• Meetings next year will be on Thursdays 4:30pm-5:30pm

• We will be trying to get a new batch of speakers, and also maybe have a couple of them return from this year

• We might try to go to a conference of some sort next year

STC Fund:

$4,200.74

• $1,703.65 – Cash 4% Total

• $2,498.09

o AAPL= -1.61%, BP= -6.29%, F= .95%, MOO .71%, LVLT= 45.1%

Previous Stocks Voted On:

SWN

GM

TSLA

Stock Presented:

• NFLX (Netflix)

o Revenue has been consistent, and there is no reason it should stop

o Planning on going international

o Not many competitors

Winner’s Curse

• http://www.youtube.com/watch?v=gnuOGW_KIMY

• Demonstrations- One bid, Auction, Second Highest bid wins

Prisoner’s Dilemma

Golden Balls

• http://www.youtube.com/watch?v=p3Uos2fzIJ0

We have 1 week left in our Investopedia game, winners will be announced next Monday (5/2).

Election Outcomes For 2011-2012:

Marketing: John Coleman

Secretary: Sean McGlynn

Treasurer: Razvan Stanici

Website Director: Nick Tessman

Investment Fund Ideas:

• SWN (Southwestern Energy Company)

o Natural gas is much cheaper

o US may begin to export- we have the largest natural gas reserve

o Natural gas stations are beginning to rise in the US

o Honda has a car that runs on natural gas

o Method to get natural gas can cause water supply to become damaged

• GM (General Motors)

o Developed Chevrolet Volt (electric car)

o Car market is on an uptrend as economy gets better

• TSLA (Tesla Motors Inc)

o Have capacity to become the 4th largest motors producer in the US

o Prices for cars are high now, but with technology the price may be able to fall

o Just acquired a GM plant that can produce 500,000 vehicles a year

New Strategy Idea:

Schwab/iShares Index Equity Strategy

• Rotate into the top 2 Equity Index ETFs by style and asset class on a monthly basis. Relative strength determines ranking priority on a monthly basis. A money market bull trend proxy defaults to “cash” in bear trend environments. Also, trailing stop losses are utilized that stop out each position at a maximum loss of 5% from the most recent closing month end price.

Bill Holm

Brief Overview

• Upstairs Trading deals with stocks and options.

• Trains people in stock trading and option trading for a living.

• Narrows down the market to 3 or 4 strategies.

• Once you’re licensed, Upstairs Trading will give $300,000 to manage.

• They will not put up any limits on your trading until you reach about $5 million.

• Has an office with computers to provide training, he does not want to train on the basics, but more for what is working right now in the market. He will teach the ins and outs of different strategies.

• All the software for his company stays within the company, it is not for sale.

• Upstairs Trading primarily does technical trading, rather than fundamental trading.

• They do not use moving averages.

• They do use a lot of the volume indicators.

• Most stocks make their moves in a one or two week period. The market is always moving faster and faster.

• Typically they make from 10-30 trades a day.

• On average, he would like to see his traders make $100,000 a year, so about $10,000 a month.

• He gives his traders 3:1 ratio for money to trade with.

Here is some of the information covered at the beginning of the meeting:

• On April 18th we will be having David Fake to come in and speak

• On April 25th we will be having elections for board positions for the 2011-2012 school year

o The positions to run for are:

 President- Only open to board member

 Vice-President- Only open to board member

 Marketing- Promote group to public

 Secretary- Respond to emails, know the group, keep track of members

 Website Director- Build new html website from scratch

 Treasurer- Manage money, organize food

o Elections will run as follows:

 Present a little bit about yourself- why you should earn a position

 All candidates will then leave the room and the group will have a vote

• On May 2nd the virtual stock game will end, and we will be giving out prizes. Winners must be present to receive prize.

o 1st place: $50

o 2nd place: $25

o 3rd place: $10

• Some stocks that were presented for the Investment Fund:

o CCJ -Cameco Corporation

 Some information about Cameco: http://www.google.com/finance?q=ccj

o LTD -Limited Brands

 Some information about Limited Brands: http://www.google.com/finance?q=ltd

o CSCO –Cisco

 Some information about Cisco: http://www.google.com/finance?q=csco

o PLM –PolyMet Mining Corp.

 Some information about PolyMet Mining Corp: http://www.google.com/finance?client=ob&q=AMEX:PLM

o GLW –Corning Incorporated

 Some information about Corning Incorporated: http://www.google.com/finance?q=glw

o MSFT –Microsoft

 Some information about Microsoft: http://www.google.com/finance?q=MSFT

o UNFI –United Natural Foods Inc.

 Some information about United Natural Foods Inc: http://www.google.com/finance?q=unfi

o TZOO –Travelzoo Inc.

