Handover Presentation - AIMJobs and Unemployment AIM XXXIII 7 The 4-week moving average for initial jobless claims has fallen over 5,000 over the last 2 weeks to 395,000 This is the

Handover PresentationDecember 7th, 2011

AIM XXXIII

Agenda

AIM XXXIII 2

Company News

Presentation Topics

I. Economic Environment

II. Portfolio Performance Evaluation

III. Portfolio Stocks

I. Economic Environment

AIM XXXIII 3

Economic Summary

AIM XXXIII 4

GDP Component Breakdown ‒ Consumer Consumption

‒ Business Investment

‒ Net Exports

‒ Government Spending

Continued Uncertainty ‒ U.S. Government

‒ Fed Policy

‒ Europe

‒ Concerns in China

‒ Housing

‒ Energy Prices

Impact of Projections on AIM XXXIII Portfolio

GDP Growth Projections

Analyst 4Q 2011 FY 2012

AIM XXXIII 2.5% 2.0%

Barclays 2.8% 2.0%

Deutsche Bank 3.0% 2.3%

Goldman Sachs 2.0% 1.6%

Morgan Stanley 2.5% 2.0%

WSJ Consensus 2.5% 2.3%

GDP Component Breakdown

AIM XXXIII 5

Source: BEA Website

2011 GDP Composition by Quarter

0.4%

1.3%

2.0%

2.5%

1.5%

0.5%

1.6%

2.0%

0.5%

0.8%

-0.1%

0.4%

-0.3%

0.2%

0.5%

0.3%

-1.2%

-0.2%0.0% -0.1%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

Q1 Q2 Q3 Q4 (E)

GDP Personal Consumption Expenditures

Gross Private Domestic Investment Net Exports of Goods and Services

Government Consumption Expenditures and Investment

The Consumer 1.6% of GDP

AIM XXXIII 6

In the middle months of 2011, Real Personal Consumption increased despite decreases in Real Disposable Personal Income

The mechanism for this asynchrony is a decrease in the personal saving rate

Real Disposable Personal Income Real Personal Consumption Expenditures

Personal Saving Rate Analysis

8,800

9,200

9,600

10,000

10,400

10,800

Jan-06 Oct-06 Aug-07 Jun-08 Apr-09 Feb-10 Nov-10 Sep-11

8,600

8,800

9,000

9,200

9,400

9,600

Jan-06 Oct-06 Jul-07 May-08 Feb-09 Dec-09 Sep-10 Jun-11

0.0

2.0

4.0

6.0

8.0

10.0


Bil

lio

ns

of

Chai

ned

20

05

Do

llar

sP

erce

nt

Bil

lio

ns

of

Chai

ned

20

05

Do

llar

s

Jobs and Unemployment

AIM XXXIII 7

The 4-week moving average for initial jobless claims has fallen over

5,000 over the last 2 weeks to 395,000

This is the first time the 4-week moving average has been below

400,000 since April 2011

Initial Jobless Claims

0

100,000

200,000

300,000

400,000

500,000

600,000

700,000

Jan-06 Oct-06 Jun-07 Mar-08 Dec-08 Sep-09 Jun-10 Feb-11 Nov-11

Jobs and Unemployment

AIM XXXIII 8

Unemployment

Nonfarm Employment and Unemployment

Continued slow growth in net nonfarm employment

Unemployment Rate released for November was 8.6% -- had been

hovering around 9% for awhile

124,000

127,000

130,000

133,000

136,000

139,000

142,000


Tho

usa

nd

s o

f P

erso

ns

Per

cent

0.0

2.0

4.0

6.0

8.0

10.0

12.0

Feb-06 Nov-06 Sep-07 Jul-08 May-09 Mar-10 Dec-10 Oct-11

Nonfarm Employment

Business Investment -.1% of GDP

AIM XXXIII 9

Percent Change in Private Nonresidential Fixed Investment Private Nonresidential Fixed Investment Breakdown

Source: St. Louis Federal Reserve

-10.0%

-6.0%

-2.0%

2.0%

6.0%

2006 2007 2008 2009 2010

(% C

han

ge)

Increased investment in nonresidential fixed assets

‒ Growth mainly driven from increased investment in equipment and software

-5%

-4%

-3%

-2%

-1%

0%

1%

2%

( P

erce

nt

Co

ntr

ibu

tion to

G

DP

)

Fixed Investment Structures Equipment and Software

2009 I 2010 I 2011

*Total Gross Private Domestic Investment

Business Investment -.1% of GDP

AIM XXXIII 10

ISM Manufacturing: Inventories Index ISM Manufacturing: New Orders Index


Inventories negatively contributed to GDP in Q3

Recent uptick in new orders index after previous contraction

20

25

30

35

40

45

50

55

60

2006 2007 2008 2009 2010 2011

(Ind

ex)

20

30

40

50

60

70

80

2006 2007 2008 2009 2010 2011

(Ind

ex)

*Total Gross Private Domestic Investment

Net Exports .49% of GDP

AIM XXXIII 11

Growth in Imports and Exports Net Export Contribution to GDP


Exports continuing to increase although may be hampered by European Crisis

‒ U.S. to become net exporter of fuel products for first time since 1949

Imports expected to slowly and steadily rise

-3%

-2%

-1%

0%

1%

2%

3%

2007 2008 2009 2010 2011

(% C

ontr

ibuti

on t

o R

eal

GD

P)

Q1 Q2 Q3 Q4

0

500

1000

1500

2000

2500

3000

2007 2008 2009 2010 2011

(In B

illi

ons

of

Do

llla

rs)

Imports Exports

Government Spending -.02% of GDP

AIM XXXIII 12

Government spending

expected to face pressure due

to increasing debt levels

State and local levels in

particular exhibiting

weakened financial profiles

‒ State and local

expenditures declined

1.4% in Q3

Government Consumption and Expenditures


-2.0%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

2006 2007 2008 2009 2010

(% C

han

ge)

US Debt Levels

AIM XXXIII 13

Likely Scenario

Austerity Scenario

Long-Term debt concerns hamper ability / willingness for fiscal

stimulus

Current Political Divide

AIM XXXIII 14

Democrats

Increase revenue

through tax increases

Moderates

No current proposal

Republicans

Will not accept plan with tax

increases

Failure of “Super Committee” & Impending Payroll Tax Battle

OECD 2012 GDP prediction 2.0%0.3%

Risk of fiscal tightening pushing US economy into a recession

regardless of outcome in Europe or US monetary Policy

Inflation: CPI Index

AIM XXXIII 15

Inflation drivers thus far in 2011: Japan earthquake, energy, other commodities

Muted forward inflation expectations: depressed wages, housing, utilization

Source: US Bureau of Labor Statistics

Federal Reserve Policy

AIM XXXIII 16

Short-term stimulus; long-term austerity

Quantitative Easing

– QE1 Sept. 2008: $1.725 trillion

– QE2 Nov. 2010: $600 billion + reinvestments of maturities

– Operation Twist Sept. 2011: $400 billion of reinvestment

QE3? Looking increasingly likely, focus on mortgages

Congressional Worries

– Inflation

– Ineffectiveness due to consumer deleveraging

Federal Reserve Policy

AIM XXXIII 17

0.00%

1.00%

2.00%

3.00%

4.00%

5.00%

6.00%

1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr

Yie

ld

Time to Maturity

US Treasury Yield Curve Over Time

1/2/2007

1/3/2011

11/29/2011

Flattening of yield curve creates difficulties for Banks, Pensions, and Insurance

Companies

Source: US Department of Treasury

European Debt Crisis

AIM XXXIII 18

Source: Bloomberg as of 12/31/2010

0%

20%

40%

60%

80%

100%

120%

140%

160%

2006 2007 2008 2009 2010

Debt-to-GDP Ratios of Select European Countries

Greece

Italy

Ireland

Portugal

Germany

Spain

Euro-zone Debate

AIM XXXIII 19

Separation of

Euro-zone

Massive devaluation of

peripheral currencies

Large losses for banks and investors

Strengthening of Euro-zone

Enforceable budget discipline and fiscal unity

Continued high debt burdens

Housing Starts and Vacancies

AIM XXXIII 20

New & Existing Home Sales

AIM XXXIII 21

Prices Continue to Fall

AIM XXXIII

`22

Home Buyer Tax Credit

Home Prices & Unemployment

AIM XXXIII 23

Oil Uncertainty

AIM XXXIII 24

Oil hits $100 per barrel Tuesday 11/29/2011

‒ Violence in Iran

‒ Increased Consumer Confidence

However, oil rally likely to ebb

‒ Increase in U.S. stockpiles

‒ Production in Libya

Economic Outlook

AIM XXXIII 25

2.5% Growth in Q4 2011 (vs. 2.5% WSJ consensus)– Consumer Spending benefits from strong holiday demand

