ACIIC Analyst Program

By: Ivan, Aaquib
November 24, 2013

ACIIC Analysts

The Association of Canadian Intercollegiate Investment Clubs

ANALYSTS TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5 TOPIC 6

• 7 schools across Canada and U.S. • Over 100 applications • 39 analysts
– – – – 9 from Ivey 6 from Schulich 5 from Queen’s 1 from Wharton - 8 from McGill - 5 from McMaster - 5 from Laurier

Introducing ACIIC

The Association of Canadian Intercollegiate Investment Clubs

TOPIC 1 INTRODUCTION TOPIC 3 TOPIC 4 TOPIC 5 TOPIC 6

• Association of Canadian Intercollegiate Investment Clubs • Formally organized as a non-profit charity organization • 6 member Universities across Canada today
– Goal of expanding from coast to coast

ACIIC Vision The Association of Canadian Intercollegiate Investment Clubs TOPIC 1 TOPIC 2 VISION TOPIC 4 TOPIC 5 TOPIC 6 • Investment education – Rigorous. structured • Shared resources • Tight-knit community – Alumni database – Mentorship .

ACIIC Conference The Association of Canadian Intercollegiate Investment Clubs TOPIC 1 TOPIC 2 TOPIC 3 CONFERENCE TOPIC 5 TOPIC 6 • Annual 2 day conference set in March • Stock pitch competition – Presenting your stock report • Education series • Industry guest speakers • Networking session .

Stock Analyst Program The Association of Canadian Intercollegiate Investment Clubs TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 PROGRAM TOPIC 6 • 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 .

Stock Analyst Program The Association of Canadian Intercollegiate Investment Clubs TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 PROGRAM TOPIC 6 Action Items Meet the Team Understanding Industry Themes Understanding Industry Drivers Identifying Potential Stock Investments Nov-24 Dec-1 Week of Dec-8 Dec-15 Industry Analysis Deliverables • • • • 4-5 PowerPoint slides Identify the key drivers and themes Identify several stocks that are potential investments Choose a stock .

Shareholder Analysis Competitive Analysis vs. Segment Analysis.Stock Analyst Program The Association of Canadian Intercollegiate Investment Clubs Action Items Dec-29 Week of Jan-5 Jan-12 Jan-19 TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 PROGRAM TOPIC 6 Investment Thesis Company Overview. SWOT) Calculate ratios. DuPont analysis. comparable valuation . Mangement Analysis. 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. Peers Comparable Analysis Company Analysis Deliverables • • • • • • • 5-8 PowerPoint slides Business model.

Liquidation Value. NAV Week of Jan-26 Feb-2 Feb-9 Valuation Deliverables • • • • 4-5 PowerPoint slides Operating assumptions should reflect company and industry analysis Perform DCF valuation Have at least one other valuation methodology that is relevant to the company . LBO. Sum of the Parts.Stock Analyst Program The Association of Canadian Intercollegiate Investment Clubs TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 PROGRAM TOPIC 6 Action Items Operating Assumptions: Understanding Key Drivers DCF Other Valuation: Precedent.

Stock Analyst Program The Association of Canadian Intercollegiate Investment Clubs TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 PROGRAM TOPIC 6 Action Items Risks to Valuation and Potential Mitigants. Catalyst Week of Feb-16 Risks & Catalyst Deliverables • • • • 2-3 PowerPoint slides Risks to the downside (great if you can quantify) Potential mitigants Catalyst in the short term horizon (soft and hard) .

if you forecasted margin expansion or to increase cross selling.Stock Analyst Program The Association of Canadian Intercollegiate Investment Clubs TOPIC 1 TOPIC 2 Action Items Potential Transformative Value Creation Strategies Week of Feb-23 Mar-2 Strategy TOPIC 3 TOPIC 4 PROGRAM TOPIC 6 Deliverables • • • • 4-5 PowerPoint slides Operational or financial strategy that the company can employ to enhance valuation Example. how is that achieved Potential acquisition and other transformative transactions .