 Some information about Travelzoo Inc: http://www.google.com/finance?q=tzoo

Jim Fehrenbach- Piper Jaffray

• Mission- Create the worlds most trusted bank

• 3 Parts of Piper Jaffray

o Equity

o Asset Management

o Public Finance/Institutional

• Upwards of about 500 deals a year

o Deals as small as $30million to $500million

• Research covers about 550 different stocks

• Guiding Principles

o We create and implement superior financial solutions for our clients. Serving clients is our fundamental purpose

o We earn our clients’ trust by delivering the best guidance and service

o Great people working together as a team are our competitive advantage

o As we serve, we are committed to these core values

 Always place our clients’ interests first

 Conduct ourselves with integrity and treat others with respect

 Work in partnership with our clients and each other

 Maintain a high-quality environment that attracts, retains and develops the best people

• Industry expertise

o Clean technology and renewables

o Consumer

o Financial Institutions

o Health Care

o Industrial Growth

o Technology

• Institutional Equity Sales & Trading

o 48 Professionals covering by institutions in the US and Europe

o Average tenure more than 11 years

o Make highly efficient markets in nearly 2,100 NASDAQ and listed stocks to benefit underwriting clients and investors

• Equity Research

o In-depth industry research

o Valued-added ideas, market trends, and expert analysis

o Nearly 600, primarily small and mid-cap, companies covered by 86 research analysts

• Unparalleled Access to Best Middle Market Companies

o Connect high-quality growth companies with growth oriented institutional investors

o Best “1 on 1” meeting system with top tier institutions on the Street

o Institutional equity sales team also sponsors:

 In-house sales force industry “teach-ins”

 Institutional road shows and conference calls

 Sector-Focused symposiums, summits, fieldtrips and events

• US Equity Capital Markets

o Most Active Underwriters- Apparel & specialty retail IPOs & Follow-ons

 Zumiez, Crocs, Underarmour, Lifetime Fitness

o Most Active Underwriters- Internet IPOs, Follow-ons & convertibles

 Orbitz, Vonage

o Second most active clean technology underwriters

 Firstwind, Molycorp, Telvent

• Bookrun Offerings

o Limelight, RealD, Cardtronics, Tension

Chris Abbott- Piper Jaffray

• What does your typical day look like?

o In office by 6am (research call)

o Call all clients

o Plan travel schedules (for sales)

o Lunch

o Research call

o Go over ideas

o Wrap up and get ready for next day

• Buy-Side vs Sell-Side

o Sales cover more stocks, but to less extent

o Buyers cover fewer stocks, but in more depth

• What would you do to prepare for your job?

o Get involved in clubs

o Get in touch with companies and check out facilities

• What was your most shocking moment after starting to work?

o After first week, realized everyone has their own tactics to sell stocks

Steve Kuhn & Angie- Pine River Capital Management

• Pine River

o Statistics

 Founded in 2002

 $4.1 billion in Assets Under Management

 8Partners

 44 Investment professionals

 126 total employees

 7 funds

o Offices:

 San Francisco, Minnetonka (HQ), New York, London, Beijing, Hong Kong

• Nisswa Fixed Income Fund

o Statistics

 Launched September 2008

 $1.7 billion in Assets Under Management

 11 team members with an average of 11 years of experience

 If you gave $1 at the beginning you would now have $4

• The economics of a Hedge Fund

o Hypothetical example

 Assetus under management $1,000,000,000

 Management fee 1.5%

 Performance fee 20%

 Assumed 2011 return 15%

• A day in the life

o Wake up 5am

o Get to office at 6am

o On the desk trading 7am

o Markets close, leave office 3:30pm

• Suggested Reading

o All the Devils are Here, Bethany McLean and Joe Nocera

o The Big Short, Michael Lewis

o A Hedge Fund Tale of Reach and Gasp, Barton Biggs

o The Invisible Hands: Top Hedge Fund Traders on Bubbles, Crashes and Real Money, Steven Drobny

o When Genius Failed, Roger Lowenstein

• Mark Henneman

o Vice President and Director- Mairs & Power

• Mairs & Power

o Est. 1931

o Oldest investment firm under continuous private ownership

o Mutual funds est. 1958

o Growth Fund celebrates 50 years, 2008

o Balanced Fund celebrates 50 years, 2011

• Investment Strategies

o Earnings that are reasonably predictable

o Return on equity that is above average, and predicted to stay that way

o Market Dominance

o Financial strength

• Emphasis is placed on small to medium sized companies, generally located in the Upper Midwest region

• The average stock in a mutual fund is held for just 11 months

• Low fees

o M&P growth fund annual expense ratio = .71%

o Industry average expense ratio = 1.15%

• Hypothetical Example- Bemis

o Established in 1858 in St Louis, Missouri, as a manufacturer of seamless cotton bags for milled food products

o Now a global supplier of flexible packaging and pressure sensitive label materials headquartered in Neenah, Wisconsin

o Porter’s Five Forces Analysis

o Bemis and Sealed Air have acted like a pseudo oligopoly for years. Both companies make acceptable margins and are unlikely to compete aggressively on pace.