– Business Investment increases slightly to replenish inventories Investment in capital, not labor, as uncertainty persists

2.0% Growth in FY 2012 (vs. 2.3% WSJ consensus)– Consumer Spending growth slows as change in income is

flat to negative and high unemployment persists Build up of existing home inventory remains a problem

– Business Investment grows at decreasing rate Macroeconomic conditions too uncertain to support major

improvements in employment

Portfolio Impact

AIM XXXIII 26

Consumer Discretionary industry hit hardest as consumption growth slows

Defense exposed to government spending cuts

Financials remain vulnerable despite attractive pricing

Political Uncertainty results in neutral healthcare and tech outlook

Staples outperform otherwise sluggish economy

Negative Positive

Positive

II. Portfolio Performance

AIM XXXIII 27

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

$500

Performance of $100 Invested on 1/1/1996

Stud Inv II HBI S&P 500 Russell 2000

Returns Comparison

$446.30

$288.34

$284.28

$270.37

* For the period ended 10/31/11

AIM XXXIII 28

Benchmarks

AIM XXXIII 29

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

1 Year 3 Years 5 Years Since Inception

An

nu

ali

zed

Ret

urn

s

AIM Portfolio Returns vs. Benchmark Returns (Annualized)

Stud Inv II S&P 500 HBI Russell 2000

Sector Allocations (as of 10/31/11)

AIM XXXIII 30

0%

5%

10%

15%

20%

25%

30%

Financials Healthcare Consumer

Disc.

Consumer

Staples

Energy Info. Tech. Materials Telecom &

Utilities

Industrials

AIM Sector Weigths vs. Benchmarks

AIM S&P 500 Russell 2000

Financials Healthcare

Consumer

Disc.

Consumer

Staples Energy Info. Tech. Materials

Telecom &

Utilities Industrials

AIM 3.50% 12.52% 19.22% 7.34% 8.40% 27.01% 7.77% 4.09% 10.16%

S&P 500 13.99% 11.51% 10.65% 11.06% 12.23% 19.66% 3.56% 6.75% 10.55%

Russell 2000 22.60% 12.50% 14.70% 3.20% 6.50% 15.20% 6.80% 4.60% 13.90%

Sharpe Ratio

AIM XXXIII 31

Used to determine whether returns generated by

management decisions or additional risk

Measured by excess portfolio returns (Rp – rf) per

unit of risk (σp)

Greater management efficacy with higher ratio

Formula:

Portfolio Return – Risk Free Rate

Portfolio Standard Deviation

Sharpe Ratio (as of 10/31/2011)

AIM XXXIII 32

1 Year 3 Years 5 Years Inception

AIM 0.2 0.28 0.06 0.12

S&P 500 0.16 0.19 0.02 0.04

HBI 0.14 0.18 0.01 0.12

0

0.05

0.1

0.15

0.2

0.25

0.3

AIM

S&P 500

HBI

Jensen’s Alpha

AIM XXXIII 33

Compares returns adjusted for systematic risk

Measures the excess portfolio return over that

predicted by the Capital Asset Pricing Model

Higher (positive) values indicative of better

management

Formula:

Portfolio Return – (Risk Free Rate + β x Market Risk Premium)

Jensen’s Alpha (as of 10/31/2011)

AIM XXXIII 34

1 Year 3 Years 5 Years Inception

AIM 0.18 0.57 0.28 0.27

HBI -0.13 -0.02 0.04 0.01

-0.2

-0.1

0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

%

AIM

HBI

Attribution Analysis

AIM XXXIII 35


% O

ver

per

form

ance

AIM XXXIII 36

0.13%

1.03%

1.67%1.46%

5.62%

1.56%1.63%

6.72%

3.15%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

1 Year 3 Years 5 Years

Allocation Effect Selection Effect Net Management Effect


AIM XXXIII 37

Consumer

Discr.

Consumer

StaplesEnergy Financials

Health

CareUtilities Materials Industrial Telecom Tech

Allocation Effect -0.24% -0.48% 0.06% 1.61% 0.11% -0.21% 0.11% -0.09% -0.11% -0.43%

Selection Effect 1.80% 0.57% 0.12% -0.25% 0.39% 0.20% -0.08% -0.69% 0.11% -0.62%

Total Net Mgmt. Effect 1.55% 0.08% 0.19% 1.36% 0.51% -0.01% 0.03% -0.78% 0.00% -1.04%

-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

% O

ver

/Un

der

per

form

an

ce

5 Year Annualized Attribution


AIM XXXIII 38

Consumer

Discr.

Consumer


Health





-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

% O

ver

/Un

der

per

form

an

ce



AIM XXXIII 39

19.67%

9.62%

7.60%

2.61%

0%

5%

10%

15%

20%

25%

AIM Weight S&P Weight AIM Return S&P Return

Consumer Discr. Weight and Return

-0.24%

1.80%

1.55%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

Consumer Discr. Performance

Attribution

Allocation Effect Selection Effect

Total Net Mgmt. Effect


AIM XXXIII 40

Consumer

Discr.

Consumer


Health





-1.5%

-1.0%

-0.5%

0.0%

0.5%

1.0%

1.5%

2.0%

% O

ver

/Un

der

per

form

an

ce



AIM XXXIII 41

14.53%

17.30%

-4.67%

4.76%

-10%

-5%

0%

5%

10%

15%

20%

AIM Weight S&P Weight AIM Return S&P Return

Technology Weight and Return

-0.43%

-0.62%

-1.04%

-1.2%

-1.0%

-0.8%

-0.6%

-0.4%

-0.2%

0.0%

Technology Performance Attribution

Allocation Effect Selection Effect Total Net Mgmt. Effect

Top 5 Stocks – LTM Return

AIM XXXIII 42

Source: BNY Mellon Workbench

48.2%

38.2%

31.3% 31.1%

24.9%

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

Perrigo Co Dollar Tree Inc Chevron Corp United Health

Group

Intel Corp* *

Bottom 5 Stocks – LTM Return

AIM XXXIII 43

-18.6% -18.3%-17.5%

-15.7% -15.3%

-20.0%

-18.0%

-16.0%

-14.0%

-12.0%

-10.0%

-8.0%

-6.0%

-4.0%

-2.0%

0.0%

Sonic Alliant Techsystems Deere & Co Hasbro

Tessera

Technologies* * * *

Portfolio Turnover

AIM XXXIII 44

Buy Sell Hold

Amazon (AMZN)

Caterpillar (CAT)

Cummins Inc. (CMI)

Dick's Sporting Goods

(DKS)

eBay Inc. (EBAY)

Halliburton Co. (HAL)

KeyCorp (KEY)

Laboratory Corporation

of America (LH)

RBC Bearings Inc.

(ROLL)

Teradata Corp. (TDC)

Activision Blizzard Inc.

(ATVI)

American Tower Corp.

(AMT)

Archer-Daniels-Midland

Co. (ADM)

Deere and Co. (DE)

Fedex Corp. (FDX)

Hasbro Inc. (HAS)

Intel Corp. (INTC)

Starbucks Corp. (SBUX)

Tessera Technologies

Inc. (TSRA)

Alliant Techsystems Inc.

(ATK)

Apple Inc. (AAPL)

Chevron Corp. (CVX)

Coca-Cola Co. (KO)

Continental Resources

Inc. (CLR)

Discover Financial

Services Inc. (DFS)

Dollar Tree Inc. (DLTR)

Ecolab Inc. (ECL)

Gilead Sciences Inc.

(GILD)

Google Inc. (GOOG)

Newmont Mining

Corp. (NEM)

Perrigo Co. (PRGO)

Potash Corporation of

Saskatchewan Inc.

(POT)

Qualcomm Inc.

