4. Objective & Core Competencies
I am pursuing opportunities in Investor Relations
My greatest Strengths are being a good listener who can tease out high
Conviction ideas on my own or with others due to my Analyst training and
communicate them effectively
My skill sets include generating Thematic Content and leveraging dissemination
into Multi-Product outcomes
Having been at the nexus of both Corporate Communications & Journalism as well
as Research, Sales & Trading, I have well developed abilities which I can bring to
bear on the Communications and Investment processes
5. What do Investors Want?
Analysts must be willing to develop highly controversial, non-consensus positions
on industries and stocks - and be right
Help portfolio managers Outperform: A couple of great ideas a year will put an
Analyst far ahead of peers
Anticipating Change is worth a lot. Analyzing Change is worth much less
Have enthusiasm and communicate that excitement to clients
Being honest and admitting mistakes early increases credibility
Cover exciting smaller cap companies
Source: Morgan Stanley Equity Strategist Byron Wien, 4/26/93
6. What Research can Offer
Good companies can be bad stocks and bad companies can be good stocks
Analysts are valuable when helping determine the attractiveness of a stock by
providing insight about future reality and the market’s likely reaction
Analysts become indispensable because they provide the most insight, not because
their stock picks are always right or their estimates are always perfect
Analysts who provide the most insightful and most proactive Research to
institutional clients are the most valuable to issuers looking to raise Capital
Source: Piper Jaffray Director of Research Tom Schreier, 2000
9. 1.1 Corporate Messaging
MORGAN STANLEY, NEW YORK
Executive Director & Corporate Communications Financial Writer, 2011 - 2012
• Financial Writer of executive communications including speeches, talking points,
internal memos, earnings releases, annual letter to shareholders and proxy
materials
• Also participated in earnings due diligence, draft Volcker Rule response,
corporate Twitter launch, Firm values refresh
• Series 24 Registered Principal compliance officer for communications with the
public by Corporate Communications, Philanthropy and Global Sustainable
Finance
10. 1.2 Writer Best Practices
Clarity, written simply in plain English, at times highly personalized for executives
Proficient: Ability to grasp complex financial issues and translate into a narrative
Seasoned: Articulate in working one on one with members of senior management
Collaborative: Collegial in working with IR on time sensitive or longer lead items
Consistent: Corporate voice and messaging in terms of content, style and format
Manage: Move projects forward in a complex environment
Address potential issues or concerns of multiple stakeholders
11. 1.3 Earnings Releases
Morgan Stanley Reports Third Quarter 2011
• http://www.morganstanley.com/about/ir/shareholder/3q2011.pdf
12. 1.4 Corporate Actions
Morgan Stanley Reaches Comprehensive Settlement with MBIA
• http://www.morganstanley.com/about/press/articles/de933308-080f-47af-
b939-4e9cba3832b9.html
13. 1.5 Annual Shareholder Letter
2012 Annual Letter To Shareholders
• http://www.morganstanley.com/2012ams/Letter-Shareholders.pdf
16. 2.1 Generating Content
DOW JONES & COMPANY, NEW YORK
Columnist / Dow Jones Investment Banker, 2010 - 2011
• Columnist primarily covering the TMT and Consumer/Retail sectors for a
premium subscription service generating sophisticated financial and strategic
commentary for an audience of investment bankers
• Writing insightful, forward-looking columns and hard-hitting, in-depth analyses
that are often accompanied by interactive spreadsheets covering topics such as
M&A, capital raising, regulatory changes, venture capital and private equity
• Coordinated production of the 2011 Deal Predictions representing the editorial
team’s best ideas about which deals could shape or shake up the markets in 2011
and participated in both a virtual press conference and a webinar
• Hewlett-Packard article generated the 1st client subscription for djibanker.com
17. 2.2 Columnist
Idea Generation
Product: A premium subscription service that leverages news and data with in-
depth opinion and analysis
Audience: Investment Bankers, Management Consultants
Commentary: Exclusive analysis which is independent and forward-thinking
Distribution: Proprietary portals, FactSet, djibanker.com, mobile, Twitter
Recognition: Best Online Professional Financial Information Service at the
Software and Information Industry Association’s 2010 Codie Awards
18. 2.3 Column Best Practices
Columnist, not a Reporter
Entertaining, memorable
The Lead: Opinion of opportunities and pitfalls, without numbers
Nut Graf: Executive summary that sets the scene
Arguments: Compelling commentary written with “swagger”
Valuation: Comparable transactions, trading laterals
Content: PowerPoints, spreadsheets, PDFs, videos and graphics
Avoid unactionable think pieces
20. 2.5 Annotated Filings
How High Will Spirit Fly?