o Bemis and Sealed Air control 40% of the flexible packaging market. Bemis is two times larger than Sealed Air and may force Sealed Air to take strategic action to close the market share gap. Other packaging industries have consolidated where the top two competitors have had 60% market share and profitability improved.

o Remainder of the industry is fragmented with Sunoco having a sizable presence. Overall business growth is slowing, marginal players are motivated to be aggressive on price to keep market share. Industry will improve further if Sealed Air makes acquisitions.

o Potential Entrants (O & stable)

 Capital Investment is very high to enter

 Economies of scale

 Access to distribution channels. Bemis has relationships with customers that would be difficult to replicate. Do similar relationships exist in acquired business?

 BMS has proprietary differentiated products that new entrants could not easily recreate. However, R&D is less than 1% of sales and doesn’t represent a significant long term advantage for the company.

 Product differentiation. Existed at low level within the core business, how about the acquired business, particularly rigid.

 Switching costs are low.

o Buyers (- & stable)

 A quality package is important to the quality of the buyer’s products. The quality of the package can influence the customer’s perception of the quality of the product. It can also affect the performance of the product: shelf life, not refrigerated.

 Large buyers tend to want multiple sources of packaging. Legacy, Bemis and Alcan customers would likely be looking for a second source. This will become apparent over three years as contracts are renegotiated.

o Substitutes (+ & stable)

 Shifting between broad packaging categories is infrequent

 Substitution to case ready meat packaging is a potential benefit to Bemis. Shelf stable is a long-term substitution from fresh product that continues to favor Bemis.

 Biodegradable packaging does not appear to be a driving factor at present.

o Suppliers (0 & improving)

 Increased chemical manufacturing in the Middle East could cause a secular decline in the price of resins in the United States.

o 2014 Expectations

 Revenue growth will exceed GDP growth because of faster industry growth and pricing

 Operating margins will improve by 300 basis points

 Annual interest expense will drop by $22 million as operating cash flow is used to reduce debt.

 $3.80 of earnings.

• Considering a career in Investment Management?

o Benefits:

 Great opportunity for financial success

 Intellectually challenging

o Drawbacks:

 Stressful

 Tenuous contribution to society

 Difficult to break into the field

• Typical Industry Requirements:

o CFA

o MBA

o Demonstrated Interest in Investments

• Different Aspects of Technical Analysis

o Price Patterns- Head and Shoulders pattern, Triangle patterns

o Indicators

o Momentum

• Key Terms

o Resistance- A price level that may prompt a net increase of selling activity

o Support- A price level that may prompt a net increase of buying activity

o Breakout- The concept whereby prices forcefully penetrate an area of prior support or resistance, usually, but not always, accompanied by an increase in volume.

o Trending- The phenomenon by which price movement trends to persist in one direction for an extended period of time

o Dead cat bounce- The phenomenon whereby a spectacular decline in the price of a stock is immediately followed by a moderate and temporary rise before resuming its downward movement

o Fibonacci ratios- Used as a guide to determine support and resistance

o Momentum- The rate of price change

o Cycles- Time targets for potential change in price action (price only moves up, down, or sideways)

• Relative Strength Index

o The Relative Strength Index (RSI) is a technical indicator used in the technical analysis of financial markets. It is intended to chart the current and historical strength or weakness of a stock or market based on the closing prices of a recent trading period. The indicator should not be confused with relative strength.

o The RSI is classified as a momentum oscillator, measuring the velocity and magnitude of directional price movements. Momentum is the rate of the rise or fall in price. The RSI computes momentum as the ratio of higher closes to lower closes: stocks which have had more or stronger positive changes have a higher RSI than stocks which have had more or stronger negative changes.

• Moving Average Convergence Divergance (MACD)

o MACD (Moving Average Convergence/Divergence) is a technical analysis indicator created by Gerald Appel in the late 1970s.[1] It is used to spot changes in the strength, direction, momentum, and duration of a trend in a stock's price.

o The MACD is a computation of the difference between two exponential moving averages (EMAs) of closing prices. This difference is charted over time, alongside a moving average of the difference. The divergence between the two is shown as a histogram or bar graph.

o Exponential moving averages highlight recent changes in a stock's price. By comparing EMAs of different periods, the MACD line illustrates changes in the trend of a stock. Then by comparing that difference to an average, an analyst can chart subtle shifts in the stock's trend.

