general body meeting 04-25-12 1. mutual investment club of cornell welcome 2

General Body Meeting 04-25-12

1

Mutual Investment Club of Cornell

2

Welcome


3

News Updates


4

Macro


5

French Elections


6

Sarkozy vs. Hollande

First round results Hollande: 28.8% Sarkozy: 26.1% Right: 18.5% Left: 11.7% Center 8.8%

Runnoff: Sarkozy v.s. Hollande (+ Left & Center) First time that incumbent didn’t have majority Outcome (still) uncertain, leaning towards Hollande

vs. Globalization, EU and cooperation with Germany

vs. Austerity


7

Energy


Argentina Nationalizes YPF

Argentina is one of the few countries that doesn’t control its own oil

In the face of slumping oil output and investments by YPF, Argentine President expropriated Spanish owned, YPF, the nation’s largest crude oil producer(34%) and refiner(50%)

Ousting the Spanish owners Repsol(57.4% stake) Setting a terrible precedent

“expropriating assets rather than going through fair market means to gain control of a company effectively closes the country off to foreign-direct investments”

Retaliation by the EU could risk Argentina exports to its 2nd largest trading partner


9

Two Minute Drill

Guest Lecturer:

Topic:

Shayra Kamal

Healthcare Pipeline


Increased Bidding for Medicare Supplies Administration announced using competitive bidding to buy Medicare

supplies in order to save money for patients and taxpayers Sharp break from fee-for-service purchasing for Medicare patients

Health and Human Services reports bidding pilot program already saved $202 million (reduced Medicare costs by 42%) Mainly from purchases in oxygen equipment and wheelchairs

Expansion for bidding planned to cover over 100 metropolitan areas by in 2013 and the entire country by 2016

MD&D providers that start off at low bids at distinct advantage

Expected savings of $25.7 billion to Medicare program in 10 years


11

2 Minute Drill

HealthcarePharmaceutical Pipelines


12

Pipeline

Set of unique compounds ,devices, and processes that a company has in development at any given time

Primary tool used to evaluate R&D activities, spending, and overall potential for success and growth

More pipeline compounds=greater valuation


13

FDA Approval

Food and Drug Administration (FDA) is primary agency that process applications for drugs to exit compound and enter market, including patent protection for prescription drugs

Can take up to 10 years from synthesis of pipeline compound to final approval

Backlog of over 100,000 application per year


14

Clinical Trials

Three stages of drug development in FDA approval process Pre-clinical, clinical, and marketing (post-approval)

Three phases of clinical trials determined by number of human and animal subjects in each phase Phase I has fewest subjects, Phase III the most Pipeline with majority of drugs in Phase II/III expected

to rollout drugs within 2-5 years

Clinical trials results often used to increase investor confidence


15

JNJ Pharmaceutical Pipeline


16

TEVA Innovative Pipeline


Apple (AAPL)17

Technology SectorAleksandar Zvorinji

Guo Jie Chin

Jerald Watson

Morgan Beller

James Ying

Raj Merchant


Investment Thesis

Ecosystem that connects success in one generation of devices to successive consumer purchases

Top-line growth that is unjustified in light of several near- and long-term growth drivers

Big iPhone (130MM) /iPad (60MM) unit revisions

Short: upside to iPhone shipments, new Macbook Air, the new iPad

Long: iPhone upgrade cycle, lower priced 3G iPhone, larger tablet market, continued Apple market dominance, expanding distribution in China, and potential for Apple to enter the Smart TV market in 2012-13.

18

Investment Thesis

Company Analysis Drivers Summa

ryCompetitive Analysis

Earnings Release Valuation Technic

als


Company History

Apple is a multinational corporation focused on designing and selling consumer electronics, software, and personal computers. Mainstream products include mobile

communication and media devices such as iPod, iPad, iPhone

Founded in 1976 by Steve Jobs, Ronald Wayne, and Steve Wozniak

As of Sept. 2011, there are 357 retail stores worldwide

Currently the largest publicly traded company Market Cap: > 530 billion

19

Investment Thesis



Earnings Release Valuation Technicals


Product Description

iPod First released in October 2001, iPod is now in

its 8th generation, and has four different products in its line: shuffle, nano, classic, touch

iPhone Originally launched in 2007, iPhone has sold

over 100 million units. The latest iPhone 4s sold over four million within the first three days of release.