Stock Analyst Program The Association of Canadian Intercollegiate Investment Clubs Action Items TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 PROGRAM TOPIC 6 Week of Mar-9 Mar-16 Presentation Presentation Deliverables • • • • ~20 PowerPoint slides Compile your presentation and summarize the salient points Practice it together Polished .

Stock Analyst Program The Association of Canadian Intercollegiate Investment Clubs TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 PROGRAM TOPIC 6 • Resources – – – – We are here to help Chapter Head Industry Mentors Each Other • Mentorship – Mentorship database – Recruitment or questions in general .

Sector Allocation The Association of Canadian Intercollegiate Investment Clubs TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5 SECTORS • • • • • • FIG – Matthew Parrott TMT – Mario Campea CRG – Colton Dick Industrials – Artie Novik HC – Geoff Clark NR – Dave Marrello .

Financial Institutions Group (FIG) TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5 SECTORS TOPIC 6 The Association of Canadian Intercollegiate Investment Clubs • Matthew Parrott – – – – – – – Eric Luo Alex Hong Andre Luk Alex Payne Andrew Gibbs Krishna Aggarwal Sebastian Grutter .

2013 .FIG By: Matt Parrott November 24.

What is FIG? The Association of Canadian Intercollegiate Investment Clubs WHAT IS FIG THEMES KEY DRIVERS INVESTING THESIS • Financial Institution Group • Three main sub-sectors – Banks – Insurance Companies – Asset Managers and Specialty Finance .

Recent Themes The Association of Canadian Intercollegiate Investment Clubs WHAT IS FIG THEMES KEY DRIVERS INVESTING THESIS • 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 .

Key Drivers The Association of Canadian Intercollegiate Investment Clubs WHAT IS FIG THEMES KEY DRIVERS INVESTING THESIS • Economic growth – The financials sector is often considered a levered play on the economy • Interest rates and inflation • Consumer and business confidence • Fund flows .

Investing The Association of Canadian Intercollegiate Investment Clubs WHAT IS FIG THEMES KEY DRIVERS INVESTING THESIS • Most widely used metric is P/B • Regression between P/B and ROE • Asset/dividend based models as opposed to cash flow models .

Sample Investment Thesis WHAT IS FIG THEMES KEY DRIVERS INVESTING THESIS The Association of Canadian Intercollegiate Investment Clubs • 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 .

2013 .Questions The Association of Canadian Intercollegiate Investment Clubs FIG By: Matt Parrott November 24.

Media. Telecom) TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5 SECTORS TOPIC 6 The Association of Canadian Intercollegiate Investment Clubs • Mario Campea – – – – – – – Matt Ting Jin Hwang Emerson Dieudonne Julie Vincent David Greenman Sean Saggi Emily Ren .TMT (Tech.

2013 . Media & Telecom By: Mario Campea & Mikhail Stepanov November 24.Technology.

IBM) .TMT Overview / Trends Technology TECHNOLOGY MEDIA TELECOM KEY DRIVERS KEY METRICS EX. THESIS The Association of Canadian Intercollegiate Investment Clubs • 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.

user review.TMT Overview / Trends Technology TECHNOLOGY MEDIA TELECOM KEY DRIVERS KEY METRICS EX. e-Commerce. storage. search engines. advertising. THESIS The Association of Canadian Intercollegiate Investment Clubs • Internet – – Companies that have majority focus on selling products and services using Internet as main delivery platform Includes social media. 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. etc. from vendors .

THESIS – – Incredibly saturated industry. Fox News) . with large players being the only ones scalable enough to compete Usually a portion of a larger conglomerate (e. CNBC.TMT Overview / Trends Media TECHNOLOGY MEDIA TELECOM KEY DRIVERS KEY METRICS The Association of Canadian Intercollegiate Investment Clubs • Advertising – – Usually an in-house function of corporate finance Investment opportunities emerging in the mobile space • Broadcasting – – EX.g. Time Warner Cable) Very little pure-play broadcasting companies due to high overhead required to compete Many private companies (e. Rogers Communications.g.

