Investment Management Certificate Program Insights

|Investment Management Certificate Program Page 1
Milwaukee Growth Fund 1/31/2014
Objective
The Milwaukee Growth Fund’s investment objective is to outperform the Russell 3000
Growth index while pursuing long-term capital appreciation by primarily investing in
equity securities of companies positioned for growth. From an educational standpoint,
students seek to refine their research and analytical abilities through active portfolio
management.
Investment Philosophy
Our goal is to invest in high quality companies with exceptional growth potential
uncovered through a thorough evaluation of fundamentals and growth metrics.
Investment Process
Security Selection
 We utilize an integrated investment process that combines fundamental bottom-
up analysis with a thematic and macro overlay.
 Macro overlay seeks to identify sectors where positive change is occurring.
 Thematic overlay seeks to identify growth in sectors that may be
overlooked.
 Each analyst is assigned a sector to cover. During meetings, analysts provide a high
level review of what occurred in the space since the last meeting.
Quantitative Screening
 We seek growth in forward sales and earnings estimates. We also look for positive
earnings revisions which tend to lead to price momentum and favorable future
trends.
 We seek to identify companies with solid financials and strong business models.
 We consider historic and industry relative multiples, with respect to forward
looking fundamentals.
Decision Criteria
 For a security to be added to the portfolio, an analyst pitches the stock to the
entire team.
 Active participants will vote majority to put the name in the portfolio.
 The analyst pitching the stock cannot vote.
 If passed, the participants will vote on an initial weighting of the position.
 Five members must be present either physically, through Go-to-Meeting or
conference call for a stock to be pitched and voted into the fund.
Modify and Review
 Weekly performance and risk characteristics are analyzed.
 Analysts deliver 1-page update pre/post significant company events.
 Securities subject to formal review by the entire team if:
 Stocks falls more than 7%
 Firm announces an M&A deal
 Momentum decays
 Security reaches analyst’s price target
Implementation Guidelines
Holdings 20-40
Sector allocation + /– 10% benchmark weight
Single Security Maximum 10% of portfolio
Cash Maximum 10%
Market cap
Fund Benchmark: Russell 3000 Growth
Large, Mid, Small
Sector weightings as of date: 1/31/14
Sectors Fund Benchmark Relative
Consumer Discretionary 17.19 19.04 -1.85
Consumer Staples 11.04 10.99 0.05
Energy 3.88 4.24 -0.36
Financials 5.90 5.44 0.46
Healthcare 13.85 13.62 0.22
Industrials 12.35 12.50 -0.15
Information Technology 30.72 26.99 3.73
Materials 3.97 4.46 -0.49
Telecommunication -- 1.88 -1.88
Utilities -- 0.24 -0.24
Cash 1.09 -- 1.09
Unassigned -- 0.59 -0.59
100.0 100.0
Portfolio
Characteristics Fund Benchmark
Return on Equity 15.6 22.0
Price/Earnings 23.0 20.5
Price/Cash Flow 9.6 13.7
Dividend Yield 0.90 1.45
Average Market Cap 47,770 89,454
Return on Assets 7.9 9.9
LT Debt/Capital 30.0 36.2
EPS Growth 16.5 15.1
Top Ten Holdings Portfolio
Panera Bread Company 5.21
eBay, Inc. 5.19
Apple, Inc. 4.97
Cognizant Technology Solution Corporation 4.63
Tiffany & Co. 4.39
Vmware, Inc. 4.34
Ecolab, Inc. 3.96
IntercontinentalExchange Group, Inc. 3.91
Carrizo Oil & Gas, Inc. 3.87
Covidien Plc 3.71
Risk/Return Portfolio Benchmark
Alpha -0.03
0
0.00
Beta 0.95 1.00
Sharpe Ratio 0.92 1.67
Standard Deviation 0.73 0.75
R-Squared 0.90 1.00

|Investment Management Certificate Program Page 2
Milwaukee Growth Fund 1/31/2014
Top 5 Contributors
Average
Weight
Security
Contribution
Vanguard Industrial Index Fund ETF 11.40 0.94
Pandora Media, Inc. 1.56 0.78
iShares North America Tech ETF 6.51 0.76
Google Inc. 2.49 0.74
Cognizant Technology Solutions Corp. 4.43 0.58
Total 26.40 3.80
Bottom 5
Contributors
Average
Weight
Security Contribution
OSI Systems, Inc. 1.67 -1.11
J.C. Penny Company, Inc. 0.95 -0.84
LKQ 3.78 -0.63
SodaStream
International Ltd.
0.99 -0.40
Portfolio Recovery
Associates
0.20 -0.10
Total 10.20 -3.11
Since Inception - 10/19/10
 Portfolio has produced a total return of 67.81%
 Portfolio has outperformed its benchmark by 258 bps
Since Client Meeting - 10/2/13
 Portfolio has produced a total return of 4.22%
 Portfolio has Underperformed its benchmark by 308 bps
-20.0%
0.0%
20.0%
40.0%
60.0%
80.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13
Relative Return (left) Milwaukee Growth Fund (Right) Russell 3000 Growth (right)
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
-4.0%
-3.5%
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
3-Oct-13 18-Oct-13 2-Nov-13 17-Nov-13 2-Dec-13 17-Dec-13 1-Jan-14 16-Jan-14 31-Jan-14
12/4
Bought JCP
Fund Impact -101 bps
12/9
Sold OSIS
Fund Impact -61
1/15 LKQ
Short Report
Announced
Fund Impact -90 bps

Ticker Company Why we are buyers
AAPL Apple Inc. China Mobile deal, increased tablet sales, new product launches including increased chatter
about a television on a new upgrade cycle, phablet (iphone 6) and services like iWallet and
streaming video. Cash cow with nearly $160/share in cash that may be returned to
shareholders or invested in cloud offerings.
CAB Cabela's Incorporated Started a huge growth phase in 2013 to expand number of stores. Opening smaller stores in
under-serviced areas will be a key growth driver. Margin expansion initiatives are set in
place. Unmatched customer service and customer satisfaction. Non-traditional brick and
mortar.
COV Covidien Plc Improving conditions in the company's developed markets. Positive price/volume/mix
momentum, augmented by continued mid-teen operational growth in emerging markets.
Fruitful R&D with a strong pipeline of new products.
CRZO Carrizo Oil & Gas, Inc. Industry leading efficiency in oil discovery, recent transition from natural gas leases to oil
offers new opportunity for additional proven reserves.
CTSH Cognizant Technology Solutions Corp. As companies continue to increase operational efficiencies, they are offshoring more and
more of their IT. CTSH is a long-term large beneficiary of these corporate investments. We
view the company as a high quality company, with a strong balance sheet, while it has
consistently shown significant top and bottom line growth (~20% 5-yr CAGR).
CYH Community Health Systems, Inc. HMA deal closes and we see it as a net positive over time as CYH improves operations with
synergies, should result in multiple expansions going forward. Poised to be the best
company to benefit from reform based on its exchange contracts.
EBAY eBay Inc. Leading player in online and mobile commerce with strong FCF, healthy margins, and double
digit active user growth. PayPal continues to disrupt traditional payments, driving higher
top-line growth.
ECL Ecolab Inc. Highly diversified global facility services company with unparalleled breadth of product
offering. Ecolab has several competitive advantages – operational stability, ability to serve
global corporations in various industries, and premium pricing from leadership in major
markets. Strong long-term EPS growth (10 YR CAGR-11%).
GNRC Generac Holdings Inc. Free cash flow cow with 7 more years of $100 million annual depreciation tax shelter,
increased demand for residential & commercial standby power due to aging and failing
domestic power grid. Early innings of its international presence with acquisitions in Mexico,
Brazil and Italy.
GOOG Google Inc. Class A Leader in online and mobile advertising. Maintains significant share, and posted strong
growth in click-volume (31% YoY).
HCA HCA Holdings, Inc. Strong fundamentals in the hospital space. Despite a modestly lower than expected impact
from reform, a smaller 2014 EHR contribution and higher stock based comp suggest stronger
underlying trends. Expect clarity from reform to ramp up in H2 2014 leading to a positive
price momentum.
ICE IntecontinentalExchange Group, Inc. Leading oil futures exchange and strategic acquirer that leverages efficiency of technology.
Early innings of interest rate penetration and regulations for clearing swaps etc.
JCP J.C. Penney Company, Inc. We view JCP as a strong turnaround play over the next 1-3 years, as top-line revenue growth
continues to inflect/accelerate, and gross margins expand to pre-RJ levels, driving to EBITDA
positive by 2015 (ahead of consensus). As our estimates positively diverge from consensus,
we view the current share price offers a very attractive price to build a long-term position in
this contrarian-growth name.
LKQ LKQ Corporation LKQ is a strong growth through acquisition story. The firm is currently consolidating a highly
fragmented market, while striking unique and profitable deals with major insurance
companies. They are now spreading their reach into Europe and Australia which are
untapped markets for them.
Milwaukee Growth Fund-Holdings

