aciic analyst program

7/13/2019 ACIIC Analyst Program

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ACIIC Analyst ProgramBy: Ivan, AaquibNovember 24, 2013


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The Association of Canadian

Intercollegiate Investment ClubsACIIC Analysts

7 schools across Canada and U.S.

Over 100 applications

39 analysts 9 from Ivey - 8 from McGill

6 from Schulich - 5 from McMaster

5 from Queens - 5 from Laurier 1 from Wharton

ANALYSTS

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Intercollegiate Investment ClubsIntroducing ACIIC

Association of Canadian IntercollegiateInvestment Clubs

Formally organized as a non-profitcharity organization

6 member Universities across Canada

today Goal of expanding from coast to coast

INTRODUCTION

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Intercollegiate Investment ClubsACIIC Vision

Investment education Rigorous, structured

Shared resources

Tight-knit community Alumni database

Mentorship

VISION

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Intercollegiate Investment ClubsACIIC Conference

Annual 2 day conference set in March

Stock pitch competition Presenting your stock report

Education series

Industry guest speakers

Networking session

CONFERENCE

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Intercollegiate Investment ClubsStock Analyst Program

Group of 6-7 assigned to a sector One Chapter Head will be your mentor

One stock report for the next 4 month Goal is to present it at the Annual Conference

6 separate deliverables in stages

Team dialogue is important

PROGRAM

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PROGRAM

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Week of

Action Items Nov-24 Dec-1 Dec-8 Dec-15

Meet the Team

Understanding Industry Themes

Understanding Industry Drivers

Identifying Potential Stock Investments

Industry Analysis

Deliverables 4-5 PowerPoint slides

Identify the key drivers and themes

Identify several stocks that are potential investments

Choose a stock


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PROGRAM

TOPIC 1

TOPIC 2

TOPIC 3

TOPIC 6

TOPIC 4Deliverables 5-8 PowerPoint slides

Business model, how does it make money

Identify and analyze the segments of the company

Assess quality of management Shareholder analysis

Assess competitive landscape (Porter 5 Forces, SWOT)

Calculate ratios, DuPont analysis, comparable valuation

Week of

Action Items Dec-29 Jan-5 Jan-12 Jan-19

Investment Thesis

Company Overview, Segment Analysis, Mangement Analysis, Shareholder Analysis

Competitive Analysis vs. Peers

Comparable Analysis

Company Analysis


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PROGRAM

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TOPIC 4 Deliverables 4-5 PowerPoint slides

Operating assumptions should reflect company and

industry analysis Perform DCF valuation

Have at least one other valuation methodology that isrelevant to the company

Week of

Action Items Jan-26 Feb-2 Feb-9

Operating Assumptions: Understanding Key Drivers

DCF

Other Valuation: Precedent, Sum of the Parts, LBO, Liquidation Value, NAV

Valuation


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PROGRAM

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Risks to the downside (great if you can quantify)

Potential mitigants Catalyst in the short term horizon (soft and hard)

Week of

Action Items Feb-16

Risks to Valuation and Potential Mitigants, Catalyst

Risks & Catalyst


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PROGRAM

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Operational or financial strategy that the company canemploy to enhance valuation

Example, if you forecasted margin expansion or to increasecross selling, how is that achieved

Potential acquisition and other transformative transactions

Week of

Action Items Feb-23 Mar-2

Potential Transformative Value Creation Strategies

Strategy


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PROGRAM

TOPIC 1

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TOPIC 4Deliverables ~20 PowerPoint slides

Compile your presentation and summarize the salientpoints

Practice it together

Polished

Week of

Action Items Mar-9 Mar-16

Presentation

Presentation


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Resources We are here to help

Chapter Head Industry Mentors

Each Other

Mentorship Mentorship database

Recruitment or questions in general

PROGRAM

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Intercollegiate Investment ClubsSector Allocation

SECTORS

TOPIC 1

TOPIC 2

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TOPIC 5

TOPIC 4

FIG Matthew Parrott

TMT Mario Campea

CRG Colton Dick

Industrials Artie Novik

HC Geoff Clark

NR Dave Marrello


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Intercollegiate Investment ClubsFinancial InstitutionsGroup (FIG)

TOPIC 1

TOPIC 2

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TOPIC 5

TOPIC 4

TOPIC 6

Matthew Parrott Eric Luo

Alex Hong Andre Luk

Alex Payne

Andrew Gibbs

Krishna Aggarwal

Sebastian Grutter

SECTORS


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FIGBy: Matt ParrottNovember 24, 2013


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Intercollegiate Investment ClubsWhat is FIG?