AT&T. Verizon • Satellites – – Provide satellite communication services Ex.TMT Overview / Trends Telecom TECHNOLOGY MEDIA TELECOM KEY DRIVERS KEY METRICS EX. Sirius. Rogers. THESIS The Association of Canadian Intercollegiate Investment Clubs • Carriers – Wireline/ Wireless – – Provide telecommunication services through either wireless or wireline Ex. Bell. Dish Network .

iOS App Store • KEY METRICS EX. Twitter 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 other developments that assist in creating competitive advantages • Ex. Apple A strong user base is key to generating sustainable earnings Providing value to your users through a strong ecosystem will create a defendable position that could prevent being displaced from the market • Ex. THESIS Significant R&D Expenditures – – • Strong User Base / Defendable Position – – .Key Drivers The Association of Canadian Intercollegiate Investment Clubs Example TMT Key Success Factors TECHNOLOGY MEDIA TELECOM KEY DRIVERS • 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 associate this space with a riskier profile • Ex.

Twitter. or it may not be a sound basis for comparison For most such companies. Forward multiples are very important Inherent limitation: ignores revenue generation completely . etc. users are the main driver behind revenue Google. THESIS Enterprise Value / Users – – – – – Company may lack revenues. Zynga.Metrics to Look For TMT Specific Multiples TECHNOLOGY MEDIA TELECOM KEY DRIVERS KEY METRICS The Association of Canadian Intercollegiate Investment Clubs • 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 • EX. Facebook. LinkedIn.

and the EV / U multiple . 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 More time means more potential exposure to advertisements and products What percentage of users actually contribute to revenues TELECOM KEY DRIVERS KEY METRICS EX.Metrics to Look For Other Core Metrics TECHNOLOGY MEDIA The Association of Canadian Intercollegiate Investment Clubs • • Subscriber or user growth rate – Since users drive revenues. THESIS • • • Time on site – – Paying Users/ Users Revenue per user – Compliments above metrics.

the company has been transformed – Pure play network services infrastructure leader • Focus on the company’s 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 . THESIS The Association of Canadian Intercollegiate Investment Clubs • Post MSFT deal.Example Thesis Nokia TECHNOLOGY MEDIA TELECOM KEY DRIVERS KEY METRICS EX.

Media & Telecom By: Mario Campea & Mikhail Stepanov November 24.Technology. – Mario Campea (mccampea@gmail. 2013 I apologize for being unable to attend. Please feel free to reach out and we can arrange a chat.com) .

Retail) The Association of Canadian Intercollegiate Investment Clubs TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5 SECTORS TOPIC 6 • Colton Dick – – – – – – – Vinayak Modi Will Zed Daniel Viner Steven Lo Erik Chu Fred Jackson Asem Mosmer .CRG (Consumer.

Consumer Discretionary & Staples Industry By: Colton Dick November 24. 2013 .

considered non-necessities . beverage. tobacco.Industry Introduction • Consumer Staples: INTRO THEMES DRIVERS OPPORTUNITY TJX The Association of Canadian Intercollegiate Investment Clubs – Non-cyclical companies that sell food. and other household items • Consumer Discretionary – Cyclical companies that sell durable and non-durable products/services.

S.“Those that need a bargain and those that want a bargain.Recent Industry Themes • U.” • Canadian grocer consolidation – Loblaw/Shoppers & Empire/Safeway • Recent earnings prove Canadian environment is saturated and extremely competitive . economic recovery INTRO THEMES DRIVERS OPPORTUNITY TJX The Association of Canadian Intercollegiate Investment Clubs – distribution of recovery is not equal • Luxury • Discount .