P Pandora Media, Inc. Well positioned to benefit from the secular shift in listening hours from terrestrial radio to
digital radio. Pandora controls ~80% of the total digital listening hours. Expect mobile RPM
(revenue per thousand hours) to catch up with desktop RPM driven by local ad spend,
improved sell-through, and improved product mix.
PNRA Panera Bread Company Class A High conviction in this fast-casual restaurant name given its highly scalable business model
differentiated by its catering business. After major investments in operations clouded 2013
SSS, we view 2014 is poised to be a strong year against modest revenue expectations and
underappreciated leverage story after its recent investments come to fruition.
PRAA Portfolio Recovery Associates, Inc. Very disciplined debt buying. Company has beat earnings estimates for 18 straight quarters.
More disposable income=ability to pay off old bad debts. Growing UK operations. M&A
activity in UK this past month helps drive growth.
PRFT Perficient, Inc. IT consulting is a great place to be with more companies moving to the cloud. Win over 50%
of the deals they place bids on. 85% customer retention rate. Million dollar deals increasing
substantially. Acquisitions help add fuel to growth.
QCOM QUALCOMM Incorporated While it does not hold dominance in LTE, all phones for foreseeable future will require 3G
capabilities. Cost cutting focus in 2014 will support margins. Attractive valuation that will
benefit when large cap tech is back in favor.
REED Reed's, Inc. Catching the natural foods trend. People are drinking less GMO soda and more healthy
drinks like kombucha. Products are made with all natural ingredients. Kombucha industry is
growing faster than any other drink. Great distribution network to get kombucha and craft
soda into more markets.
TIF Tiffany & Co. TIF can grow international revenues, particularly in Asia/China where the company has a low
revenue base relative to other luxury brands. Asia/Pac sales are 20% of total and should
grow 15% to 20% annually. The company can double its store base in key global markets
and still has room to grow in the U.S.
TMH Team Health Holdings, Inc. Tied to solid core trends and expected benefits from Medicaid parity and Medicare
reimbursement. Strong cash flow-meaningful firepower in an acquisition rich environment.
TQNT TriQuint Semiconductor, Inc. Increased LTE penetration is driving demand for filters and amplifiers worldwide. Apple's
China Mobile deal adds operating leverage, increased exposure to Samsung. Stable demand
from defense (upgrades of old military radar, plus new orders) and cellular base stations.
Added kicker with the evolution of the "Internet of Everything".
VMW Vmware, Inc. Class A Re-accelerating growth in both top and bottom-line. Leader in software-virtualization, and
now mobile-device management, through its acquisition of AirWatch.

Milwaukee Growth Fund
February 14, 2014 Client meeting

Management team – Graduate students
Drew Konop
Financial Analysis
Energy
LONGBOW Research
Praful Velagapudi
MBA
Health Care
Avondale Partners
Faisal Hersi
MBA
Consumer Discretionary
Robert W. Baird
2

Management team – Undergraduate students
Alexander Sagal
Accounting & Finance
Consumer Staples
Robert W. Baird
Nicholas Mydlach
Accounting & Finance
Information Technology
KLCM, Inc.
Fischer Van Handel
Finance
Financials
Robert W. Baird
Paul Lukaszewicz
Finance
Industrials & Materials
New Works
3

Table of Contents
 Objective of the fund (5)
 Philosophy (6)
 Process (7-8)
 Performance (9 -11)
 Risk (12)
 Characteristics (13)
 Sector holdings (14)
 Evolution (14-19)
 Example of a security selection (20-29)
 Questions
 Appendix (30)
4

Objectives
 Students seek to refine their research and analytical skills
 Outperform the Russell 3000 Growth Index®
 Pursue long-term capital appreciation
Outperform
RefineLearn
Growth
5

Philosophy
We invest in high quality companies with exceptional growth
potential uncovered through a thorough evaluation of
fundamental and momentum metrics
6

Investment Process
Screen Universe
Revenue growth, profitability, momentum, valuation, corporate
governance, institutional ownership
Analyze Fundamentals
Bottom-up analysis, thematic & macro overlay
Examine Valuation
P/S, EV/S, EV/EBITDA, P/E, P/CF
Construct Portfolio
Guidelines – pitching, voting
Monitor and Review
Weekly performance & risk, analyst updates, formal reviews
7
Investment
Excellence
Knowledge
ConvictionDiscipline

Process-Enhancements
 Assignment of Roles
 Meeting organizer – Alex
 Meeting facilitator – Drew
 Meeting minutes– Fischer
 Trader – monthly rotations – Donnie, Nick, Paul, Praful
 Stock Pitches
 All pitch materials must be sent out a minimum of 1 day prior to the official pitch
 Trading
 Trader must send email with trade details to team the night before trades are executed
 That same email, so long as nothing needs to be changed, must be sent to the broker no
later than 8:15am the following morning
 If, by 8am, an analyst in the fund has material reason to rescind the trade, that analyst
must send an email with justified reasoning, and convince a majority to agree to the
changes (and cancel/change the trade) by 8:15am.
8

Performance Since Inception
Outperformance: 9.09%
The Milwaukee Growth Fund has produced a total return of 67.81%*
while the benchmark has produced a total return of 65.23%
Outperformance 2.58%
9
* Returns are provided by FactSet, which differs from actual due to transaction fees and intraday pricing not taken into account by FactSet. Performance attribution and
risk figures are also computed using FactSet, and while not exact, they provide a good overall representation of performance attribution and risk.
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
70.0%
80.0%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
Oct-10 Apr-11 Oct-11 Apr-12 Oct-12 Apr-13 Oct-13
Relative Return (left) Milwaukee Growth Fund (Right) Russell 3000 Growth (right)

Performance Since Transition
Outperformance 0.87%
10
-5%
0%
5%
10%
15%
20%
25%
30%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
3.5%
4.0%
4.5%
5.0%
May-13 Jun-13 Jul-13 Aug-13 Sep-13 Oct-13 Nov-13 Dec-13 Jan-14
Relative Return (right) Milwaukee Growth Fund (left) Russell 3000 Growth (right)

