Finance & Investment ClubSeptember 12th, 2012

First General Meeting

 

2

Introduction of the 2012-2013 Executive Board

Christopher KovalikPresident

Knut KirchoffVP - Operations

Joseph McNiffVP - Investment Research

Xun Yao ChenVP - Investment Research

Stefan BellVP - Corporate Relations

Andrei TapligaVP - Technology

Ashwin TelukuntlaVP - Investment Management

 

3

Introduction to the Finance Club at Boston University

Long-term Goals

Education To offer an educational, real-life opportunity for

aspiring investment professionals

Community To foster lasting relationships amongst our

membership in Boston University and beyond

Alpha To continue professional procedures to

maintain an alpha generating process

Growth Personal, career and fund growth

 

4

Introduction to the Finance Club at Boston University (Cont’d)

President, VP Corporate Relations, VP Investment Management, VP Investment Research, VP Operations, VP Technology

Executive Board Members Responsible for planning and executing strategic direction of the club

Investment Management Focused Industries: Materials, Industrials, Energy, Real Estate, Healthcare, Technology, Telecommunications & Media, Consumer Products, and Fixed Income

Responsible for finding investment opportunities across several industries within

teams.Investment Associates

Responsible for managing the Undergraduate Investment Fund, and its performance.Sector Heads

Investment Research Focused Industries: Materials, Industrials, Energy, Real Estate, Healthcare, Technology, Telecommunications & Media, and Consumer Products

Senior AnalystsResponsible for engaging and training junior

analysts in creating quality investment research and presentations.

Junior AnalystsResponsible for researching and analyzing

industries and companies, working side by side with other junior analysts and senior analysts.

Talk

to A

nyon

e W

ithin

the

Club

!

 

5

Introduction to the Finance Club at Boston University (Cont’d)

“A Week in the Club”

Monday Tuesday Wednesday Thursday Friday Saturday Sunday

Senior Analyst Forum

VPs of IR hold meeting with SAs to teach core valuation and financial research

concepts with sector presentation updates.

General Club EventsNote: Periodically each semester there are various conferences and networking events

open to all members of club.

IR Sector Meetings

SAs schedule meeting to work on presentation deliverables and focus on JA

research & education. (Every day)

IM Team Meeting

VP IM, SHs and IAs discuss sector developments, potential investments and

current portfolio holdings.

General Club Meeting

Meeting of all members focused on senior member presentations, discussions led by E-Board, guest speakers and portfolio updates.

E-Board Meeting

SAs schedule meeting to work on presentation deliverables and focus on JA

research & education.

 

6

Introduction to the Finance Club at Boston University (Cont’d)

Industry Research and Analysis

Fall Semester

1. Identify sub-industry for research2. Find industry data 3. Understand industry drivers4. Recommend outlook for the industry over the next one year period

Company Research and Analysis

Spring Semester

1. Identify company drivers2. Conduct financial analyses3. Value companies and assess investment risk4. Provide buy or sell recommendation with a one year outlook

Investment Recommendation

End of Spring Semester

1. Deliver investment recommendations2. Investment decision and tracking3. Best sector presentations, best junior analysts, and best senior analysts awards will be announced.

Semester Schedule

 

7

Introduction to the Finance Club at Boston University (Cont’d)

General Meeting AgendaSeptember 12th, 2012

SMG 105 6:00pm – 7:10pm

Opening remarks from Executive Board

Portfolio performance update

Overview of deliverables for IR team

Stock pitch and sector update

Guest speaker Garrett Bauer on insider trading

Typical General Meeting Agenda

 

8

Our new Faculty Advisor

Steven SegalBU Executive-in-ResidenceFaculty Advisor

Teaches graduate and undergraduate Private Equity and Leveraged Buyouts courses Special Limited Partner of J.W. Childs Associates Over 20 years of private equity investment experience Board memberships:

Trustee, Combined Jewish Philanthropies W/S Packaging Group, Inc. Trustee, Temple Emanuel; Chair, Endowment Committee The NutraSweet Company, Inc. Trustee, Hebrew College; Chair, Finance Committee Round Grill Inc. (d/b/a FiRE + iCE) Fitness Quest, Inc.

 

9

Investment Management: Summer Investment Management Program2012-2013 Investment Management Division Goals: Increase the BUFC Investment Fund through strategic investments, S.H & Associate collaboration and

constant fund adjustments to maximize alpha.