(QCOM)

Sonic Corp. (SONC)

Starwood Hotels and

Resorts Inc. (HOT)

United Health Group

(UNH)

Portfolio Purchases

Company Ticker Decision Day Price Intrinsic Value Upside / (Downside)

Amazon AMZN $ 189.25 $ 229.51 21%

Caterpillar CAT $ 89.63 $ 112.00 25%

Cummins Inc. CMI $ 91.10 $ 145.68 60%

Dick's Sporting Goods DKS $ 39.74 $ 44.31 12%

eBay Inc. EBAY $ 28.90 $ 35.90 24%

Halliburton Co. HAL $ 33.86 $ 53.17 57%

KeyCorp KEY $ 6.77 $ 10.68 58%

Laboratory Corporation of America LH $ 79.30 $ 102.76 30%

RBC Bearings Inc. ROLL $ 38.90 $ 47.06 21%

Teradata Corp. TDC $ 51.27 $ 59.48 16%

AIM XXXIII 45

Portfolio Divestitures

AIM XXXIII 46

Company Ticker Decision Day Price Intrinsic Value Upside / (Downside)

Activision Blizzard Inc. ATVI $11.88 $12.24 3%

American Tower Corp. AMT $55.90 $58.17 4%

Archer-Daniels-Midland Co. ADM $28.69 $31.59 10%

Deere and Co. DE $70.88 $70.00 (1%)

Fedex Corp. FDX $78.74 $85.75 9%

Hasbro Inc. HAS $36.29 $44.40 22%

Intel Corp. INTC $23.28 $21.00 (10%)

Starbucks Corp. SBUX $41.88 $40.97 (2%)

Tessera Technologies Inc. TSRA $17.60 $18.00 2%

Final Portfolio as of 11/21/11

AIM XXXIII 47

Company Ticker # Shares Price Total Value

% of

Portfolio

Alliant Techsystems Inc ATK 3,400 $57.46 $195,364 3.5%

Amazon AMZN 1,050 $189.25 $198,713 3.6%

Apple Inc AAPL 750 $369.01 $276,758 5.0%

Caterpillar CAT 2,500 $91.12 $227,800 4.1%

Chevron Corp CVX 2,250 $95.66 $215,235 3.9%

Coca-Cola Co KO 3,100 $65.95 $204,445 3.7%

Continental Resources Inc CLR 3,200 $65.91 $210,912 3.8%

Cummins Inc CMI 2,400 $91.10 $218,640 3.9%

Dicks Sporting Goods Inc DKS 4,900 $39.79 $194,971 3.5%

Discover Financial Services DFS 8,600 $22.86 $196,596 3.5%

Dollar Tree Inc DLTR 2,500 $75.69 $189,225 3.4%

eBay Inc EBAY 6,800 $28.75 $195,500 3.5%

Ecolab Inc ECL 4,000 $53.11 $212,440 3.8%

Gilead Sciences Inc GILD 5,500 $36.26 $199,430 3.6%

Final Portfolio (cont’d)

AIM XXXIII 48

Company Ticker # Shares Price Total Value

% of

Portfolio

Google Inc GOOG 340 $580.94 $197,520 3.6%

Halliburton Co HAL 5,500 $34.86 $191,730 3.5%

KeyCorp KEY 28,000 $6.85 $191,800 3.5%

Laboratory Corp. of America LH 2,500 $79.30 $198,250 3.6%

Newmont Mining Corp NEM 3,200 $65.29 $208,928 3.8%

Perrigo Co PRGO 2,200 $89.96 $197,912 3.6%

Potash Corp Of Saskatchewan POT 5,000 $42.40 $212,000 3.8%

Qualcomm Inc QCOM 4,100 $54.27 $222,507 4.0%

RBC Bearings Inc ROLL 4,800 $38.90 $186,720 3.4%

Sonic Corp SONC 28,000 $6.98 $195,440 3.5%

Starwood Hotels and Resorts HOT 4,000 $47.63 $190,520 3.4%

Teradata Corp TDC 4,000 $51.27 $205,080 3.7%

United Health Group UNH 4,800 $44.44 $213,312 3.8%

Final Portfolio

AIM XXXIII 49

Stock Ticker Weight Market Value Stock Ticker Weight Market Value

Amazon AMZN 3.6% $198,713 Alliant Tech ATK 3.5% $195,364

Dick's Sporting Goods DKS 3.5% $194,971 Caterpillar CAT 4.1% $227,800

Dollar Tree DLTR 3.4% $189,225 Cummins CMI 3.9% $218,640

Sonic Corp SONC 3.5% $195,440 RBC Bearings ROLL 3.4% $186,720

Starwood Hotels HOT 3.4% $190,520 Industrials 14.9% $828,524

Consumer Discretionary 17.4% $968,869 (AIM XXXII 10.2%)

(AIM XXXII 19.2%)

EcoLab ECL 3.8% $212,440

Coca-Cola KO 3.7% $204,445 Newmont Mining NEM 3.8% $208,928

Consumer Staples 3.7% $204,445 Potash Corp POT 3.8% $212,000

(AIM XXXII 7.3%) Materials 11.4% $633,368

(AIM XXXII 10.9%)

Chevron CVX 3.9% $215,235

Continental Resources CLR 3.8% $210,912 Apple AAPL 5.0% $276,758

Halliburton HAL 3.4% $191,730 eBay EBAY 3.5% $195,500

Energy 11.1% $617,877 Google GOOG 3.5% $197,520

(AIM XXXII 8.4%) Qualcomm QCOM 4.0% $222,507

Teradata Corp TDC 3.7% $205,080

Discover DFS 3.5% $196,596 Technology 19.7% $1,097,364

KeyCorp KEY 3.4% $191,800 (AIM XXXII 27.0%)

Financials 7.0% $388,396

(AIM XXXII 3.5%) Cash and Hedge $20,410

Total $5,568,157

Gilead Sciences GILD 3.6% $199,430

LabCorp LH 3.6% $198,250

Perrigo PRGO 3.6% $197,912

United Health Group UNH 3.8% $213,312

Healthcare 14.5% $808,904

(AIM XXXII 12.5%)

III. Portfolio Stocks

AIM XXXIII 50

Potash Corp. of Saskatchewan (POT)

AIM XXXIII 51

Market Price $42.29

1-year forward P/E 15.9x

Market Cap $36.2 B

Enterprise Value $40.41 B

LTM EPS $3.32

LTM Stock Price Graph

POT Company Background

AIM XXXIII 52

Revenue BreakdownBusiness

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

2Q

11

1Q

11

4Q

10

3Q

10

2Q

10

1Q

10

4Q

09

3Q

09

2Q

09

1Q

09

4Q

08

3Q

08

2Q

08

1Q

08

4Q

07

3Q

07

2Q

07

1Q

07

Revenue by Product Segment, 1Q07-2Q11

Total

Potash

Phosphate

Nitrogen

• World’s largest integrated fertilizer company by

capacity, representing 17% of global potash

production.

• Produces three primary crop nutrients: potash,

phosphate, nitrogen.

• Highest quality, low cost deposits in significant

quantity provide cost advantage over competitors

• Demand will be driven by increased global

population size, increased buying power in

emerging markets, decreasing arable land per

person, and changes in agricultural

practices.

POT Company Background

AIM XXXIII 53

Gross Margins

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

2Q111Q114Q103Q102Q101Q104Q093Q092Q091Q094Q083Q082Q081Q084Q073Q072Q071Q07

Gross Profit Margin (%) by Product Segment, 1Q07-2Q11

TotalPotashPhosphateNitrogen

POT Recommendation – Hold

AIM XXXIII 54

Valuation Method Weight Value Contribution

Forward P/E 25% $59.46 $14.87

Price to Sales 13% 54.32 6.79

Price to Book 13% 57.73 7.22

Free Cash Flow 50% 62.83 31.42

Final Valuation $60.29

Price as of 11/21/2011 $42.40

Estimated Upside 42.2%

Dick’s Sporting Goods (DKS)

AIM XXXIII 55

Market Price $39.79


Market Cap $4.8 B


LTM EPS $1.93


DKS Company Background

AIM XXXIII 56

LocationsBusiness

• Full-line, multi-channel sporting goods retailer.

• Largest and most profitable publicly held sporting

goods retailer.

• Operates 445 stores in 42 states as well as 81 Golf

Galaxy stores in 30 states.

• Offers a full line of merchandise separated into

the golf pro shop, camping and outdoor equipment,

fitness and exercise equipment, footwear, team

sports, and athletic apparel.

• Industry leading market share, large geographic

footprint, best-in-class inventory management

systems.

DKS Company Background

AIM XXXIII 57

RevenueStore Growth

DKS Recommendation – Buy

AIM XXXIII 58


Forward P/E 25% $34.50 $8.63

Price to Sales 13% 28.91 3.61

Price to Book 13% 33.91 4.24



Price as of 11/21/2011 $39.79


Chevron Corporation (CVX)

AIM XXXIII 59

Market Price $104.36


Market Cap $207.8B

Enterprise Value $194.2B

LTM EPS $13.50


Company Overview

AIM XXXIII 60

• Third largest of the global major integrated

companies, behind XOM and RDS

• Fifth largest major integrated in 2010 proved

reserves and fourth in production

• Subsidiaries engage in petroleum distribution,

chemical, mining, power generation and energy

operations worldwide

Upstream Downstream

• Exploration, development and production of

crude oil and natural gas

• Processing, liquefaction, transportation and

regasification of LNG

• Core, bread-and-butter business

• $65.3 bn in sales, $17.7 bn contribution to 2010

net income – 27.1% profit margin

• Refining and marketing of crude oil and

refined products primarily under the

Chevron, Texaco, and Caltex brands

• Transportation of crude oil and refined

products

• Improve earnings across the value chain

• $170.2 bn in sales, $2.6 bn contribution

to 2010 net income – 1.46% profit margin

2010 Sales (bn)

$170.2

$65.3

Downstream Upstream

28%

72%

2010 Net Income (bn)

$17.7

$2.6

Downstream Upstream

87%

13%

AIM XXXIII 61

Global Majors earnings sensitivity

$0.10 $0.12 $0.14 $0.16 $0.18 $0.20 $0.22

TOT

ENI

BP

RDS

Sector Ave.

