Transcript Reality Investing at Stern The Michael Price Student Investment Fund ________________________________________

Reality Investing at Stern
The Michael Price Student Investment Fund
April 25, 2006
________________________________________
The Fund
Stern Alumni Presentation April 25th 2006
1
Tonight’s Program
Overview of MPSIF – Richard Levich, Faculty Advisor
MPSIF Experience – Debbie Jones, President
The MPSIF Funds –
Fixed Income
Growth
Small Cap
Value
Questions & Answers
The Fund
Stern Alumni Presentation April 25th 2006
2
Overview of MPSIF
Origin of The Michael Price Student Investment
Fund (MPSIF)
Organizational Overview
MPSIF as an MBA Course
MPSIF as an Endowment Fund
Goals for the Future
The Fund
Stern Alumni Presentation April 25th 2006
3
MPSIF Established in 1999
Founded with $2.0 million gift - Michael F. Price
Michael F. Price - Managing partner of MFP Investors and former chairman of
Franklin Mutual Series funds.
Gift enabled establishment of three funds
Three Funds - Red, Green and Blue - Each allocated $600,000.
Each Fund had a different investment objective.
Note: $200,000 allocated for administrative expenses
Fund part of the overall NYU endowment
Fund has a mandated 5% per annum distribution
Distribution provides scholarships to selected students from the Price
College of Business at the Univ. of Oklahoma for study at NYU Stern.
The Fund
Stern Alumni Presentation April 25th 2006
4
MPSIF Established in 1999
Advisory Board for MPSIF
Board determines general investment guidelines and provides administrative
oversight
Management Advisory Council
Council receives annual and semi-annual reports and visits class to review
operating practices
Executive Committee
The Faculty Advisor, President, Treasurer and Portfolio Managers Exec Committee oversees activities of the fund over the semester
Individual Funds
Student portfolio managers oversee day-to-day operations, other students
perform related tasks
The Fund
Stern Alumni Presentation April 25th 2006
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Organizational Overview
Advisory Board
Executive Committee
Faculty Advisor, President, Treasurer, Portfolio Managers
Growth
Small Cap
Value
Portfolio Manager (2)
Portfolio Manager (2)
Portfolio Manager (2)
Fixed Income
Portfolio Manager (1)
The Fund
Stern Alumni Presentation April 25th 2006
6
Pedagogical Objectives
We operate MPSIF as a Course not a Club
•
Course promotes responsibility for managing significant real
assets, and a vehicle for selecting and organizing students
• To promote continuity, students are required to participate over two
semesters. Half register fall-spring, half register spring-fall.
“Overlapping generations” setup
Goals
The Fund
•
An 8-11 month immersion course for honing analytical and
presentation skills
•
A capstone, interdisciplinary course in which managing diverse
tasks relies on teamwork
•
Deeper understanding of governance and fiduciary responsibilities
in running an endowment fund
Stern Alumni Presentation April 25th 2006
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MPSIF as an MBA Course
Not an ordinary class
• Some outside speakers, but very few lecturers
• Emphasis is hands-on, experiential, learning-by-doing
Students perform all of the key tasks
•
•
•
•
~ 45 students populate 3 equity fund teams
Economic, sector and company research
Stock selection, buys & sells, monitoring
Fiduciary duties – Annual and semi-annual reports, minutes of
activities, Board presentations
The deliverables
• Financial writing, oral presentations, financial decision making in a
group setting
The Fund
Stern Alumni Presentation April 25th 2006
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Recent MPSIF Initiatives
Management Advisory Council
Wilshire analytics portfolio analysis
Alumni Panel and Alumni Reunion
Annual Report upgrade
Web-site upgrade
“The Educated Investor” newsletter
Resume book
Proxy voting, litigation filings
Re-balancing of MPSIF portfolio
• Gross flows in excess of $400,000
The Fund
Stern Alumni Presentation April 25th 2006
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Deliverables
The Fund
Stern Alumni Presentation April 25th 2006
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MPSIF as an Endowment Fund
Student run MPSIF, but within limits “Rules of the Game”
• MPSIF is a long-only endowment fund.
