Sunday, October 30, 2011

7 New Candidates

Yesterday was a very busy meeting for our team.  From presenting the analysis work which the current members were working on to learning about the 7 new candidates who will be put through a 2 week intensive path, we had a lot to talk about and are excited about what lies ahead.  We also had a surprise visit from Nathan Foley-Mendelssohn, an Equity Analyst for a Boston based asset manager.

Over the next week we will be working on improving our DCF models and I will be teaching a brief course on DCF modeling this coming Saturday.  The new candidates will share with us the 3 firms which they will begin to cover, why they choose that firm, and something unique about the company.  The current members will discuss the firms which they are following and how they believe their models have changed due to new things which are happening within that firm or industry.

- Saliq Khan

Discussion Topic for 10/31/2011 (Mon)

1.       Sluggish income growth led U.S. households to cut back on saving in September to raise their spending, showing the economy's recovery remains fragile. (from Reuters)

Question 1:

Any comments, opinions? How would you predict the 4th quarter personal income growth rate?

2.       Emerging market debt was one of the last shoes to drop when Europe’s simmering sovereign debt crisis once again turned into a full-blown panic this summer, but when it finally did, it landed with a thud. (from Financial Times)

The head of Europe's rescue fund sought to entice China on Saturday to invest in the facility by saying investors may be protected against a fifth of initial losses and that bonds could eventually be sold in yuan if Beijing desires. (from Reuters)

Question 2:
Do you think the EU Debt Crisis is an opportunity for emerging countries to go global?
Question 3:
Assume Beijing buy the yuan dominated EU bond, do you think it’s a sign that the Chinese yuan is becoming an international currency?

3.       MetLife Inc. (MET), the insurer whose plan for a dividend increase was rejected by the Federal Reserve, said third-quarter profit surged more than 10-fold on gains in the company’s derivative bets. (from Bloomberg)

Question 4:
Give an introduction about the MetLife and the insurance industry.
Question 5:
As some big companies are reducing their package for employee insurance, how do you see the future individual insurance service?

4.       Meg Whitman wants Hewlett-Packard Co. to sell personal computers after all, a dramatic about-face by the H-P chief executive only five weeks into the latest chapter of her sweeping career. (from WSJ)

Question 6:
Compare the PC business of H-P with Dell’s.
Question 7:
Do you think the tablet is a substitution of the laptop?

Lorena Li

Thursday, October 20, 2011

Tupperware Brands Corp. (TUP) Analysis Finished & Working on Kimberly-Clark (KMB)

Done with the analysis for TUP (Tupperware Brands Corp.). Working on the valuation for Kimberly-Clark (KMB). The team and I are done with our first analysis, but the finals week pushed us back a little. We will have both of the analysis up on the website this coming week. 

Tupperware Brands Corp: My projection

Current Price $55.17  
Target Price $71.50

Yahoo! Finance Price Target Summary
Mean Target:            $73.13
Median Target:         $73.00
High Target:              $80.00
Low Target:              $66.00
No. of Brokers:        8

- Saliq Khan -

Discussion Topic for 10/17/2011 & 10/18/2011 (Thu & Friday)

Morgan Stanley swings to profit

1 What’s the impact of accounting adjustments on the 3rd quarter report of Morgan Stanley?

2. Compared with Goldman Sacks which reports a rare loss yesterday, how did Morgan Stanley manage to survive with a profit? 

3. Which business contributed the most excluding accounting adjustment? While Morgan Stanley is suffering from a conflicting shared leadership between Colm Kelleher and Paul Taubman, how do you predict the future strategy of the company?

4. What’s Morgan Stanley’s exposure to European counties at the end of the 3rd quarter? What are the exposures of other big bank to the distressed countries (list at least 4 banks which just reported their 3rd quarter performance)?

Lorena Li

Wednesday, October 19, 2011

Richard Bernstein - Turn America Into a Giant 'Enterprise Zone'

I started liking Richard Bernstein ever since I started reading his reports while I was working at Merrill Lynch.  Of all the economists that are out there, he appeared to be the only one who was right more often than he was wrong.

Bernstein wrote in the Financial Times about "Turn(ing) America into a Giant Enterprise Zone."  He mentions that the U.S. needs to move away concentrating on an economy that is driven by consumption and move towards building an economy which is more focused on production and exports.  I have been saying this (clearly not loud enough and without much credibility....just yet!) for a while now and believe that exports and production is going to have a sizable impact on the U.S. economy.

Bernstein mentions that we need to focus on creating an economy that is attracting international firms to build facilities in the United States and to hire domestically.  Giving these firms tax incentives will benefit the U.S. and will allow the government to realize tax revenue from the jobs which are created.  These new jobs will spur growth in their respective states, and allow the states, and the federal government to shrink the budget deficit.  The element which is very attractive is that it will cost nothing to try this technique and will only benefit the economy.

Read below:

- Saliq Khan -

Monday, October 17, 2011

The Sages by Charles R. Morris

Just started reading The Sages by Charles Morris and am looking forward to reading what Morris has to say about the investment styles of Warren Buffett, George Soros and Paul Volcker.


- Saliq Khan