Performance Since Client Meeting
Underperformance 3.08%
11
-4%
-2%
0%
2%
4%
6%
8%
10%
12%
-4.0%
-3.5%
-3.0%
-2.5%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
3-Oct-13 18-Oct-13 2-Nov-13 17-Nov-13 2-Dec-13 17-Dec-13 1-Jan-14 16-Jan-14 31-Jan-14
Relative Return (right) Milwaukee Growth Fund (left) Russell 3000 Growth (right)
12/4
Bought JCP
Fund Impact -101 bps
12/9
Sold OSIS
Fund Impact -61 bps
1/15 LKQ
Short Report Announced
Fund Impact -90 bps

Portfolio Risk
12
129%
98% 100%
91%
0%
20%
40%
60%
80%
100%
120%
140%
Sice Inception 1 Year Since Transition Since Client Meeting
Upside Capture
Milwaukee Growth Fund Benchmark
101%
100%
99%
102%
96%
97%
98%
99%
100%
101%
102%
103%
Sice Inception 1 Year Since Transition Since Client Meeting
Downside Capture
Milwaukee Growth Fund Benchmark

Portfolio Characteristics
13
Characteristics
Milwaukee
Growth Fund
(10-4-2013)
Russell 3000
Growth
(1-31-2014)
Milwaukee
Growth Fund
(1-31-2014)
Market Cap. 56,679 89,454 47,770
Number of Securities 22 1,793 28
Dividend Yield 1.36% 1.45% 0.90%
Price/Earnings 20.6x 20.5x 23.0x
P/E using FY1 Est 15.8x 18.5x 20.3x
P/E using FY2 Est 14.1x 16.4x 17.5x
Price/Cash Flow 14.5x 13.7x 9.6x
Price/Book 3.5x 4.2x 3.3x
Price/Sales 3.2x 2.1x 1.5x
Hist 3Yr Sales Growth 23.3 15.3 21.7
Hist 3Yr EPS Growth 24.5 17.2 28.2
Est 3-5 Yr EPS Growth 14.9 15.1 16.5
ROA 15.3 9.9 7.9
ROE 23.7 22.0 15.6
Operating Margin 23.4 20.5 18.3
Net Margin 16.6 13.0 12.1
LT Debt/Capital 15.7 36.2 30.0
 Portfolio versus
benchmark
 Higher P/E and higher
growth
 Lower P/B and P/S, but
lower ROE and net
margin with opportunity
for improvement
 Lower debt

Sector Holdings
Sector Weightings
Milwaukee
Growth Fund
(1-31-2014)
Russell 3000
Growth
(1-31-2014) Relative
Energy 3.88 4.24 -0.36
Health Care 13.85 13.62 0.22
Industrials 12.35 12.50 -0.15
Materials 3.97 4.46 -0.49
Telecommunication Service -- 1.88 -1.88
Utilities -- 0.24 -0.24
Cash 1.09 -- 1.09
14
 Underweight consumer discretionary,
energy, materials, telecommunication
services, utilities
 Overweight information technology,
financials, healthcare, consumer staples
17.19%
11.04%
3.88%
5.90%
13.85%
12.35%
30.72%
3.97%
0.00%
0.00%
1.09%
0.00%
19.04%
10.99%
4.24%
5.44%
13.62%
12.50%
26.99%
4.46%
1.88%
0.24%
0.00%
0.59%
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Telecommunication
Service
Utilities
Milwaukee Growth
Fund
Russell 3000 Growth

Evolution
Full Liquidations
SODA UNP MNK
OSIS CPSI SNDK
CAB TIF REED EBAY
TMH CYH JCP VMW
TQNT P PRFT GNRC
New Positions
15
HCA

Evolution
Trims
PRAA P ECL
AAPL EBAY VMW
TIF TQNT PNRA
REED P JCP
Increased Positions
16

Top/Bottom Five Performers
 Technology sector remains key contributor to our top five
performers
17
Ticker
Average
Weight
Price
Change
(%)
Total
Return
Contribution
To Return
Top 5 26.40 14.33 14.92 3.80
VIS Vanguard Industrial Index Fund ETF 11.40 7.44 8.6 0.94
P Pandora Media, Inc. 1.56 40.51 40.51 0.78
IGM iShares North America Tech ETF 6.51 8.70 8.95 0.76
GOOG Google Inc. 2.49 35.38 35.38 0.74
CTSH Cognizant Technology Solutions Corporation 4.43 14.21 14.21 0.58
Bottom 5 10.20 -29.44 -29.44 -3.11
OSIS OSI Systems, Inc. 1.67 -37.58 -37.58 -1.11
JCP J. C. Penny Company, Inc. 0.95 -38.72 -38.72 -0.84
LKQ LKQ Corporation 3.78 -16.99 -16.99 -0.63
SODA SodaStream International Ltd. 0.99 -20.18 -20.18 -0.40
PRAA Portfolio Recovery Associates, Inc 2.81 -14.55 -14.55 -0.14

Top Ten Individual Holdings
 As an ultra-concentrated portfolio, individual positions are
vastly larger than our benchmark
*This excludes potential added weight if an ETF holds the same security
18
Ticker Company
Portfolio
Weight
Benchmark
weight
Difference
PNRA Panera Bread Company 5.21 0.05 5.16
EBAY eBay Inc. 5.19 0.69 4.49
AAPL Apple Inc. 4.97 3.58 1.39
CTSH Cognizant Technology Solutions Corporation 4.63 0.28 4.35
TIF Tiffany & Co. 4.39 0.09 4.30
VMW Vmware, Inc. 4.34 0.08 4.26
ECL Ecolab Inc. 3.96 0.26 3.70
ICE IntercontinentalExchange Group, Inc. 3.91 0.15 3.76
CRZO Carrizo Oil & Gas, Inc. 3.87 0.02 3.85
COV Covidien Plc 3.71 - 3.71

Exchange Traded Fund Holdings
 Diversification through ETFs provides time for in depth
security analysis and risk mitigation
19
Ticker Name Date 1 % 2 % 3 % 4 % 5 %
VIS
Vanguard Industrials Index
Fund ETF
8/2013 GE 11.92 UTX 4.35 BA 3.73 MMM 3.71 UNP 3.57
VHT
Vanguard Health Care Index
Fund ETF
8/2013 JNJ 10.73 PFE 8.19 MRK 6.31 GILD 4.06 AMGN 3.61
KXI
iShares Global Consumer
Staples ETF
8/2013 PG 7.34 NESN 7.25 KO 5.02 PM 4.69 PEP 4.23

Cabela’s Inc.(CAB)
 Recommendation: BUY
 Price Target: $80.00
 Current Price: $66.63
Growth 2012 2013E 2014E 2015E
Sales (Bil) 3.11 3.62 4.04 4.68
Growth 10.7% 16.2% 11.6% 16.0%
EPS $2.48 $3.31 $3.84 $4.65
Growth 20.5% 33.3% 15.9% 21.1%
Profitability
EBIT 275.7 361.1 435.0 532.0
Growth 19.1% 31.0% 20.5% 22.3%
ROE 13.6 15.9 16.5 17.1
ROIC 4.8 5.6 6.3 7.3
ROA 3.2 3.9 4.3 4.8
Valuation
P/E 20.6 22.4 23.0 20.0
Institutional Ownership
Growth and Aggressive Growth Funds account for 61% of ownership.
21
• Non-traditional brick and mortar
• Fragmented market
• Low e-commerce risk
BUY
• Poised to grow store count by
~88% in the next three years
• Goal is to have 225 stores
Store
Expansion
•Freight and transportation
•Bring management functions in
house
Margin
Expansion
• One of the top credit cards
• Strong brand loyalty
• Very low delinquency rate
CLUB Visa
Growth
• Buy rating with an $80 PTValuation
• Increased gun regulations
• Volatility in consumer spending
• Increased competition
Risk
Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan
45
50
55
60
65
70
75
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
Source: FactSet Prices
Cabela's Incorporated (CAB)
Volume (Thousands) Price (USD)
Volume Cabela's Incorporated