• Permitted securities include: Stocks, bonds, money market instruments,
and limited mutual funds. NYU is a tax exempt institution.
• Goals include
(a) returns in excess of inflation over a 3-5 year period,
(b) returns exceeding an appropriate benchmark,
(c) focus on long-term opportunities rather than short-term trading gains,
(d) an acceptable level of diversification
MPSIF Operates on an open book policy
• Stands ready to make its results, activities, reports available to
anyone within the NYU community with an interest. (Active web site)
The Fund
Stern Alumni Presentation April 25th 2006
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How has MPSIF Performed?
Six year record – Inception March 1, 2000
The Michael Price Student Investment Fund vs. Blended Benchmark
Performance of $1000 Investment since Inception (March 1, 2000)
Since Inception
1.8B to $2.01B
1,600
1,500
Does not include $461,000
in distributions
$1,443
1,400
Price Fund
Blended Benchmark
1,300
$1,243
1,200
1,100
44% Total Return
in first six years
(~6.18% p.a.)
1,000
900
800
700
The Fund
Feb-06
Oct-05
Dec-05
Jun-05
Aug-05
Feb-05
Apr-05
Oct-04
Dec-04
Jun-04
Aug-04
Feb-04
Apr-04
Oct-03
Dec-03
Jun-03
Aug-03
Feb-03
Apr-03
Oct-02
Dec-02
Jun-02
Aug-02
Feb-02
Apr-02
Oct-01
Dec-01
Jun-01
Aug-01
Feb-01
Apr-01
Oct-00
Dec-00
Jun-00
Aug-00
Feb-00
Well ahead of benchmark
75% Equity, 25% Debt
Apr-00
600
Monthly returns are time-weighted and thus exclude effects of the Fund's annual 5% distribution. The Blended Benchmark is equally comprised of the Russell 2000
Index, the Russell 1000 Growth Index, the Russell 1000 Value Index, and the Vanguard Total Bond Index Fund.
Stern Alumni Presentation April 25th 2006
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Goals for the Future
Enhance MPSIF profile inside and outside Stern
Enhance MPSIF as a vehicle for student
recruitment and placement, as well as
fundraising
Attract more funds under management
– from NYU endowment or other benefactors
The Fund
Stern Alumni Presentation April 25th 2006
13
MPSIF – Student Experience
The Michael Price Student Investment Fund
President: Debbie Jones
___________________________________
The Fund
The Fund
Stern Alumni Presentation April 25th 2006
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My Story…Why NYU, Why MPSIF
Why to get my MBA
Previously analyzed mutual funds…needed to improve
my fundamental stock picking skills
Where to get my MBA
Met with alum from my undergraduate school who was
also the original MPSIF President
How to get a job/internship
First Annual
Student Alumni
Mixer
Deutsche Bank
CMC & NYU
Financial Modeling?
DCF?
Stock pitches are standard for MBA internship and fulltime job applicants (both buy side and sell side)
MPSIF After Stern
With six years of history there are numerous MPSIF alum
working in the investment management profession
The Fund
Stern Alumni Presentation April 25th 2006
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The MPSIF Experience
Placement into Fund (Team)
Generally 15 students per fund – requests are considered.
Management seeks a diversified background.
MPSIF Pitch/Update Format
Standard MPSIF written pitch format
Presentation to Individual Fund (mon/weds mtgs)
Student Feedback
Question & Answer period – students are required to
defend their ideas – Students vote on stock purchase
Student Responsibilities
• • Spent
three years
at a
Investment
Summary
successful start-up
• biopharmaceutical
Performance
• company.
Valuation (DCF,
multiples,
etc.
• Spent
a year
as a post-
fellow
at Harvard
• doctoral
Business
Description
Medical School, focusing
• on
Industry
Outlookof antithe research
drugs.
• cancer
Competitor
position
• • He
holds aOutlook
Ph.D. degree
Earnings
in chemistry from Harvard
• University.