• Momentum

o Relative strength is a ratio of a stock price to a market average

• Patterns:

o Rounding Bottom

o Rounding Top

o Head and Shoulders

o Reverse Head and Shoulders

o Ascending Triangle

 Upward Breakout

 Downward Breakout

o Descending Triangle

 Upward Breakout

 Downward Breakout

o Rising Triangle

o Falling Triangle

o Double Top

o Double Bottom

• Patterns that work best

o Rounding Top

o Rounding Bottom

o Double Top

o Double Bottom

o Work best on 30 and 60 day

o Performance is best at 5-10 days after

• About Travis Jakel

o President since Spring semester 2010

o Personal trading stocks since February 2009

o Research assistant this past summer

o Current: Intern at Piper Jaffray

• Spring Semester plans

o Speakers every other week

o Virtual Stock Market Game with prizes

o STC Investment Fund

o Good Food

• Spring Speakers

o Chris Dvorak- President of Dvorak Technical Research- Next week?

o Mark Henneman- Mairs $ Powers Mutual Fund Manager (MPGFX)

o David Fake- Gilliard Capital Management (Quant)

o Paul Karos- Airline Analyst

o Carissa Vincent- Piper Jaffray Recruiter

• Joining Stock Trader’s Club

o $15 to join

o Benefits

 Being a part of the virtual stock market game

• Virtual Stock Game

o 1st place: $50

o 2nd place: $25

o 3rd place: $10

 Last semester: Around 50 people competed

• Investment Fund

o $5550 invested already

o $50 minimum

o One vote= $50

o If interested we have more details to handout

o Benefits

 Hands on experience

 “Skin in the game”

 Real research with real money

John Molloy

Finance Teacher at Carlson

Peter Lynch: Growth Investing

• Managed Fidelity Magellan fund from 1977-1990

• Assets grew from $20 million to $14 billion

• Average annual return of 29%

• Famous for several books:

o “One Up on Wall Street”

o “Beating the Street”

• Peter Lynch Investment Checklist:

o Know what you own

o It’s futile to predict the economy and interest rates

o You have plenty of time to identify and recognize exceptional companies

o Avoid long shots

o Good management is very important- buy good businesses

o Be flexible and humble, learn from mistakes

o Before you make a purchase, you should be able to explain why you’re buying

o There’s always something to worry about

• Key Principles

o How will the company grow?

o Pay attention to what’s going on around you

o What is the price (he looks at P/E) relative to growth?

o Look at the balance sheet (cash and investments versus debt)

o Examples- Chipotle, Google, Apple. Deckers Outdoors (Uggs)

 Chipotle

• 1,000 domestic stores

o estimated 3 int’l

 Google

• Mobile search- Android

• YouTube

• Banner

• Email

 Apple

• iPad

• Verizon

• $50 billion cash

 Deckers Outdoors

• Growing international

• Retail stores

• Chipotle

o P/E= 95.20/3.95= 24.10

o EPS ‘08= 2.36, ‘09= 3.95 ……. +60% growth

o Debt= $3.7 million

o Cash= $300 million

o Net cash= $296 million

o EPS 3Q’09-3Q’10 1.08-1.52= +41% growth

o $296/31.6= $9.37/per share

o P/E= 233/5.17= 45.07

o P/E/g= 1.10 (around 1 or less is what to look for)

• Lynch Quotes

o “Go for a business that any idiot can run- because sooner or alter, any idiot is probably going to run it.”

o “If you stay half-alert, you can pick the spectacular performers right from your place of business or out of the neighborhood shopping mall, and long before Wall Street discovers them.”

o “Investing without research is like playing stud poker and never looking at the cards.”

o Absent a lot of surprises, stocks are relatively predictable over twenty years. As to whether they’re going to be higher or lower in two to three, years you might as well flip a coin to decide.”

o “If you spend more than 13 minutes analyzing economic and market forecasts, you’ve wasted 10 minutes”

Revenue: All the money a company makes (quarterly, yearly)

Net Income: All money made after expenses (equipment, managers, employees are paid)

Shares Outstanding: All stock shares for a public company

Market Capitalization: Stock price X all outstanding shares

Earning Per Share (EPS): Net income divided by outstanding shares

P/E Ratio: Price divided by earnings per share (EPS)

If a stock has P/E ratio of below 15, it is potentially a good stock to invest in

Warren Buffet

Berkshire Hathaway: Buffet started buying shares in 1964 for $8 a share, and eventually owned majority of the company. Buffet was once the richest man in the world, but now he ranks at number 3.

Wells Fargo: Buffet bought in 1990. It was worth $56 billion in 1990, and $48 billion was in mortgages. Buffet paid $290 million for 10% of the company, and now the company is now worth $3.1 billion.

• Never put more than 10% of your money into one stock.

• Don’t take more risk than is needed

• Take 100 and subtract your age, and that’s how much of a percent you should invest in stocks. The rest should be invested in bonds.

Things to look into for a company

Profit/Loss: Revenue – expenses – dividend = net profit/loss

Balance Sheet

Cash Flow