0% 2.2%) (1.0% 3.2% INTRO THEMES DRIVERS OPPORTUNITY TJX 2.2%) (1.0% (0.0%) (2.0% 1.0% 0.0% 5.Recovery Gains 6.8%) (1.0%) The Association of Canadian Intercollegiate Investment Clubs 5.0% 4.0% (1.2%) Lowest Fifth Second Fifth Third Fifth Fourth Fifth Highest Fifth Top 5 % Negative real income gains heightens the number of value conscious consumers .

2 1.95 0.25 1.9 2012 2012 2012 2013 2013 2013 2013 2013 2013 2013 2013 2013 2013 S5COND Index S5CONS Index SPX Index Discretionary has seen margin expansion relative to the S&P500.15 21% 17% 11% OPPORTUNITY 1.Increasing Valuations 1.3 The Association of Canadian Intercollegiate Investment Clubs U.05 TJX 1 0. whereas Staples has seen a relative margin contraction .S.1 1. Normalized NTM P/E Growth INTRO THEMES DRIVERS 1.

Industry Key Drivers The Association of Canadian Intercollegiate Investment Clubs INTRO THEMES DRIVERS OPPORTUNITY TJX • Macro Drivers – – – – – – – – Unemployment Rate Outstanding Household Debt Real Disposable Income Emerging Market & European Recovery Same Store Sales Growth Food Inflation Margin Expansion Pricing Power • Micro Drivers .

Industry Opportunities The Association of Canadian Intercollegiate Investment Clubs INTRO THEMES DRIVERS OPPORTUNITY TJX • Off-Price & Luxury Retail • Gaming • Newspapers • Diversified Food Packagers .

SSS driven by housing recovery Store growth in new/existing countries Convergence to US margins Barrier to entry Foundation for successful international expansion Continued margin expansion DRIVERS OPPORTUNITY TJX HomeGoods Europe Global Buying Organization …Especially to it’s only true competitors ROSS . INTRO THEMES The Association of Canadian Intercollegiate Investment Clubs Marmaxx Remodel eCommerce • • • • • • • • • Compete with department store experience Potential significant growth Consumer analytics insight Store growth in USA.TJX Investment Thesis The Market is undervaluing….

8x 9.6x 3. 2013 $46.6x 22.5x 9.6x 1.0x 1.4x 3.281 $17. EV / adj.4% 5.844 $695 $1.8x n/a 18.443 $647 $3.7%) 6. and Net Debt adjusted for capitalized operating leases (2) All estimates are consensus as at November 20.8% TJX’s dominance as a leader in off-price retail is reflected by a high return on invested capital and as such.3x 20.5x (2.8x 10.6% 10. 2013 (1) EV.5% 43.2x 18.6x 7.6% n/a 24.0x 20. 2013 INTRO THEMES DRIVERS OPPORTUNITY TJX (in US$ millions) Company Off-Price Retailers Big Lots Ross Stores Stein Mart Burlington Coat Average TJX Companies Notes: Share price as at November 20.6x 3.2% 43.3x 17.6x n/a 3.0x 11.4x 11.2% 1.205 6.482 $2.5x n/a 15.4x n/a 4.1x n/a 8.6x 1.4% 19.8% 7.0x 9.21 $45.0% 7. commands a premium to its peers .0x nmf n/a 7.7x 1.9x 6. EBITDAR( 1) ( 2 ) CY2014E CY2015E SSS Growth LTM EBITDA LTM Margin LTM ROIC CY2014E CY2015E CY2013E CY2014E CY2015E CY2013E 3.8x 19.8x 22.7x 6.9x 1.6% 8.5x 3. Enterprise Value adj.3x 16.4x 7.0% 2.8x n/a 8.4x 10.5x 9.2% 15.9% 14.6% 7.3x 13.3x 8.TJX Investment Thesis Data as at November 20.3x n/a 16. EBITDAR( 1) ( 2 ) CY2013E P / E( 1) ( 2 ) The Association of Canadian Intercollegiate Investment Clubs adj.7x Market Cap.204 $17.5x n/a 2.7% 1. Net Debt / adj.7x 18.544 $2.218.1x 1.