Financial Statements
Additionally Students are required to take on an extra
role, (e.g. alumni relations, historical analytics)
The Fund
Stern Alumni Presentation April 25th 2006
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Benefits of Reality Investing
You are accountable
Fund Simulation just isn’t the same
Seacor (CKH)
Russell 2000 Index
The Fund
Stern Alumni Presentation April 25th 2006
SEACOR is in the
business of owning,
operating, investing in,
marketing and
remarketing
equipment, primarily
in the offshore oil and
gas and inland
transportation
industries. It also
provides oil spill
response and
environmental
remediation services.
17
Performance as of February 28
th,
Source: Wilshire Analytics
Beating our Benchmark
1,600
2,400
25% Russell 1000 Value Index
25%The
Russell
1000
GrowthInvestment
Index
MichaelThe
Price
Student
vs. Blended
Michael
Price Student Fund
Investment
Fund Benchmark
Performance
of
$1000
Investment
since
Inception
(March 1, 2000)
25%Performance
Russell 2000
Index
of $1000
Investment since Inception (March 1, 2000)
25% Vanguard Total Bond Index
$2,273
1,500
$1,443
CAGR since inception
Fixed Income
Fixed Income: 2.56%
Growth
Price Fund
Growth: -2.63%
Small Cap: 14.66%
Blended Benchmark Small Cap
Value: 6.51%
Value
2,200
1,400
2,000
1,300
2006
$1,243
* The Quantum growth/value
style score is created from a
weighted average of a
standardized book/price and
forward looking earnings/price
(standardized against the Dow
Jones Wilshire U.S. 2500
Index, 75% book/price and
25% forward earnings/price).
1,800
1,200
1,600
1,100
$1,370
1,400
1,000
1,200
900
$1,164
1,000
800
800
$852
700
600
Feb-06
Feb-06
Oct-05
Nov-05
Dec-05
Aug-05
Aug-05
Apr-05
May-05
Jun-05
Feb-05
Feb-05
Oct-04
Nov-04
Dec-04
Aug-04
Aug-04
Apr-04
May-04
Jun-04
Feb-04
Feb-04
Oct-03
Nov-03
Dec-03
Aug-03
Aug-03
Apr-03
May-03
Jun-03
Feb-03
Feb-03
Oct-02
Nov-02
Dec-02
Aug-02
Aug-02
Apr-02
May-02
Jun-02
Feb-02
Feb-02
Oct-01
Nov-01
Dec-01
Aug-01
Aug-01
Apr-01
May-01
Jun-01
Feb-01
Feb-01
Oct-00
Nov-00
Dec-00
Aug-00
Aug-00
Apr-00
May-00
Jun-00
400
Feb-00
Feb-00
600
Monthly
Monthly returns
returns are
are time-weighted
time-weighted and
and thus
thus exclude
exclude effects
effects of
of the
the Fund's
Fund's annual
annual 5%
5% distribution.
distribution. The Blended Benchmark is equally comprised of the Russell 2000
Index,
the Russell
1000 Growth
Index,
Russell
1000
Value
Index,from
and each
the Vanguard
Total
Bond Index Fund.
The Fixed
Income Fund
was created
onthe
May
10, 2002
with
transfers
of the stock
funds.
The Fund
Stern Alumni Presentation April 25th 2006
18
The Fixed Income Fund
The Michael Price Student Investment Fund
Portfolio Managers: Marc Strauss and Michael Flood
___________________________________
Fixed Income
The Fund
Stern Alumni Presentation April 25th 2006
19
Fund Overview
Fund Objective
• The fund aims to outperform its benchmark, the Vanguard Total Return
Bond Fund (VBMFX) by taking positions in mutual funds and exchange
traded funds (ETFs).