Business Overview
 Retailer of hunting, fishing, camping, and
outdoor merchandise
 Currently has 48 existing stores
 Has its own brand of outdoor gear
 Non-traditional brick and mortar
 Families will travel 250+ miles to get to a
Cabela’s
 Average visitor spends 3.5 hours in the store
 Some stores considered to be a tourist attraction
 Three sources of revenue
 Retail
 Direct
 Financial services
22
Business Driver 1 Driver 2 Driver 3 Financials Valuation Surprises
& Targets Risks

Driver 1: Store Expansion
 Cabela’s plans to add 42 stores in the
next three years
 14 new stores each year
 11 of 14 will be Next Generation stores
 3 of 14 will be Outpost stores
 Next Generation stores
 Smaller (60,000-70,000 sq. ft.)
 Initial data is positive
 Outperform larger stores in terms of Sales/Sq. Ft. by
50%
 Outperform larger stores in terms of Profit/Sq. Ft. by
60%
 Outpost stores
 Even smaller (40,000-50,000 sq. ft.)
 Targeted toward underserviced
populations
23
0
10
20
30
40
50
60
70
80
90
100
04 05 06 07 08 09 10 11 12 13 14E 15E 16E
Store Count
0
1
2
3
4
5
6
CAB NGVC TFM WFM DKS ULTA TSCO VSI
Total Store Potential Relative to Existing Store Count
3.7x
2.8x
2.1x
2.0x
1.7x
1.4x
4.4x
4.7x
& Targets Risks
Existing 48 68 136 351 527 609 1,223 630
Potential 225 300 500 1,000 1,100 1,200 2,100 900
Source: William Blair & Company

Driver 2: Margin Expansion
 Freight and transportation
 Move only when absolutely necessary
 Fewest possible miles
 Bring management functions in-house
 Ability to structure relationships at a
regional level
 Creates a flexible and nimble work
environment
 Better management of markdowns
 New marketing model
 From print to digital
 Using an Omni-channel approach
 Category marketing
24
& Targets Risks
39.1%
40.8%
42.6%
43.1%
44.0%
45.0%
45.5%
34.0%
36.0%
38.0%
40.0%
42.0%
44.0%
46.0%
2009 2010 2011 2012 2013E 2014E 2015E
Gross Margin

Driver 3: CLUB Visa Growth
 World’s Foremost Bank
 13th largest issuer of credit cards
 1/3 of customers have CLUB Visa
cards
 This part of the business drives
customer loyalty and retention
 Acceleration of physical stores will
help drive growth of CLUB Visa
accounts
 New credit card accounts originate
from the retail stores
 Delinquencies and charge offs are
the best in the industry
 Average FICO score is 793
25
& Targets Risks
65
70
75
80
85
90
Comparables ‘12
‘12
Cabela’s
‘11
Average 77
ACSI Satisfaction
Total Delinquency
2.0%
1.0%
1.5%
0.5%
Oct-07 Jan-09 July-10 Jan-12 July-13

Financials
26
& Targets Risks
Sales
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
2009 2010 2011 2012 2013E 2014E 2015E
33.3%
15.9%
21.1%
EPS
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
$3.50
$4.00
$4.50
$5.00
2009 2010 2011 2012 2013E 2014E 2015E
Billions
16.2%
16%
11.6%
6.3%
5.2%
4.8%
5.6%
6.3%
7.3%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
2010 2011 2012 2013E 2014E 2015E
ROIC
3.72
1.85
1.45
1.19
0.89 0.74 0.60
-
0.50
1.00
1.50
2.00
2.50
3.00
3.50
4.00
2009 2010 2011 2012 2013E 2014E 2015E
Debt/EBIT

Valuation
 Price target of $80.00
 Average from two 3-stage DCF’s and an
EV/EBIT multiple
 Discounted cash flows
 Years 1-2 = $4.82
 Years 3-7 = ($0.75)
 Stage 3 – PV of terminal value multiples
 Terminal EPS = ($7.59*20)*0.51
 $77.51+$4.82+($0.75)=$79.53
 Terminal SPS = (104.7*1.2)*.51
 $64.14+$4.82+($0.75)=$66.16
 FY’15 EBIT/share $7.29
 $7.29*13.0 =$94.74
 + cash – debt=$3.41
 Share price =$98.15
27
& Targets Risks
Assumptions Cost of equity
Terminal P/E 20.0x Risk free rate 2.80%
Terminal P/S 1.2x Beta 1.40
EV/EBIT 13.0x Market return 8.0%
Second stage
growth rate
10.0%
Market risk premium 5.2%
Stock risk premium 7.3%
Cost of equity 10.1%
$-
$10
$20
$30
$40
$50
$60
$70
$80
$90
$100
P/E P/S EV/EBIT
$80 Price Target

Surprises & Targets
EPS Surprise History
28
Analyst Targets
& Targets Risks

Risks
 Poor execution of store expansion plan
 Credit card delinquencies spike
 Gun regulations
 Coming off of very high comps
29
& Targets Risks

Appendix
 Process
 Screening (31)
 Fundamentals (32)
 Valuation (33)
 Portfolio construction (34)
 Implementation guidelines (35)
 Modify and review (36)
 Individual securities (37)
 Income statement (CAB) (38)
 JCP thesis (39-55)
 Macro-divergence monitor (56)
30

Process-Screening
Proactively
screening
for great
growth
companies
 Screening for securities
 Revenue growth
 Profitability
 Momentum
 Valuation
 Corporate governance
 Institutional ownership
*For a security to pass this screen it must pass 5 of 6 characteristics
31

Process-Fundamental Analysis
 Fundamental bottom-up
analysis
 Strong business model
 Solid financials
 Thematic & macro
overlay
 Examples
 Healthcare reform
 Mobile monetization
 3D - printing
 Rising interest rates
Strong
business
model
Solid
financials
Thematic
overlay
32

Process-Valuation
 Key valuation metrics
 Price to Sales
 EV to Sales
 EV to EBITDA
 Price to Earnings
 Price to Cash Flow
*Metrics used to gauge market expectations
33

Process-Portfolio Construction
 Position alteration guidelines
 An analyst will pitch a security (Buy, Hold, Sell)
 Vote on analyst’s recommendations
 Vote on size of alteration
 Five members must be present via:
 In person
 VoIP
 Conference call
34

Process-Implementation Guidelines
 Holdings
 20-40
 Sector allocation
 +/- 10% benchmark weight
 Single security (excluding ETFs)
 Maximum 10% of portfolio
 Cash
 Maximum 10%
 Market capitalization
 Large, mid and small
35

Process-Modify and Review
 Weekly performance and risk characteristic analysis
 Analysts provide updates pre/post key events
 Securities subject to formal review if:
 Security falls by more than 7%
 Announces a M&A deal
 Momentum is decaying
 Security reaches analyst’s price target
36