Financial Institution Group

Three main sub-sectors Banks

Insurance Companies

Asset Managers and Specialty Finance

WHAT IS FIG

THEMES

KEY DRIVERS

INVESTING

THESIS


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Intercollegiate Investment ClubsRecent Themes

Increased regulation Implementation of Basel III

Rising interest rates Insurance companies to benefit the most

Rotation from bonds to equities

Asset managers to benefit the most

THEMES

WHAT IS FIG

KEY DRIVERS

INVESTING

THESIS


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Intercollegiate Investment ClubsKey Drivers

Economic growth The financials sector is often considered a

levered play on the economy

Interest rates and inflation

Consumer and business confidence

Fund flows

KEY DRIVERS

WHAT IS FIG

THEMES

INVESTING

THESIS


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Intercollegiate Investment ClubsInvesting

Most widely used metric is P/B

Regression between P/B and ROE

Asset/dividend based models asopposed to cash flow models

INVESTING

WHAT IS FIG

THEMES

KEY DRIVERS

THESIS


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Intercollegiate Investment ClubsSample InvestmentThesis

Macro Expectations that interest rates will rise and

equity markets will rally

Micro Insurance company X has the lowest combined

ratio relative to its peers

Valuation Currently trading at a discount on a P/B basis

THESIS

WHAT IS FIG

THEMES

KEY DRIVERS

INVESTING


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Intercollegiate Investment ClubsQuestions

FIGBy: Matt ParrottNovember 24, 2013


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Intercollegiate Investment ClubsTMT (Tech, Media,Telecom)

TOPIC 1

TOPIC 2

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TOPIC 5

TOPIC 4

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Mario Campea Matt Ting

Jin Hwang Emerson Dieudonne

Julie Vincent

David Greenman

Sean Saggi

Emily Ren

SECTORS


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Technology, Media & TelecomBy: Mario Campea & Mikhail StepanovNovember 24, 2013


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Intercollegiate Investment ClubsTMT Overview /Trends

Technology

Software Generally refers to computer programs and applications that dictate

specific functions

Hardware Physical elements that a computing system is made of

Many companies sell both Hardware and Software components (ex.IBM)

TECHNOLOGY

MEDIA

TELECOM

KEY DRIVERS

EX. THESIS

KEY METRICS


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Technology

Internet Companies that have majority focus on selling products and services using

Internet as main delivery platform

Includes social media, advertising, search engines, user review, e-Commerce, etc.

Cloud Computing Refers to companies that deliver hosted services over the Internet

Software as a Services (SaaS): Vendors deliver applications to customers

Platform as a Service (PaaS): Customers can rent hardware, storage, etc. from

vendors

TECHNOLOGY

MEDIA

TELECOM

KEY DRIVERS

EX. THESIS

KEY METRICS


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Media

Advertising Usually an in-house function of corporate finance

Investment opportunities emerging in the mobile space

Broadcasting Incredibly saturated industry, with large players being the only ones scalable

enough to compete

Usually a portion of a larger conglomerate (e.g. Rogers Communications, TimeWarner Cable)

Very little pure-play broadcasting companies due to high overhead required tocompete

Many private companies (e.g. CNBC, Fox News)

TECHNOLOGY

MEDIA

TELECOM

KEY DRIVERS

EX. THESIS

KEY METRICS


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Telecom

Carriers Wireline/ Wireless Provide telecommunication services through either wireless or wireline

Ex. Rogers, Bell, AT&T, Verizon

Satellites Provide satellite communication services

Ex. Sirius, Dish Network

TECHNOLOGY

MEDIA

TELECOM

KEY DRIVERS

EX. THESIS

KEY METRICS


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Example TMT Key Success Factors