Fund Strategy
• The Fund implements its views through a top-down allocation approach to
the main sub sectors of the US Fixed Income [investment grade] market,
namely – U.S. Treasuries, Corporates and MBS/ABS, as well as the Foreign
investment grade bond market
Fund is tax exempt – No municipal bonds
Looking forward, we hope to start the next
semester with the ability to trade in individual
bonds across all sectors
The Fund
Fixed
Growth
Income
Fund
Stern Alumni Presentation April 25th 2006
20
Performance as of February 28
th,
2006
For the six months ended February 28, 2006, the fund had a
negative net return of 69 basis points, trailing our
benchmark by 50 basis points
• Overexposure to the short end of the Treasury yield curve
• Failure to capitalize on the continued strength of the MBS market
• Slight overweighting of the Corporate sector
After bottoming out in October 2005, the fund enjoyed four
straight months of positive returns, with a YTD return of 98
basis points, 70 basis points above our benchmark
Over the past three months, we have focused our attention
to being more closely aligned with our benchmark,
reducing our exposure to the foreign sector and spreading
our exposure to Treasuries across the yield curve
The Fund
Fixed
Growth
Income
Fund
Stern Alumni Presentation April 25th 2006
21
Performance as of February 28
th,
2006
The Fixed Income Fund vs. The Vanguard Total Bond Fund
Performance of $1000 Investment since August 31, 2005
1,040
Fixed Income Fund
Vanguard Total Bond Fund
1,020
1,000
$994
$991
980
Feb-06
Jan-06
Dec-05
Nov-05
Oct-05
Sep-05
960
Monthly returns are time-weighted and thus exclude effects of the Fund's annual 5% distribution.
The Fund
Fixed
Income
Stern Alumni Presentation April 25th 2006
22
Sector Allocations as of February 28
th,
2006
Sector Weightings vs Benchmarks
40.0%
35.61%
34.96%
35.0%
30.0%
27.35%
27.36%
25.0%
22.55%
20.63%
20.0%
15.0%
11.46%
10.0%
5.0%
7.78%
3.65%3.51%
2.94%
2.21%
VBMFX
The Fund
Fixed
Income
Ca
sh
Fo
re
ig
n
ge
nc
y
Tr
ea
su
ry
/A
Co
rp
or
at
e
BS
M
AB
S
0.0%
MPF
Stern Alumni Presentation April 25th 2006
23
Fund Holdings as of February 28
th,
2006
Fixed Income Fund Holdings as of Febuary 28, 2006
Company
Ticker
Sector
# Shares
Held
Closing
Price
PIMCO Total Return Mortgage A
iShares GS $ InvesTop Corp Bond Fnd
iShares Lehman 1-3 Year Treasury Bo
Templeton Global Bond Fund
iShares Lehman 20+ Year Treasury Bo
iShares Lehman 7-10Year Treasury Bo
PMRAX
LQD
SHY
TPINX
TLT
IEF
MBS
Corporates
Treasuries
Foreign
Treasuries
Treasuries
17,073
875
875
5,124
275
300
10.60
107.54
80.13
10.62
91.35
82.97
Total Securities
Cash
Total Assets
The Fund
Fixed
Income
Stern Alumni Presentation April 25th 2006
Position
Value
% of
Assets
180,974
94,098
70,114
54,417
25,121
24,891
39.5%
20.5%
15.3%
11.9%
5.5%
5.4%
449,614
8,608
458,222
98.1%
1.9%
100.0%
24
Sector Update and Outlook
U.S. Treasuries
• The Federal Reserve, reacting to inflationary fears as the economy remains resilient, is
likely to continue to raise rates one or two more times in the short term. Future policy is
likely to remain data dependent.
• Should the economy start to sputter, rate cuts are a distinct possibility by Q4
2006.
• Although the calendar year started with softness in the Treasury market, we are
bullish on Treasuries and recommend overweighting the index with longer duration
positions.
MBS
• With mortgage rates forecasted to rise to as much as 6.40% by the fourth quarter of
2006, slower growth in the housing market is expected. Higher rates will slow
prepayments and curb home price appreciation, creating potential credit challenges
ahead.
• As spreads widen we will continue take a slightly underweight position with respect to
the index.