Individual Securities
Ticker Company Name Main Business Port. Weight Bench Weight Rel. Weight
PNRA Panera Bread Company Class A Restaurants 5.18 0.05 5.14
LKQ LKQ Corporation Automotive Aftermarket Parts 3.28 0.08 3.28
CAB Cabela’s Incorporated Catalog/Specialty Distribution 2.97 0.03 2.94
TIF Tiffany & Co Specialty Stores 4.23 0.09 4.14
JCP J.C. Penny Company, Inc. Department Stores 1.54 -- 1.54
KXI iShares Global Consumer Staples ETF Multiple 8.44 -- 8.44
REED Reed’s, Inc. Beverages 2.60 -- 2.60
Energy 3.88 4.37 -0.49
CRZO Carrizo Oil & Gas, Inc. Exploration & Production 3.88 0.02 3.86
ICE IntercontinentalExchange, Inc. Securities Exchanges 3.87 0.15 3.73
PRAA Portfolio Recovery Associates, Inc. Bad Debt Recovery 2.03 0.02 2.00
Health Care 13.85 13.62 0.22
TMH Team Health Holdings, Inc.. Physician Practice Management 2.61 0.03 2.58
COV Covidien Plc Medical Specialties 3.80 -- 3.80
CYH Community Health Systems, Inc. Hospitals 2.40 0.01 2.39
HCA HCA Holdings, Inc. Hospitals 2.11 0.01 2.10
VHT Vanguard health Care Index Fund ETF Multiple 2.82 -- 2.82
Industrials 12.35 12.50 -0.15
GNRC Generac Holdings Inc Power Generation Equipment 2.21 0.02 2.19
VIS Vanguard Industrials Index Fund ETF Multiple 10.14 -- 10.14
AAPL Apple Inc. Computer and Smartphone Producer 4.85 3.47 1.37
CTSH Cognizant Technology Solutions Corp. Outsourcing Technologies 4.69 0.29 4.40
GOOG Google Inc. Internet Services & Current Technologies 2.86 3.11 -0.25
EBAY eBay Inc. Payment processing 5.06 0.67 4.39
OSIS OSI Systems, Inc. Electronic Equipment Producer 3.16 0.01 3.14
QCOM QUALCOMM, Inc. Smartphone Hardware 1.92 1.25 0.66
TQNT TriQuint Semiconductor, Inc. Smartphone Hardware 2.95 -- 2.95
P Pandora Media, Inc. Internet Software/Services 1.63 0.05 1.58
PRFT Perficient, Inc. IT Consulting 2.48 -- 2.48
VMW Vmware, Inc. Class A Cloud Computing 4.29 0.08 4.21
Materials 3.97 4.46 -0.49
ECL Ecolab Inc. Commercial Chemicals Producer 3.97 0.26 3.72
Telecommunication Services -- 1.91 -1.91
Utilities -- 0.11 -0.11
Cash 1.09 -- 1.09
37

Income Statement (CAB)
38
Income Statement 2009 2010 2011 2012 2013E 2014E 2015E
Sales $2,632,240 $2,663,242 $2,811,166 $3,112,682 $3,616,000 $4,035,000 $4,680,600
Growth 1.2% 5.6% 10.7% 16.2% 11.6% 16.0%
Direct Costs 1,602,621 1,575,449 1,613,249 1,769,798 2,024,960 2,219,250 2,550,927
Gross Margin 1,029,619 1,087,793 1,197,917 1,342,884 1,591,040 1,815,750 2,129,673
SG&A 870,147 895,405 954,125 1,046,861 1,214,976 1,355,760 1,572,682
Impairment 66,794 5,656 12,244 20,324 15,000 25,000 25,000
Net Interest - - - - - -
EBIT 92,678 186,732 231,548 275,699 361,064 434,990 531,991
Growth 101.5% 24.0% 19.1% 31.0% 20.5% 22.3%
Interest 16,154 20,082 17,081 13,985 10,000 9,875 9,875
EBT 76,524 166,650 214,467 261,714 351,064 425,115 522,117
Taxes 26,907 54,521 71,847 88,201 119,362 148,790 182,741
Continuing income 49,617 112,129 142,620 173,513 231,702 276,325 339,376
Other - - - - - - -
Net income 49,617 112,129 142,620 173,513 231,702 276,325 339,376
Growth 126.0% 27.2% 21.7% 33.5% 19.3% 22.8%
Basic Shares 67,007.7 67,791.8 69,194.7 69,856.3 70,000.0 72,000.0 73,000.0
EPS $0.74 $1.65 $2.06 $2.48 $3.31 $3.84 $4.65
Growth 123.4% 24.6% 20.5% 33.3% 15.9% 21.1%

BELEAGUERED, BEGOTTEN, BUT
WON’T BE FORGOTTEN
Fischer Van Handel – December 12, 2013

J.C. Penney (JCP)
 Recommendation: BUY
 Price Target: $20.50
 Current Price: $8.52
Company Metrics 2011 2012 2013E 2014E
Sales (Bil) 17.26 12.99 12.16 13.78
YoY chg -2.8 -24.8 -6.4 13.4
GAAP – EPS -0.70 -4.50 -4.93 -1.09
YoY chg -142.9 542.7 9.8 -78.0
Profitability
EBIT (Bil) -0.02 -1.31 -1.32 -0.14
EBIT margin -0.0 -10.1 -10.8 -1.0
ROE -3.2 -27.4 -61.1 -20.9
ROIC 0.0 -12.6 -17.2 -1.4
Valuation
P/S 0.50x 0.30x 0.19x 0.17x
P/B 1.67x 1.21x 1.31x 1.13x
Analyst Ratings
2-Buy, 12-Hold, 4-Sell. Average 12-month price target: $9.00
40
•Deeply undervalued relative to
future expectations
•MGMT change provides catalyst
for fundamental improvement
BUY
•Revival of couponing and
improved inventory management
•FY14E sales per sq. ft. expected
to be $124 up 13.4% yoy
Sales/Sq.ft.
Growth
• Resurgence of private label –
largest GM business
• FY14E top-line growth of 13%
vs. consensus of 7%
Gross
Margin
Expansion
• Average DOL >500% in
forecasted years.
• Average DFL >250% in
forecasted years.
High
Leverage
• DCF Price Target: $20.68
• EV/EBITDA PT: $20.12
Valuation
• Highly competitive environment
• Lack of sufficient capital
• SEC investigation
Risk

Business Overview
 Mid-level retailer operating 1,095 stores
 429 owned – Remainder leased
 Diversified throughout 49 states and Puerto Rico
 Top Brands –
 Liz Claiborne
 St. John’s Bay
 Arizona
 a.n.a.
 Others
41
Business Driver 1 Driver 2 Driver 3 Financials Industry Valuation IMCP vs.
Consensus Risks Summary
Sales Mix
Source: Company reports

Driver 1: Sales per sq. ft. growth
 Refocussing on what worked – Couponing, private
label inventory, and online cohesion
42
-19%
-22%
-26%
-32%
-17%
-12%
-5%
2%
14%
-40%
-30%
-20%
-10%
0%
10%
20%
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
$7,000
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12-RJ
2Q12-RJ
3Q12-RJ
4Q12-RJ
1Q13-RJ
2Q13-RJ
3Q13
4Q13E
1Q14E
2Q14E
3Q14E
4Q14E
Sales Same Store Sales %
Ullman Johnson ???
Sales 1Q11-4Q11 $17,260
Sales 3Q12-2Q13 $12,109
Absolute delta ($5,151)
% Chg -30%
Gross income 1Q11-4Q11 $6,218
Gross Income 3Q12-2Q13 $3,475
% Chg -44%
Dil. EPS 1Q11-4Q11 -$0.73
Dil. EPS 3Q12-2Q13 -$5.33
Absolute delta ($5)
% Chg 630%
*Numbers in millions, except per share data
**Lagged 1Q to allow time for strategy change
Ron Johnson Analysis
TTM-Lagged 1Q