Create a summer program that generates new investment ideas and recommendations on current investments to ultimately strengthen the investment fund.

Investment Management Focused Industries: Materials, Industrials, Energy, Real Estate, Healthcare, Technology, Telecommunications & Media, and Consumer Products

Sector HeadsResponsible for covering current investment positions in each sector as well as identifying

possible micro-sectors for investment opportunities.

AssociatesResponsible for making investment

recommendations in certain sectors and micro-industries identified by Sector Heads.

Summer Investment Management Assignment: S.H Deliverable: Research and present stock pitches for the investment management team.

Associate Deliverable: Research and report on current positions in the fund and make recommendations on increasing/decreasing/exiting current investments.

 

10

Investment Research: Summer Senior Analyst Program2012-2013 Investment Research Division Goals: Strengthen BUFC Brand through top notch investment research, SA leadership and JA retention, ultimately

developing the future leaders of the club.

Create a summer program that strengthens the leadership skills of our Senior Analysts as well as gives them the opportunity to explore and prepare skills necessary to enhance their investment research and analysis.

Investment Research Focused Industries: Materials, Industrials, Energy, Real Estate, Healthcare, Technology, Telecommunications & Media, and Consumer Products

Senior AnalystsResponsible for engaging and training junior

analysts in creating quality investment research and presentations.

Junior AnalystsResponsible for researching and analyzing

industries and companies, working side by side with other junior analysts and senior analysts.

Summer Senior Analyst Assignment: First Deliverable: Reading of multiple HBR case studies to understand effective leadership and management

while providing reflections and recommendations of Finance Club. Second Deliverable: An 8 minute PowerPoint industry analysis presentation focused upon a micro-sector of

6-8 companies within Senior Analyst Industry.»Industry breakdown / trends / risks / outlook / recommendation

Home Building IndustrySector: Real Estate

Senior Analyst: Kento Okamoto

Industry Summary

Jan-00Se

p-00

May-01

Jan-02Se

p-02

May-03

Jan-04Se

p-04

May-05

Jan-06Se

p-06

May-07

Jan-08Se

p-08

May-09

Jan-10Se

p-10

May-11

Jan-12

0.00

50.00

100.00

150.00

200.00

250.00Case-Shiller Index 20-city composite

Rating Neutral/OverweightUpside Potential• Indication of modest

recovery• Potentially undervalued

due to skepticismDownside Risk• Possibility of another

economic disaster• High elasticity due to

uncertainty

Industry Revenue ($MM)

20002001200220032004200520062007200820092010201120120

100,000

200,000

300,000

400,000

500,000

600,000

-40

-30

-20

-10

0

10

20

Growth % Revenue $ millionAction StatementHousing market seems to be on its path for recovery with mixed factors that can potentially shift the market outcome in different directions. Some major factors are:Signs of recovery in residential home price

Housing price increased for the first time since Sep-2010. Some concrete signs of modest recovery.

30 year mortgage interest rate at all time low Golden opportunity for financing real estate purchases. Increase in

prime mortgage to support future growth of the market. Subliminal risk of high demand elasticity

Still concerned market may over-react to negative market news.

Industry Definition – House Construction

• Firms in this industry are primarily engaged in construction and remodeling of single-family houses and residential buildings. These firms may also hold their own financial services arm to provide clients with customized financial solution. Firms in this industry operate in multiple states, yet tend to hold strong position in their indigenous states.

NYSE: PHM NYSE: DHI NYSE: LEN

NYSE: KBH NYSE: RYL NYSE: TOL

Industry Breakdowns

East Midwest South West0

2

4

6

8

10

12

14

Pulte Group D.R.HortonLennar Corp KBHomes Inc.Ryland Group Toll Brothers Inc.