COP

XOM

CVX

Change in upstream earnings per $ change in Brent

2011E Upstream Net Income per Barrel

$10

$12

$14

$16

$18

$20

$22

$24

$26

$28

CVX OXY SU XOM TOT HES MR RDS COP BP MUR CNQ

$/b

oe

• Chevron maintains the greatest exposure to rising oil

prices, but also the greatest downside

• In addition to its recent Atlas shale gas acquisition,

Chevron is poised to capitalize on its heavy

investment in Asia-Pacific LNG, which is priced

using formulas linked to oil prices

• $1/barrel change in Brent crude changes upstream

earnings by $0.2/boe, making Chevron 25% more

sensitive to oil price movements than its peer average

• Chevron’s net income/boe of $27 leads all of the

global majors as best-in-class

• Possesses a world-class upstream project pipeline

and an estimated 10.5 bn boe in proven reserves

(8.5 years), which should lead to increased growth

in production, earnings and cash flow

• Maintained a peer-group leading 7% production

growth in 2009 and 2% in 2010, expected to grow at

4.8% CAGR through 2016

Competitive Advantage

CVX Recommendation – Hold

AIM XXXIII 62

Investment Thesis:Chevron is led by a management team with a proven track record of transforming its huge resource

base of proven reserves into billion-dollar revenue projects. The global major is over-levered to

fluctuations in crude oil prices, but has made a significant bet on liquefied natural gas (Australia) and

shale gas (Marcellus) to hedge that exposure. More importantly, Chevron delivers the highest

upstream profitability per boe over its competitors, and substantial upside in the stock remains.


Enterprise Value-to-DACF 25% $101.80 $25.45

Forward Price-to-EBITDAX 25% 97.56 24.39

Free Cash Flow 20% 196.65 39.33

Implied Forward Price-to-Earnings 20% 106.16 21.23

Forward Price-to-Book 5% 118.42 5.92

Forward Price-to-Operating Profits 5% 96.91 4.85


Price as of 11/21/2011 $95.66


Stock Price $7.29


Market Cap $451M

Enterprise Value $963M

LTM EPS $0.31

Sonic (SONC)

AIM XXXIII 63


Company Background

AIM XXXIII 64

Largest chain of drive-in restaurants in the United States

‒ Founded in Shawnee, Oklahoma in 1953

‒ Differentiated by unique product offerings and roller skating carhop service

Now operates 3651 restaurants in 43 states

‒ Consists of 446 Company Drive-Ins and 3115 Franchise Drive-Ins

Hampered by downturn of economy and current high levels of debt

Company Overview

DCF Assumptions

AIM XXXIII 65

2011-2012: Revenue will likely remain relatively flat through 2012 as

economy struggles to gain momentum

˗ Main emphasis will be to increase same-store-sales with new product introductions and

quality enhancements

2013-2015: Sonic’s focus will return to expansion as economy recovers,

allowing for margin expansion and greater revenue growth

˗ Sonic will return to previous strategy of growing number of restaurants on top of SSS

growth

Debt metrics will continue to improve as Sonic’s financial stability increases

˗ Absolute level of debt will remain issue to watch going forward

SONC Recommendation – Buy

AIM XXXIII 66


Free Cash Flow 60% $10.11 $6.07

Forward Price-to-Earnings 30% 12.06 3.62

Other Multiples 10% 9.36 0.94


Price as of 11/21/2011 $6.98


Investment Thesis:

Although the sluggish recovery to the economic downturn and Sonic’s high debt loads

do pose as headwinds to the stock’s recovery, its core brand value has not been

significantly damaged by its poor performance. As the economy strengthens, Sonic will

reap the benefits of its high correlation to the overall markets.

Starwood Hotels

AIM XXXIII 67

Market Price $48.80


Market Cap $9.27B


LTM EPS $3.40


Starwood has built a diverse brand portfolio…

Source: Company investor presentation

Starwood Hotel brands

AIM XXXIII 68

…while reshaping its revenue structure in the past decade

0

2000

4000

6000

2007 2008 2009 2010 LTM 6/30/2011

Owned Hotels Vacation Ownership

Man. and fran. fees and other Non-fee revenue from man. and fran.

Revenue breakdown by segment, 2007-2011

Source: Company filings and investor presentation

Revenue by type, 2000-2010 Revenue by geography, 2000-2010

Owned & VO84%

2000 LTM 6/30/2011

Fees16%

Owned & VO43%

Fees57% U.S.

70%

2000 LTM 6/30/2011

ROW30% U.S.

38%ROW62%

39% 38% 33% 34% 33%

30% 35%

41% 42% 43%14%

15%15% 14% 14%17% 13%

11% 11% 10%

AIM XXXIII 69

HOT Recommendation – Hold

AIM XXXIII 70

Investment Thesis:

HOT has reshaped its business in the past five years, as management has taken an

over-levered, asset-heavy, U.S.-centric hotel operator and turned it into nimble hotel

franchiser with the industry’s leading international platform. While these changes

have significantly reduced Starwood’s risk exposure, the market is yet to reward the

valuation, as Starwood has recently traded in lockstep with other hotel stocks.


NTM P/E 30% 56.24 $16.87

Recent offer price 30% 65.00 19.50



Price as of 11/21/2011 $47.63


RBC Bearings (ROLL)

AIM XXXIII 71

Market Price $39.68


Market Cap $877M

Enterprise Value $844M

LTM EPS $1.78


Strategy and product mixStrategy

Highly specialized bearings manufacturer Dominate small niche markets

‒ Has leading market position in many of the markets in which it competes

Partners with customers to develop highly specialized bearings

‒ Often has to secure regulatory approval, and seeks patents

‒ Works with customers for 6 mo. – 6 years on developing bearings

Growth through acquisition, new customers

Largest customers Segment breakdown

Products

Source: Company filings

Diversified industrials

Aerospace and defense

Name Uses Image

Plain

bearings

Aircraft engine controls;

missle launchers;

construction equipment

Roller

bearings

Aircraft hyrdaulics; truck

chassis

Ball

bearings

Radar and night vision;

missle guidance; airframe

control

OtherCollets for machine tools;

industrial gears

Customer type

Aerospace& defense

47%Diversified industrials

53%

Product

Plain bearings50%

Roller bearings

30%

Ball bearings12%

Other – 8%

ROLL Recommendation – Buy

AIM XXXIII 73

Investment Thesis:

As a niche bearings manufacturer, RBC Bearings has put up significant barriers to

entry to any competition for its original manufacturing and after-market parts sales.

While the company has recently receded in operating efficiency, it remains an

attractive takeover target for large diversified industrials. RBC’s operating model has

significant value, which will eventually be realized by either RBC’s management or

another company’s.


LBO Analysis 30% $46.00 $13.80



Price as of 11/21/2011 $38.90


Cummins (CMI)

AIM XXXIII 74

Market Price $91.10


Market Cap $17B


LTM EPS $8.54


CMI – Description

AIM XXXIII 75

• Founded in 1919 and based in Columbus, Indiana

• Divided into Four Operating Segments:

• International Company – Customers in 190 countries

• 36% US Sales

• 64% Rest of World

Segment % of Sales % of EBIT

Engines 49% 48%

Power Generation 18% 18%

Components 19% 16%

Distribution 14% 18%

CMI – DCF Assumptions

AIM XXXIII 76

• Management 4 year plan for 2015

• Grow Sales to $30B from around $18B in 2011

• Improve EBIT Margins to 18% from around 14% current level

• Slowing growth in 2012 but accelerating to 20% in 2013 with Chinese

emission standard changes

• Slowing growth and stabilization after

• Project Sales to slightly beat plan and EPS of 22.30 in 2015 (vs. $9.12 2011)

• Increasing dividend to $4/share and $2 Billion buyback in 2016

CMI Recommendation – Buy

AIM XXXIII 77

Investment Thesis:

Cummins stands to benefit from the secular growth trend in trucking due to improving

emission standards (especially in the US, Brazil & China), and its strong management

team has a 4-year plan to grow sales at a 14% CAGR and improve EBIT Margins to 18%.


