Author: Yiling Bai

Market Update
Unemployment fall10000 to 278 000
ECB keeps the key interest rate unchanged.
Euro has very low rate inflation
Comcast: service providers slipping: Obama urge FCC to adopt net neutrality
Alibaba:
Stock price up to 120(most because of bachelor’s day). Sales volume reached 9B
Tmall recently began allowing foreign brands to reach Chinese consumers directly through its network
Kate Spade:
Shares up 15.7% last Thursday on strong third quarter earning result
Net sales grew by 30%
Strength: notable ROE, revenue growth and good cash flow from operations
Weakness: higher debt management risk
Yahoo:
To acquire video advertising company Brightroll for $640 million
Combine yahoo’s premium desktop and mobile video adverting inventory with Brightroll’s platform
Healthcare industry
Government spending out of total GDP increases rapidly in recent 30 years
$8508 personal spending on health care in 2013
Hospital mergers can lead to price increases of up to 20.3%
Enter barriers: new drug development; demand for doctors; build a new hospital
FDA: New Drug Development Process: an average of 12 years
More joint hospital overseas
4 concerns: aging population and chronic diseases; cost and quality; access to cares; technology
Numerous digital and e-health/data initiatives are gaining critical mass
Stock Pitch
DXCM
A leading company of glucose Mortaring
1999- Founded
2005- IPO ON NASDAQ
Product:
Ambulatory product line
In- Hopspital Product Line
Others
Market opportunities:
Diabetes
Importance of Glucose Monitoring
Limitations of Existing Glucose Monitoring Products
Strategy:
Research
Technology
Direct Sales
Partnership
Coverage Policies
Broad Use
Customer Service
Regulation
FDA
Fraud and Abuse Laws NAD other Compliance Requirement
International Regulations
Risk
Net loss
Research
Acquisitions
Sales
Competitors
Roche Disetronic
LifeScan, Inc.
Bayer Corporation
News
FDA Approves Dexcom Share
Collaboration with Animas AND Tandem
Wearable Device (corporation with Apple)

Market Update

The end of QE:
Officially announced last week that it end its QE program this month
Facebook:
Earning of 43 cents per share
Increase of 49% from last quarter
Facebook surprised investors, declaring 2015 a “Significant Investment Year”
Michael Kors Qtrly Earnings:
Net earnings of$1 per share on 1.06 billion in revenue.
Comparable store sales grew 16.4%, but fell short of the 19% growth forecast.
Following the release of the earnings results, shares of Michael Kors plunged as           much as 11% in pre- market trading action

Portfolio Update
NTT and VZ were add into the portfolio

 

 

Stock pitch

Verizon communications

Overview

• Largest wireless service provider in the U.S by retail connections and revenue.

Completed 100% stake acquisition of Vodafone Group Feb 2014

• Two sections: Verizon Wireless& Verizon Wireline

Stock and Financials Overview

• Market Cap207.13B
• P/E 10.78
• EPS:4.63
• 3^rd quarter report: increase in revenue
• Added 1.5 million new subscribers to its wireless service, beating analysts’ estimate.

Risk Factors

• Missed expected 92 cents per share
• Significant domestic and global competition faced by both the Wireless and Wireline segment.
• Rapid technological development and changing consumer demand
• Verizon’s has a significant amount of debt and it could further increase if Verizon incurs additional debt or does not retire existing debt.

Competitors

• ATT
• Sprint
• T-Mobile

Opportunities

• Increasing demand in mobile data and broadband service
• Strong subscriber addition:
• Wireless segment adds 1/4M postpaid connections
• Wireline: Verizon added 130,000 net new FiOS Internet connections and 100,000 net new FiOS Video connections

Market update

• Market trend dip last week but bounced back since 10/21

General concern in the market: increasing interest rate

• Third quarter report is out:
  • Boeing shows strong 3^rd quarter result:  17% increase in earning
  • Yahoo’s earning exceeds expectation but not very impressive compared to other companies.
  • Snap chat start to raise more money.

Stock pitch

ConocoPhillips(COP)

Overview:

• The world’s largest independent exploration and production (E&P) company.

• Explore for, produce, transport and market crude oil, bitumen, natural gas, liquefied natural gas (LNG) and natural gas liquids on a worldwide basis.
• Have operations and activities in 27 countries.
• Six operating segments defined by geographic region: Alaska, Lower 48 and Latin America, Canada, Europe, Asia Pacific and Middle East, and Other International.
• No dominating competitors for any segment of business.
• Goal: 3-5 % annual production and margin growth.

Risk

• Prices of crude oil, bitumen, natural gas, natural gas liquids and liquefied natural gas.
• Decline in volume of reserves.
• Expenses on compliance with existing and future environmental laws and regulations.
• Change in domestic and worldwide political and economic environment.
• Changes in governmental regulations may impose price controls and limitations on production of crude oil, natural gas, bitumen, and natural gas liquids.

Decline in oil price- strategic focus

• Higher cash margin developments by reducing production cost.
• ConocoPhillps produces oil and gas at comparatively low rate compare to other oil and gas producers.

Reserve

• 179%annual reserve placement in 2013
• Continue adding deep water discoveries.
• Increased production on reserves.