# o

f St

ates

Industry breakdown by region 5983.6

829.78

6060.065080.91

1158.35407.58

DHI KBH LEN PHM RYL TOL

Industry breakdown by market cap ($MM)

3637

140534284137

891 1476

DHI KBH LEN PHM RYL TOL

Industry breakdown by revenue ($MM)

General Business Model

Home BuildingSupplier

Base Material

Material Cost Construction

Customer

Mortgage Loans

Payments + Interest + (Collateral)

Mortgage

Banking

Home Builders

Land Purchase

Economic Landscape

Home Builders

Financial Entities

New Residenc

es

Foreclosed

Properties

Housing

MarketDeman

dConsume

rs

Financing

Collateral

“Supply Side”

“Demand Side”

Absorption of Existing Inventory

Existing Home Sales and Remaining Inventory

2004-Q1

2004-Q3

2005-Q1

2005-Q3

2006-Q1

2006-Q3

2007-Q1

2007-Q3

2008-Q1

2008-Q3

2009-Q1

2009-Q3

2010-Q1

2010-Q3

2011-Q1

2011-Q3

2012-Q1

$0

$50

$100

$150

$200

$250

$300

0.0

10.0

20.0

30.0

40.0

50.0

60.0

70.0

80.0

90.0

National Median Housing price HOI

What does this trend tell us?• Steady decrease in existing house

inventory • Government support to prevent

foreclosure• Recovering consumer appetite for real

estate purchase

July-1

1

Augu

st-11

Septe

mber-1

1

Octobe

r-11

Novem

ber-1

1

Dece

mber-1

1

Janua

ry-12

Febru

ary-12

March-1

2

April-

12

May-12

June-1

2

July-1

20

500,000

1,000,000

1,500,000

2,000,000

2,500,000

3,000,000

3,500,000

4,000,000

4,500,000

5,000,000

f(x) = − 1933.63167385967 x + 81682045.7005374R² = 0.649292534628651

f(x) = 892.905096943982 x − 32095134.8085289R² = 0.40753258897442

Inventory Linear (Inventory)Existing Home Sales Linear (Existing Home Sales)

Projected demand surplus, leading to opportunity for new

home buildingForeclosure rate down 2.99% in June v.PY

30-yr Mortgage rate and New Home Sales

Jun-11

Jul-11

Aug-11

Sep-1

1

Oct-11

Nov-11

Dec-11Jan

-12

Feb-1

2

Mar-12

Apr-12

May-12Jun

-120

50

100

150

200

250

300

350

400

450

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

4.50

5.00

f(x) = − 0.00199848196308534 x + 85.7410224933074R² = 0.848049128570088

East MidwestSouth West30yr Mtg. Linear (30yr Mtg.)

In 0

00’s

%

Mortgage rate movement and New home sales With low home price, what matters

to potential purchaser is the interest payment

• Current 30-yr mortgage rate down to approx. 3.5% v. 8.3% pre – 2008 crash

• Significant decrease in total interest payment for property purchases

• Signs of increasing demand in second home purchase by retired population

• Projected increase in prime mortgage, which could support the recovery of the real estate market as a whole

Golden opportunity to purchase a superior property in minimum sunk-cost

and interest payment

Future Outlook

Industry to experience organic recovery/growth• Strong projected growth in total industry revenue

and company orders • Profitability to recover with less loss from

depreciated property/options valueRisks to ConsiderSizable negative market news

• As the market begins its process to recovery, a sizable negative news on the market could scare out potential demand.

Loss of federal support or/and continuous over-regulation in lending standard

• Loss of federal lending support or overly strict lending policy could take away the golden opportunity for financing real estate purchase.

General Outlook

Jun-06 Jun-07 Jun-08 Jun-09 Jun-10 Jun-11 Jun-120

100,000

200,000

300,000

400,000

500,000

600,000

-40.0%

-30.0%

-20.0%

-10.0%

0.0%

10.0%

20.0%

30.0%

40.0%

f(x) = 0.0813392857142857 x − 0.455R² = 0.686571286715371

f(x) = − 0.006375 x + 0.211214285714286R² = 0.105497152506456

Total Industry RevenueMedian Orders (Selected)Linear (Median Orders (Selected))Gross Margin % (Selected)Linear (Gross Margin % (Selected))

$MMTime-series analysis on total

revenue, orders, and profitability

RecommendationReiterate a Neutral/Overweight rating: • Promising signs of modest market recovery seen in

various key statistics and indicators

• Possibility of significantly outperforming the total real estate market as shortage in supply may become more imminent

• Contains subliminal risk of high demand elasticity as market confidence is still under repair Good potential for outstanding performance, yet with recognizable risk of disappointing outcome

Appendix

Company ComparableScale 1,000,000

Currency USD

Key Financials & Effectiveness                

Name TickerSalesTTM

SalesYear/Year

Net MarginTTM

Net MarginFY1

EPSTTM

EPSYear/Year

ROICTTM

PULTEGROUP, INC. PHM 4,354.72 1.10 (1.95%) 3.98% (0.22) 0.07 (3.93%)KB HOME KBH 1,404.60 0.99 (4.68%) (5.25%) (0.85) 0.39 2.05%