Forward P/E 25% 122.16$ 30.54$

Price-to-book 25% 115.41$ 28.85$

Free Cash Flow 50% 172.58$ 86.29$

Final Valuation 145.68$

Price as of 11/21/2011 91.10$


Google (GOOG)

AIM XXXIII 78


1-year forward P/E 21x

Market Cap $202B

Enterprise Value $167B

LTM EPS $29.34


GOOG – Description

AIM XXXIII 79

• Global leader in online search & advertising – Provide products that

are an integral part of users’ daily lives with relevant and useful ads

• Wide platform of products spanning all of tech

Segment % of Sales % Growth

AdWords 69% 39%

AdSense 27% 18%

Region Current % of Revenues Last Year % of Revenues

United States 45% 48%

Rest of World 55% 52%

GOOG – DCF Assumptions

AIM XXXIII 80

• Slowing sales growth to around 10% by 2016

• Growth driven by display ads, core search, mobile and location based ads

• Especially international

• Monetization of other high usage products over time (Android)

• Improving margins from current levels

• Reduce SG&A as % of sales from 33% to more typical levels around 30%

• Continued low tax rates around 20%

• Eventual large share repurchase plan to return excess cash

GOOG Recommendation – Buy

AIM XXXIII 81

Investment Thesis:

Google is positioned well to take advantage of the secular growth trend in online

advertising, especially in the display, mobile and local space while continuing to benefit

from core search. It should experience improving margins after the recent ramp in

spending and has an array of potential growth opportunities in its vast product line.


Forward P/E 33% 689.19$ 229.73$

Forward P/S 33% 722.28$ 240.76$

Free Cash Flow 33% 703.30$ 234.43$


Price as of 11/21/2011 580.94$


Stock Price $48.29


Market Cap $51.7B


LTM EPS $4.58

UnitedHealth Group (UNH)

AIM XXXIII 82


Business Segments

Company Background

AIM XXXIII 83

Impacts of Healthcare Reform

2011: Medical Loss Ratio

2014: Expanded insurance coverage

($ in millions) 2010 Revenue 2010 Operating Profit Margin

UnitedHealthcare $86,905 $6,636 7.6%

OptumHealth $2,852 $610 21.4%

OptumInsight $1,496 $84 5.6%

OptumRx $2,293 $534 23.3%

Total $93,546 $7,864 8.4%

UNH Recommendation – Buy

AIM XXXIII 84


Free Cash Flow 50% $76.09 $38.05



Price as of 11/21/2011 $44.29


Investment Thesis:

As the largest player in the managed care space, UnitedHealth Group is well positioned

to grow its enrollments as healthcare reform expands coverage and as an aging

population demands more medical services. Medical Loss Ratio regulation will

compress margins, but the growth in enrollment should outweigh this downside.

Coca-Cola (KO)

AIM XXXIII 85

Market Price $66.74


Market Cap $151B

Enterprise Value $163B

LTM EPS $5.44


Company SWOT

AIM XXXIII 86

Strengths Weaknesses Opportunities Threats

Brand equity

International platform

Market leader

Strong management

Customer

concentration

Increasing debt levels

Seasonality (Q2 and

Q3 best)

Operational efficiency

concerns

Expansion into

Europe, Asia and

Africa

Acquisition of industry

players

Expansion into

healthier product lines

Entrance into food

market

Intense competition

Rising commodity

prices

Consumer health

consciousness

Government regulation

DCF Assumptions

AIM XXXIII 87

• Income Statement

• 10% growth in 2012, followed by more moderate (5 – 7%) growth from 2013-

2016

• COGS and SG & A as a percent of sales remain constant at 37.5% and 38%,

respectively

• Effective tax rate of 24%

• Slowly declining share count in line with management guidance

• Balance Sheet

• Balance sheet figures remain at historical levels

• Cash balance slightly declining going forward

• PP & E expenditures continue

KO Recommendation – Buy

AIM XXXIII 88

Investment Thesis:

Coca-Cola’s international platform and its brand equity have enabled Coca-Cola to

become the market leader in the non-alcoholic beverage space. Coca-Cola’s future

growth will come from emerging market growth, entrance into new markets and

improving its North American operating efficiency. Although, Coca-Cola may be

susceptible to increasing commodity prices going forward, Coca-Cola is in a better

position relative to its competitors.


Free Cash Flow 60% $87.30 $52.38

P/E Multiplier 40% 68.68 27.47


Price as of 11/21/2011 $65.95


Stock Price $65.29


Market Cap $33.2B


LTM EPS $4.39

Newmont Mining (NEM)

AIM XXXIII 89


Project Pipeline

AIM XXXIII 90

Project Pipeline (continued)

AIM XXXIII 91

Company Background

AIM XXXIII 92

SWOT Analysis

Four segments

˗ North America

˗ South America

˗ Asia Pacific

˗ Africa

End product is dorè bars, sent to

refiners

Sales come from refined gold in

international market

Saleable concentrate of copper sold to

smelters

Business Overview

Strengths

Pure play on gold with price-linked dividend

Weaknesses

Lack of pipeline projects beginning

production over next 2 years

Opportunities

Management plan to increase gold

production 35% by 2017

Threats

Margins highly dependent on price of gold

Gold Price Assumptions

AIM XXXIII 93

Dividend discount

2010A 2011E 2012E 2013E 2014E 2015E 2016E Terminal

Realized price of gold 1224.53 1,450 1,700 1,600 1,500 1,400 1,300 1,300

Dividend / share 0.50 1.08 1.70 1.40 1.20 1.00 0.80 0.80

% growth 25.0% 115.0% 58.1% (17.6%) (14.3%) (16.7%) (20.0%) 0.0%

Implied equity value / share $23.86

NEM Recommendation – Buy

AIM XXXIII 94


Forward Price-to-Earnings 20% $72.41 $14.48



Price as of 11/21/2011 $65.29


Investment Thesis:

Though Newmont has experienced some operational underperformance and unexpected

protests in Peru during 2011, the company maintains the most diversified portfolio of

international mining assets and has set aggressive goals to ramp up gold production.

Despite Newmont’s coming struggle to increase output over the next two years, the

company’s price-linked dividend offers the most upside among gold miners to profit if

the price of gold continues to rise due to adverse market conditions.

Stock Price $79.30


Market Cap $8.2B


LTM EPS $6.30

LabCorp (LH)

AIM XXXIII 95


Volume 2008A 2009A 2010A

Routine Testing 86.0 84.6 83.3

% change -1.6% -1.6%

Genomic and Esoteric Testing 23.7 25.8 27.2

% change 8.9% 5.7%

Ontario, Canada 8.0 9.1 9.1

% change 12.9% 0.4%

Total 117.7 119.5 119.6

Revenue Per Requisition 2008A 2009A 2010A

Routine Testing $32.30 $33.62 $35.96

% change 4.1% 7.0%

Genomic and Esoteric Testing $62.49 $62.14 $63.48

% change -0.6% 2.2%

Ontario, Canada $30.92 $27.24 $30.68

% change -11.9% 12.6%

Average $41.90 $41.00 $43.37

Company Background

AIM XXXIII 96

Revenue Breakdown

Routine testing

‒ Blood, drugs of abuse testing

by employers

‒ 60% of revenue

Genomic and esoteric testing

‒ Oncology, HIV genotyping,

infectious disease, companion

diagnostics

‒ 34.5% of revenue

‒ Expected to be 45% by 2015

Ontario, Canada

‒ 85.6% owned joint venture

‒ 5.5% of revenue

Lines of Business

LabCorp Revenue = Volume x Revenue per requisition

DCF Assumptions

AIM XXXIII 97

Revenue growth

˗ 2012-13: Win market share from Quest Diagnostics (main competitor), increased volume

of genomic and esoteric tests

˗ 2014: Healthcare coverage expansion

Margin expansion

˗ Higher percentage of genomic/esoteric tests

Continue share repurchases and acquisitions

LH Recommendation – Buy

AIM XXXIII

`98



Forward Price-to-Sales 10% 74.22 7.42

Forward Price-to-Book 15% 72.88 10.93

Free Cash Flow 50% 121.63 60.82


Price as of 11/21/2011 $79.30


Investment Thesis:

While key growth indicators, including overall healthcare utilization, remain weak,

LabCorp is well-positioned as an industry leader in the high-growth genomic and

esoteric testing segment. The company maintains superior volume and margin trends to

Quest and has greater financial flexibility to pursue acquisitions or share repurchases.