Macbook/iMac Macbook Pro, debuted in 2006, is the highest

selling personal computing apple device.

20

Investment Thesis





Revenue and Profit Margins21

Investment Thesis





Revenue Breakdown (Geo)22

Investment Thesis





14.24%5.46%

52.70%

19.75%

3.47%

Macs

iPod

iPhone

iPad

Periph-erals

As of Q1 2012: Macs (desktops/laptops): 14.24% iPod: 5.46% iPhone (including software sales): 52.70% iPad (with software) : 19.75% Peripherals: 3.47%

23

Revenue Breakdown (Product)

Investment Thesis





Q1 2012: Total Revenue – 46.33 billion

EBITDA: 18.06 billion (Operating Margin: 38.98%)

Net Income: 13.06 billion (Net Margin: 28.19%)Competitor figures: Google

Operating Margin: 32.11% Net Margin: 27.09%

Hewlett-Packard: Operating Margin: 8.41% Net Margin: 4.75%

Microsoft Operating Margin: 38.44% Net Margin:

31.95%

24

Quick Comparison

Investment Thesis





SWOT Analysis

Strengths:• Brand recognition and dominance• Stable and strong financial and

revenue growth; investor confidence is high

• Many avenues of growth and revenue sources

• Commitment to R&D; emphasis on innovation over profit

• Strong relationship with Intel, helps reduce costs

Weaknesses:• Foxconn labor issues• Patent Infringement Law Suit

could affect brand name and profit margins

• Product recall will damage brand name significantly

Opportunities:• Continual growth in smartphone

markets• Potential for Apple TV and iCloud:

syncing/linking all company products and App Store

• International expansion of Apple retail stores

Threats:• Competition in smartphone and

tablet markets (e.g. Android, Kindle, etc)

• Risk in continuity of management/innovation with replacement of Steve Jobs

• Dependence on Intel

25

Investment Thesis





26

Short Term Drivers: Pros

FQ2 earnings blow past expectations Tuesday: earnings surged 93% in the March

quarter, largely powered by stronger-than-expected sales of the iPhone

Set up well for months ahead and iPhone 5 release CEO, Tim Cook: PC market is slow overall (probably

partly due to the iPad), but that the Mac still outperformed the rest of the market

Spain: subsidies cut by country's wireless carrier Bifurcation of iPhone pricing to capture emerging

market demand Improved iPhone and iPad shipment momentum Rising gross margins driven by iPhone and iPad

scale

Investment Thesis




als


27

Short Term Drivers: Cons

Threats Android (HTC, Samsung), Windows 8

(Nokia), Kindle Shortage of 28-nanometer chipsets used in

smartphone devices from Qualcomm No current phones use them but may delay

iPhone 5 release Cook dismissive of idea to combine PC and

tablet

Investment Thesis




als


28

Long term drivers

Risk-reward profile Revenue and earnings growth Market penetration rates in tablets, PCs, China

and enterprise Enabling the burgeoning social

media/networking adoption curve Expanding store, online and carrier distribution

in China or other developing markets Returning cash to shareholders through

buybacks and dividends Shipment upside and continued evolution of the

iPad line Potential Smart TV launch in 2013

Investment Thesis




als


29

Investment Risks

Android competition in smartphones, and Android and Windows competition in tablets

Regulatory and legal risk as Apple gains profit share momentum in mobile devices

Weak global consumer demand Rate of new product cycles / CEO transition

Investment Thesis




als


30

Main Competitors

Personal Computers: Acer, Dell, HP, Lenovo, Samsung Electronics

Wireless Handsets: HTC, Nokia, RIM, Samsung Electronics

Software/Media: Microsoft, Google, Amazon

Investment Thesis




als


31

The PC Market: Steady Growth

Investment Thesis




als


32

PC Market: A Paradigm Shift

Investment Thesis




als


33

King of Tablets

Investment Thesis




als


34

PC Market: All About Margins

2011 Q4 Acer Dell HP LenovoSamsun

g Apple MeanGross Margin 8.97% 22.25% 20.56% 11.40% 25.17% 44.68% 22.17%EBITDA Margin 0.27% 7.39% 10.91% 2.92% 19.07% 39.28% 13.31%EBIT