Potential for Rapid Growth Many investors look to the TMT space specifically for rapidly growing companies

that could provide outsized returns

These high expectations relative to other industries make investors associatethis space with a riskier profile

Ex. Twitter

Significant R&D Expenditures R&D expenditure is a key requirement in TMT in order to sustain innovation

Effective R&D will lead to the creation of a patent portfolio and otherdevelopments that assist in creating competitive advantages

Ex. Apple

Strong User Base / Defendable Position A strong user base is key to generating sustainable earnings

Providing value to your users through a strong ecosystem will create adefendable position that could prevent being displaced from the market

Ex. iOS App Store

TECHNOLOGY

MEDIA

TELECOM

KEY DRIVERS

EX. THESIS

KEY METRICS


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Intercollegiate Investment ClubsMetrics to Look For

TMT Specific Multiples

Enterprise Value / Revenue Many early-stage TMT companies have little to no profits

Serves as a proxy for the P/E ratio

Compares the entire value of the firm to the revenues generated

Inherent limitations: ignores profitability completely

Important to look at the change in multiples over time

Enterprise Value / Users Company may lack revenues, or it may not be a sound basis for comparison

For most such companies, users are the main driver behind revenue

Google, Facebook, Twitter, Zynga, LinkedIn, etc.

Forward multiples are very important

Inherent limitation: ignores revenue generation completely

TECHNOLOGY

MEDIA

TELECOM

KEY DRIVERS

EX. THESIS

KEY METRICS


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Intercollegiate Investment ClubsMetrics to Look For

Other Core Metrics

Subscriber or user growth rate Since users drive revenues, user growth is critical to TMT

Retention rate High retention rates indicate more stable revenues and cash flows

Can indicate quality of product and distinguish fads

Time on site More time means more potential exposure to advertisements and products

Paying Users/ Users

What percentage of users actually contribute to revenues

Revenue per user Compliments above metrics, and the EV / U multiple

TECHNOLOGY

MEDIA

TELECOM

KEY DRIVERS

EX. THESIS

KEY METRICS


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Intercollegiate Investment ClubsExample Thesis

Post MSFT deal, the company has been transformed

Pure play network services infrastructure leader

Focus on the companys strongest business segment

Divestiture of non-core assets to unlock shareholder value Monetization of industry leading patent portfolio

Previously defensive segment allows for growth

Unfair overhanging Nokia could Historically deteriorating performance of the handset business

Different ways to value the business

Network services infrastructure using a DCF and comparables

Patent portfolio using precedents and Gordon Growth method

TECHNOLOGY

MEDIA

TELECOM

KEY DRIVERS

EX. THESIS

KEY METRICS

Nokia


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Technology, Media & TelecomBy: Mario Campea & Mikhail StepanovNovember 24, 2013

I apologize for being unable to attend. Please feelfree to reach out and we can arrange a chat.Mario Campea ([email protected])


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Intercollegiate Investment ClubsCRG (Consumer, Retail)

TOPIC 1

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Colton Dick Vinayak Modi

Will Zed Daniel Viner

Steven Lo

Erik Chu

Fred Jackson

Asem Mosmer

SECTORS


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Consumer Discretionary

& Staples IndustryBy: Colton DickNovember 24, 2013


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Intercollegiate Investment ClubsIndustry Introduction

Consumer Staples: Non-cyclical companies that sell food, beverage, tobacco,

and other household items

Consumer Discretionary Cyclical companies that sell durable and non-durable

products/services; considered non-necessities

INTRO

THEMES

DRIVERS

OPPORTUNITY

TJX


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Intercollegiate Investment ClubsRecent Industry Themes

U.S. economic recovery distribution of recovery is not equal

Luxury

Discount - Those that need a bargain and those that

want a bargain.