Questions The Association of Canadian Intercollegiate Investment Clubs Consumer Discretionary & Staples Industry By: Colton Dick November 24. 2013 .

Industrials The Association of Canadian Intercollegiate Investment Clubs TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5 SECTORS TOPIC 6 • Artie Novik – – – – – – Ryan Haydon Jonathan Kim John Lu Chris Pepper Dean Brown Hyla Nayeri .

Industrials By: Artie Novikov November 24. 2013 .

4 x .77T 20.Sector Overview The Association of Canadian Intercollegiate Investment Clubs • Diverse sector including companies involved with: INTRODUCTION THEMES KEY DRIVERS KEY RISKS SPECIFICS THESIS RETURNS QUESTIONS – 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 Market Cap P/E $7.

Themes & Trends The Association of Canadian Intercollegiate Investment Clubs INTRODUCTION THEMES KEY DRIVERS KEY RISKS SPECIFICS THESIS RETURNS QUESTIONS • Services an increasingly important source of revenues • Industrials scaling back on operational leverage • Focus on cost reductions and divestiture of non-core operations .

and capital goods • GDP growth provides good indicator of future demand • Growth in government spending • Large infrastructure projects .Key Drivers The Association of Canadian Intercollegiate Investment Clubs INTRODUCTION THEMES KEY DRIVERS KEY RISKS SPECIFICS THESIS RETURNS QUESTIONS • Performance largely driven by demand for building construction. manufactured products.

Key Risks The Association of Canadian Intercollegiate Investment Clubs INTRODUCTION THEMES KEY DRIVERS KEY RISKS SPECIFICS THESIS RETURNS QUESTIONS • Large companies putting off investments due to uncertain economic conditions • Increasing interest rates • Declining budget environment for several subsectors .

Sector Specifics The Association of Canadian Intercollegiate Investment Clubs INTRODUCTION THEMES KEY DRIVERS KEY RISKS SPECIFICS THESIS RETURNS QUESTIONS • PMI is a good leading indicator of industrial production • Generation of Free Cash Flow is key • Airlines: – EV/Plane – EV/Passenger • Infrastructure: – EV/NAV – P/B .

Thesis Example The Association of Canadian Intercollegiate Investment Clubs INTRODUCTION THEMES KEY DRIVERS KEY RISKS SPECIFICS • Micro – High return on capital – Barriers to entry – High margins relative to industry THESIS RETURNS QUESTIONS – Good management .

Thesis Example The Association of Canadian Intercollegiate Investment Clubs INTRODUCTION THEMES KEY DRIVERS KEY RISKS SPECIFICS • Macro – Important to understand what is happening at the subsector.. China. and national levels – GDP reports & forecasts: U.S. Germany THESIS • Setup – What is the current state of your pitch? – 52-week highs/lows – Short-interest RETURNS QUESTIONS . sector.

Sector Performance The Association of Canadian Intercollegiate Investment Clubs INTRODUCTION THEMES KEY DRIVERS KEY RISKS SPECIFICS TOPIC 7 RETURNS QUESTIONS .

2013 .Questions The Association of Canadian Intercollegiate Investment Clubs Industrials By: Artie Novikov March 9.

NR (Natural Resources) The Association of Canadian Intercollegiate Investment Clubs TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5 SECTORS TOPIC 6 • David Marrello – – – – – – Karishma Balani Bill Cong Akshay Gujral Darren Viegas Egor Gaggin Jenny Kletnich .

Natural Resources By: David Marrello November 24. 2013 .

Sector Intro • Metals and Mining SEC. INTROS SEC. The Association of Canadian Intercollegiate Investment Clubs – Was once Canada’s most important sector – Major underperformer for 2013 (-24% for the year) – Key Canadian companies in the sector include Barrick Gold. Agnico Eagle. – Success of the industry highly dependent on the prices of underlying precious metals – Companies have different specialties: as producers or as explorers . THEMES KEY DRIVERS INVESTING SAMPLE THES. and Potash Corp.