Margin (0.02%) 5.83% 6.56% 2.32% 11.30% 37.72% 10.62%Pretax Margin (0.19%) 5.68% 6.08% 2.30% 10.89% 37.72% 10.41%

Net Margin 0.07% 4.79% 4.90% 1.83% 8.22% 28.20% 8.00%

Investment Thesis




als


35

Wireless Handsets

2011 Q4 HTC Nokia RIM Samsung Apple MeanGross Margin 25.74% 26.94% 29.81% 25.17% 44.68% 30.47%EBITDA Margin 13.80% (5.73%) 6.01% 19.07% 39.28% 14.49%EBIT

Margin 12.95% (9.53%) (3.27%) 11.30% 37.72% 9.83%Pretax Margin 12.94% (9.74%) (3.27%) 10.89% 37.72% 9.71%

Net Margin 10.79% (10.71%) (2.98%) 8.22% 28.20% 6.70%

Investment Thesis




als


36

Solid Growth

36-Month

Apple Inc.

Hewlett-Packard Google

Research In Motion

Industry Median

Market Median

Revenue Growth

49.37% 2.44% 20.26% 18.55% 6.65% 2.77%

Net Income Growth

75.03% -5.30% 32.07% -14.96% 18.05% -1.30%

EPS Growth

72.85% 0.71% 30.76% -12.38% 21.67% --

Dividend Growth

-- 7.72% -- -- 12.28% --

Investment Thesis




als


37

Competitive Analysis

Unrivaled margins among hardware manufacturers

Supreme (and increasing) market share Innovation leader with phenomenal

growth Threats: Android (HTC, Samsung),

Windows 8 (Nokia), Kindle

Investment Thesis




als


38

Earnings Release

April 24, 2012 Apple Released Earnings Reports for the first quarter of 2012

Total Revenue: $39.2 Billion (59.7% Increase Year over Year)

Net Profit: $6 Billion (94% Increase Year over Year)

EPS: $12.3 (92% Increase Year over Year) Gross margin rose slightly to 47.4

percent Beat expert estimates of 10.08 EPS

Investment Thesis




als


39

Earnings Release (2)

iPhone 4s and iPad sales were the primary drivers of revenue within the quarter

35.1 Million iPhones Sold (88% Increase Year over Year)

11.8 Million iPads Sold (151% Increase Year over Year)

International sales attributed to over 64% of the quarter’s total revenue

Apple CEO Tim Cook promises further innovation “across the year”

Investment Thesis




als


40

Valuation

Bloomberg price target blend: $720 Upside: +18%

Investment Thesis




als


41

DCF

Growth MultipleWACC 1.5 2.0 2.5 7.5 8.5 9.5 Prob (%)

9.5 850 894 944 726 792 857 17.5

10.0 800 838 882 714 778 842 65

10.5 756 789 827 703 765 828 17.5

Prob (%) 20 22.5 7.5 15 30 5

∑ price matrix X probability matrix = $798Upside: +31%

Investment Thesis




als


42

Technical Analysis

Investment Thesis




als


Williams %R

Williams %R Current = -40.95%

43

Investment Thesis




als


Bollinger Bands

Bollinger Bands April 25 Lower Bound = 566.64, Upper Bound = 642.52, Price =

607.87

44

Investment Thesis




als


Relative Strength Index

Relative Strength Index (RSI) Current: 54.89

45

Investment Thesis




als


MACD

Moving Average Convergence Divergence (MACD) Current: 1.49%

46

Investment Thesis




als


47

Summary

Ecosystem that connects success in one generation of devices to successive consumer purchases

Strong valuation (big upside) Short: upside to iPhone shipments, new Macbook

Air, the new iPad Long: iPhone upgrade cycle, lower priced 3G iPhone,

larger tablet market, continued Apple market dominance, China (emerging markets), Smart TV market

Returning cash to shareholders through buybacks and dividends

Recommendation: Buy 4 shares at $610 for $2,440.