http://sec.gov/Archives/edgar/data/1498710/000119312510212371/ds1.htm
21. 2.6 CEO Interviews
Why Tupperware Is Buyback-Prone And M&A-Shy - March 29, 2011
http://online.wsj.com/video/why-tupperware-is-buybackprone-and-mashy/
20802514-CC67-4846-9E42-15D7B1C81FEC.html
22. 2.7 A View on GOOG Antitrust
We Said: November 10, 2010 - Google Opponents Should Put Up Or Shut Up
http://www.google.com/press/ita/saying.html
“A competitive threat is not the same thing as an antitrust violation… It is difficult to
make out FairSearch’s precise antitrust arguments. There are alternatives to ITA’s
software: both the GDSs but also upstarts such as the U.K.’s Everbread Ltd., which
has relationships with 60 low-cost carriers, and Vayant Travel Technologies LLC of
New York. It isn’t clear, therefore, that competition would be reduced even if
Googled didn’t honor ITA’s contracts with other travel companies.” - Peter Gallagher
What Happened: April 8, 2011 - ITA Software acquisition cleared for takeoff
http://googleblog.blogspot.com/2011/04/ita-software-acquisition-cleared-for.html
“We're excited that the U.S. Department of Justice today approved our acquisition.”
24. 3.1 Commercializing Research
UBS INVESTMENT BANK, STAMFORD
Director & Transportation / Aerospace Defense Equity Sales, 2003 - 2004
• Stamford Trading floor based specialized Research Salesperson / Desk Analyst
providing high Impact Research calls & Trading opportunities of Industrials stocks
to 25 of the firm's top institutional clients with sectorized responsibilities
• Marketing Differentiated Research platform with geographically distributed
Analysts, Breadth of coverage and Global representation by working with Global
Airlines, Transport and Aerospace & Defense Equity Analysts
• Maximizing the intraday Flow between Analysts, Trading and clients while
protecting against Facilitation Costs; Leveraging Research into Convertibles and
Fixed Income to derive relative value across the Capital Structure
• #1 Block Trading volume of Airline stocks in 1Q04 with a 9% market share
25. 3.2 Specialist Sales
Staying on Message
Partners: A premium service that leverages geographically distributed Analysts as
a Complementary overlay with Sales
Depth: Provides industry insights to company specific Research calls and
maintains an ongoing dialogue as Themes unfold
Idea Generation: Draw upon Cash Equities, Derivatives, Converts, Fixed Income
Transactional: Corporate Access to maximize Capital raising for issuers and
Performance opportunities for investors
Feedback: Timely, Consistent Feedback from non-deal roadshows, conferences
Risk: Idea Generation that loses money for the firm through Facilitation Costs
27. 3.4 Analyst Marketing
US Transport & Aerospace / Defense Analyst Marketing
NY: Andor, Balyasny, Chilton, Citigroup, DeAM, Galleon, GIC, GSAM, Jennison,
JPMorgan, Maverick, MSIM, Pequot, SAC, Schroders, TCW, TIAA/CREF, ZBI
Boston: AmEx, Babson, Brookside, Columbia, DeAM, Evergreen, Fidelity, John
Hancock, MFS, Pioneer, Putnam, State Street, Tudor, Wellington, Westfield
Atlantic: AmEx, Gartmore, Lord Abbett, MLIM, State of New Jersey, Sun America,
T Rowe Price, Wellington
London: ABN AMRO, DeAM, MLIM, O’Connor, Sarasin
European Transport & Aerospace / Defense Analyst Marketing
NY: Andor, Balyasny, Brown Brothers, GIC, Jennison, Mackay Shields, MSIM, SAC,
Sierra Global, TIAA/CREF, Trident, ZBI
Boston: Boston Co, Fidelity, Putnam
Atlantic: Franklin, MLIM, T Rowe Price, Wellington
28. 3.5 Morning Call Best Practices
It’s a Sales pitch, not a speech
Attention spans are short
Preparation: Use a bullet point outline for Key selling points
Practice: Speak out loud, so you don’t end up reading
Express Conviction: Use your voice and body language to convey confidence in
your recommendation; Speak slowly, enunciate and project your voice
Don’t give Sales a reason not to make your call: Minimize maintenance material
to Sales, reiterating Research to Sales Traders; Avoid unfocused, lengthy Content
providers
29. 3.6 Sales Commentary
Global Laterals
Buy Long Haul, Sell Discount - and an Exception to the Rule
- Ryanair Profit Warning / JBLU Earnings Preview
- Buy Long Haul: US / Europe / Asia
- Sell Discounters: US / Asia
- An Exception to Every Rule: Europe / easyJet
30. 3.7 Cross Product Dinner Ideas
Airlines Cross Instrument Ideas Hedge Fund Dinner
