TXINV & Stock Pitch
Stock Pitch Info Session
Conference Overview
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2 Panels of Speakers
Keynote – Dennis Murphree
See Schedule and all relevant information at TXINV.com
Competition Overview
Key Points
•
This conference aims to educate any people interested in learning
about different investment techniques and industry trends by
combining industry panels with a stock pitch competition and
networking lunch.
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Prize Money
•
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1st Place - $1000
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2nd Place - $400
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3rd Place - $200
REGISTER AT TXINV.COM
Competition Overview
Key Points
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Date: Saturday, April 25 from 10:00am – 5:30pm
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Location: SAC Ballroom
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Sign-in Begins: 10:00 AM outside Ballroom
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Team Composition: 2 – 4 students of any undergraduate
classification
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Breakfast & Lunch Provided
Format
Presentation
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PowerPoint Format
– 15 minutes of uninterrupted presentation time
– 5 minutes of Q&A from Judges – Prelims
– 10 minutes of Q&A from Judges - Finals
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Business Professional attire required
PC’s for the presentation will be provided
– Presentation remotes will not be provided
Competition Overview
Evaluation Criteria
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Presentation
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Industry/Market Analysis
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Financial Analysis
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Strategic Analysis
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Balance of Risk/Return
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X-Factor
Event Details
Pitch Specifications
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U.S. Exchange Traded Equities
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$1 Billion+ market capitalization
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PowerPoint presentation AND one-pager should be emailed to
president@usiteam.org by 8am Saturday
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See example 1 pager at txinv.com
Event Details
Round Setup
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Preliminary Round:
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15 minute presentation
–
5 minute Q&A period
Final Round:
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1 Room
–
15 minute presentation
–
10 minute Q&A period
Networking
Networking Opportunities
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Boxed lunches provided
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Central eating location for judges and students
– Networking encouraged
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Resume book submitted to all judges
Typical Stock Pitch
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Company Overview
Industry Analysis
Investment Thesis
Risks Overview
Financial Analysis
Typical Stock Pitch
Industry Analysis
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Major competitors in the industry
Trends in the overall industry
Porter’s Five Forces
Expectations of industry trends
Typical Stock Pitch
Investment Thesis
• Why did you pick this as an investment?
• Support your argument
Typical Stock Pitch
Risk Overview
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•
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Major Macroeconomic Risks
Major Industry Risks
Major Company-specific Risks
Mitigating Factors
Typical Stock Pitch
Company Overview
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How the company makes money
What the company sells
Who the company sells to and buys from
Competitive advantages of the company
Growth Opportunities
Investment Thesis
China’s Real Estate
Bubble
Where do you look to invest?
Global Economic
Blue Instability
chip value stocks
that consistently outperform in
both bull and bear markets
Eurozone Crisis
Student Loan Bubble
Investment Thesis
Global Tech Services
Global Business Services
Software
Systems and Technology
Global Financing
Industry Analysis
First to Market
1) Consultants define needs
2) Meet demand in real time
3) Industries are digitally dependent
Digitization
Cloud Computing
Industry Analysis
Bargaining Power of Buyers
Current Industry Competition
Threats of Substitutes
Bargaining Power of Suppliers
400,000 employees vs. 100,000 employees
Vs.
Threats of New Entrants
Competitive Advantages
Emerging Market Dominance
Innovative Expansion
Blue Chip Protection
Emerging Market Dominance
The Energy and Utilities Solution Lab in China
In 2011, IBM openedKey100
new offices
Takeaway
Emerging Markets
will drive 60+% of
Natural Resource Solution Centers in Brazil
 IBM is building out
infrastructurethe
and developing
beyond
BRIC countries
strategic industries by responding to massive
Banking
Singapore
demographic
shiftsCenter
such asinrapid
urbanization.