Canadian grocer consolidation Loblaw/Shoppers & Empire/Safeway

Recent earnings prove Canadian environment issaturated and extremely competitive

THEMES

INTRO

DRIVERS

OPPORTUNITY

TJX


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Intercollegiate Investment ClubsRecovery Gains

THEMES

INTRO

DRIVERS

OPPORTUNITY

TJX

Negative real income gains heightens the number of value conscious

consumers

(0.8%)

(1.2%) (1.2%) (1.2%)

2.0%

5.2%

(2.0%)

(1.0%)

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

Lowest Fifth Second Fifth Third Fifth Fourth Fifth Highest Fifth Top 5 %


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Intercollegiate Investment ClubsIncreasing Valuations

THEMES

INTRO

DRIVERS

OPPORTUNITY

TJX

21%

11%

17%

0.9

0.95

1

1.05

1.1

1.15

1.2

1.25

1.3

2012 2012 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013

U.S. Normalized NTM P/E Growth

S5COND Index S5CONS Index SPX Index

Discretionary has seen margin expansion relative to the S&P500, whereas

Staples has seen a relative margin contraction


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Intercollegiate Investment ClubsIndustry Key Drivers

Macro Drivers Unemployment Rate

Outstanding Household Debt

Real Disposable Income

Emerging Market & European Recovery

Micro Drivers Same Store Sales Growth

Food Inflation

Margin Expansion

Pricing Power

DRIVERS

INTRO

THEMES

OPPORTUNITY

TJX


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Intercollegiate Investment ClubsIndustry Opportunities

Off-Price & Luxury Retail

Gaming

Newspapers

Diversified Food Packagers

OPPORTUNITY

INTRO

THEMES

DRIVERS

TJX


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Intercollegiate Investment ClubsTJX Investment Thesis

TJX

INTRO

THEMES

DRIVERS

OPPORTUNITY

The Market is undervaluing.

Especially to its only true competitors ROSS

Marmaxx Remodel Compete with department store experience

eCommerce Potential significant growth Consumer analytics insight

HomeGoods Store growth in USA, SSS driven by housing recovery

Europe Store growth in new/existing countries Convergence to US margins

Global BuyingOrganization

Barrier to entry

Foundation for successful international expansion Continued margin expansion


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Intercollegiate Investment ClubsTJX Investment Thesis

TJX

INTRO

THEMES

DRIVERS

OPPORTUNITY

TJXs dominance as a leader in off-price retail is reflected by a high return

on invested capital and as such, commands a premium to its peers

Data as at November 20, 2013

(in US$ millions) Mark et En terp rise adj. EV / adj. EBITDAR( 1) ( 2 ) P / E( 1) ( 2 ) adj. Net Debt / adj. EBITDAR( 1) ( 2 ) SSS GrowthLTM EBITDA LTM

Company Cap. Value CY2013E CY2014E CY2015E CY2013E CY2014E CY2015E CY2013E CY2014E CY2015E LTM Margin ROIC

Off-P rice Retailers

Big Lots $2,204 $2,281 6.8x 6.5x 6.5x 13.0x 11.7x 11.3x 3.7x 3.6x 3.6x (2.7%) 7.2% 19.2%

Ross Stores $17,844 $17,443 10.3x 9.6x 9.0x 20.6x 18.3x 16.2x 1.6x 1.5x 1.4x 6.0% 15.4% 43.6%

Stein Mart $695 $647 8.1x 7.8x nmf 22.8x 20.3x 18.5x 3.6x 3.5x 7.4x 2.7% 5.6% 10.6%

Burlington Coat $1,544 $3,205 n/a n/a n/a n/a n/a n/a n/a n/a n/a 1.2% 7.6% n/a

Average 8.4x 8.0x 7.8x 18.8x 16.8x 15.3x 3.0x 2.9x 4.1x 1.8% 8.9% 24.5%

TJX Companies $46,218.21 $45,482 10.7x 9.9x 9.3x 22.0x 19.4x 17.4x 1.7x 1.6x 1.5x 7.0% 14.4% 43.8%

Notes:

Share price as at November 20, 2013

(1) EV, and Net Debt adjusted for capitalized operating leases

(2) All estimates are consensus as at November 20, 20 13


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Consumer Discretionary &

Staples IndustryBy: Colton DickNovember 24, 2013


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Intercollegiate Investment ClubsIndustrials