Investment Thesis




als


Analysts: Adrian Diaz-Granados, Andrea Cheung, Michael Wolcott, Tom Jaeger

Whole Foods Market, Inc. (WFM)


49

Company History & Overview

Founded: 1980 Headquarters: Austin, Texas Over 310 stores in the U.S., Canada,

and the U.K. Began expanding to other domestic

markets in 1984 by acquiring other natural food retailers

Entered Canadian market in 2002 and the U.K. market in 2004


50

Management Structure & Culture

Co-CEOs John Mackey (Co-Founder)

Ernst & Young CEO of the Year in 2003 Walter Robb

The work culture is centered on the company’s grassroots level management, which helps it eliminate bureaucracy

Tight-knit team of five senior executives have functioned as a sort of CEO committee for the past 10 years

Great employee relations that create a fun and exciting atmosphere

Excellent training program Diverse workforce: 44% women, 43% minorities


51

Favorable Behavioral Trends

Organic usage remains strong, with 75% of U.S. consumers purchasing organic products

35% of the consumers polled indicated they buy organic products monthly, up from 22% in 2000.

Shoppers have become increasingly interested in knowing where their food comes from

Last year, sales flourished among grocery retailers who jumped on the movement among consumers to “buy local”

Source: The Hartman Group’s “Beyond Organic and Natural 2010” report


52


A growing number of farmers are educating communities about buying organic foods and local-grown foods by using blogs and social media sites 99% of farmers and ranchers aged 18 to 35 have access

to and use the Internet and 75% of those surveyed have a Facebook page

77% of those surveyed view this type of communication as an important part of their jobs as farmers and ranchers

Marketing boom has pushed retail sales of organic foods up to $28.6 billion in 2010 from $3.6 billion in 1997

Organic handlers are selling more organic products to conventional retailers and club stores than ever before

Source: American Farm Bureau’s 2010 “Young Farmers and Ranchers” Survey


53


Natural product sales through retail channels were approximately $65 billion, a 7% increase over the prior year Driven by:

Heightened awareness of the role that healthy eating plays in long-term wellness

A better-educated and wealthier public whose median age is increasing each year

Increasing consumer concern over the purity and safety of food as well as environmental concerns

Source: Natural Food Merchandisers 2011 Report


54

Macroeconomic Analysis

U.S. Mortgage rates sit at a record low Private sector employment is posting year-ago

increases not seen since 2006/2007 Analysts forecast sturdy economic growth, citing

real GDP expansion as a key factor generating new jobs and cutting into employment

The jobless rate appears set to fall below 8% by year’s end

In the coming months, economic data will turn a bit soft as the effects of the warm winter fade Surging gasoline prices have the potential to take a toll

on consumer sentiment


55


Analysts also expect lawmakers to make significant policy changes after the presidential election Most likely they will again extend the Bush-era tax cuts

for middle and lower income taxpayers, delay spending cuts, and allow the payroll tax programs to expire

The fiscal drag next year is expected to be closer to 1.5 of a percentage point of GDP

Global The global economy continues to expand at a

moderate pace, with financial stresses in the mature economies remaining a key theme

Persistent economic weakness in the Euro Area is likely to be a continued drag on the global economic expansion


56


The perception that there is no clear solution to the deeply-rooted problems of the Euro Area is weighing on confidence regionally and globally

There is a persistent divergence between weak performance in mature economies and solid performance in emerging economies

Inflation pressures will remain subdued in mature economies and have recently subsided somewhat in many emerging economies


57

Industry Overview

Grocery Industry Focus on natural/organic food product sales through retail

channels Competes with other major supermarkets

Kroger SuperValu SafeWay

U.S. organic industry grew 8% in 2010 – direct tie to WFM Opposes current trend where “flat is the new growth”

In 2010, the organic industry grew to over $28.6 billion

Source: Organic Trade Association’s 2011 Organic Industry Survey


58

Competitive Advantages

Best operator of small, hip, and natural food retailers This market position is powerful and sustainable

Now the only major organic grocer in the country (post-acquisition of Wild Oats in 2007)

Selling “normal” food alongside organic food does not have the same market penetration as Whole Food’s strategy

Size of their stores exceed 20,000 sq. feet Customized layout in order to target customers of

that region


59

Competitive Advantages

Depth and breadth of item selection Offer an economic value-added management

and incentive system for employees Variety of selection of prepared foods for lunch,

dinner, and dessert 30% of shoppers do not know what they are

having just two hours before the meal, making the prepared meal appealing to grocers