Gas. Electrical Power. Coal. Nuclear. CNR. & Imperial Oil – Success of the industry highly dependent on the prices of underlying commodities . Encana. Talisman.Sector Intro • Energy The Association of Canadian Intercollegiate Investment Clubs – Includes: Petroleum. and Renewables – Currently Canada’s second most important sector – Also an underperformer for 2013 (8% for the year – Key Canadian companies in the sector include Suncor.

INTROS SEC. 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 developing nations – New technologies (deepwater drilling now only 9% but increasing) – The profound impact of new technology (ex Deepwater drilling) – US energy independence KEY DRIVERS INVESTING SAMPLE THES.Sector Themes Mining and Metals SEC. . THEMES The Association of Canadian Intercollegiate Investment Clubs – Shift in mining focus towards developing nations – The profound impact of new technology (ex.

diamonds) – Production efficiencies of miners – Regulation (threat of nationalization) – Ability to raise debt/equity.Key Drivers • Metals and Mining SEC. and cash flow – Macroeconomic considerations • Energy – – – – Underlying commodity prices Government subsidies and regulations Global demand and supply outlook Mergers and Acquisitions . silver. INTROS SEC. THEMES KEY DRIVERS INVESTING SAMPLE THES. The Association of Canadian Intercollegiate Investment Clubs – Prices of Underlying Precious Metals (gold.

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 . THEMES KEY DRIVERS INVESTING SAMPLE THES.Investing Specifics Key Industry Metrics • Metals and Mining SEC. The Association of Canadian Intercollegiate Investment Clubs – Production/Capacity/Reserves (typically measured in weight) – Cash flow from operations – EBITDAX – Net Asset Value Model Typified by long lasting. INTROS SEC.

Larger multi-mineral mining companies are leaving the industry to pursue the opportunities that come with increased demand for other commodities such as steel. . Proved and Probable Recoverable and Attributable Reserves showing signs of growth.Sample Investment Thesis Dominion Diamonds 1. falling behind expected demand growth that will be driven by China. especially from 2012 to 2013:expected to grow from 30840 T to 37080 T Current Ekati mine plan calls for further seven years of production until 2019. however Dominion Diamond Corp has discovered additional resources on Ekati property. copper etc. supply is expected to decline. The rough-diamond market is expected to remain balanced from 2013 through 2017. 4. INTROS SEC. SAMPLE THES. From 2018 onward. as existing mines get depleted and no major new deposits come online. giving companies such as Dominion Diamond Corporation the opportunity to step in and increase their market share in the diamond industry substantially. 3. SEC. India and the US. THEMES KEY DRIVERS INVESTING The Association of Canadian Intercollegiate Investment Clubs 2. iron.

One-time expenses due to purchase of Ekati resulted in the US$16. the company would have seen $11. or 13¢ a share.Thesis Continued • • • • • The Association of Canadian Intercollegiate Investment Clubs The Company is the fourth largest diamond producer by value globally Largest publicly listed diamond mining pure play by market capitalization Both mines located in the low political risk environment In Q3. a 62% increase in carats sold was offset by a 9% decrease in achieved diamond prices Rough prices had picked up by about 6% in the first months of the year – Since then.3-million net loss – Excluding such one-time items. is slated to begin in 2016.1 million. where stripping is under way. prices have been flat • • Production at the Misery pit. in profit .

Dominion is undervalued .Investment Thesis Continued The Association of Canadian Intercollegiate Investment Clubs • At $14/share.

Questions The Association of Canadian Intercollegiate Investment Clubs Natural Resources By: David Marrello .

Healthcare The Association of Canadian Intercollegiate Investment Clubs TOPIC 1 TOPIC 2 TOPIC 3 TOPIC 4 TOPIC 5 SECTORS TOPIC 6 • Geoff Clark – – – – – Tianhao Fang Wahaaj Ud Din Tanveer Randhawa Rahul Sharma Dmitry Kutsyy .