The Fund
Fixed
Growth
Income
Fund
Stern Alumni Presentation April 25th 2006
25
Sector Update and Outlook cont.
Corporates
•
In terms of business fundamentals, competition from emerging
economies has challenged many U.S. companies and industries.
•
Rising interest rates will likely erode future profitability as borrowing
costs rise and consumer spending slows.
• We recommend avoiding sectors like consumer discretionary,
which may be adversely affected by a slowing housing market and
high energy prices.
Foreign
•
A shrinking interest rate differential, coupled with an ever growing
current account deficit, could spell trouble for the dollar.
• With rates in Europe and Japan likely to rise, we will look to further
reduce our exposure in the near term, especially as the Fed looks
to put the brakes on future rate hikes.
The Fund
Fixed
Growth
Income
Fund
Stern Alumni Presentation April 25th 2006
26
Challenges Looking Forward
Challenges
•
•
•
•
Future Fed Policy
Future of the MBS market
Dollar weakness
Tight credit spreads
Switching Platform
• Performing our own credit research
The Fund
Fixed
Income
Stern Alumni Presentation April 25th 2006
27
The Growth Fund
The Michael Price Student Investment Fund
Portfolio Managers: Nelson Shim and Rafael Tejada
___________________________________
Growth Fund
The Fund
Fixed
Income
Stern Alumni Presentation April 25th 2006
28
Fund Overview
Fund Objective
• Achieve returns above Russell 1000 Growth Index benchmark.
• Achieve positive absolute returns.
Investment Strategy
•. Search for stocks with long-term EPS growth expectations exceeding 15%
that are attractively priced on a fundamental and relative basis.
• Search for stocks with a long-term, sustainable competitive advantage.
• Such companies may be:
 pioneering a new product or service that will see dramatic future demand
 altering pre-established norms in a static industry and gaining significant
market share
 applying their business model to new regions or leading in an industry
that is experience high levels of growth
The Fund
Growth
Fund
Stern Alumni Presentation April 25th 2006
29
Fund Performance as of February 28
th,
2006
The fund outperformed its benchmark by 365 bps with an absolute
return of 8.75% through the six months ended February 28, 2006
$1,100
$1,087
$1,080
Growth Fund
$1,060
Russell 1000
Growth Index
$1,051
$1,040
$1,020
$1,000
$980
$960
Aug-05
The Fund
Growth
Fund
Sep-05
Oct-05
Nov-05
Dec-05
Stern Alumni Presentation April 25th 2006
Jan-06
Feb-06
30
Sector Allocation as of February 28
th,
2006
The Growth Fund - Sector Allocation
45%
MPSIF Growth - Aug 05
40%
Russell 1000 Growth - Aug 05
35%
MPSIF Growth - Feb 06
30%
Russell 1000 Growth - Feb 06
25%
20%
15%
10%
The Fund
Growth
Fund
Stern Alumni Presentation April 25th 2006
Utilities
Telecommunication
Services
Materials
Information
Technology
Industrials
Financials
Energy
Consumer Staples
Consumer
Discretionary
0%
Health Care
5%
31
Fund Holdings as of April 23
Ticker
AEA
AMAT
BHE
CSCO
DELL
DOVP
FDC
FDG
GFIG
HOT
MOGN
MRX
MSCC
MXIM
PETM
PRAI
RIG
SMOD
TELK
TPX
XMSR
WAG
WFT
The Fund
Growth
Fund
Name
Sector
Shares
Held
Advance America
Applied Materials, Inc.
Benchmark Electronics, Inc.
Cisco Systems, Inc.
Dell Inc.
DOV Pharmaceutical, Inc.
First Data Corporation
FORDING INC
GFI Group Inc.
Starwood Hotels & Resorts
MGi Pharma, Inc.
Medicis Pharmaceutical
Microsemi Corporation
Maxim Integrated Products Inc.
PETsMART, Inc.
PRA International
Transocean Inc.
SMART Modular Technologies
Telik, Inc.