LENNAR CORPORATION LEN 3,427.86 1.14 14.89% 16.12% 2.42 4.40 2.59%D.R. HORTON, INC. DHI 4,116.10 1.18 21.67% 22.26% 2.58 32.25 2.31%

THE RYLAND GROUP, INC. RYL 1,000.22 1.19 (1.93%) 2.30% (0.43) 0.24 (2.77%)TOLL BROTHERS, INC. TOL 1,677.74 1.16 5.41% 5.92% 0.54 1.19 5.52%

Median 1,404.60 1.12 (1.93%) 3.37% (0.36) 0.43 1.98%High 7,552.00 1.35 21.67% 22.26% 2.58 32.25 5.52%Low 921.66 0.99 (13.38%) (5.25%) (1.67) (0.57) (3.93%)

EV Multiples & Credit Ratios       Market Data & Price Multiples        

Name TickerEV/Sales

TTMNet Debt/

EV Name Ticker Price52 Week

HighPrice/

Book ValuePrice/

BV Tangible

PULTEGROUP, INC. PHM 1.51 0.23 PULTEGROUP, INC. PHM 13.28 13.91 1.76 2.80KB HOME KBH 1.45 0.59 KB HOME KBH 10.72 13.12 1.51 2.24

LENNAR CORPORATION LEN 2.79 0.32 LENNAR CORPORATION LEN 32.27 32.85 1.63 1.94

D.R. HORTON, INC. DHI 1.69 0.11 D.R. HORTON, INC. DHI 18.62 19.35 1.68 1.71

THE RYLAND GROUP, INC. RYL 1.56 0.23 THE RYLAND GROUP, INC. RYL 26.01 27.15 2.51 -

TOLL BROTHERS, INC. TOL 4.05 0.20 TOLL BROTHERS, INC. TOL 32.41 33.68 1.81 2.07Median 1.69 0.23 Median 22.32 23.25 1.72 2.07

High 4.05 0.71 High 32.41 33.68 2.51 2.80Low 1.01 0.11 Low 10.72 13.12 1.51 1.71

Finance & Investment ClubHealthcare SectorSummer 2012

Senior Analyst: Roy Tong

Generic Pharmaceuticals

 

24

Executive Summary – Generic Pharmaceutical Manufacturing

• Growth in revenue outpaces that of GDP• Acceptance of Generics evident in growing domination of sales mix

at the expense of brand names

Generic Drugs Industry in Growth

Stage

• Lower cost to manufacture than brand names• Sales further driven by patent expiry of brand names

Generics Growth Fuelled by Low Prices

• Increased government Medicare and Medicaid spending leading to more consumer access to prescription drugs as opposed to OTC

• Most insurances (both private and public such as Medicare) do not cover brand names when generics are available

Use of Generics Aided by Government Spending and Reform

• Large aging population increasing – elderly more vulnerable to diseases that require medication to treat

• Unhealthy American lifestyle, too much fat and calories, inadequate exercise and fiber, breed obesity and other diseases

Aging Population and Unhealthy American

Lifestyle

 

25

Industry Definition – Generic Pharmaceutical Manufacturing• Generic pharmaceutical and medicine manufacturers develop prescription drug

products that are used to prevent or treat illnesses in humans or animals

• Generic drugs are produced, marketed and distributed without patent protection, yet at the same time comparable to brand listed drug products (if existent) in dosage, strength, administration, quality, performance and intended use

• Firms are allowed to manufacture generics of brand name drugs AFTER the expiration of patents protecting the branded drugs, and are able to do so at a much lower cost due to the bypassing of discovery costs

Ligand PharmaceuticalsNASDAQ: (LGND)

Avanir PharmaceuticalsNASDAQ: (AVNR)

Catalyst PharmaceuticalsNASDAQ: (CPRX)

Sagent PharmaceuticalsNASDAQ: (SGNT) Hi Tech Pharmaceuticals

NASDAQ: (HITK)

Source: Yahoo Finance Industry Center, Various Firms’ 10K & IBISWorld Analysis

 

26

20.1%

25.3%

3.1%

23.1%

28.5%

Health Care$2,384.26B

(100%)

Drug Manufacturers and Related

$1,423B(61.23%)