Amazon (AMZN)

AIM XXXIII 99


1-year forward P/E 94.2

Market Cap $85.67B


LTM EPS $1.90


Amazon

12.0%

eBay

2.5%

Other

85.5%

Company Background

AIM XXXIII 100

Market Share Geographic Breakdown Revenue Breakdown (2010)

North America

55%

International

45%

Sales of

Electronics and Other General

Merchandise

54%

Media

43%

Other*

3%

DCF Assumptions

AIM XXXIII 101

Revenue growth

2012-2013: Top line revenue growth supported by increased sales of their branded

products, as well as the introduction of Kindle products in international markets, their

digital content library, and the general favorable trend in the industry

2014-2016: Revenue growth supported by international expansion, trends in the industry,

and introduction of new products

Margin compression

˗ Margin compression in 2012-2013 as they sell products like the Fire at a loss, but

compensated by high margin digital content sales in later years

SG&A

Increase in 2012-2013 consistent with management’s announced fulfillment center

increase, then return to normalized levels

Balance sheet figures – held at historical averages

AMZN Recommendation – Buy

AIM XXXIII 102

Investment Thesis:Amazon is favorably positioned in the E-Commerce industry, which is forecasted by

IBISWorld to grow at an average annual rate of 9.4% to 2016. Additionally, the company has

potential to expand further internationally, build brand loyalty through Amazon Prime, and

increase sales with branded products like the Kindle Fire and associated content.

Method Weight Value Contribution

Free Cash Flow 80% 237.41$ 189.93$


Final Valuation 100% 229.51$

Price of 11/21/11 189.25$


Stock Price $35.57


Market Cap $32.73B


LTM EPS $2.76

Halliburton (HAL)

AIM XXXIII 103


DCF Assumptions

AIM XXXIII 105

Revenue growth

2011 expected revenue growth of 37% - based on higher oil prices which analysts expect

to remain elevated in the near-term and subsequent demand increases in North America

2012 expected revenue growth of 20%

2013-2016 : 10-5% growth - based on inherent unpredictability of oil and gas prices

North American market will be key as well as expected market growth in Eastern Asia

Margins

Contract slightly/remain relatively flat - based on firm expanding global footprint and

anticipation of continued acquisition activity while asset valuations remain depressed

Legal Issues

Will be unaffected by the Deepwater Horizon Incident as contracts with BP indemnify Hal

from fines

Work-product and key relationships outshine somewhat tarnished societal reputation

HAL Recommendation – Buy

AIM XXXIII 106


Price-to-Book 5% $50.99 $2.55



Forward Price-to-EBITDA 10% 50.02 5.00



Price as of 11/21/2011 $38.49


Investment Thesis:

As a best-in-class oilfield service provider, Halliburton stands to continue to capitalize on both its

expertise in complex liquid and gas extraction and key relationships with major oil producers. As

the economic environment strengthens and rig count continues to expand both domestically and

abroad, increased service demand will drive growth. Finally, demand for energy from emerging

markets will offer attractive opportunities for further growth and expansion.

Dollar Tree (DLTR)

AIM XXXIII 107

Market Price $75.69

1-year forward

P/E

17.28x

Market Cap $9.73B


LTM EPS $3.75


Company Overview

AIM XXXIII 108

Founded in 1986; Headquartered in

Chesapeake, VA

Only discount variety store that

offers all of its products for $1 or

less

‒ Market Share: 11.6%

‒ Competitors: Dollar General,

Family Dollar

‒ Domestic and International

Exposure

‒ 4101 domestic locations; 86

stores in 4 Canadian provinces

Brand Names

Revenue Segments

50%45%

5%

Consumable Merchandise

Variety Merchandise

Seasonal Goods

Key Assumptions

AIM XXXIII 109

Conservative Scenario

Decreased revenue growth from 11% to 6%

Slightly increased COGS as POS from 63% to 65%

Maintained SGA margins

DDM

Generating so much extra cash might pay dividends

Assumed 20% of RE

Dividend Discount Model

Given Information:

Risk Premium 5.00%

Risk-Free Rate (10 YR) 2.05%

Estimated Beta 0.56

Expected Return 4.85%

Retained Earnings $1,458

20% of RE $292

Dividend Per Share $2.39

Estimated Growth Rate 2.00%

Estimated Intrinsic Value: $85.55

Discovery

All 3 managers confirmed lack of

competition from big-box retailers

Supported by Target’s investor

relations

Vs.

DLTR Recommendation – Hold

AIM XXXIII 110

Investment Thesis:

Dollar Tree not only offers significant expansion opportunity both domestically and

internationally, but also provides the portfolio with a countercyclical equity.

Additionally, due to the recent economic downturn, Dollar Tree has grown its loyal

customers, with management projecting a prolonged “forever frugal” mentality.


Conservative DCF 18% 96.67$ 16.92$

DCF Sensitivity Analysis 18% 76.44 13.38


Other DCF Scenarios 15% 84.25 12.64

Other Multiples 20% 84.69 16.94


Price as of 11/21/2011 75.69$

Stock Price $100.90


Market Cap $9.4B


LTM EPS $3.62

Perrigo (PRGO)

AIM XXXIII 111


Company Background

AIM XXXIII 112

Revenue & Operating Margins

Consumer Healthcare

~60% of revenue

Nutritionals

~18% of revenue

Rx

~12% of revenue

API

~6% of revenue

Lines of Business

7.60%

16%17.80%

19.70%

18%

0.00%

5.00%

10.00%

15.00%

20.00%

25.00%

0

200

400

600

800

1000

1200

1400

1600

1800

2007 2008 2009 2010 2011

Revenue Operating Margin

PRGO Recommendation – Buy

AIM XXXIII 113



Free Cash Flow 50% $111.25 55.63


Price as of 11/21/2011 $89.96


Investment Thesis:

Perrigo is positioned to benefit from the upcoming name-brand patent cliff

spanning 2012-2014, healthcare providers’ desire to rely less upon name-brand

drugs, its focus upon niche pharmaceutical markets, and its strong position with

mass retailers.

Stock Price $57.83


Market Cap $1.9N


LTM EPS $8.73

Alliant Techsystems (ATK)

AIM XXXIII 114


Company Background

AIM XXXIII 115

Operating Segments

Aerospace and defense supplier to

US government and allies (68% of

sales to US government; 48% of

sales to US military

Growing commercial offerings

(sporting ammunitions, aircraft

components, etc.)

$526 million operating profit

FY11 (10.86% of sales)

Key Statistics

Aerospace Systems (30% sales, 24%

operating profits)

Armament Systems (37% sales, 39%

operating profits)

Missile Products (14% sales, 13%

operating profits)

Security and Sporting (19% sales, 24%

operating profits)

DCF Assumptions

AIM XXXIII 116

Revenue growth

˗ Able to maintain a conservative revenue growth estimate of 7% while

maintaining margins within the tight range that they have been historically

Discovery

˗ Talked to Project Manager at key competitor Northrop Grumman

˗ Confidence in ability to weather the storm of defense spending cuts, transition

into more commercial operations, and regain revenue lost from discontinuance

of space shuttle program through new projects with NASA

Begin to grow the dividend that ATK began paying in March 2011

ATK Recommendation – Buy

AIM XXXIII 117

Investment Thesis:

Though the defense industry as a whole will be under pressure from defense cuts,

Alliant is uniquely positioned to maintain moderate growth as it has strong relationships

with key Department of Defense organizations and a promising pipeline of defense and

aerospace technology that positions it well to win big contracts over the next few years.

Stock Price $7.33


Market Cap $7.0B


LTM EPS $0.98

KeyCorp (KEY)

AIM XXXIII 118


Company Background

AIM XXXIII 119

Weaknesses Opportunities Threats

Interest income

trending downward

(4 years in a row)

Committed to being

“source of strength” for

subsidiaries

One of 19 bank holding

companies under the

Fed’s Supervisory

Capital Assessment

Program

Extra $125 million in

cash flow no longer

needed for TARP

preferred stock

Focusing on lending in

developing countries

Selective small-scale

acquisitions in line

with recent moves

Potential cost savings

via Keyvolution

initiative

Exposure to financial

sector as a whole

Increasing regulatory

burden as a result of

Dodd-Frank

High competition in

financial services

industry, partly due to

consolidation of

competitors

Strengths

Strong capital base

Diversified operations

both geographically

and by business line

Strong market share in

many of its 14 states

Paid off all TARP

preferred stock in

March 2011

DCF Assumptions

AIM XXXIII 120

Revenue growth

˗ 2012-13: Shrunk interest

income as interest expense

remained fairly constant –

hence, shrunk net interest

income

˗ 2014 and beyond: slow

recovery in net interest

income

Year FCFE Discount Factor PV of FCF

2012 (396.19) 0.9195 ($364.3)

2013 (871.85) 0.8456 ($737.2)

2014 2,601.93 0.7775 $2,023.1

2015 4,368.57 0.7150 $3,123.4

2016 4,412.36 0.6574 $2,900.8

CV 9,053.46 0.6574 $5,952.1

Equity Value $12,897.8

Shares out. 952,888,140

FCFE Value $13.54

KEY Recommendation – Buy

AIM XXXIII 121

Investment Thesis:

Though the financial industry is experiencing unprecedented macroeconomic

headwinds, KeyCorp is well positioned with an incredibly strong capital base that can

help them withstand any potential pressures on margins. They are currently trading at a

discount to Price-to-Book despite their strong assets.

