General Meeting 2
9.16.2014
Agenda
• Announcements
• Portfolio Update
• Market Update
• Lecture: Careers in Finance
• Pitch: WFM
USIT General Meeting 2
9.16.2014
Officer/SCG positions
• Need to meet new officers
• What do I do now?
USIT General Meeting 2
9.16.2014
Pitch sign ups/Lecture
• Pitch sign ups for the 30th, 7th, and 14th
• Lecture Topics
•
•
•
•
LBOs
Financial Crisis
Employment
Is a college degree worth the cost
USIT General Meeting 2
9.16.2014
Fall Portfolio
Challenge
Register at usiteam.org/events
•Build and manage your own portfolio
•Compete with other McCombs students
•Top three winners receive prizes in May
$5
entry fee
Announcements
Technical Workshops
Every Thursday 7-8
CBA4.328
This Week:
Multiples Analysis
USIT General Meeting 2
9.16.2014
Announcements
USIT General Meeting 2
9.16.2014
Portfolio Update
Portfolio Update
• FNMA (6.96%) – volatile
• ACC (6.44%) – Insider selling; giving pass
previous gains
• BBRY (6.2%) – Announcement of Passport;
Earnings coming up on Sep. 26; Acquired
Movirtu
• GY(4.5%) – Analyst downgrade
USIT General Meeting 2
9.16.2014
Fannie Mae- 6 month
USIT General Meeting 2
9.16.2014
ACC- 3 month
USIT General Meeting 2
9.16.2014
Company Overview - ACC
•
•
•
•
•
Largest student housing company
• 1st publicly traded student housing REIT
Real Estate Investment Trust
• Distribute 90% of income as dividends
• Does not pay corporate income tax
$4.2 billion worth of developments
Partners with universities to build both on and
off campus properties
Headquartered in Austin
Market Update
Market Performance
USIT General Meeting 2
9.16.2014
Alibaba IPO
 What is Alibaba?
 Is it larger than Ebay and Amazon?
 2013 transactions totaled $248 bn
 More than Ebay + Amazon
USIT General Meeting 2
9.16.2014
Alibaba IPO
 Why am I talking about Alibaba?
 IPO
 Midpoint price range of $155 bn
USIT General Meeting 2
9.16.2014
Alibaba IPO
1. By buying stock in Samsung you get stock in?
 A. The Bundesbank
 B. A off shore account in Jamaica
 C. Samsung
 D. A South Korean Pension fund
2. By buying stock in Alibaba you get stock in?
 A. The Dallas Cowboys
 B. Chinese equivalent of social security
 C. Alibaba
 D. An agency in the Cayman Islands
3. The largest IPO in U.S. history was?
 A. AT&T
 B. Visa
 C. General Motors
 D. Facebook
USIT General Meeting 2
9.16.2014
Freedom!!!!!
USIT General Meeting 2
9.16.2014
United Kingdom
• Are England and the UK the same thing?
USIT General Meeting 2
9.16.2014
Folks
• Who are these people?
USIT General Meeting 2
9.16.2014
Scottish Independence
• What’s going on?
• Who’s involved
• Why are they doing this?
• Why does it matter?
YES
NO
USIT General Meeting 2
9.16.2014
Quantitative Easing
• What is it?
• Where is it being employed?
• Principal actors?
• What’s the big news right now?
USIT General Meeting 2
9.16.2014
May/June
2013
Federal Reserve
Assets: Key Dates
Fed hints at
tapering
Nov. 2010
Fed enters
QE2, buys $600
Fed announces QE1 and starts billion in
buying up to $1.7 trillion in
securities over
securities
seven months
Nov. 2008
Nov. 2012
Fed begins QE3 $85
billion pm
TWIST
March
2010
June 2011
QE1 ends
QE2 ends
Mortgage
backed
Securities
2007
2008
Source: U.S. Federal Reserve
2009
2010
2011
2012
2013
2014
Jan. 2014
Fed begins taper
QE Tapering

Tapering began in January of 2014 and will continue through October 2014.
Fed QE
Windown
Quantitative
Easing
2014 Tapering
$90
$80
$70
$60
$50
$40
$30
$20
$10
$0
Dec-13
Jan-14
Feb-14
Mar-14
Apr-14
May-14
Jun-14
Jul-14
Aug-14
Sep-14
Oct-14
Nov-14
Dec-14
Fed Purchases ($billions)
USIT General Meeting 2
9.16.2014
Japanese Quantitative Easing
Japan Central Bank Balance Sheet (Billion JPY)





1999 Japan hits 0% interest rate
2010 Japan starts QE
August 2011 BOJ increases balance sheet by 10T
October 2011 BOJ increases balance sheet by 5T
April 2013: Abenomics begin 130T over two years
o
Represents ~23% of GDP
Source: Bank of Japan; Trading Economics
26
USIT General Meeting 2
9.16.2014
Monetary Easing in Europe

In Sep. 2014 ECB announces proposal for 1tn Euros of bank targeted initiatives intended to bring
balance sheet to 2012 levels:
 Proposed program would be 7.8% of the Euro Area GDP
 Largest prong is the purchase of over 500bn Euros worth of covered bonds and ABS
European Central Bank Balance Sheet (Euro)
(in
millions
of
Euros)
2008
Source: European Central Bank
2009
2010
2011
27
2012
2013
USIT General Meeting 2
9.16.2014
Introduction to Careers in Finance
Major Fields
• Banking
• Private Equity
• Hedge Funds
• Corporate Finance
• PWM
USIT General Meeting 2
9.16.2014
Banking
• Retail Banking
• Commercial Banking
• Private Banking
• Investment Banking
USIT General Meeting 2
9.16.2014
Investment Banking
USIT General Meeting 2
9.16.2014
Basic Facts
• You don’t invest
• Long hours
• Long weeks
• Decent pay
• Modeling
• Pitch books
• Other junk
USIT General Meeting 2
9.16.2014
Fields within Banking
• Product Groups
• Specialized type of banking
• Coverage Groups
• Specialized industry of focus
USIT General Meeting 2
9.16.2014
Investment Banking Geography
• NYC
• Houston
• San Francisco
• Charlotte
USIT General Meeting 2
9.16.2014
Investment Banking Career Hierarchy
USIT General Meeting 2
9.16.2014
Private Equity
• Financial buyers
• Utilize methods such as LBOs
• Look for turn around of distressed company
• Liquidity event
• IPO
USIT General Meeting 2
9.16.2014
Hedge Funds
• Asset Management
• Small teams
• Limited number of large investors
• Not accessible to public
• Typically not undergraduates
USIT General Meeting 2
9.16.2014
Corporate Finance
• M&A
• Capital Raising
• Work focuses on your company
USIT General Meeting 2
9.16.2014
PWM
• Managing money
• Very relationship driven
• AUM fees
• Commission fees
• Problematic incentives
USIT General Meeting 2
9.16.2014