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2/22/2010 TONIGHT'S AGENDA

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Transcript

  • 1. 2/22/2010
  • 2. TONIGHT'S AGENDA
    • Portfolio Update
    • Market Update
    • Sell Bank of America
    • Sell Ultra Petroleum
  • 3. PORTFOLIO UPDATE Anthony Vitiello
  • 4. RECENT TRANSACTIONS
    • Bought 300 Shares of ARD @ $41.19 on 2/16/2010
    • Sell 100 Shares of CHL @ $48.53 on 2/16/2010
    • Sell 200 Shares of GILD @ 48.00 on 2/16/2010
  • 5. ALL-STARS 21.75% 12.72% 4.67% 12.04% 3.85 %
  • 6. DOGS 2.80% 2.46% 1.75% 0.49% 0.89%
  • 7. LARGEST HOLDINGS
    • Winn Dixie Stores: 5.49%
    • Research in Motion 5.10%
    • jetBlue Airways: 5.04%
    • Monsanto Company 4.88%
    • Short UST ETF: 4.63%
  • 8. BCIC VS. S&P 500
  • 9. SELL BANK OF AMERICA (NYSE:BAC) David Hollister
  • 10. A BRIEF BACKGROUND
    • Largest bank holding company in US
    • Based in Charlotte NC
    • Holds 12.2% of all US Deposits as of August 09
    • Received a total of $45 billion in TARP funds, paid off this past December
    • Total assets of $2.25 trillion
  • 11. WHY WE SHOULD SELL
    • Member of the S&P
    • No growth potential
    • Complex business structure
    • Stock approaching its 52 week high of 19.10
  • 12. BUSINESS MODEL: PRODUCTS
    • Consumer and Corporate Banking
    • Investment Banking and Management
    • Private Equity
    • Mortgage
    • Credit Cards
  • 13. BUSINESS MODEL
    • Acquisition of FleetBoston in 04
    • Credit Card giant MBNA in 05
    • US Trust in 06
    • LaSalle Bank in 07
    • Countrywide Financial in 07
    • Merrill Lynch in 08
  • 14. CREDIT CRISIS COLLAPSE
    • Little understanding of the value of toxic assets
    • Acquisition of troubled Merrill Lynch forced BAC to receive federal bailout money
  • 15. WHAT THE FUTURE HOLDS
    • JD Power and Associate Consumer rankings
    • A movement to smaller, regional banks?
  • 16. WHAT THE FUTURE HOLDS
    • No room for growth
    • Stock price may go up, but too volatile and dependent on economic reports and potential government regulation
  • 17. CONCLUSION
    • Our goal is to beat the S&P, not match it
    • We don’t have a full understanding of BAC’s complex business structure
    • Get out while the price is good
    • Use this money to find a stock that has growth potential
  • 18. Sell Pitch: Ultra Petroleum NYSE: UPL Gregory Butler
  • 19. UPL
    • Ultra Petroleum Corp. engages in the acquisition, exploration, development, production, and operation of oil and natural gas properties. It primarily focuses on developing and expanding a tight gas sand trend located in the Green River Basin in southwest Wyoming.
    • Market Cap – $7.24billion
    • Beta: 0.87
  • 20. BACKGROUND
    • Purchased 100 shares at $52.01/share
    • Currently trading around $48.51/share
    • Only loss of $350
  • 21. THESIS
    • UPL: Natural Gas Pure-Play E&P Bet
    • Portfolio Rebalancing Toward Oil
    • Sold XTO, a similar Nat Gas E&P
  • 22.
    • “… for E&P companies to rally you need a RIP in natural gas or for the winter to get VERY cold or from companies to start producing in record fashion...except that won't happen because there’s already too much supply.”
    • --Graham Gullans, Former President of BCIC, Citi S&T
  • 23. WEATHER
    • Last month we have seen unexpected weather patterns which would have historically caused natural gas to move higher, yet prices have not responded
    • This demonstrates the oversupply
  • 24. UPL
    • Owning UPL is a bet on:
    • -Management’s ability to continue increasing production at low costs
    • -Long-term resilience of natural gas prices
    • However, many well-run, well-financed natural gas e&p companies exist – Chesapeake Energy, XTO(Exxon), EOG Resources, etc. The result is oversupply.
  • 25. NATURAL GAS
  • 26. LIMITED UPSIDE Company 2008 Earnings Current Stock Price Precise P/E UPL $2.65 $49 18.490566 ARD $2.20 $41.77 18.9863636 COG $2.08 $41.32 19.8653846 PXD* $3.06 $49.49 16.1732026 *2007, not 2008, represents recent peak EPS (better management of costs)
  • 27. PORTFOLIO REBALANCING
    • Increase cash in portfolio
    • Continue shift toward oil- and services-bias (November discussion)
        • -Oversupply in natural gas market (storage levels are 13% above their five-year average), natural gas supply over-responds to demand --> ceiling on prices
  • 28. LONG OIL: LONG RECOVERY Source: Kevin Kelly (November, 2009 Pitch)
  • 29. CONCLUSION
    • Last week is indicative of what will happen if the market continues to recover
      • JBLU up 8%
      • Oil up 8%
      • Natural Gas down 8%
  • 30. ANNOUNCEMENTS & HOUSEKEEPING
    • Pitch Volunteers
    • Market Game– Keep Trading!!!
    • Tee Shirt Ideas– Email vitiella@bc.edu