taper or halt Quantitative Easing

12Student Managed FundEconomic OutlookFall 2013 Presentation

Macroeconomic Outlook

1.6%

4.1%

3.3%4.3%

2.1%

0.6%

1.6%

7.8%

0.5%

2013 YTD GDP Growth rates

13Student Managed FundInteresting HoldingFall 2013 Presentation

Interesting Holding- American Express

• Purchased 1,350 shares on November 11, 2013 for $80.84 per share

• As of November 29, we have realized a 6.13% gain on AXP

• Closed-loop model• Spend-centric model• Attractive buyback & dividend programs

14

Interesting Holding - NVR• Purchased 80 shares on November 6, 2013

for $945.00 per share• As of November 29, we have realized a

2.63% gain on NVR• Single-family homebuilder• Profitable for the past sixteen years• Unique lot acquisition strategy

Student Managed FundInteresting HoldingFall 2013 Presentation

15Student Managed FundPortfolio ApproachFall 2013 Presentation

Portfolio Approach

• Seek to take positions at various percentage increments depending on a variety of factors

5% or under position• Strong fundamentals• Fairly valued• Carry more risk

5% or larger position• Safe/predictable• Strong upside

potential• Strong downside

protection• Very undervalued

16

Equity Breakdown

Student Managed FundPortfolio BreakdownFall 2013 Presentation

17

Portfolio Breakdown

Student Managed FundPortfolio BreakdownFall 2013 Presentation

18

Portfolio Performance

Student Managed FundPortfolio PerformanceFall 2013 Presentation

Undergraduate SMF Portfolio S&P 500

Beginning Value(9/13/2013) $1,567,133.91 Beginning Value 1,687.99Current Value(11/29/2013) $1,659,659.79 Current Value 1,805.81OverallProfit/(Loss) $92,525.88

OverallProfit/Loss 117.82

Return 5.90%Return 6.98%

• Undergraduate SMF portfolio has underperformed the S&P 500 by 1.08% (108 BPS)

19

Portfolio Performance

Student Managed FundPortfolio PerformanceFall 2013 Presentation

20

Individual Stock Performance

Student Managed FundPortfolio PerformanceFall 2013 Presentation

21

Risk Management

Student Managed FundRisk ManagementFall 2013 Presentation

• Rigorous screening and analysis process• Purchased half of stocks analyzed or pitched

• Diversification across sectors to avoid aggregation risk

• Stop-loss• Focus on long-term performance, not concerned

with short-term volatility

22

Lessons Learned

Lessons• Record high market conditions• Corporate social responsibility

Moving Forward• Maintaining strict valuation standards• Corporate social responsibility initiative• Company price tracking

Student Managed FundLessons LearnedFall 2013 Presentation

23

Acknowledgements

• Pat Terrion• Jeff Annello• Dr. Chinmoy Ghosh• Dr. Michel Rakotomavo• Laurel Grisamer• Paul DeSalvo• Investment Advisory Board• IAB Advisors• UConn Foundation Board

Student Managed FundAcknowledgementsFall 2013 Presentation