general body meeting 02.17.11. mutual investment club of cornell agenda announcements news updates...

General Body Meeting 02.17.11

Mutual Investment Club of Cornell

2

Agenda

Announcements News Updates Real Estate Sector Pitch


3

External Relations Committee Managing relationships with companies Marketing events to campus Work directly with Director of PR &

President

Applications open until Saturday at 8:00pm


4

Wall St. Training

M&A and LBO Modeling on Excel Saturday, 3/6: 12pm-6pm

Sunday, 3/7: 12pm-8pm No Previous WST experience necessary

www.wallst-training.com/cornell

http://www.wallst-training.com/cornell


5

African Stock Competition

Virtual Trading Competition on Johannesburg Stock Exchange

Time frame: February-September Prizes: $$$ MICC Teams of 3-4

http://www.africanstockcompetition.com/

http://www.africanstockcompetition.com/


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News Updates


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Boardwalk Pipeline Partners (NYSE: BWP)

Earnings of $0.45 > Analyst expectation of $.0.35

Net Income increased 60% compared to previous two quarters.

• Operating Income 37% higher. • Income pattern may be seasonal – High

for the 1st and 4th quarters; Low for the 2nd and 3rd quarters.

PE Ratio – 23.92 – One of the highest among the industry.


8

Philip Morris

PM Industry

Sector S&P 500

P/E 15.22 1.02 17.23 18.27

Yield 4.29 1.72 1.86 1.55

EPS Growth

Rate21.01 -1.18 12.14 65.12

Current Ratio

1.07 0.50 0.91 0.83

ROE 65.2 21.99 16.52 7.14


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• Reported diluted earnings per share of $3.92, up by 21.0%

• Repurchased 97.1 million shares of its common stock for $5.0 billion

• Increased the regular quarterly dividend during 2010 by 10.3%

• In Asia, net revenues increased by 21.6% to $7.9 billion

2010 in Review


2010 4Q and 2011

• Reported diluted earnings per share of $0.96, up by 20.0%

• In the EU, net revenues decreased by 7.3% to $2.2 billion

• In EEMA, net revenues increased by 0.3% to $1.9 billion

• In Asia, net revenues increased by 22.9% to $2.1 billion

• In Latin America & Canada, net revenues increased by 12.6% to $860 million

• Announces planned share repurchases in 2011 of approximately $5.0 billion


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Reallocation Pitch

Real Estate Sector


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Overview

Sell off: General Growth Properties: $2963.34 Howard Hughes Corporation: $1006.5

Invest in: SCANA Corporation Otter Tail Corporation

GGP

HHC

Rest of Portfolio


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Rationale for GGP

Taking profits Bought GGP ~4.50

Lessening Risk Beta of 4.00 Extreme Volatility with rapid price

movements Underperforming the market

Stabilized No news or growth to look forward to


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GGP


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Rationale for HHC

Over-speculation 80% rise in stock price over past months

No news Headquarters in Dallas


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Portfolio Maintenance

Decrease Volatility Risk adverse

Choose positions that will provide stability Market Tracking High Yielding Dividends


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Stability and Tracking


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Stability

SCANA Beta: 0.59 4.50% Forward Dividend Yield


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Tracking

OTTR Five year arbitrage


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Portfolio Allocation

Achieve a balance in tracking market growth OTTR

Achieve stability and solid growth SCG Portfolio Composition

OTTRSCGRest


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Otter Tail


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Thesis

“Strong foundation, bright future”

Foundation Monopoly

Growth Potential Renewable Energy Manufacturing


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Otter Tail

Electrical Power Provider Minnesota, North Dakota, South Dakota

Dominant in market


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Growth Potential


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Otter Tail

Wind Power


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Otter Tail

Wind Infrastructure

Flatbed Hauling Electrical Contractor Energy Service


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Otter Tail

Health Services dms Imaging

Imaging Services dms Health Technologies

Sales and service of medical equipment

Food Processing Idaho Pacific

Fourth Largest Potato Provider


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Otter Tail

Dividends since 1938


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Financials

Price/Earnings Ratio P/E (ttm): 34.96 P/E (five year average): 13.8-42.8; 17.8

average

Enterprise Value to Free Cash Flow EV/FCF (ttm): -79.45 EV/FCF (ttm): not significant (negative)


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Financials

Stock Price 52 week high: $25.39 5 year high: $46.20

Other: Quarterly growth revenue: 9.00% Gross margin: stable over past 5 years Current ratio: 1.5


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Competitors

OTTER TAIL

ALLETE

CATERPILLAR

CLECO

P/E (5 YR)

17.8 16.7 18.8 16.9

EV/FCF -79.45 -20.51 22.5 315.2

Dividend Yield

5.31% 4.69% 1.67% 3.23%

Allete: Energy services in upper midwest, primarily Minnesota

Caterpillar: Industrial power systems and generation, engine/turbine production

Cleco: Energy services company situated in Louisiana


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Otter Tail

Valuation Discounted Cash Flow

Using 22% Growth rate for Earnings per Share Zack’s Investment

Conservative 7% Perpetual Growth afterwards Traditional 11% Benchmark Rate

Valuation: $27.48


SCANA Corporation


Industry Overview

Electrical Energy Provider South Carolina- SCE&G North Carolina- PSNC Georgia- SEGA

SCANA umbrella Economies to Scale Low Corporate Overhead


Operations

North Carolina Raleigh/Durham Asheville

South Carolina Columbia Charleston Myrtle Beach

Georgia Savannah


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Operations


Earnings


Estimation


Estimation

General Upward Consensus in all circles Price Earnings at 14.07; Middle of the

road


40

Competitors


Risks

Nuclear Plant 37% Milestone Completion


Past Share Performance


Thesis

Stable with Solid Growth Estimations all tend upwards Low Beta

Dividend Yield 4.5% Yield

Opportune Buying Time Below Bollinger Band


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Proposal

OTTR: 68.33% SCG: 31.67%

Portfolio 9.8% OTTR 4.54% SCG


45

Questions?


46

Thanks for coming by!

You have two fuses, each which burns in exactly one hour.

How can you time exactly 45 minutes?

general body meeting 02.17.11. mutual investment club of cornell agenda announcements news updates...

Documents

net revenues

net income

stock price

common stock

billionin asia

general growth properties

operating income

income pattern