Continental Resources (CLR)

AIM XXXIII 122

Market Price $65.91

1-year forward P/E $25.30

Market Cap $12.82B


LTM EPS $2.82


Company Profile

Company Background

AIM XXXIII 123

Advanced Technologies

Hydraulic Fracturing Eco-Pad

Horizontal Drilling

- Crude oil and natural gas exploration and

production company founded in 1967 by

CEO Harold Hamm (went public in 2007)

- Strong and experienced management team

- Sr. officers – 30 yr. avg. experience

- Tech. staff – 16 yr. avg. experience

- Business strategy - focus exploration

activities in new or developing plays that

provide the them the opportunity to acquire

undeveloped acreage for future drilling

operations

CLR Recommendation – Buy

AIM XXXIII 124

Investment Thesis:Continental Resources is a company that has an experienced management team that has a

strong history of finding cheap, undeveloped resource plays. They have been able to

rapidly increase proved reserves and production while efficiently managing costs. This is

a company with tremendous growth potential that should continue to efficiently scale

their business domestically.

eBay Inc. (EBAY)

AIM XXXIII 125

Market Price $28.90

1-year forward P/E $14.53

Market Cap $39.89B


LTM EPS $1.37


Company Profile

Company Background

AIM XXXIII 126

Segments

Marketplaces (56% of revenue)- Founded in 1995

- Operates as the world’s largest online

marketplace with over 180 million users (97

million are considered active)

-How do they generate revenue?

- Net transaction revenues – listing and

final value fees and fees paid by

merchants for payment processing

services (85% of revenue)

- Marketing services and other

revenues – sale of advertisements,

revenue sharing arrangements,

classifieds fees and lead referral fees

(15% of revenue)

Payments (37% of revenue)

GSI Commerce (7% of revenue)

EBAY Recommendation – Buy

AIM XXXIII 127

Investment Thesis:Ebay has one of the strongest brand names and market position in a growth industry. The

E-Commerce industry is forecasted by IBISWorld to grow at an average annual rate of

9.4% to 2016. Additionally, PayPal should remain the main driver of growth as it is the

best online payment solution as more purchases are being made online.

Stock Price $390.95


Market Cap $363.3 B


LTM EPS $27.68

Apple (AAPL)

AIM XXXIII 128


Company Background

AIM XXXIII 129

Revenue Breakdown (in billions)

• Founded in 1976; HQ in Cupertino, CA

•Designer, producer, and marketer of high tech products and software

•Business model Continued innovation and seamless integration

A Brief Overview

Macs

$21,783

iPod

$7,453

Music and related

$6,314 iPhone

$47,057

iPad

$20,358

Peripherals and

hardware

$2,330

Software and services

$2,954

Revenue Growth YOY

•iPhone: 87%

•iPad: 311%

•Portable computers: 36%

•Total Net Sales: 66%

DCF Assumptions

AIM XXXIII 130

Revenue growth

˗ 2012: Projecting growth of 30.8%; driven by strong iPad and iPhone growth

˗ 2013 & 2014: Growth rate reduced to 17.9% and 13.4% respectively as iPod continues to

decline, while iPhone and iPad growth moderate

Margin compression

˗ Project slight margin compression as AAPL has maximized supply chain efficiency

Return of Cash to shareholders

Two most likely scenarios involve a share repurchase program or a large, one time

dividend

AAPL Recommendation – Buy

AIM XXXIII 131



Free Cash Flow 75% $544.71 $408.53


Price as of 11/21/2011 $369.91


Investment Thesis:

Apple remains the industry leader in the high-tech consumer segment offering best-in-

class products in the iPad, iPhone, and Mac computer line. Strong growth should

continue as the iPhone looks to take market share through a two-tiered pricing strategy.

Headwinds exist for Apple in that expectations for growth are high and competition is

increasing in its core markets. Questions also exist about new leaderships ability to

continue to drive growth. I believe that Apple’s ability to efficiently operate and

innovate will sustain the company’s competitive advantage despite these challenges.

Stock Price 39.80


Market Cap $29.9B


LTM EPS $3.51

Gilead Sciences (GILD)

AIM XXXIII 132


Company Background

AIM XXXIII 133

Breakdown of Product Sales ($ Thousands)

Disease

Treated

2010 2009 2008

Antiviral Products % of Total % of Total

% of

Total

Atripla HIV 2,926,579 40% 2,382,113 37%1,572,455 31%

22.86% 51.49%

Truvada HIV 2,649,908 36% 2,489,682 38%2,106,687 41%

6.44% 18.18%

Viread HIV 732,240 10% 667,510 10% 621,187 12%

9.70% 7.46%

Hepsera Hep C 200,592 3% 271,595 4% 341,023 7%

-26.14% -20.36%

Emtriva HIV 27,679 0% 27,974 0% 31,080 1%

Total Antiviral Products 6,536,998 88% 5,838,874 90%4,672,432 92%

AmBisome Fungus 305,856 4% 298,597 5% 289,651 6%

2.43% 3.09%

Letairis PAH 240,279 3% 183,949 3% 112,855 2%

30.62% 63.00%

Ranexa Angina 239,832 3% 131,062 2%— —

82.99%

Other 66,956 1% 16,829 0% 9,858 0%

Total Product Sales 7,389,921 100% 6,469,311 100%5,084,796 100%

Sales from HIV Products 6,336,406 86% 5,567,280 85%4,331,409 85%

DCF Assumptions

AIM XXXIII 134

Financial Model ($ Thousands)

2011 2012 2013 2014 2015 2016

Sales 9,407,466 10,960,394 12,588,741 14,271,980 15,989,454 17,721,191

Sales Growth % 18.34% 16.51% 14.86% 13.37% 12.03% 10.83%

COS 2,257,792 2,630,494 3,021,298 3,425,275 3,837,469 4,253,086

Gross Pft 7,149,674 8,329,899 9,567,443 10,846,705 12,151,985 13,468,106

SGA 1,222,971 1,424,851 1,636,536 1,855,357 2,078,629 2,303,755

R&D 1,034,821 1,205,643 1,384,762 1,569,918 1,758,840 1,949,331

Dep 42,334 42,334 49,322 56,649 64,224 64,224

Op Inc 4,849,549 5,657,071 6,496,824 7,364,780 8,250,292 9,150,796

Int exp/(income) 46,893 10,357 -40,369 5,451 -60,278 -60,278

Non-Op Inc 0 0 0 0 0 0

Tax Inc 4,802,656 5,646,714 6,537,193 7,359,330 8,310,570 9,211,074

Taxes 1,356,130 1,593,433 1,843,627 2,072,446 2,339,305 2,593,870

Net Inc 3,457,913 4,065,634 4,706,779 5,298,717 5,983,611 6,631,973

Dividend 0 0 0 0 0 0

R/Inc 3,457,913 4,065,634 4,706,779 5,298,717 5,983,611 6,631,973

800,800 799,801 798,802 796,804 794,806 792,808

EPS 4.32 5.08 5.89 6.65 7.53 8.37

GILD Recommendation – Buy

AIM XXXIII 135

Investment Thesis:

Market leader with a dominant competitive advantage in HIV therapeutics. Strong drug

pipeline with recently introduced Complera and the QUAD drug that is expected to be

introduced in 1H2012. HIV antiretroviral will continue to grow as doctors begin to

prescribe them more and more people get HIV.

Stock Price $96.48

1 year forward P/E 10.7x

Market Cap $62.4B


LTM EPS $6.96

Caterpillar (CAT)

AIM XXXIII 136


Company Background

AIM XXXIII 137

Machinery

65%

Engines

29%

Financial

Products

6%

2010 Revenue by Segment

Rest of

World

68%

North

America

32%

2010 Revenue by Geography

• Lines of Business:– Machinery

– Engines

– Financial Products

• Business Model:– Lowest-total-cost to customers over

equipment lifetime

• SWOT:– (S) Experienced management team and

best-in-class dealer network

– (W) More expensive business modelthan competitors

– (O) Completed Bucyrus acquisition

– (T) Softening in emerging markets, esp. China Total 2010 Revenue: $42.6 billion

DCF Assumptions

AIM XXXIII 138

Revenue growth

˗ 2012-13: Gain global market share in emerging markets further fueled by the

Bucyrus acquisition

˗ 2014-15: Leveling of sales as emerging markets soften and CAT operates near

capacity

Margin expansion

˗ Acquisition-related costs disappear in 2013 and CAT begins to realize

efficiencies through improved inventory turnover

Continued strategic alliances in emerging markets as well as near-

term capacity expansion

CAT Recommendation – Buy

AIM XXXIII 139



Free Cash Flow 80% 116.32 93.06


Price as of 11/21/2011 $91.12


Investment Thesis:

While the current economic environment is faced with many uncertainties threatening

future global growth, CAT is better positioned than any of its competitors to gain market

share in emerging markets. CAT’s best-in-class after-sale support and strong

management team will help maintain its brand reputation and operating performance as

it expands into new markets with the Bucyrus mining acquisition.