Balance sheet

• Has enough assets to cover liability
• Net tangible assets have been growing since 2012

Market Updates

• Hewlett- Packard split into 2 different smaller companies. Lots of big tech companies are trying to split into small ones (eBay/ PayPal; EMC/ VMware). Main reason is to narrow down their focuses.
• Go pro Camera gifted 5.8 million toward charitable organization during lock up period.
• Chinese Insurer, Anbang Insurance Group, buys Waldorf Astoria for a Record $1.95B

 

Stock Pitch

 

AerCap Holdings N.V. (AER)

• Aviation company that engages in the leasing, financing, trading, sales and management of commercial aircraft and engines.
• December 16, 2013 announced the acquisition of ILFC from AIG.

Airline Leasing Industry

• Over a third of the world’s airline fleet is now rented and the proportion is likely to keep growing

• Many leasing companies also offer maintenance for the airlines at an additional cost.

Acquisition

• The combined company will be the largest global franchise in the aircraft leasing industry.
• Combined fleet of 1,329 aircraft and an order book for an additional 385.
• Will allow for cost savings and operating efficiencies.
• Lower tax expense.
• Future profits and synergies are expected to reduce its leverage meaningfully over the following four to five years.

Revenue

• Lease rental revenue:
• Asia/Pacific/Russia 32%
• North America 18%
• Latin America 11%
• Africa/Middle East 4%
• Europe 35%

Recent Activity

• Sold $2 billion worth of planes since December.
• Well ahead of its disposal target averaging $1 billion a year.
• Expected to meet a target of reaching a debt-to-equity ratio of around 3-to-1 by the end of next year.
• Secured operators for 90% of the planes due for delivery by the end of 2016.

Risks

• Interest Rates
• Emerging Markets
• Defaults
• Continued Demand from Airlines

 

Recommendation

• Buy
• Asses the result of earnings report in November
• Hold through end of December

 

Market update:

• -JP Morgan losses ruling in the lawsuit. They are facing a 13 billion settlement.
• Mortgage loan rates fell last week. However, the demand for home loan is still muted.

 

Guest speaker Ivy Gluck:

Ivy works as an equity analyst at Brandywine Global Investment Management after her summer internship with the company.  She graduated from Bryn Mawr College in 2014 as a math major and Philosophy minor. She was also part of portfolio management team in OIG

About Brandywine Global Investment Management:

“Brandywine Global Investment Management offers a broad array of fixed income, equity, alternatives, and asset allocation strategies that seek value across global markets.”

know more about the firm:

http://www.brandywineglobal.com/Index.cfm?Page=About%20Us&Content=Our%20Firm

 

Key tips to Bryn Mawr Student:

• Asking smart questions. Constantly questioning things.
• Be a good team member.
• Good reading and writing skill

Job responsibilities:

• Market update through Wall Street Journal
• Company research- being aware of anything new happens in these companies in their portfolio.
• Stock research: Value investing is to seek stocks with low popularity but worth investing.
  • “Fear when everyone is excited and excited when everyone fear”
  • PE multiple (price over earning) analysis.
  • balance sheet analysis
  • Is there a reason that this company is trading very low?
  • What is this company do? What is the company’s competitive position? What is its biggest risk?

Tips for internship search:

• Network through career office, lantern link, Haverford network and Linked in

Bryn Mawr Owl Investment Group starts its first meeting by Annual Summer Internship Panel on 9/17/2014.

Panelists list is as follows:

• Carmen Lai ( International Studies Major, Class of 2015, BMC):
– JP Morgan Chase in Newark, DE
– Corporate and Investment Banking: Financial Control

• Aly Walsh (East Asian Studies & Economics Minor, Class of 2015, BMC):
– JP Morgan Chase in Newark, DE
– Corporate and Investment Banking: Financial Control Project Team Intern

• Ziye Lin (Mathematics Major, Class of 2016, BMC ):
– XL Group in Exton, PA
– Actuarial Intern, Specialty Line

• Tom Yi (Mathematics & Economics Major, Class of 2015, HC) :
– Richmond Hill Investment Co. in NYC
– Summer Analyst, Value-investing hedge fund

• Laura James (Sociology Major, Class of 2015, BMC) :
– The Trivedi’s Congress Campaign for Pennsylvania’s 6th congressional district
– Finance Intern

Each of the panelist shared his or her experience about their internship this past summer. They started by talking about their general experience- what did they do and what is the industry look like. Then they also shared about how they got their internships, their ups and downs during the internship, advantages and disadvantages of coming from an liberal art college. In the end, they gave us their best advice:

-Learn some excel skill. Excel has been used a lot in business related industries

-Ready to take challenge. Those internships are very challenging for students.

-Think step by step logically , rationally and think ahead

-Talk to alumnae. They are the best resource for whatever you want to learn about the industry.

-Know your selling point. Your selling point is going to help you get your dream internship

-Willing to learn. You will learn a lot in an internship.

-Show your interest. People love to work with interns who love their jobs

-Ask questions. Ask for anything you don’t understand and the reason for specific tasks

-Be a quick learner. You need to try your best to learn a lot and fast during your internship.

Many of the students stayed to talk to the panelists after the panel was over and we learned a lot from them. We would like to thank all of the panelist for coming and taking their precious time to talk to OIG members.