TOPIC 1

TOPIC 2

TOPIC 3

TOPIC 5

TOPIC 4

TOPIC 6

Artie Novik Ryan Haydon

Jonathan Kim John Lu

Chris Pepper

Dean Brown

Hyla Nayeri

SECTORS


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IndustrialsBy: Artie NovikovNovember 24, 2013


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Intercollegiate Investment ClubsSector Overview

Diverse sector including companies involvedwith: Capital Goods

Aerospace & Defense

Building Products

Construction & Engineering

Electrical Equipment

Industrial Conglomerates

Machinery

Services Commercial Services & Supplies

Professional Services

Transportation

Air Freight & Logistics

Airlines

Marine

Road & Rail

Transportation Infrastructure

INTRODUCTION

THEMES

KEY DRIVERS

KEY RISKS

THESIS

SPECIFICS

RETURNS

QUESTIONS Market Cap $7.77T

P/E 20.4 x


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Intercollegiate Investment ClubsThemes & Trends

Services an increasingly important sourceof revenues

Industrials scaling back on operationalleverage

Focus on cost reductions and divestiture ofnon-core operations

THEMES

INTRODUCTION

KEY DRIVERS

KEY RISKS

THESIS

SPECIFICS

RETURNS

QUESTIONS


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Performance largely driven by demand forbuilding construction, manufactured

products, and capital goods

GDP growth provides good indicator of futuredemand

Growth in government spending

Large infrastructure projects

KEY DRIVERS

INTRODUCTION

THEMES

KEY RISKS

THESIS

SPECIFICS

RETURNS

QUESTIONS


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Intercollegiate Investment ClubsKey Risks

Large companies putting offinvestments due to uncertain economic

conditions

Increasing interest rates

Declining budget environment forseveral subsectors

KEY RISKS

INTRODUCTION

THEMES

KEY DRIVERS

THESIS

SPECIFICS

RETURNS

QUESTIONS


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Intercollegiate Investment ClubsSector Specifics

PMI is a good leading indicator ofindustrial production

Generation of Free Cash Flow is key Airlines:

EV/Plane

EV/Passenger

Infrastructure: EV/NAV

P/B

SPECIFICS

INTRODUCTION

THEMES

KEY DRIVERS

THESIS

KEY RISKS

RETURNS

QUESTIONS


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Intercollegiate Investment ClubsThesis Example

Micro

High return on capital

Barriers to entry

High margins relative to industry

Good management

THESIS

INTRODUCTION

THEMES

KEY DRIVERS

SPECIFICS

KEY RISKS

RETURNS

QUESTIONS


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Intercollegiate Investment ClubsThesis Example

Macro Important to understand what is happening at

the subsector, sector, and national levels GDP reports & forecasts: U.S., China, Germany

Setup What is the current state of your pitch?

52-week highs/lows

Short-interest

THESIS

INTRODUCTION

THEMES

KEY DRIVERS

SPECIFICS

KEY RISKS

RETURNS

QUESTIONS


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Intercollegiate Investment ClubsSector Performance

RETURNS

INTRODUCTION

THEMES

KEY DRIVERS

SPECIFICS

KEY RISKS

TOPIC 7

QUESTIONS


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IndustrialsBy: Artie NovikovMarch 9, 2013

( l )


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Intercollegiate Investment ClubsNR (Natural Resources)

TOPIC 1

TOPIC 2

TOPIC 3

TOPIC 5

TOPIC 4

TOPIC 6

David Marrello Karishma Balani

Bill Cong

Akshay Gujral

Darren Viegas

Egor Gaggin

Jenny Kletnich

SECTORS


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Natural ResourcesBy: David MarrelloNovember 24, 2013

S I


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Intercollegiate Investment ClubsSector Intro

Metals and Mining Was once Canadas most important sector

Major underperformer for 2013 (-24% for theyear)

Key Canadian companies in the sector includeBarrick Gold, Agnico Eagle, and Potash Corp.

Success of the industry highly dependent onthe prices of underlying precious metals

Companies have different specialties: asproducers or as explorers

SEC. INTROS

SEC. THEMES

KEY DRIVERS

INVESTING

SAMPLE THES.

