Jeff FriedbergFriedberg Investment Management

Investing by Instinct

• 1964 Jeff buys first stock. 20 shares of Varian Associates.

• 1965 Jeff often stops by Merrill Lynch office before attending graduate school classes.

• 1968 Jeff is first employed as a geophysicist and manages his own portfolio.

• 1975 Brokerage industry is deregulated. Fixed commissions disappear. Discount brokers arise.

The Evolution of FIM

• 1978 Jeff meets with the SEC.• 1979 Jeff gets registered and licensed. First client

gives Jeff $7,431.50 to manage• 1990 Jeff moves from home office to regular office• 2014 FIM now consists of a team of 9 persons

managing nearly $300 million for more than 350 individuals or families.

• FIM is an independent, fee based, money management firm.

• We manage customized investment portfolios to meet each client’s objective in a continually changing economic environment.

• We do this by investing exclusively in publicly traded securities.

• We believe the key to successful investing is to make long term investments in successful companies.

Who We Are

Today’s Blue Chips are good companies

…but tomorrow’s Blue Chips are today’s best investments.

Bloomberg

FIM Performance History (Growth)

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$0

$100,000

$200,000

$300,000

$400,000

$500,000

$600,000

$700,000

$800,000

$900,000

$1,000,000 Change in Value of $10,000 Investment

FIM Growth Composite

S&P 500

Russell 2000

Finding Companies for Investment

• Are managed by people• Have personalities• Reflect the DNA of their managers• Evolve and adapt• Can be complacent, reactive, proactive,

aggressive

We View Companies as organisms which….

Institutional Analysts FIM

Data Input Keyboard Eyes and Ears

Analysis Digital Conceptual

Data Output Earnings Model Company DNA

Time Frame Next Quarter 2-5 Years

Approach to Investment Analysis

• Large companies are usually fairly priced.• Silicon Valley companies are typically overpriced.• New York companies are well known on Wall Street.• Companies with little debt don’t go bankrupt.• The closer a stock is to zero, the more likely it is to

get there.• There is greater risk in international stocks than

domestic ones.

Observations Over 33 Years of Investing

• Above-average growth is achievable.• Competitive advantages are sustainable.• Smaller companies can be successful.• Examples include Energy, Industrials,

Aerospace, Technology (non-semiconductor), and Healthcare.

Over the years, FIM has chosen to focus on a handful of specific sectors where:

• Banks & Brokers• Insurance Companies• National Retailers• Semiconductors• Commodity-Oriented or Cyclical Companies• Large Companies• International Companies

FIM generally avoids investing in areas where institutional investors are strong:

• Investment Conferences

• Road Shows

• Companies visit our office

• Interaction with other investors

Finding Companies for Investment

• Reading company press releases• Watching archived presentations from investment

conferences (200+/yr)• Listening to company earnings conference calls

(600+/yr)• Calling company executives or visiting them (100+/yr)• Reading investment analyst reports

Getting Acquainted with Companies

• Clarity• Teamwork• Longevity• Newness• Treating employees as assets, not expenses.• “Jack of all Trades”• Responsiveness to questions

Assessing CEOs and Managements

We don’t think so

Is Stock-Picking Dead?

Schlumberger -- SLB

Core Labs (CLB) vs. SLB

Apache -- APA

EOG vs. APA

Kinder Morgan LP (KMP)

Plains (PAA) vs. KMP

Magellan (MMP) vs. KMP

Allergan -- AGN

Valeant (VRX) vs. AGN

Illinois Tool Works -- ITW

Middleby (MIDD) vs. ITW

Database company – 1980’sZapata – 1981Compaq – 1986McDermott – 2004Sprint -- 2007SXCI (CTRX) -- 2008Digital River -- 2011

Instinctive Decision Examples

Bought in 1985 at $43Bought more in 1986 at $72Sold in April, 1987, at $127

Compaq

McDermott International Inc. (MDR)

McDermott International Inc. (MDR)

McDermott

SXC Health Solutions, Corp. (SXCI)

PartialSale

SXC Health Solutions, Corp. (SXCI)

PartialSale

Catamaran

Digital River Inc. (DRIV)

Digital River earnings revenue

In 2011, we intend to capitalize on this market momentumwhile continuing to grow our enterprise commerce business insoftware, consumer electronics and games, and expand intothe education and payments markets. The common denominatorthat continues to successfully drive these growth strategies is ourvalue proposition – delivering the online expertise, technologiesand revenue strategies companies need to succeed in today’sonline marketplace.

At the heart of Digital River is the drive to succeed – nowherewas this more evident than in 2010, when we delivered on ouraggressive commitment to accelerate our revenue and convertour pipeline of prospects into signed clients. Our ability toexecute against this plan was backed by the people at DigitalRiver – a team of e-commerce experts unparalleled in the industry.

Annual Report Excerpt

Digital River Inc. (DRIV)

Digital River

Some Energy Companies with Excellent Management

Plains All American – PAA/PAGP

Magellan Midstream LP -- MMP

EOG Resources -- EOG

Noble Energy -- NBL

Core Labs -- CLB

Oceaneering Intl -- OII

Matador Resources -- MTDR

Some of Our Favorites

Wabtec -- WAB

LKQ Corp -- LKQ

Oceaneering Intl -- OII

XPO Logistics -- XPO

Polaris -- PII

Matador Resources -- MTDR

EPL Oil & Gas -- EPL

Bonanza Creek -- BCEI

Questions?

Thank You

www.friedberginvestments.comjeff@friedberginvestments.com

https://twitter.com/dowjeff

Stock Picks for 2013Ansys ANSS +30% Liquidity Svcs LQDT -45% Bonanza Creek BCEI +56% Middleby MIDD +87%Cardtronics CATM +83% Magellan MMP +47% Campus Crest CCG -23% Oceaneering OII +47%Core Labs CLB +74% Plains LP PAA +14%Clean Harbors CLH +9% Shuffle Ent SHFL acquiredCatamaran CTRX +6% STAG Industrial STAG +13%Digital Globe DGI +68% Titan Machinery TITN -28%HMS Holdings HMSY -24% Monotype TYPE +94%ITC Holdings ITC +25% Valeant Pharma VRX +85% Total +36%

Stock Picks for 2014American Electric AETI -32% Noble Energy NBL +2%Ansys ANSS -4% Oceaneering OII -10%Ardmore Shipping ASCP -13% Plains GP PAGP +4%Black Diamond BDI.TO -1% Polaris PII -5%Catamaran CTRX -7% Power Integ POWI +14%EPL Oil & Gas EPL +6% ResMed RMD -6%Genesee & Wyo RR GWR +4% STAG Industrial STAG +14%ITC Holdings ITC +9% Wabtec WAB +10%LKQ Corp LKQ -15% Westlake WLK +12%National Inst NATI -8% XPO Logistics XPO +23% Total -1%