Tempur-Pedic International Inc.
XM Satellite Radio Holdings Inc.
Walgreen Company
Weatherford International Ltd.
Financials
Information Technology
Information Technology
Information Technology
Information Technology
Health Care
Information Technology
Materials
Financials
Consumer Discretionary
Health Care
Health Care
Information Technology
Information Technology
Consumer Discretionary
Health Care
Energy
Information Technology
Health Care
Consumer Discretionary
Information Technology
Consumer Staples
Energy
1,600
1,141
981
1,157
565
1,269
501
266
448
350
944
330
366
558
825
385
367
1,111
656
1,050
454
431
608
rd,
Current
Price
14.65
18.06
28.30
20.68
27.01
14.78
48.00
38.96
59.16
54.32
17.84
33.14
28.10
36.54
28.90
26.32
87.00
9.39
18.31
15.49
22.15
42.41
49.69
Total Equities
Cash
Total Assets
Stern Alumni Presentation April 25th 2006
2006
Current % of Total
Holdings
Assets
23,440
20,606
27,762
23,927
15,261
18,756
24,048
10,363
26,504
19,012
16,841
10,936
10,285
20,389
23,843
10,133
31,929
10,432
12,011
16,265
10,056
18,279
30,212
431,289
55,139
486,429
4.8%
4.2%
5.7%
4.9%
3.1%
3.9%
4.9%
2.1%
5.4%
3.9%
3.5%
2.2%
2.1%
4.2%
4.9%
2.1%
6.6%
2.1%
2.5%
3.3%
2.1%
3.8%
6.2%
88.7%
11.3%
100.0%
32
The Small Cap Fund
The Michael Price Student Investment Fund
Portfolio Managers: Shivanker Saxena and Lei Mu
___________________________________
Small Cap
The Fund
Growth
Fund
Stern Alumni Presentation April 25th 2006
33
Fund Overview
Strategy
• Focused upon stock selection and Identifying small-cap companies
with strong fundamental prospects, and that are under followed by the
market.
• No explicit bias toward “growth” or “value” investing.
• Invest exclusively in U.S.-traded equities, (market cap < $2B).
• Concentrated portfolio of 20 to 25 positions, with a standard position size of
$20,000.
• Security selection driven primarily by bottom-up fundamental research.
• In conjunction with the team’s overall sector and economic views.
Objective
• Achieve returns above Russell 2000 Index benchmark.
• Achieve positive absolute returns.
The Fund
Small
Cap
Stern Alumni Presentation April 25th 2006
34
Fund Performance as of February 28
th,
2006
The Fund outperformed its benchmark by an average
monthly 100 bps in the last sixth months
Small Cap Fund
$1,157
Russell 2000 Index
1,150
$1,102
1,100
1,050
1,000
Feb-06
Jan-06
Dec-05
Nov-05
950
Oct-05
• An absolute return of
9.05% in 3 months ended
Feb 28, 2006 (Russell
2000 return – 7.88%)
1,200
Sep-05
• An absolute return of
15.70% in 6 months ended
Feb 28, 2006 (Russell
2000 return – 10.24%)
The Small Cap Fund vs. The Russell 2000 Index
Performance of $1000 Investment since August 31, 2005
Aug-05
• An absolute return of
28.22% in LTM ended Feb
28, 2006 (Russell 2000
return – 16.59%)
Monthly returns are time-weighted and thus exclude effects of the Fund's annual 5% distribution.
The Fund
Small
Cap
Stern Alumni Presentation April 25th 2006
35
Sector Allocation as of February 28
th,
2006
The Small Cap Fund - Sector Allocation
35%
MPSIF Small Cap - Aug 05
30%
Russell 2000 - Aug 05
MPSIF Small Cap - Feb 06
25%
Russell 2000 - Feb 06
20%
15%
10%
The Fund
Small
Cap
Stern Alumni Presentation April 25th 2006
Index
Utilities
Telecommunication
Services
Materials
Information
Technology
Industrials
Financials
Energy
Consumer Staples
Consumer
Discretionary
0%
Health Care
5%
36
Winners and Losers
Name
% Change
Reason
DIOD
59.73%
DIOD has completed a significant transition over recent years and constantly brings competitive
new products to the market. The company has right mix of revenue, lean operations and
predictable demand. We are still holding full position of the stock as we believe the company’s
competitive edge could continue to support its price growth. The stock is now 75.07% higher than
purchase price.