S I


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Intercollegiate Investment ClubsSector Intro

Energy Includes: Petroleum, Gas, Electrical Power,

Coal, Nuclear, and Renewables

Currently Canadas second most important

sector Also an underperformer for 2013 (8% for the

year

Key Canadian companies in the sector include

Suncor, CNR, Encana, Talisman, & Imperial Oil

Success of the industry highly dependent onthe prices of underlying commodities

S Th


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Intercollegiate Investment ClubsSector Themes

Mining and Metals Shift in mining focus towards developing nations

The profound impact of new technology (ex. Arctic mining)

The increased importance of small to medium sized miners

Energy Increased prominence of renewable technologies and

decreased reliance on nuclear

A shift in demand from developed nations to developingnations

New technologies (deepwater drilling now only 9% but

increasing) The profound impact of new technology (ex Deepwater

drilling)

US energy independence

SEC. THEMES

SEC. INTROS

KEY DRIVERS

INVESTING

SAMPLE THES.

K D i


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Metals and Mining Prices of Underlying Precious Metals (gold, silver,

diamonds)

Production efficiencies of miners

Regulation (threat of nationalization) Ability to raise debt/equity, and cash flow

Macroeconomic considerations

Energy

Underlying commodity prices Government subsidies and regulations

Global demand and supply outlook

Mergers and Acquisitions

KEY DRIVERS

SEC. INTROS

SEC. THEMES

INVESTING

SAMPLE THES.

I ti S ifi


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Intercollegiate Investment ClubsInvesting Specifics

Key Industry Metrics

Metals and Mining Production/Capacity/Reserves (typically measured in

weight)

Cash flow from operations

EBITDAX

Net Asset Value Model

Typified by long lasting, but punctuated cycles

Energy Production/Capacity/Reserves (typically measured in

barrels or other volume measure)

EBITDAX

Net Asset Value Model

Dividend yield may be a consideration

INVESTING

SEC. INTROS

SEC. THEMES

KEY DRIVERS

SAMPLE THES.

S l I Th


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Intercollegiate Investment ClubsSample Investment Thesis

1. Larger multi-mineral mining companies are leaving the industryto pursue the opportunities that come with increased demandfor other commodities such as steel, iron, copper etc; givingcompanies such as Dominion Diamond Corporation theopportunity to step in and increase their market share in thediamond industry substantially.

2. The rough-diamond market is expected to remain balanced from2013 through 2017. From 2018 onward, as existing mines getdepleted and no major new deposits come online, supply isexpected to decline, falling behind expected demand growth thatwill be driven by China, India and the US.

3. Proved and Probable Recoverable and Attributable Reservesshowing signs of growth, especially from 2012 to 2013:expectedto grow from 30840Tto 37080 T

4. Current Ekati mine plan calls for further seven years ofproduction until 2019, however Dominion Diamond Corp hasdiscovered additional resources on Ekati property.

Dominion Diamonds

SAMPLE THES.

SEC. INTROS

SEC. THEMES

KEY DRIVERS

INVESTING

Th i C ti d


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Intercollegiate Investment ClubsThesis Continued

The Company is the fourth largest diamond producer byvalue globally

Largest publicly listed diamond mining pure play by marketcapitalization

Both mines located in the low political risk environment

In Q3, a 62% increase in carats sold was offset by a 9% decrease inachieved diamond prices

Rough prices had picked up by about 6% in the first months of theyear

Since then, prices have been flat

Production at the Misery pit, where stripping is under way, isslated to begin in 2016.

One-time expenses due to purchase of Ekati resulted in theUS$16.3-million net loss

Excluding such one-time items, the company would have seen $11.1million, or 13 a share, in profit

I t t Th i


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Intercollegiate Investment ClubsInvestment ThesisContinued

At $14/share, Dominion is undervalued

Q ti


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Natural ResourcesBy: David Marrello

Healthcare


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Intercollegiate Investment ClubsHealthcare

TOPIC 1

TOPIC 2

TOPIC 3

TOPIC 5

TOPIC 4

TOPIC 6

Geoff Clark Tianhao Fang

Wahaaj Ud Din Tanveer Randhawa

Rahul Sharma

Dmitry KutsyySECTORS


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HealthcareBy: Geoffrey ClarkNovember 24, 2013

