Newsletter 9

THIS ISSUE
Who calls the shots? p.2

Dear Friends,
There has been a slight (for some people of our board this word would be a utter underestimation) technical issue last week due to which the ninth edition of our newsletter could not reach you on Monday. However, now everythings back to normal and you can enjoy our selected topics in economics and finance. The first article of our newsletter is devoted to one of our to an interesting type of business, namely family-owned business. Although nowadays this term seems to sound rather archaic as many companies are primarily public, still there are some examples that have evolved in the past years and have turned into notable giants in their fields. In the article we will deal with the commodity business and some of its greatest specimens in terms of success. In the second article we shall deal with a company that is undoubtedly recognized by everybody. Yes, this is Nokia, and it looks as if it is not going to give away its positions and is planning to regain its lost share by presenting a range of innovative products. They do seem o look very attractive and unforeseen in the consumer electronics industry, but isnt it already too late? As always, comments and suggestions are more than welcome, so we hope you will enjoy reading the newsletter. Yours financially, iFund

This week we will introduce to you the sector which is very shy and well hidden from public but is more influential and richer than banking system. Well, it is not about the grey economy, guns & drugs. All over the world some family owned companies control the commodities market and earn sky-high profits every year. That is what this article is about. A glorious dawn for Nokia p.3

Nokia, a Finland-based mobile device developer has unveiled its latest Lumia smartphone line at the Nokia World 2011 event last week. While the company maintains the leader position in the overall mobiledevice market, it has been losing ground in the smartphone segment which has higher margins. Nokia claims that Lumia will be a new dawn for the company, but isnt it too late to jump in the market dominated by Samsung and Apple? Board updates Upcoming Events p.4 p.4

Who calls the shots around?

Learn more about the topic

Glencores success is inimitable: from a small private company it has transformed in one of the worlds largest commodity companies, which is confirmed by its $ 10 Billion IPO in May 2011, which is among the 15 largest in financial history. Read more about its success story: http://www.bloomberg.com/ne ws/2011-08-31/murraytransforms-glencore-from-marcrich-legacy-with-foreign-legionvigor.html Although relatively old, but a very good list of the largest companies still owned by families. Many of these companies in the list are now publicly traded: http://www.cobizmag.com/ima ges/uploads/lists/FamilyOwned List.pdf Businesses owned by families also went through a series of difficulties as a result of the repercussions from the financial crisis: http://www.thedailybeast.com/ newsweek/2010/12/29/familyowned-businesses-get-throughhard-times.html

By Martynas Samulionis

This week we had a flow of good news from different continents starting from the Euro Zone help package and finishing the list with growing USA GDP. But this article is not about these shiny clearly seen and escalated news. This week I want to introduce to you the sector which is very shy and well hidden from public but is more influential and richer than banking system. Well, it is not about the grey economy, guns & drugs. All over the world some family owned companies control the commodities market and earn sky-high profits every year. That is what this article is about. To start with these companies control all the commodities from food to crude oil and gas. They own everything from fields and mines to pipelines, railways, tankers, ports and warehouses. Moreover while other in public opinion big companies are proud of their hundreds of millions of annual revenues these companies silently every year have numbers equaling hundreds of billions under the heading Revenues. In this sector two biggest companies trading oil can have bigger turnover than combined oil exports of two oil-rich countries like Saudi Arabia and Venezuela. Everything we use in our everyday life is produced using various commodities whether it is wheat for our sandwich or oil for car fuel. We cannot live without many things and these companies perfectly know that. Therefore they at least partially use their ability to

influence prices and stay unseen. While now U.S. and EU governments are considering opportunities to limit banking sector powers to speculate with their cash, trading houses stay uncontrolled and that is what these huge companies basically do. They trade millions of futures and other derivatives every day, they have the best teams of risk management in the world and they earn enormous money from this. But that is fine for governments. This time I would like to elaborate on one of these companies a bit more because it is the only one which last year had its IPO and now is publically traded. It is Glencore: company controlling more than 50% of the zinc market and more than 1/3 of the copper market and working in Switzerland. Glencore during the first day of IPO turned its executives into paper millionaires as prices sky rocketed. Even though companys headquarters are in Switzerland it is operating all over the world reaching every continent. Place chosen for the headquarters is not surprising because this country is famous for its secret accounts in banks and business friendly taxes. Such conditions results in 5 out of the 10 biggest commodities companies working exactly in Switzerland. After such big company became publicly traded is it a sign that mysterious influential sector is revealing its secrets and families are giving up their businesses or it is just an exception and as always with icebergs the main part is in the water.