Source: The Food Marketing Institute 2010 Survey


60

‘Health Starts Here’ Brand

New line of private brand products aimed at healthier eating

Includes convenient sides, salads, snacks and ready-to-cook entrée options, as well as frozen vegetables and sprouted grain breads Based on ingredients that are whole, fresh,

natural, organic and neither refined or highly processed

The products are part of a larger effort to help its customers improve and clean up their diets, and include educational efforts, both in store and online


61

Marketing & Social Media

Currently, WFM has nearly 900,000 fans on Facebook and over two million followers on Twitter

In addition, all of their stores have their own Facebook and Twitter accounts Used to connect with local/regional customers and

farmers/suppliers Customer events to tighten relationships with

local communities


62

Whole Foods in the News…

“Ban on Some Seafood Has Fishermen Fuming” Whole Foods Stops Selling Unsustainable

Seafood “Whole Foods Market Funds Community

Projects in Developing Countries Thanks to World Trade Guarantee Products Whole Foods Market announced that with the

help of its shoppers, it has paid more than $2.5 million in Community Development premiums for Fair Trade Certified produce


63

Whole Foods in the News…

“No ‘pink slime’ at Whole Foods Market” Whole Foods Market does not sell any fresh or

frozen meat containing lean finely textured beef (“pink slime”) as the company’s stringent quality standards do not allow for it

“Taste life with new online magazine, Dark Rye” Launched Dark Rye, an online magazine that

explores food, art, health and sustainable living The site features compelling people and

content through storytelling with video, photography, recipes and articles


64

Valuation Measures

Price ~ $82 Market Cap: $15B Trailing P/E: 39 (industry average of ~ 18) Forward P/E: 30 EV/EBITDA:16.58 PEG Ratio (5 year expected): 2.09


65

Stock Chart


66

Income Statement

Revenue: $10.5B Quarterly Revenue Growth (yoy): 12.6% Gross Profit: $3.54B EBITDA: $892.8M Quarterly Earnings Growth (yoy): 33.4%


67

Balance Sheet

Total Cash $850M As opposed to $1B of debt three years ago Cash on balance sheet is being used to finance

more than 50 new store openings in the next two years

Expect to reach 1,000 stores in the United States

Total Debt: $19.3M Book Value per share of 17.65% Current Ratio: 1.87 Debt/Equity: 0.61


68

Financials (WFM v. Competitors)

Whole Foods Market

Kroger Safeway

Market Cap$15B $13B $6B

Quarterly Rev. Growth 12.90% 7.60% 6.20%

Gross Margins35.03% 21.48% 28.16%

Operating Margin 5.71% 2.51% 2.70%

EPS2.07 1.01 1.49

P/E39.00 23.00 15.00


69

Financial Summary

Extremely high growth and high potential for future growth

Very high margins and efficient operations allowing for high profits

Very low debt Plenty of cash Also to consider: some of this high growth

potential is priced in as evidenced by relatively high P/E and EV/EBITDA ratios

Analyst opinion: 24 out of 24 analysts rank this stock between ‘Strong Buy’ and ‘Hold’


70

Major Competitors

Kroger (NYSE: KR) Number one leading grocery store chain in the country Operates over 3,600 stores Runs convenience stores under the names Quik Stop and Kwik Shop Has a host of private-label products that it uses to differentiate products

and to increase customer loyalty

SUPERVALU (NYSE: SVU) Retail grocery chain that acquired Albertsons in 2006 Operates 4,280 stores in 40 states Sales have been falling drastically with competition from Wal-Mart and

Costco

Safeway (NYSE: SWY) Operates in the US and in Western Canada with over 1,725 stores Sales fell 7% in 2009 with severe price competition from Wal-Mart Offers its own brand products and has also been forced to add an “O

Organics” line to fight with competition from Whole Foods in the organic sector


71

Comparison of Operational Metrics & Margins

Company (Fiscal Year)

Comp Sales Growth

Square Footage Growth

Revenue per Square Footage (Millions USD)

New Store Additions

Closures

Average Store Size (Sq. Feet)

Gross Margin (%)

Operating Margin (%)

Net Profit Margin (%)

Whole Foods Market(FY 2010)

7.1% 6.0% 882.0 16 3 38,000 34.8% 5.9% 2.7%

Safeway (FY 2009)

(4.90%)

(0.40%)

509.99 8 23 46,000 28.62% (1.54%) (2.69%)