global GDP growth in the next four years
Latin American Micro-Financing Center in Peru
Growth Market Initiatives
Innovative Expansion
Key Takeaway
IBM spends more IBM
than
is the forerunner in
technological advancement and will
continue to redefine the way we
interact with technology and data
$6 billion a year on R&D
Blue Chip Protection
Brand Name
126 Acquisitions
since 2000
Key Takeaway
 IBM is strategically poised to
command markets for decades to
come
Industry Experience
Customer Loyalty
Financial Highlights
Dividends Paid Out (Millions)
$4,000
$3,500
$3,000
$2,500
$2,585
$2,860
$3,177
EBIT Margin
$3,473
20.0%
$2,147
15.0%
$2,000
$1,000
FY2007
FY2008
FY2009
FY2010
FY2011
19.0
17.0
14.3
15.1
16.3
0.0%
16.6
FY2010
$6.00
9.0
$4.00
7.0
$2.00
FY2009
FY2010
FY2011
$13.25
$12.00
$8.00
FY2008
FY2008
$11.69
$9.07
$10.00
12.4
FY2007
FY2007
$14.00
11.0
5.0
FY2009
20.2%
Earnings Per Share
Free Cash Flow (Billions)
13.0
16.2%
18.7%
5.0%
$500
15.0
14.5%
18.5%
10.0%
$1,500
$0
25.0%
FY2011
$0.00
$10.12
$7.32
FY2007
FY2008
FY2009
FY2010
FY2011
USD Billions
Balance Sheet Health
6
5
4
3
2
1
Key Takeaways
1.30
1.10
1.20
1.19
1.15
1.21
0.90
0.70
0.50
0.30
FY2007
FY2008
FY2009
FY2010
FY2011
USD Billions
1.50
 IBM’s liquidity, cash flow
Current Ratio generation, and access to lowcost debt financing all equate to
1.36
a strong balance sheet.
Growth Opportunities
The Cloud
$100B
Key Takeaways
“By the end of the
 IBM
is uniquely
positioned
Developing
are
decade,
IDCmarkets
expects
at to
takeexpected
advantage
toofdouble
least 80%
ofgrowth
the in in the
The
Cloud
cloud
through
its
meshing
their
share
of global
industry’s
growth
will of
knowledgeable
consultants
cloud
spending
by
2016.
be driven
byITcloud
and comprehensive
services” product
portfolio.
150%
$40B
2012
2016
Public Cloud Spending
Software’s Effect on Income
Intrinsic Valuation
Projected
2013
2014
2015
$118,997.5 $126,732.3 $133,069.0
$59,999.7 $61,799.7 $63,035.7
$58,997.8 $64,932.6 $70,033.3
49.6%
51.2%
52.6%
2016
$138,391.7
$63,666.1
$74,725.7
54.0%
R&D Expense
SG&A Expenses
EBIT
EBIT Margin
$5,990.0
$6,049.9
$6,110.4
$6,171.5
$6,233.2
$23,553.0 $25,201.71 $26,587.80 $27,651.32 $28,757.37
$21,578.0 $22,983.4 $26,299.6 $31,109.8 $35,042.7
20.2%
20.5%
22.1%
24.5%
26.3%
$6,295.6
$29,620.09
$38,810.0
28.0%
NOPAT
D&A
Change in NWC
CapEx
FCF
Present Value of Cash Flows
$16,399.3
$4,815.0
($1,251.0)
$4,108.0
$18,357.3
Revenue
Cost of Sales
Gross Profit
Gross Margin
Terminal Value
Enterprise Value
2011
2012
$106,916.0 $112,261.8
$55,795.0 $58,026.8
$51,121.0 $54,235.0
47.8%
48.3%
$17,467.4
$5,007.6
($3,145.0)
$4,417.0
$21,203.0
$20,002.8
$19,987.7
$5,207.9
($1,966.0)
$4,637.9
$22,523.7
$20,046.1
$23,643.5
$5,416.2
$3,516.0
$4,823.4
$20,720.3
$17,397.2
$26,632.4
$5,578.7
$1,191.0
$4,968.1
$26,052.1
$20,635.7
$29,495.6
$5,746.1
$1,191.0
$5,067.4
$28,983.3
$21,658.0
$ 293,020.79
$ 318,701.89
Assumptions
WACC
Tax Rate
Exit Multiple
Share Price
$
6%
24.0%
10.11x
205.91
Calculations
Enterprise Value
$
318,701.9
Less Net Debt
$
31,320.0
Equity Value
$
287,381.9
Shares Outstanding
1158.67
Value Per Share
$
248.03
Implied Discount
20.45%
Industry and Internal Risks
Hardware
revenues slowing
down
BRICS growth
market
stagnation
Consolidation of the
Chairman and CEO
positions
Competitors
Key Takeaway
 IBM is on the forefront of cyber security
 IBM features unmatched diversity in its
portfolio’s products and services
Exit Strategy
Key Takeaway
Implement a trailing stop-loss strategy
with a 9% retracement as the sell point
Ideal method to capitalize on growth and
account for unlikely losses
Q&A