MIPS
44.46%
Royalty payback on significant number of licenses signed in 2003 together with end users’ strong
momentum in consumer electronics have boosted MIPS’s royalty revenue in recent quarters. We
had chosen a good entry point for the stock when MIPS announced a disappointing Q4-FY05
result which lowered its P/E ratio down to a quarter of the sector average. Robust royalty revenue
in Q1-FY06 made the stock price soar and we reduced to half position in Jan 06, right before it
went down with a 52.75% return.
RI
35.24%
RI’s stock price growth has benefited from the improving same stores sales growth, a successful
marketing strategy and a business turnaround in FY06. The high margins also grant the stock
price higher multiples relative to its peers. We began to hold the stock when it had an adverse
run in the last 12 months, with the share price declining quite near to its 52-week low. We sold
the stock in Mar 06 when it hit target price.
NFP
34.05%
NFP enjoyed successful expansions in institutional life insurance market via aggressive
acquisitions, providing a complementary geographic footprint to NFP. We liquidated the stock in
Mar 06 with a 40.30% gain.
(34.61%)
While its biggest revenue source Aloxi remained strong revenue growth, MOGN suffered from
further delay in FDA approval on its widely-expected product Dacogen as well as failures in
Phase 3 trials of its next important product. We liquidated the position in Mar 06 for a loss.
WINNERS
LOSERS
MOGN
The Fund
Small
Cap
Stern Alumni Presentation April 25th 2006
37
Current Holdings as of April 23
The Fund
Small
Cap
Current
Holdings
2006
Current
Weight in
Total Fund
Ticker
Sector
Name
Shares
Held
IWM
Index
IWM
100
76.68
7,668
1.6%
1.3%
ARLP
ARO
AXL
BBBB
BBI
CKH
DIOD
ELNK
FVE
LTM
MIPS
OPEN
PHH
POP
PROS
RAIL
RARE
RURL
TXI
USNA
VB
WDFC
WLDA
Materials
Consumer Discretionary
Industrials
Information Technology
Consumer Discretionary
Energy
Information Technology
Information Technology
Health Care
Consumer Discretionary
Information Technology
Information Technology
Financials
Industrials
Financials
Industrials
Consumer Discretionary
Health Care
Materials
Health Care
Industrials
Consumer Discretionary
Alliance Resource Partners, L.P.
535
Aeropostale, Inc.
825
American Axle & Manufact. Holdings,1,170
Inc.
Blackboard, Inc.
650
Blockbuster Inc.
4,500
Seacor Holdings, Inc.
280
Diodes Incorporated
840
EarthLink, Inc.
1,070
Five Star Quality Care, Inc.
2,000
Life Time Fitness, Inc.
581
MIPS Technologies, Inc.
1,750
Open Solutions Inc.
1,285
PHH Corporation
500
Pope & Talbot, Inc.
2,900
ProCentury Corporation
1,800
FreightCar America, Inc.
290
RARE Hospitality International, Inc. 650
Rural/Metro Corporation
2,350
Texas Industries, Inc.
375
USANA Health Sciences, Inc.
476
VANGUARD SMALL-CAP V
WD-40 Company
740
World Air Holdings, Inc.