Generic

Drug Manufacturer$45B

(1.89%)

Health Care Sector BreakdownIndustry Breakdown by Market Cap ($BLN) Breakdown by Market Cap

LGND $317.78M

AVNR $399.33M

CPRX $48.57M

SGNT $364.84M

HITK $450.88M

Total $1.58B

Selected Companies Market Cap

Source: Yahoo Finance Industry Center & Various Firms’ 10K Analysis

 

27

Breakdown by LTM Revenue (Total: $427.28M) Biological Products

6%In-Vitro Diagnostic

Substances Products6%

Pharmaceutical Prep for Other Drugs

35%

Pharmaceutical Prep for Metabolic Drugs

14%

Pharmaceutical Prep for Cardiovascular

Drugs12%

Pharmaceutical Prep for Central Nervous

System Drugs11%

Pharmaceutical Prep for Psychotherapeutic

Drugs7%

Medicinal and Botan-ical Products

10%

Industry at a Glance

7.10%2.48%

36.03%54.38%

Source: Yahoo Finance Industry Center, Various Firms’ 10K and IBISworld Analysis

Revenue $52.8B

Profit $7.8B (14.7%)

Exports $19.6B

Annual Growth (07-12) 5.4%

Expected Growth (12-17) 6.3%

Businesses 1,103

Product Segmentation

 

28Source: Various Firms’ 10K and Firms’ Website Analysis

Pre Clinical Trials

Generic Drug Manufacturers Revenue Generation

Stage I Stage II Stage III

Manufacturers Research and Development Partners

New Drug Application

(NDA)

PassPassPass

PassFDA

ReviewMarketed and Sold

Through Partner

Sales Team or Retailers

Direct through Sales Team

Institutions

Retailers

3rd Party

End User

Royalties or Licenses

Pipeline

FDAApproval

 

29

Geographical Distribution of Generic Pharma Manufacturers

Source: IBISworld Analysis

• Mid-Atlantic and West regions with most manufacturers but sales branches typically located close to end market

• Advantage of locating near other manufacturers include local specialize workforce, experienced business services & availability of facilities that are specialized and expensive to build

• Sales of generics follow population trends – Southeast, home to significant portion of elderly, accounts for largest region in terms of revenue

 

30

100%

Hi-Tech Generics86%

Health Care Products (OTC)

7%

ECR Pharmaceuticals (Branded)

6%

58%

42% 40%

31%

20%

9%

100%

2011 Revenue Generation Breakdown by Segments

Source: Various Firms’ 10K Analysis

 

31

Time Series Analysis

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012(est) 2013(est) 2014(est) 2015(est) 2016(est) 2017(est)0

10

20

30

40

50

60

70

80

0

100

200

300

400

500

600

700

800

Generic Drugs Revenue Medicare Spending Medicaid Spending

$ in

Bill

ions

$ in

Bill

ions

• Revenue – Medicare Spending Correlation: 0.98 • Revenue – Medicaid Spending Correlation: 0.86 • Based off anticipated US government spending on Medicare and Medicaid (which can be found from

records and projections from the US Government Office of Budget and Administration), we can reason that a comparable growth rate will be found in projected revenue of the generic drugs industry

• Projected Revenue (Billion $) = 6.601 + 0.112*Medicare – 0.68*Medicaid Spending (Billion $)• Accurate within +/- 3 Billion $

Source: Office of Management and Budget, IBISworld & BUFC Analysis

 

32

• Generic pharmaceutical manufacturing shows key features of an industry in its Growth stage

• The value that industry (revenue) adds to the US economy is growing at a much faster pace than US GDP

• Rapid introduction of products and brands coincides with growing customer acceptance of products

• This is seen in how market share has grown substantially at CAGR of 5.4% for past 15 years compared to brand name drugs’ decline

Trend 1 – Growth of Generics Revenue > GDP Growth

2007 2008 2009 2010 201190%

95%

100%

105%

110%

115%

120%

125%

% o

f 200

7

Generics Revenue

US GDP

1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100

10

20

30

40

50

60

70

80% Distribution of Brand vs Generic Sales Mix

CAGR: 5.4%

Source: US Census Bureau, Mintel & IBISworld Analysis

 

33

Trend 2 – Competitive Edge in Low Costs

Source: US Census Bureau, Mintel & IBISworld Analysis

• Lure of generics are obvious, with a 74% difference in average retail prices as of 2010

