INVESTMENT CLUB FRIDAY, FEB 7 2014 WEEKLY MEETING PREVIEW 1. Market Update 2. Club Overview 3. Interview Tips 4. Stock Fundamentals Market Update Expedia Earnings Reported earnings – Earnings beat estimates Stock appreciated 13% after hours Was down 4.3% due to search-engine concerns Difficult to separate from competitors Club has enjoyed 30% gains Long-Term Jobless Benefits Rejected Republicans blocked 3 month extension Could hurt consumer confidence Discourages workers to continue job search Issue could be revived depending on debt limit Market Volatility The S&P 500 appreciated 30% - 2013 Investors estimate between 8-10% for 2014 Reduce positions in U.S. small company stocks Blue chip stocks / short – term bonds Tech giants Apple and Cisco highlighted Established infrastructure Pay dividends Improved Labor Market Fed officials concerned with fast falling unemployment Contradicts Okun’s Law By U6 measure, unemployment was 13.1% When should Fed raise rates? Too quickly: dampen economic recovery Too slow: fuels inflation, financial bubbles Global Economy Continued pessimism for economic recovery Sentiment based upon: Tumbling stock prices Fed’s taper of QE Weak U.S. reports in car sales, home sales, hiring Emerging Markets: Brazil growth down 5% since 2011 Concerns in Chinese growth (2nd largest economy) CLUB OVERVIEW Investment Club OVERVIEW: 1. Close to $500,000 2. Over 40 stocks 3. Strictly Student Run GOALS 1. Manage and Grow Portfolio 2. Educate Members 3. Network WHY INVESTMENT CLUB? New Ideas 1. Shareholder Meeting Ideas 2. Freshman Investing Crash Course 3. Wall Street Panel Ideas 4. Stock Pitch Battle 5. WSJ Quiz Ideas 6. Mentorship Program 7. Interview Prep INTEVIEW PREP INTERVIEW PREP NETWORKING, NETWORING, NETWORKING WHAT YOU NEED: *** STRONG GPA *** UNDERSTANDING OF MARKETS *** DESIRE TO LEARN Wall Street Interview COURSE WORK: - Financial Accounting, Financial Theory, Corporate Finance, ect. COMMON QUESTIONS FIT QUESTIONS: 1. How did you prepare for this interview? - Coursework, WSJ, Barrons, ect. 2. Describe a moment when you worked under pressure? - Time crunch, stick to basics Banking Questions 1. What is the main goal of an investment bank? - Get company from point A to B 2. Briefly tell me about recent major financial transactions? 3. Explain Structure of XYZ Bank? - Read 10K Questions 4. Most important trends in economy? 5. Do you follow a certain stock? 6. Role of a summer intern/ full time analyst? 7. Why XYZ Bank? - CEO: Direction of firm FINANCIAL QUETIONS 1. How does Net Income influence all 3 financial statements? - Income Statement, Balance Sheet, Cash Flow 2. Basic Methods for Valuing a Company? - Comparable Analysis - Precedent Transaction Analysis - DCF BRAIN TEASERS Q: You’ve got a 10 x 10 x 10 cube made up of 1 x 1 x 1 smaller cubes. The outside of the larger cube is completely painted red. On how many of the smaller cubes is there any red paint? BRAIN TEASER A: First, note that the larger cube is made up of 1000 smaller cubes. The easiest way to think about this is how many cubes are NOT painted? 8 x 8 x 8 inner cubes are not painted which equals 512 cubes. Therefore, 1000 – 512 = 488 cubes that have some paint. Alternatively, we can calculate this by saying that two 10 x 10 sides are painted (200) plus two 10 x 8 sides (160) plus two 8 x 8 sides (128). 200 + 160 + 128 = 488. RESOURCES 1. FINANCIAL NEWS OUTLET 2. MACABACUS. COM 3. WALLSTREETOASIS.COM 4. GLASSDOOR.COM Qualitative Analysis of Tesla (TSLA) BY BRENDAN GOVER Common Qualitative Measures Dan Killmurray ’85 (UBS) TAM Moat Management Management track record/compensation package Elon Musk Previous/current other business ventures COMMENTS? How can the club improve? Suggestions?