A Still More Glorious Dawn Awaits

Nokia revealed its newest Lumia smartphones in efforts to reverse the trend of decline in the market share that has continued for years.

Learn more about the topic:

An article discussing the top smartphone developers and their positions in the market: http://www.bloomberg.com/ne ws/2011-10-28/samsung-beatsapple-as-no-1-smartphonevendor.html An article that sheds some light on Nokias Lumia marketing strategy as well as some forecasts for the smartphone market: http://www.bloomberg.com/ne ws/2011-10-26/nokia-startsmarketing-blitz-to-wincustomers-to-lumia-device.html A video interview with Stephen Elop of Nokia: http://www.bloomberg.com/vid eo/78954724/

Nokia, a Finland-based mobile device developer has unveiled its latest Lumia smartphone line at the Nokia World 2011 event last week. While the company maintains the leader position in the overall mobile-device market, it has been losing ground in the smartphone segment which has higher margins. Nokia claims that Lumia will be a new dawn for the company, but isnt it too late to jump in the market dominated by Samsung and Apple? The new Lumia phones will be running Microsoft operating system. Investors, however, do not seem to be particularly enthusiastic about this as Nokias shares tumbled nearly 30% back in February when the company announced its partnership with Microsoft. Nevertheless, Nokias chief Stephen Elop claims that Windows will help differentiate the products and incorporate the companys core competences digital map software and music in the new Lumia smartphones. Re-establishing itself as the leader in the smartphone market is one of the key goals for Nokia, which has lost over 60 billion euros in market capitalization since Apples iPhone introduction in 2007. Some analysts fear that it might be too late for the Finnish company as it has lost more than 18 per cent of the smartphone market share to its biggest rivals Samsung and Apple. Both Apple and Samsung, which overtook Apple as the market leader in Q3, have released their new products in October Apples iPhone 4S and Samsungs Galaxy Nexus, making the competition for Lumia pretty tough. More importantly, Nokia will partly miss out on the Christmas holiday season as Lumia will enter the US market only in 2012.

Along with the new Lumia line Nokia presented its Asha phones a family designed specifically for the emerging markets. The Finnish company cashes in on the low-end mobile devices developed for the next billion. Many experts agree that the two classes of phones will eventually converge, stressing the importance of filling Nokias portfolio gap with a top-tier phone. It is too early to tell whether Nokias Lumia will be a success or a flop, but some experts already claim that this is the make or break moment for Nokia. The company representatives promise that there is more to come, but what the consumer market is enthusiastic about is that Nokia and Microsoft will provide a much needed alternative to Android and iPhone. By Justinas Sukys

A detailed overview of the new Nokia products: http://www.reuters.com/article /2011/10/26/idUS93569+26Oct-2011+HUG20111026

Board updates
Here the iFund board posts weekly updates on what has been done or achieved during the week by the board: 1. Negotiations continue with Ab.lv and Rietumu Banka for the Gold Sopnsorship and we hope we will be finally able to finalize with our sponsors We have reached an agreement wit Financial Markets Regulatory Commission to provide a guest lecture on financial market regulation, features, and trading ethics. Finally we have negaotiated with Orion Securities to have our portfolio this year. In addition to the portfolios from the previous years, we will have an additional 10000LTL for investment purposes The iFund board is now involved in the creation of the SSE Riga Endowment Fund, which is to be launched in the nearest future

2.

Upcoming Events
Guest Lecture
November 20, 14.00-15.00 in 311 (TBA)
3.

Movie Night: Rogue Trader (1997)

November 24, 16.00 18.00 in Soros (TBA)
4.

Seminar 4: Fundamental Analysis

December 2, 16.00 17.00 in 311 (TBA)

Seminar 5: Technical Analysis

December 9, 16.00 17.00 in 311 (TBA)

SSE Riga Investment Fund

Strlnieku iela 4a, Rga LV-1010, Latvia Ifund.sseriga@gmail.com http://www.ifund.lv