• Virtually all major pharmacy chains offer generics at extremely inexpensive prices, leading to price wars

• Result of this has been an increase in sales of generics, often at the expense of brand names

• In 2010, 93% of physicians prescribed generics when they were available – compared to 83% in 2003

• Some 75% of prescriptions dispensed in 2011 were generic drugs – compared to 40% in 2000

1995 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 20100.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00Average Retail Prices of Brands vs Generic ($)

Pharmacy Chain Offer Price

Walmart 30 Day $4

CVS 90 Day $9.99

Kroger 30/90 Day $4/$10

United Healthcare

Provides for co-payments for Medicare

Part D$2

 

34

Wil Not Pay for Brand Name if Generic is Available

59%

Will Pay for Certain Brand Names, Does Not Cover

Generics13%

Doctor Willing to Prescribe Drug, But Not Covered (i.e. Viagra for Sexual Dysfunc-

tion)16%

Prescription Drugs Covered but Doctor Will Not

Prescibe It (i.e. Xanax for Anxiety)

12%

Covers Prescription Drugs90%

Does Not Cover Prescription Drugs

7%

Unknown3%

Trend 3 – Government and Private Insurance Coverage

• Of the pool of respondents in a Mintel study, 90% of the total indicated that their insurance covers prescription drugs

• Furthermore, close to 60% of respondents indicated that their insurance would not pay for Brand Name drugs should a Generic be available

Source: Mintel & IBISworld Analysis

 

35

2006 2007 2008 2009 2010 2011 2012 (est)

2013 (est)

2014 (est)

2015 (est)

0

100

200

300

400

500

600

700

800

Medicare

Medicaid

Spen

ding

in M

illio

ns

Federal Medicare & Medicaid Spending• When Medicare and Medicaid receive

more funding from the government, more consumers gain prescription drug coverage

• As a result, industry demand increases with the population’s ability to afford the industry’s products

• Coverage by these government aids usually will not cover the cost of brand name drugs if generics are available

• Health Care reform in 2010 expected to benefit generic pharmaceutical manufacturers - PPACA

Source: Office of Management and Budget, Mintel & IBISworld Analysis

CAGR: 6.7%

CAGR: 8.7%

Patient Protection and Affordable Care Act (PPACA)

Section 10609

Prevents brand-name manufacturers from

making label changes to the brand-name or listed drugs, thereby

delaying generic products

Trend 3 (Con’t) – Federal Health Care Spending & Reform

 

36

Trend 4 – Aging Population

2006 2011 2016(Est)0

10,000

20,000

30,000

40,000

50,000

60,000

70,000

80,000

90,000

100,000

20%

21%

22%

23%

24%

25%

26%

27%

28%

>55 >55 % of Total Population

Popu

latio

n Ov

er 5

5 Ye

ars

Old

%

• American population is an aging one, with Americans aged 65-74 estimated to see the greatest hike from 2011-2016, followed by 55-64s

• This means that the 2 fastest growing demographics are at or approaching the age when the aging process will place them at greater risk for a variety of age-related ailments

• The elderly are more vulnerable to certain diseases, including Alzheimer’s, heart disease, diabetes, cancer etc, which require preventive or treatment measures provided by pharmaceuticals

Source: Mintel & IBISworld Analysis

 

37

Comps Financials

Company Market Cap (In Millions)

Closing Price

(Aug 28)% of 52 wk High

P/E Ratio

EV/EBITDA EPS Debt/

EquityLTM ROE

Quick Ratio

Ligand (LGND) 326.17 16.36 82% 32.08 85.3x 0.51 3.31 60% 0.71

Avanir (AVNR) 403.1 2.96 73% (5.8) (4.8x) (0.51) 0 (85%) 5.93

Catalyst (CPRX) 46.73 1.52 77% (7.24) 7.6x (0.21) 0 (170%) 7.47

Sagent (SGNT) 233.69 14.68 55% (15.29) (17.9x) (0.96) 0.03 (19%) 1.89

Hi Tech (HITK) 460.14 35.26 79% 9.82 4.5x 3.59 0.01 20% 4.74

Industry 45,000 - - 50.1 - - - 7.6% -

High 460.14 35.26 82% 32.08 85.3x 3.59 3.31 60% 7.47

Low 46.73 1.52 55% (15.29) (17.9x) (0.96) 0 (170%) 0.71

Median 326.17 14.68 77% (5.8) 4.5x (0.21) 0.01 (19%) 4.74

Mean 293.97 14.17 73% 2.71 14.9x 0.48 0.67 (39%) 4.15

Source: Yahoo Finance Industry Center, Google Finance, MacroAxis & Various Firms’ 10K Analysis