Kroger Company (FY 2009)

0.90% 0.01% 518.47 14 27 60,000 22.60% 1.42% 0.07%

SUPERVALU(FY 2009)

(5.1%) (6.2%) 624.57 40 112 29,000 22.50% 2.96% 0.97%


72

SWOT Analysis

Strengths Corporate Culture Customer Experience ‘Hip’ Image Double-Digit Growth Product Differentiation (in the offering of high-quality natural

food products) Branding for the affluent and health-conscious

Weaknesses Lack of international expansion (except for Canada and UK) Dependence upon global food prices and suppliers such as

United Natural Foods


73

SWOT Analysis

Opportunities Market Leadership in high-demand segment/industry Media coverage focus on organic and natural foods Focus on consumer education Expansion of WFM brand image with the Health Starts Here label Store expansion into new domestic and international markets

Threats Increased Competition Re-branding existing supermarkets Increased inflationary pressure on food items Changes in economic conditions and government regulations

and a possible impact on consumer spending


Whole Foods

Williams %R Current = -76.11%


Whole Foods

Bollinger Bands April 25 Lower Bound = 81.70 April 25 Price = 82.51


Whole Foods

Relative Strength Index (RSI) Current: 43.96


Whole Foods

Moving Average Convergence Divergence (MACD) Current: .26%


Whole Foods

Technical Analysis Thesis

Williams %R: Current -76.11% Buy BOLL: March 6: Lower Bound = 81.70, Price = 82.51

Neutral RSI: 43.96 Neutral/Slight Buy MACD: .26% Neutral

Overall technical analysis: Neutral/Slight Buy


79

Investment Thesis Summary

Increasing number of people striving to live healthy and protect the environment by buying organic and all natural foods

As the US comes out of the recession, the projected increase in discretionary spending will greatly benefit WFM

Significant growth potential within the United States

Few direct competitors that specialize in organic and all natural foods

Much higher margins than competitors


80

Investment Proposal

20 Shares x $82.05 per share = $1641.00

Investment Horizon: 2-3 years Long-Term Position with review after 6

months


81

MSCI South Korea IF (EWY)

MACRO SECTOR


82


MACRO SECTOR


83


MACRO SECTOR


84

I. Introduction

II. Thesis

III. ETF Composition

IV. Geopolitics & Law

V. Stock movement

VI. Macro Overview

VII. Korea & Corporations

VIII. Analysis

IX. QuanTeam

X. Proposal

Overview


85

Introduction -South Korea

Located in the Korean peninsula between China and Japan 12th largest economy in the world

7th largest exporter, 10th largest importer Main trade partners: China, Japan, USA, Saudi Arabia

One of four highly developed Asian economies along with Singapore, Hong Kong, Taiwan (“Four East Asian Tigers”)

One of the world’s fastest growing economies from 1960 to late 1990s

GDP per capita: $2,300 (1980) -> $30,000 (2010) “Miracle on the Han River” Still one of the fastest growing developed countries in

2000s Over the last decade, EWY yielded 160% return


86

Introduction -South Korea

Leader in high-tech industries electronics, telecommunications,

automobile, shipbuilding, steel

Chaebol System: Korean family-controlled business conglomerates

Samsung, Hyundai, LG, SK, Lotte, Doosan groups

Receive a lot of government support and finance


87

Introduction -Korean Stock ExchangeMSCI South Korea Index

Capitalization-weighted Index provided by Morgan Stanley, acting as an investment decision support to investors

Categorizes Korea’s public stocks into different sectors

KOSPI (Korean Composite Stock Price Index)

Like Dow Jones or S&P 500KOSDAQ (Korean Securities Dealers Automated Quotations)

Like NASDAQ


88

Introduction -ETFs

ETF (Exchange-Traded Funds) is an investment fund traded on stock exchanges

ETF usually track an index, such as MSCI or S&P 500 and thus captures the performance of a stock market index

Other types Commodity, Bond, Currency, Leveraged

ETFsWhy ETF versus stocks?