2013 .Healthcare By: Geoffrey Clark November 24.

Sector Introduction The Association of Canadian Intercollegiate Investment Clubs INTRODUCTION RECENT THEMES KEY DRIVERS SECTOR SPECIFICS SAMPLE INVESTMENT THESIS • The healthcare sector is made of many different sub-industries – Pharmaceuticals and biotechs: Manufacturers of drugs – Device manufacturers: Medical equipment – Hospitals – Health-insurers .

Medicaid • Healthcare spending growing in relation to GDP – Currently at 18% of U.Recent Themes The Association of Canadian Intercollegiate Investment Clubs INTRODUCTION RECENT THEMES KEY DRIVERS SECTOR SPECIFICS SAMPLE INVESTMENT THESIS • Shift towards a single-payer system in the U.S.S. companies that can will be successful • Employers passing burden on employees – Rising costs of insurance – Increased amount of part-time/contract workers . Medicare. – Obamacare. GDP and growing at 4% annually • Sector growing too fast for its own good – Focus is on cutting costs.

Recent Themes The Association of Canadian Intercollegiate Investment Clubs INTRODUCTION RECENT THEMES KEY DRIVERS SECTOR SPECIFICS SAMPLE INVESTMENT THESIS • Changing demographics from aging population – 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 and allergies • Increased prevalence and awareness of mental disabilities .

Medicaid is the number one cost – Healthcare spending growing faster than other categories .Key Drivers The Association of Canadian Intercollegiate Investment Clubs INTRODUCTION RECENT THEMES KEY DRIVERS SECTOR SPECIFICS SAMPLE INVESTMENT THESIS • Government budgets – For most states.

Key Drivers

The Association of Canadian Intercollegiate Investment Clubs

INTRODUCTION RECENT THEMES KEY DRIVERS SECTOR SPECIFICS SAMPLE INVESTMENT THESIS

• 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

Sector Specifics

The Association of Canadian Intercollegiate Investment Clubs

INTRODUCTION RECENT THEMES KEY DRIVERS SECTOR SPECIFICS SAMPLE INVESTMENT THESIS

• Pharmaceuticals and Biotechs
– Patent protection: Intellectual property is key
• Difficult to make money when generic brands are available

– Long and expensive process to bring products to market
• FDA and other regulatory approvals take time

– High R&D budgets
• Look for companies with consistent success in developing innovative products

Sector Specifics

The Association of Canadian Intercollegiate Investment Clubs

INTRODUCTION RECENT THEMES KEY DRIVERS SECTOR SPECIFICS SAMPLE INVESTMENT THESIS

• Facilities
– Focus on operating costs and sustained cost advantages – Large and well-funded systems vs. local hospitals
• Significant M&A activity between the two

investment grade fixed income securities .Sector Specifics The Association of Canadian Intercollegiate Investment Clubs INTRODUCTION RECENT THEMES KEY DRIVERS SECTOR SPECIFICS SAMPLE INVESTMENT THESIS • Health Insurers and Managed Care Providers: – Focus on medical cost ratio. the reverse of operating profit • Healthcare costs divided by revenue from premiums • Shows whether the company is skilled in underwriting – Affected by interest rates • Most investment holdings are short-term.

Sample Investment Thesis INTRODUCTION RECENT THEMES KEY DRIVERS SECTOR SPECIFICS SAMPLE INVESTMENT THESIS The Association of Canadian Intercollegiate Investment Clubs • For company XYZ in healthcare facilities: – Leading market share in large and growing urban centers – Economies of scale act as barrier to entry to newcomers and protect against existing local hospitals – Benefiting from increased M&A activity with a balance sheet that can support it .

Questions The Association of Canadian Intercollegiate Investment Clubs ACIIC Analyst Program By: Ivan. 2013 . Aaquib November 24.

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