*does not include industry values

 

38

Conclusion and Recommendation

• Growth stage industry fuelled by continual acceptance of products, low prices of goods and federal health care spending

• State and behavior of American population set to have positive effects on prescription drugs and therefore generic industry in the next 5 years

Industry: Positive

• Competition from brand name manufacturers that attempt to keep generics off the market for a longer period of time

• Must stay responsive to potentially new government regulations and health care reforms, especially during election years

Industry Risks to Overcome

• HITK is profitable, with 4.7 Quick Ratio showing good financial health and liquidity in addition to having minimal debt (0.01 Debt-Equity Ratio)

• LGND with diverse revenue generation, yet could mean complicated business model • ROE well above industry average and poised to take advantage of trends

Why Recommended

Firm

 

39

Investment Research: Summer Senior Analyst Program2012-2013 Investment Research Division Goals: Strengthen BUFC Brand through top notch investment research, SA leadership and JA retention, ultimately

developing the future leaders of the club.

Create a summer program that strengthens the leadership skills of our Senior Analysts as well as gives them the opportunity to explore and prepare skills necessary to enhance their investment research and analysis.

Investment Research Focused Industries: Materials, Industrials, Energy, Real Estate, Healthcare, Technology, Telecommunications & Media, and Consumer Products

Senior AnalystsResponsible for engaging and training junior

analysts in creating quality investment research and presentations.

Junior AnalystsResponsible for researching and analyzing

industries and companies, working side by side with other junior analysts and senior analysts.

Summer Senior Analyst Assignment: First Deliverable: Reading of multiple HBR case studies to understand effective leadership and management

while providing reflections and recommendations of Finance Club. Second Deliverable: An 8 minute PowerPoint industry analysis presentation focused upon a micro-sector of

6-8 companies within Senior Analyst Industry.»Industry breakdown / trends / risks / outlook / recommendation

 

40

Your Future in Finance

Our Biggest Event of the Fall Semester – Start Networking Now

When: Saturday, September 29th from 8:15am to 4:15pm

Block 1: Exploring a Career in Finance, Managing your Career Progression, Global Career PerspectivesBlock 2: Valuation Analysis, How to Pitch a Stock, Techniques in Microsoft Excel

Block 3: Retail & Finance, Credit Analysis, and Networking EtiquetteMock Interviews will also be held during Block 1 – first come first served

Register at BUinvest.com TONIGHT! We will send you an email!Formal deadline 9/21/2012, but spots are limited

 

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Day on the Job With the Equity Department @ MFS Investment ManagementFriday, September 28 – 11am to 1pm

Who we are:- Boston-based global asset manager with $285 Billion in assets under management- 20 global offices

Our Equity Research Associate Program- Working on a sector team, our equity research associates assist analysts in recommending stocks to

portfolio managers. Associates assist heavily with building models, project-oriented proprietary research, and in meetings with company management teams. We have opportunities to work in multiple sectors and gain knowledge on stock-picking across industries, in an academic environment that encourages constant learning.

Enjoy pizza with us and learn about our firm, and the field of Investment Management.- Meet our recruiters, and learn about our recruitment process for the Equity Research

Associate Program- Hear from post-undergrad associates about entry into the field- Talk to post-MBA analysts about their stock-picking process- Listen to experiences from Portfolio Managers- Network with BU alums at MFS- Learn more about our culture ahead of recruitment

11:00-11:30am: Welcome with Managers of the Equity Research Associate Program11:30-12:00pm: Q+A with BU Alumni at MFS12:00-12:45pm: Lunch Panel with Equity Research Associates

 

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To Participate…

Information required:

Name, contact information, class, school, concentration / major (if decided)

Also provide which position you would like to apply for; positions available:

Junior Analyst Senior Analyst Investment Associate

You must… register! (Also available at BUinvest.com)

 

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E-mail (BUinvest@bu.edu) with any questions

Today’s dinner spot:Scoozi

Next Meeting:Wednesday, 9/19 in PHO 206

Come in business casual; we have a speaker!

Next Steps

Come talk to us!