2,200
38.98
29.55
17.69
29.44
4.81
86.73
41.41
9.63
10.17
46.21
7.06
28.15
27.48
5.79
13.90
70.00
32.38
7.82
60.50
37.90
67.38
32.00
9.04
20,854
24,379
20,697
19,136
21,645
24,284
34,784
10,304
20,340
26,848
12,355
36,173
13,740
16,791
25,020
20,300
21,047
18,377
22,688
18,040
23,680
19,888
4.4%
5.1%
4.3%
4.0%
4.5%
5.1%
7.3%
2.2%
4.2%
5.6%
2.6%
7.6%
2.9%
3.5%
5.2%
4.2%
4.4%
3.8%
4.7%
3.8%
0.0%
4.9%
4.2%
3.5%
4.1%
3.4%
3.2%
3.6%
4.0%
5.8%
1.7%
3.4%
4.5%
2.1%
6.0%
2.3%
2.8%
4.2%
3.4%
3.5%
3.1%
3.8%
3.0%
0.0%
3.9%
3.3%
471,371
479,039
121,698
600,737
98.4%
100.0%
78.5%
79.7%
20.3%
100.0%
Direct Equity Holdings
Total Equities
Cash as of April 23, 2006
Total Assets
Current
Price
Current
weight
among
equity
holdings
rd,
Stern Alumni Presentation April 25th 2006
38
The Value Fund
The Michael Price Student Investment Fund
Portfolio Managers: Benjamin Macdonald and Chao Mui
___________________________________
Value Fund
The Fund
Small
Cap
Stern Alumni Presentation April 25th 2006
39
Fund Overview
Fund Objective
• Outperform the benchmark on a total return basis by investing in
securities that provide superior returns on a risk/return basis through capital
appreciation and dividends.
Fund Benchmark – Russell 1000 Value Index
New Strategic Implementations
•
•
•
•
•
•
•
•
The Fund
Value
Fund
Stronger Discipline
Top-Down Approach
ETFs
Increased Holdings to 30 Positions
Mid-Large Cap Focus (over $2bn)
Minimum 20% Total Return Potential
Stop-Loss on Every Position
Stop-Loss and Sell Limit During Summer and Winter Breaks
Stern Alumni Presentation April 25th 2006
40
Fund Performance as of February 28
th,
2006
(a) Prices as of 4/21/2006
The Fund
Value
Fund
Stern Alumni Presentation April 25th 2006
41
Sector Allocation as of February 28
th,
2006
The Value Fund - Sector Allocation
40%
MPSIF Value - Aug 05
35%
Russell 1000 Value - Aug 05
30%
MPSIF Value - Feb 06
Russell 1000 - Feb 06
25%
20%
15%
10%
The Fund
Value
Fund
Stern Alumni Presentation April 25th 2006
Utilities
Telecommunication
Services
Materials
Information
Technology
Industrials
Financials
Energy
Consumer Staples
Consumer
Discretionary
0%
Health Care
5%
42
Winners and Losers
Ticker
Name
Buy Date
Sell Date
Buy Price
Sell/Current
Price (a)
Return
PERFORMERS
AWGI
Alderwoods Group, Inc.
12/13/04
02/15/06
$12.03
$16.73
39.1%
EC
Engelhard Corporation
11/08/04
01/09/06
29.79
37.84
27.0%
FSL
Freescale Semiconductor Inc
03/30/05
NA
16.85
31.45
86.6%
RML
Russell Corporation
10/05/05
NA
13.54
18.23
34.6%
STX
Seagate Technology
11/02/05
NA
14.87
25.10
68.8%
BCGI
Boston Communications
02/14/05
04/04/06
7.29
2.90
-60.2%
BSX
Boston Scientific Corp.
03/09/05
NA
29.65
22.49
-24.1%
HELE
Helen of Troy
11/29/04
04/04/06
27.08
20.51
-24.3%
SAFM
Sanderson Farms, Inc.
10/13/05
NA
36.51
24.77
-32.2%
LOSERS
(a) Prices as of 4/21/2006
The Fund
Value
Fund
Stern Alumni Presentation April 25th 2006
43
Current Holdings as of April 24
The Fund
Value
Fund
Stern Alumni Presentation April 25th 2006
th,
2006
44
Reality Investing at Stern
Questions & Answers
___________________________________
The Fund
Stern Alumni Presentation April 25th 2006
45