 “Inventory levels nearly restored.” – CEO Ullman
3Q13 conference call.
43
3.60x
3.39x
3.25x
3.05x
3.14x
3.46x
2.70x
2.80x
2.90x
3.00x
3.10x
3.20x
3.30x
3.40x
3.50x
3.60x
3.70x
$0
$500
$1,000
$1,500
$2,000
$2,500
$3,000
$3,500
FY08 FY09 FY10 FY11 FY12 FY13E FY14E FY15E
Inventory at Year-End Inventory turnover Pre-RJ avg. turnover*
*3.46x signifies the average turnover during FY09-FY12.
Key events:
 Nov. 2011: RJ enters as CEO.
 Jan. 2012: Plans to reduce
annual promos from 590 to 12.
“Fair-in-square” pricing.
 Jan. 2012: Reveals store-
within-stores concept, reduces
‘clutter’ in stores.
 May 2012: Ends sales
commissions for sales staff.
 April 2013: RJ ousted. Former
CEO Ullman returns.
 Nov 2013: Inventory levels
nearly restored.

 Proper inventory management should bring sales
per square foot near pre-RJ levels.
44
-2%
-25%
-6%
13%
8%
-30%
-25%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
$-
$20
$40
$60
$80
$100
$120
$140
$160
$180
Sales per sq. ft. FY08-FY12 Avg. YoY % change
Nordstrom, Inc. $431
The Gap, Inc. $364
Target $299
Kohl's $220
Macy's $175
Bon-Ton $135
J.C. Penney $116
*Based of FY12 numbers
**Source: FactSet
Industry Analysis
Sales per sq. ft.
Pre-RJ Levels 151$
Current (FY12) 116$
% Delta -23%
FY15E 134$
% Delta -11%
*IMCP Estimates
J.C. Penney
Sales per sq. ft.

Driver 2: Gross margin expansion
 Return of private label is expected to drive FY14E
gross margin +582bps (incremental GM 80%)
 FY14E EPS benefit of $2.23
45
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
$0
$500
$1,000
$1,500
$2,000
$2,500
1Q08
2Q08
3Q08
4Q08
1Q09
2Q09
3Q09
4Q09
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11
4Q11
1Q12-RJ
2Q12-RJ
3Q12-RJ
4Q12-RJ
1Q13-RJ
2Q13-RJ
3Q13
4Q13E
1Q14E
2Q14E
3Q14E
4Q14EGross Margin Gross Margin % Pre-RJ avg. GM - 38%*
*Signifies the average annual gross margin during FY08-FY11(38.0%).
% Chg -44%
Gross Margin 1Q11-4Q11 36%
Gross Margin 3Q12-2Q13 29%
Absolute delta (733) Bps
Decremental margin 53%
Gross Income FY14E $5,009
YoY % Chg 35%
Gross Margin 36%
Incremental Margin 80%
* Dollar values in millions
**FY14E yoy sales growth is estimated at 13.8%
***Lagged 1Q to allow for strategy change
Ron Johnson Analysis
TTM-Lagged 1Q

Driver 3: Leverage
46
 Total operating expenses seen flat for foreseeable
future. Restructuring costs seen as one-time expenses.
 FY14E EPS benefit of $1.29
-30.0%
-25.0%
-20.0%
-15.0%
-10.0%
-5.0%
0.0%
5.0%
10.0%
15.0%
20.0%
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
SG&A Other expenses
YoY Sales % Chg YoY Total Op. Ex. % Chg
13.4%
-2.0%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
-$50
$0
$50
$100
$150
$200
$250
$300
1Q10
2Q10
3Q10
4Q10
1Q11
2Q11
3Q11*
4Q11-RJ
1Q12-RJ
2Q12-RJ
3Q12-RJ
4Q12-RJ
1Q13-RJ
2Q13
3Q13
4Q13E
1Q14E
2Q14E
3Q14E
4Q14E
Rest. % of Tot. Op. Ex. Avg. Pre-RJ % of Tot. Op. Ex.**
*One-time VERP expense of $179mn.
**0.1% average is calculated from 1Q08-2Q11.
***During RJ’s tenure JCP spent ~524mn on restructuring.
*SG&A expense expected to increase ~120mn in forecasted years.
**Average degree of operating leverage expected to be >500% in forecasted
years.

Driver 3: Leverage
47
 High levels of debt provide substantial leverage on
forecasted EBIT growth.
*Maturing debt is forecasted to be reissued at similar rates.
**Under current covenants quarterly payments on this note are to be $5.63mn until maturity-
Upon maturity the remaining balance is expected to be reissued at a similar rate.
*Total debt includes short-term borrowings and capital leases.
**Industry (ex. JCP) total debt as % of assets is 81% (Source: FactSet).
***Industry (ex. JCP) total debt as % of equity is 27.0% (Source: FactSet).
****DFL is expected to be >250% in forecasted years.
$5,606
393%
53%
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Total debt* Total debt % of Equity
Total debt % of Assets
Issue Date Bond Amt Out Coupon Maturity
16-Oct-95 Medium-Term Notes $200 6.88% 10/15/2015
14-Aug-96 Long-term debt $200 7.65% 8/15/2016
09-Apr-97 Long-term debt $285 7.95% 4/1/2017
24-Apr-07 Senior Notes $300 5.75% 2/15/2018
18-May-10 Senior Notes $400 5.65% 6/1/2020
16-Nov-93 Debentures $10 7.13% 11/15/2023
14-Aug-96 Long-term debt $2 6.90% 8/15/2026
24-Apr-07 Senior Notes $400 6.38% 10/15/2036
09-Apr-97 Debentures $326 7.40% 4/1/2037
20-Feb-97 Long-term debt $500 7.63% 3/1/2097
08-Feb-13 Credit facility $650 5.25% 4/4/2014
22-May-13 Senior Notes** $2,244 5.00% 5/22/2018
BV of debt - Weighted average coupon: $5,517 5.92%
MV of Debt - Weighted average YTM: $5,020 4.40%
*Amount of debt due in next 3 years (shaded): $1,050
Debt Analysis

Driver 3: Leverage
48
0.0%
20.0%
40.0%
60.0%
80.0%
100.0%
120.0%
140.0%
160.0%
180.0%
0%
500%
1000%
1500%
2000%
2500%
3000%
3500%
4000%
4500%
FY16E FY17E FY18E FY19E FY20E FY21E
DOCL YoY % Sales Chg YoY % EBIT Chg YoY% EPS Chg
FY16E FY17E FY18E FY19E FY20E FY21E
Degree of Combined Leverage 3904% 1555% 985% 757% 583% 436%
YoY % EPS Chg 156% 47% 20% 15% 12% 9%
YoY % EBIT Chg 27% 16% 8% 7% 5% 4%
YoY % Sales Chg 4% 3% 2% 2% 2% 2%
*Many assumptions are built into this, but significant leverage can most likely be seen if
sales growth is near our forecasts.
Key assumptions:
 No change in number of Stores
 Sales/Sq. ft. reaches $152 by
FY21.
 Gross Margin reverts to 38%
by 2015 remains steady.
(2008-2011 avg. ~38.0%).
 EBIT Margin steadily reverts to
4.6% by FY21 (2008-2011
avg. ~5.3%).
 No material change in debt
outstanding.
 Interest expense is reduced by
$9mn per year.
 Tax rate is 35%.
 No change in outstanding
shares.