Stock Price $54.27


Market Cap $91.6B


LTM EPS $2.52

Qualcomm (QCOM)

AIM XXXIII 140


Company Background

AIM XXXIII 141

Revenue Breakdown

Four operating segments:

‒ Qualcomm CDMA Technologies (QCT)

‒ Qualcomm Technology Licensing (QTL)

‒ Qualcomm Wireless & Internet (QWI)

‒ Qualcomm Strategic Initiatives (QSI)

Majority of customers are outside

of the United States

Lines of Business

QCT QTL QWI QSI

Revenue 6,695 3,659 628 9

% Total 60.9% 33.3% 5.7% 0.1%

EBT 1,693 3,020 12 (439)

% Total 39.5% 70.5% 0.3% (10.2%)

% Margin 25.3% 82.5% 1.9% NM

29%

27%12%

9%

5%

18%China

South Korea

Taiwan

Japan

United States

Other foreign

DCF Assumptions

AIM XXXIII 142

Revenue growth˗ 36% percent revenue growth in 2011

˗ Expected to continue but at a slower rate, due to proliferation of smart phones and tablets

Margins remain relatively stable˗ Goods become more costly to produce

˗ Increased competition for talented labor

˗ R&D decreases as a percentage of sales

Income Statement Projections

2010A 2011A 2012E 2013E 2014E 2015E 2016E

Revenue 10,991 14,948 17,937 20,987 24,135 27,755 31,918

% Growth 5.5% 36.0% 20.0% 17.0% 15.0% 15.0% 15.0%

COGS 3,517 4,877 5,830 6,821 7,844 9,159 10,533

% Sales 32.0% 32.6% 32.5% 32.5% 32.5% 33.0% 33.0%

R&D 2,549 2,995 3,408 3,919 4,507 5,183 5,961

% Sales 23.2% 20.0% 19.0% 18.7% 18.7% 18.7% 18.7%

SG&A 1,557 1,945 2,422 2,938 3,500 4,163 4,788

% Sales 14.2% 13.0% 13.5% 14.0% 14.5% 15.0% 15.0%

QCOM Recommendation – Buy

AIM XXXIII 143



Discounted Cash Flow 85% 63.30 53.81


Price as of 11/21/2011 $54.27


Investment Thesis:

Qualcomm is uniquely positioned to benefit from the proliferation of smart phones and

tablets both domestically and in emerging markets. This will continue to drive revenue

growth over the next several years.

Teradata Corporation (TDC)

AIM XXXIII 144


The Problem…and the Solution

AIM XXXIII 145

Revenue Mix and Operating Segments

AIM XXXIII 146

Multiple Analysis: M&A P/E

Jim Parsons of Viking Capital – “it could be 2 days

or 12 months…”

AIM XXXIII 147

TDC Recommendation – Buy

Investment Thesis:

Teradata’s best of breed solution positions the firm as the clear market leader in an

industry growing at a 12.8% CAGR through 2016 (IBISworld). CIOs are shifting IT

spend towards big data analytics, providing major growth opportunities in the mid-

market and abroad. Moreover, TDC is a likely target for acquisition in an industry

that pays a high premium for valuable IP.


Forward P/E 30% $53.54 $16.06

M&A Scenario P/E 20% 66.67 13.33


Final Valuation 59.43

Price as of 11/21/2011 51.27


AIM XXXIII 148

Discover Financial Services (DFS)

AIM XXXIII 149


Market Price $24.09

1-year Forward P/E

7.47

Market Cap 13.24B

Enterprise Value 27.21B

LTM EPS 3.75

Company Background

• Founded in 1986 with HQ in Riverwoods, IL

• Pioneer in offering cash rewards and no annual fees

• Third largest credit card brand in US– More than 50 million card

holders

AIM XXXIII 150

Pro Forma Income Statement

AIM XXXIII 151

DFS Recommendation – Hold

Investment Thesis:

Financials are very cheap in today’s environment. Due to management’s disciplined

approach, Discover had the lowest loss rate during the crisis and maintains one of the

highest operating efficiency ratios in the industry. This stable and consistent firm is

poised for growth on the international front as well as in the payments space.


Price-to-Book 35% $28.93 $10.13



Price as of 12/7/11 $24.09


AIM XXXIII 152

Stock Price $55.37


Market Cap $8.2B


LTM EPS $2.13

EcoLab (ECL)

AIM XXXIII 153


Company Background

AIM XXXIII 154

Segment revenues and operating margins

Global leader in cleaning, sanitation,

food safety and infection control

products and services

Operations in more than 160

countries

Expected to close acquisition of

Nalco Holdings in late Q4

‒ Global leader in water treatment

‒ $5.4 billion deal

11% net income CAGR over past 10

years

General information

15%

17% 16%

19% 19%

9% 9%

11%

15%16%

10% 10%

9%

8%8%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

20%

2006 2007 2008 2009 2010

U.S. Cleaning and Sanitizing U.S. Other Services International

4824 5323

6105 5788

6187 5706

(500)

2000

4500

7000

2006 2007 2008 2009 2010 LTM

International U.S. Cleaning and Sanitizing U.S. Other Services

DCF Assumptions

AIM XXXIII 155

Revenue growth

˗ U.S. growth returns to stability around 7% y-o-y

˗ International growth increases to 10% y-o-y due to growing emerging market exposure

Costs

˗ COGS increases following acquisition of lower margin NLC

˗ SG&A increases post-acquisition then moderates

Acquisition of Nalco Holdings

˗ Accretive to earnings

˗ Expect this segment to grow at 8% y-o-y with considerable upside

Very low business risk – 90% recurring revenue

5% sales volatility

7% EBIT volatility

ECL Recommendation – Buy

AIM XXXIII 156


Forward P/E 10% $52.53 $5.25

Dividend Discount 10% $60.14 $6.01

Free Cash Flow 80% $57.50 46.00


Price as of 11/21/2011 $53.11


Investment Thesis:

EcoLab is the leading global provider of industrial cleaning solutions. With 90%

recurring revenue and extremely low business risk, it is well positioned to weather any

economic environment. Its acquisition of Nalco Holdings, along with its favorable and

increasing exposure to the emerging markets, will make it the leading provider of

sustainability solutions to companies worldwide.

Final Portfolio

AIM XXXIII 157

Stock Ticker Weight Market Value Stock Ticker Weight Market Value

Amazon AMZN 3.6% $198,713 Alliant Tech ATK 3.5% $195,364

Dick's Sporting Goods DKS 3.5% $194,971 Caterpillar CAT 4.1% $227,800

Dollar Tree DLTR 3.4% $189,225 Cummins CMI 3.9% $218,640

Sonic Corp SONC 3.5% $195,440 RBC Bearings ROLL 3.4% $186,720

Starwood Hotels HOT 3.4% $190,520 Industrials 14.9% $828,524

Consumer Discretionary 17.4% $968,869 (AIM XXXII 10.2%)

(AIM XXXII 19.2%)

EcoLab ECL 3.8% $212,440

Coca-Cola KO 3.7% $204,445 Newmont Mining NEM 3.8% $208,928

Consumer Staples 3.7% $204,445 Potash Corp POT 3.8% $212,000

(AIM XXXII 7.3%) Materials 11.4% $633,368

(AIM XXXII 10.9%)

Chevron CVX 3.9% $215,235

Continental Resources CLR 3.8% $210,912 Apple AAPL 5.0% $276,758

Halliburton HAL 3.4% $191,730 eBay EBAY 3.5% $195,500

Energy 11.1% $617,877 Google GOOG 3.5% $197,520

(AIM XXXII 8.4%) Qualcomm QCOM 4.0% $222,507

Teradata Corp TDC 3.7% $205,080

Discover DFS 3.5% $196,596 Technology 19.7% $1,097,364

KeyCorp KEY 3.4% $191,800 (AIM XXXII 27.0%)

Financials 7.0% $388,396

(AIM XXXII 3.5%) Cash and Hedge $20,410

Total $5,568,157

Gilead Sciences GILD 3.6% $199,430

LabCorp LH 3.6% $198,250

Perrigo PRGO 3.6% $197,912

United Health Group UNH 3.8% $213,312

Healthcare 14.5% $808,904

(AIM XXXII 12.5%)

Documents

Handover Presentation - AIMJobs and Unemployment AIM XXXIII 7 The 4-week moving average for initial jobless claims has fallen over 5,000 over the last 2 weeks to 395,000 This is the