Sector Introduction


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Intercollegiate Investment ClubsSector Introduction

The healthcare sector is made of manydifferent sub-industries

Pharmaceuticals and biotechs: Manufacturersof drugs

Device manufacturers: Medical equipment

Hospitals

Health-insurers

INTRODUCTION

RECENT

THEMES

KEY DRIVERS

SECTOR

SPECIFICS

SAMPLE

INVESTMENT

THESIS

Recent Themes


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Shift towards a single-payer system in theU.S. Obamacare, Medicare, Medicaid

Healthcare spending growing in relation toGDP Currently at 18% of U.S. GDP and growing at 4%

annually Sector growing too fast for its own good

Focus is on cutting costs, companies that can willbe successful

Employers passing burden on employees Rising costs of insurance Increased amount of part-time/contract workers

RECENT

THEMES

INTRODUCTION

KEY DRIVERS

SECTOR

SPECIFICS

SAMPLE

INVESTMENT

THESIS

Recent Themes


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Changing demographics from agingpopulation People are living longer and suffering from chronic

diseases for more of their lives

Environmental factors Air and water pollution are increasing the

prevalence of conditions like asthma

Rise of problems like obesity, diabetes andallergies

Increased prevalence and awareness ofmental disabilities

RECENT

THEMES

INTRODUCTION

KEY DRIVERS

SECTOR

SPECIFICS

SAMPLE

INVESTMENT

THESIS

Th A i i f C diKey Drivers


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Government budgets For most states, Medicaid is the number one

cost Healthcare spending growing faster than other

categories

KEY DRIVERS

INTRODUCTION

RECENT

THEMES

SECTOR

SPECIFICS

SAMPLE

INVESTMENT

THESIS

Th A i ti f C diKey Drivers


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Management Innovation Company must be able to offer innovative

solutions to meaningfully impact diseases Either be first in the area or be the best

Companies must find ways to cut costs

Healthcare is too expensive

Upcoming clinical trials A trial failure or an increase in time to market

can cripple some companies

KEY DRIVERS

INTRODUCTION

RECENT

THEMES

SECTOR

SPECIFICS

SAMPLE

INVESTMENT

THESIS

Th A i ti f C diSector Specifics


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Pharmaceuticals and Biotechs Patent protection: Intellectual property is key

Difficult to make money when generic brands areavailable

Long and expensive process to bring productsto market

FDA and other regulatory approvals take time

High R&D budgets

Look for companies with consistent success indeveloping innovative products

SECTOR

SPECIFICS

INTRODUCTION

RECENT

THEMES

KEY DRIVERS

SAMPLE

INVESTMENT

THESIS

The Association of CanadianSector Specifics


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Facilities Focus on operating costs and sustained cost

advantages Large and well-funded systems vs. local

hospitals

Significant M&A activity between the two

SECTOR

SPECIFICS

INTRODUCTION

RECENT

THEMES

KEY DRIVERS

SAMPLE

INVESTMENT

THESIS

The Association of CanadianSector Specifics


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Health Insurers and Managed CareProviders:

Focus on medical cost ratio, the reverse ofoperating profit

Healthcare costs divided by revenue from premiums

Shows whether the company is skilled inunderwriting

Affected by interest rates

Most investment holdings are short-term,investment grade fixed income securities

SECTOR

SPECIFICS

INTRODUCTION

RECENT

THEMES

KEY DRIVERS

SAMPLE

INVESTMENT

THESIS

The Association of CanadianSample Investment


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Intercollegiate Investment ClubsSample InvestmentThesis

For company XYZ in healthcarefacilities:

Leading market share in large and growingurban centers

Economies of scale act as barrier to entry tonewcomers and protect against existing local

hospitals Benefiting from increased M&A activity with a

balance sheet that can support it

SAMPLE

INVESTMENT

THESIS

INTRODUCTION

RECENT

THEMES

KEY DRIVERS

SECTOR

SPECIFICS

The Association of CanadianQuestions


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ACIIC Analyst ProgramBy: Ivan, AaquibNovember 24, 2013

aciic analyst program

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