Financials
49
 Inflecting IS, beaten-not-broken BS, bottoming CF
 The worst – in rearview mirror
 Positive FCFF, FCFE, EPS by FY15E
($4.62)
$1.32
($5.57)
$0.60
($4.93)
$0.17
($8.00)
($6.00)
($4.00)
($2.00)
$0.00
$2.00
$4.00
$6.00
FY09 FY10 FY11 FY12 FY13E FY14E FY15E
FCFF/share FCFE/share EPS
$5,606
393%
53%
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
Total debt* Total debt % of Equity
Total debt % of Assets

Industry
50
 Bifurcation in retail market
 Management change provides
catalyst to regain market share
(478) Bps
(92) Bps
(70) Bps
(26) Bps (12) Bps
(600) Bps
(500) Bps
(400) Bps
(300) Bps
(200) Bps
(100) Bps
0 Bps
JCP KSS M BONT DDS
268 Bps
121 Bps 113 Bps
92 Bps 87 Bps
0 Bps
50 Bps
100 Bps
150 Bps
200 Bps
250 Bps
300 Bps
TJX ROST RH GPS JWN
Pre-RJ Avg Market share 14.0%
Post-RJ Market Share 8.3%
Delta (563) Bps
FY15E-IMCP Estimates 10.6%
Delta Post- RJ +228 Bps
*Assuming overall market grows 1%
JCP Market Share Analysis
Market share – Losers FY12-FY13 Market share – Winners FY12-FY13

Industry
51
 Comps
 JCP – Deeply undervalued if our estimates are correct
NTM TTM EV/ P/CF Sales Growth Book
Ticker Website NPM P/S OM ROIC EBIT Current 5-yr NTM STM Pst 5yr Equity
JCP J.C. PENNEY CO, INC. -7.8% 0.25 -15.1% -3.1 -1.9 10.0 5.4% 6.8% -8.1% $10.53
KSS KOHL'S CORP 5.0% 0.61 9.3% 8.9 6.8 7.1 0.0% 1.7% 3.2% $27.77
M MACY'S INC 5.6% 0.70 10.5% 10.0 8.6 4.6 1.9% 3.0% 1.0% $15.25
TJX TJX COMPANIES INC 7.9% 1.64 12.4% 45.2% 14.6 17.6 10.3 6.1% 8.7% 6.8% $5.80
DDS DILLARDS INC -CL A 0.63 11.9% 9.6 5.1 -1.3% $43.89
GPS GAP INC 7.9% 1.13 26.7% 10.1 10.5 7.5 2.5% 5.6% -0.1% $7.39
SHLD SEARS HOLDINGS CORP -1.8% 0.14 -3.5% -16.8% -9.5 -8.5 36.4 -5.5% -1.5% -4.7% $17.68
BONT BON-TON STORES INC 0.9% 0.12 -2.2% 50.5 1.2 0.5% 0.3% -2.8% $2.43
ROST ROSS STORES INC 8.6% 1.54 44.2% 12.4 16.0 10.8 5.1% 8.2% 10.2% $8.91
RH RESTORATION HARDWARE 4.7% 2.11 -8.1% -2.7% -11.2 9.7 24.3% 27.3% $12.83
EXPR EXPRESS INC 6.3% 0.72 26.5% 6.4 9.5 3.5% 6.9% $4.93
TGT TARGET CORP 3.8% 0.54 6.1% 9.9% 11.3 8.6 6.3 2.8% 4.4% 3.0% $25.57
Average 3.7% 0.84 1.7% 12.3% 9.2 7.7 9.9 4.2% 6.5% 0.7%
Median 5.0% 0.66 1.3% 10.2% 9.8 9.1 7.3 2.8% 5.6% 0.4%
Source: FactSet

Valuation
 DCF Valuation: PT = $21.00
 EV/EBITDA: PT = $20.00
 Valued using a multiple of 12x based on FY15E EBITDA
52
JCP – DCF assumptions
Risk Free Rate 3.00%
Beta 1.50
Market Return 10%
Market Risk Premium 7.0%
Stock Risk Premium 10.5%
Cost of Equity 13.5%
Terminal P/S 0.76
Terminal SPS $55.55
Price Target $20.68
JCP – EV/EBITDA
assumptions
EV/EBITDA Multiple 12x
15E EBITDA $1,081
Enterprise Value $12,968
Total Debt $5,612
Cash $1,227
Equity Value $6,129
Shares 305
Price Target $20.12
$8.08 $8.08
$20.68 $20.12
$0.00
$5.00
$10.00
$15.00
$20.00
$25.00
DCF EV/EBITDA
+156% +149%
** Price targets are based on FY15 IMCP Estimates.

IMCP vs. Consensus
 Positive surprises expected foreshadowing upgrades
throughout FY14.
53
Analyst Ratings
+$0.85
+ $1.66
+$1.28
$(8.00)
$(6.00)
$(4.00)
$(2.00)
$-
$2.00
FY13E FY14E FY15E
EPS - Cons. Es. EPS - IMCP Est.
+$88
+$894 +$1,317
$0
$5,000
$10,000
$15,000
$20,000
FY13E FY14E FY15E
Sales - Cons. Est. Sales - IMCP Es.
+$609
+$492
+$583
$(1,500.0)
$(1,000.0)
$(500.0)
$-
$500.0
$1,000.0
$1,500.0
FY13E FY14E FY15E
EBITDA - Cons. Est EBITDA - IMCP. Est.
2 2 2 2 1 1 1 1 1 1 1 3 3 4
6 6 6 7 7 7 7 7 6 6 6
11
8 9 9 12 12 12 13 14 12 12
12 12
12
10 12 11 11 11 11 11
16 16 16 16
4
6 5 5 6 7 6 7 6 6 6 5 5 4 4 3 5 6 6 6 6
2 1 1 1
0%
20%
40%
60%
80%
100%
SELL HOLD BUY
BUY 1
HOLD 16
SELL 6
# of Analysts 23
Avg. PT $10.11
*As of 12/8/2013
Analyst Ratings
Source: FactSet

Risks
 Company Specific
 Looming SEC investigation – Filed Oct. 7, 2013
 Inability to return to profitability
 Insufficient liquidity
 Inability to raise capital (if needed)
 Market sentiment remains negative longer than expected
 Industry Specific
 Reduction in consumer spending
 Highly competitive market
54

Summary
 Fundamental
 Change in corporate strategy
 Inflecting growth
 Tremendous leverage
 Thematic
 Multi-year recovery in consumer spending
 Valuation
 Undervalued relative to future expectations
 Portfolio Construction
 Current position size: 1.42%
55