Low costs, tax efficiency, stock-like features


89

Thesis

European IssuesConsumer-oriented marketStrong growthNot recovered from August


90

ETF Composition

An already-diversified portfolio of the most prominent companies in Korea

Samsung, Hyundai, POSCO, LG Its index characteristic enables hedging of company- or sector-

specific risks Captures the performance of Korean economy as a whole Net Assets: $3.04 billion # of Holdings: 105 Total Market Capitalization: $763 billion


91

ETF Composition -Top 10 Holdings

Name % Of Fund

SAMSUNG ELECTRONICS CO LTD 22.69

HYUNDAI MOTOR CO 6.29

POSCO 3.79

HYUNDAI MOBIS 3.25

KIA MOTORS CORPORATION 3.00

SHINHAN FINANCIAL GROUP LTD 2.91

SAMSUNG ELECTRONICS-PREF 2.57

LG CHEM LTD 2.51

KB FINANCIAL GROUP 2.47

KYNIX SEMICONDUCTOR INC 2.40

Total 51.84


92

Geopolitics & Law

Political tensions with North Korea and China Trade acting as protection

China & 8% Margin

Korea’s strength Miliatry Alliances Pacific Trade Union

Korean perception of Samsung-Apple lawsuit

Samsung “strong” company in Korea Licencing/manufacturing issues


93

Geopolitics & Law -North Korea Insecurity with NK drag index down

Irrational Fear US & China alliances/trade

“Just for show”

Entry point

Limit buy

Wait for stability in Regime to Sell


94

Stock Movement


95

Stock Movement

Not returned to pre-August levels 4.5-4% Growth “Luxury goods” longer to recover Limited trade with Europe

Near future: Samsung Galaxy S3 on May 3

Samsung supplier for Apple Auto releases in April & May & Hyundai Veloster (2013)


96

Macro Overview

Crisis only stalled Spain’s rising bond yields >8% Greek, French & Dutch Elections

Uncertainty of politics post-election

Lack of market confidence

Austerity: deepening recession Internal political problems

Is the Euro the problem?

John Paulson: short German bonds


97

Macro Overview

Move away from European markets into Asia

Asian markets continue to do fine despite unrest in Europe

Hedge Limited trade with S. Korea

Good entry point

Increase consumer confidence in Asia

Push Asian bond and interest rates down Growth stimulus


98

Korea & Corporations

Perception of Samsung, Hyundai, KIA, etc. Mentality towards corporations Subsidies

Isolated from Europe

Consumerism


99

Korea & Samsung -Apple

Apple knows Samsung’s goal is to dethrone it as the world’s most valuable company.

Samsung claimed top spot in global smartphone shipments for Q3 2011, Apple slipped to number two

Lawsuits Apple is the only closed source smartphone company Actively trying to sue anyone over any

alleged technology infringements & licencing 3G Wirless Technology iPhone/ iPad design Source code Galaxy Tab


100

Korea & Samsung -Apple

Apple needs Samsung’s “best of breed” components for it’s main products

Anytime Apple makes money, so does Samsung

Samsung accounted for 25% of iPhone’s parts (including processor)

Samsung providing the high resolution touch screen for iPad 3


101

Analysis


102

Analysis


103

Analysis


104

Analysis -DCF (Samsung)

Currency: South Korean Won. Exit multiple method. 5yr % increase: projected to be between 13% to 52%. Median =

Mean = 32%. Change in EBIT per year: 4.1% WACC was 16% with 1% flex. Exit Multiple was 7.9% (similar to the current industry average).

Samsung, Microsoft & Windows 8 on new touch screen computer in 2012.

The date this was announced corresponds with time Samsung's stocks started to rise. Note that Microsoft hasn't even announced the release date

for windows 8.

2011 2012 (projected) 2013 (projected)

EBIT 9.680 24.887 25.453

EBITDA 18.987 40.513 42.890


105

QuanTeam

????


106

Proposal

Buy $1500 worth at current market price


107

Announcements


108

Senior Analyst Applications

Due April 25th at 11:59pm Interviews conducted at this Sunday, April

29th

Between 1:00 and 3:00pm


109

Brainteaser

A one-armed surgeon needs to operate on three patients but he only has two individual surgical gloves and he can't get any more. How can he operate on the three patients in turn without infecting the patients or himself?

general body meeting 04-25-12 1. mutual investment club of cornell welcome 2

Documents

austerity slide

phase phase

pipeline compounds

medicare program

ypf argentina

synthesis of pipeline

medicare patients health

competitive bidding