2/22/2010 TONIGHT'S AGENDA

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2/22/2010 TONIGHT'S AGENDA

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

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