Macro-Divergence Monitor
56
Last Close: 1-Day 5-Day 1-Month 3-Month 6-Month 1-Year 18- Month 3-Year MTD QTD YTD
IWV iShares Russell 3000 ETF 109.23 1.1% 3.6% -1.2% 2.9% 7.9% 20.8% 31.9% 37.7% 2.0% -1.3% -1.3%
IWZ iShares Russell 3000 Growth ETF 70.01 1.1% 3.8% -0.6% 4.2% 10.7% 23.9% 32.1% 40.4% 2.2% -0.8% -0.8%
IWW iShares Russell 3000 Value ETF 121.08 1.2% 3.5% -1.8% 1.5% 5.1% 17.9% 31.5% 34.6% 1.8% -1.9% -1.9%
IWB iShares Russell 1000 ETF 101.93 1.1% 3.8% -1.0% 3.0% 8.0% 20.7% 31.2% 37.7% 2.1% -1.2% -1.2%
IWR iShares Russell Mid-Cap ETF 149.78 0.9% 3.5% -0.6% 3.8% 8.3% 22.1% 38.3% 38.3% 1.8% -0.1% -0.1%
IWM iShares Russell 2000 ETF 112.03 0.9% 2.3% -3.0% 2.4% 7.7% 23.5% 40.2% 36.5% -0.1% -2.9% -2.9%
IWC iShares Micro-Cap ETF 74.61 1.0% 2.3% -3.0% 6.7% 13.3% 33.4% 50.2% 44.4% -0.1% -0.7% -0.7%
IWF iShares Russell 1000 Growth ETF 85.34 1.0% 3.9% -0.5% 4.3% 10.7% 23.4% 30.9% 40.0% 2.3% -0.7% -0.7%
IWP iShares Russell Mid-Cap Growth ETF 84.24 0.8% 3.8% -0.4% 4.9% 9.4% 24.9% 39.2% 38.5% 2.2% -0.1% -0.1%
IWO iShares Russell 2000 Growth ETF 133.24 0.8% 2.7% -2.8% 3.9% 10.2% 29.4% 45.4% 44.3% -0.1% -1.7% -1.7%
IWD iShares Russell 1000 Value ETF 92.54 1.2% 3.5% -1.6% 1.7% 5.3% 17.9% 31.2% 35.1% 1.9% -1.7% -1.7%
IWS iShares Russell Mid-Cap Value ETF 65.50 0.9% 3.2% -0.7% 2.4% 7.1% 19.3% 36.9% 37.5% 1.5% -0.3% -0.3%
IWN iShares Russell 2000 Value ETF 95.46 1.1% 2.1% -3.2% 0.8% 5.1% 17.9% 34.6% 28.9% -0.2% -4.1% -4.1%
1.0% 3.2% -1.6% 3.3% 8.4% 22.7% 36.4% 38.0% 1.4% -1.3% -1.3%
0.1% 0.7% 1.1% 1.6% 2.5% 4.6% 6.1% 4.0% 1.0% 1.1% 1.1%
% Sec. # of Sec. Sector Market Cap % Mkt.Cap 1-Day 5-Day 1-Month 3-Month 6-Month 1-Year 18- Month 3-Year MTD QTD YTD
15% 505 Consumer Discretionary 34,084B 15% 0.8% 3.8% -3.1% 1.3% 6.9% 31.6% 55.9% 61.4% 1.3% -4.1% -4.2%
4% 124 Consumer Staples 15,859B 7% 1.0% 2.5% -3.7% -0.4% 2.1% 26.4% 41.0% 59.8% 0.3% -5.0% -4.6%
6% 193 Energy 17,639B 8% 1.4% 2.8% -0.2% -1.4% 9.5% 21.6% 33.5% 8.0% 1.1% -1.4% -1.4%
27% 906 Financial Services 42,293B 19% 0.8% 1.8% -1.4% 2.2% 4.7% 18.8% 39.8% 40.9% 0.4% -1.5% -1.5%
13% 433 Health Care 25,635B 11% 0.8% 4.0% 0.7% 21.1% 26.4% 60.2% 80.6% 88.7% 1.2% 8.9% 8.8%
7% 223 Materials 9,961B 4% 1.3% 3.6% -1.4% 5.9% 11.4% 18.9% 42.2% 41.9% 1.2% 0.4% 0.5%
11% 374 Producer Durables 21,668B 10% 0.9% 1.9% -3.1% 4.4% 14.3% 32.5% 53.1% 41.9% -0.5% -3.1% -3.1%
14% 476 Technology 35,124B 16% 0.8% 2.5% -0.8% 7.0% 12.3% 32.7% 46.0% 30.8% 0.1% 0.0% -0.1%
4% 137 Utilities 21,363B 10% 1.2% 2.1% 0.3% 1.4% 0.5% 17.4% 20.8% 23.8% -0.1% 0.3% 0.8%
100% 3371 WEIGHTED MEAN 223,626B 100% 0.9% 2.7% -1.5% 5.3% 10.4% 29.9% 48.9% 47.0% 0.6% -0.4% -0.4%
WEIGHTED STANDARD DEVIATION 0.2% 0.9% 1.4% 6.9% 7.7% 13.9% 15.5% 21.8% 0.2% 1.3% 1.3%
% Mkt Cap Index Index Name Mkt. Cap. Last Close: 1-Day 5-Day 1-Month 3-Month 6-Month 1-Year 18- Month 3-Year MTD QTD YTD
12% IXY Consumer Discretionary Select Sector 20,065B 648.51 0.7% 4.2% -2.8% 1.8% 7.5% 27.7% 44.9% 63.8% 2.6% -3.5% -3.5%
10% IXR Consumer Staples Select Sector 15,649B 416.67 1.1% 3.6% -2.2% -2.2% 0.2% 11.0% 17.3% 41.1% 1.9% -3.4% -3.4%
10% IXE Energy Select Sector 17,016B 850.03 1.3% 2.3% -2.6% -2.2% 2.7% 8.4% 17.2% 14.5% 1.5% -4.3% -4.3%
16% IXM Financial Select Sector 26,243B 214.85 1.0% 3.8% -2.4% 3.2% 5.4% 21.8% 44.2% 26.1% 2.2% -1.6% -1.6%
13% IXV Health Care Select Sector 22,119B 577.84 1.3% 3.9% 1.4% 8.1% 13.1% 33.1% 48.9% 78.0% 2.8% 3.7% 3.7%
3% IXB Materials Select Sector 5,675B 481.42 1.2% 4.8% -0.5% 3.1% 10.0% 16.0% 26.8% 14.8% 3.2% -1.6% -1.6%
11% IXI Industrial Select Sector 18,214B 507.72 1.1% 3.6% -2.4% 2.9% 11.6% 25.0% 38.6% 34.3% 1.4% -2.9% -2.9%
21% IXT Technology Select Sector 34,448B 356.24 1.2% 3.9% 0.7% 5.0% 11.5% 18.8% 18.1% 32.3% 2.1% -0.7% -0.7%
3% IXU Utilities Select Sector 4,845B 399.22 0.9% 2.3% 3.2% 1.6% 1.1% 7.5% 5.4% 23.7% 0.9% 3.8% 3.8%
100% WEIGHTED MEAN** 164,272B 1.1% 3.7% -1.1% 2.9% 7.9% 20.7% 31.7% 39.7% 2.1% -1.2% -1.2%
WEIGHTED STANDARD DEVIATION 0.2% 0.7% 2.0% 3.6% 4.9% 8.7% 15.6% 22.7% 0.7% 3.0% 3.0%
Source: FactSet data, IMCP calculations. Bolded cells denote values in excess of [1] standard deviation from the respective mean.
Sector divergence: Step 2 Find sector breakout/breakdowns (Equal Weighted)
Standard deviation
**The market weighted sector divergence is calculated using Select Sector indicies, which replicate the S&P 500's sectors. We use this since we do not have access to full Russell data. Thus, these indicies have a larger
cap bias, and may not have the same sector weightings as the Russell Indicies
Macro United States - Divergence Monitor
*Equal weighted standard deviaton is used to adjust for the different number of securities in each sector.
Equity Style Factors Classes: Step 1 Find style factor breakout/breakdowns (Growth, Value; Large, Mid, Small)
MEAN
2/12/2014 10:55
2/12/2014 10:55
Sector divergence: Step 2 Find sector breakout/breakdowns (Market-CapWeighted)

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