• Geared toward clients with a fundamental Equity role who were: long Airlines at a
low cost basis, feared they had missed the move off the bottom looking for
alternative ways to get long exposure and/or going back to shorting the group
• Airline Analyst: Equity Fundamentals:
Bankruptcies for this cycle are behind us
• Head of Equity Derivatives: Best Idea
AMR Stock Replacement: Sell stock and buy 1 x 2 Call Spread
- Lock in gains while maintaining long exposure through the Call Spread position
• Head of Credit Derivatives: Best Idea
Buy Boeing Capital Protection / Sell Boeing Corp Protection
- Capital will Underperform due to leases, more Liquid than Airline credits
31. 3.8 Equity Origination
GOL Linhas Aéreas
- CFO Stamford Trading Floor Visit
- Specialist Sales IPO Pitch Letter
XJT $137MM Convertible Underwriter
- Deal Team Captain
32. 3.9 Research & Events
I identified ways to leverage Research & events to Capitalize on Change, establish
myself, Differentiate our platform and Drive relationships & Revenue
• Originated Branded CEO Dinner Series with JBLU, DAL, NWAC, CAL, LUV;
Arranged and/or Executed Corporate Access with AMR, ACAI, EZJ, UPS
• Arranged cross instrument dinner with Airline & Aero Analysts and Equity
Derivatives, Converts & Credit Default
• Arranged Trader dinner with Airline Analyst, Block Traders & Equity Derivatives
and buyside Analysts & Traders; Executed cross sector dinner with Airline, Rail &
Auto Analysts and buyside Analysts
• Supported Aircraft & Transport Conferences and NBAA BizJet Field Trip
33. 3.10 Events & Clients
Dinners
UBS Delta CEO Dinner Series: Andor, CSAM HY, Duquesne HY, Equinox, GLG,
GSPS, Mackay Shields HY, Principaled, T Rowe Price, UBS Prop, Wellington, ZBI
Airlines Cross Instrument Ideas Hedge Fund Dinner: Balyasny, Chilton,
Derchin, Galleon, GSPS, Hunter Global, O’Connor, Pequot, Satellite, Soros
Non-Deal Roadshows & Field Trips
ACAI CEO Boston NDR: Boston Co, Fidelity, Highfields, Putnam, Wellington
AMR New CEO Dallas Headquarters Field Trip: AmEx, Carlson, Fidelity, Lazard,
Lord Abbett, Primecap, Tudor, Waddell & Reed
AMR New CFO West Coast NDR: Brandes, Capital, Primecap
34. 3.11 Events Drive Relationships
I launched the Branded UBS CEO Dinner Series on an ad hoc basis. I solicited
CEO participation either directly or through Investor Relations. Attendees would be
primarily limited to ~10 sectorized Equity clients with large company holdings or
large sector investors who could take/increase positions as well as
~5 Convert/Fixed Income clients to maximize the Dinner Series’ value internally
A highlight of the UBS CEO Dinner Series was held with DAL where board member
Gerald Grinstein was making his first appearance to investors as the company's
new CEO. Feedback from the event included the following email from Sales: "Kenn
just called to tell me how much he enjoyed the dinner you hosted with DAL this
week. He was impressed by your insights and is eager to be kept in the loop on
your thinking. He was gushing really”
In addition to building Strong client relationships, my Performance review
acknowledged the CEO Dinner Series as being Innovative in sponsoring events
and building internal relationships with Converts & Fixed Income
35. 3.12 Controversy Drives Trading
In late July, ACAI announced plans to Change its business model from being a
contract carrier feeding legacy Airlines to being an independent low cost carrier.
UBS Analyst Robert Ashcroft assumed coverage of ACAI in mid August with a
Reduce rating due to his opinion that the company's existing assets where ill suited
for their proposed Strategy. My relationship with the CFO resulted in the CEO
agreeing to a non-deal roadshow visiting institutional accounts in Boston
When MESA launched a bid with a 25% premium in early October to acquire ACAI
and maintain the contract model, Ashcroft reiterated his Reduce rating and
recommended that investors reverse the spread. Cash Trading captured first day
volumes following the hostile offer of 50% for the acquirer and 25% for the target.
When the CEO reiterated his Strategy on the NDR, holders exited the stock while
the firm Dominated market share until the bid was terminated in late December
ACAI launched its Strategy in June 2004. However, the controversial call proved
correct when the carrier filed bankruptcy due to high costs in November 2005
36. 3.13 Conviction Drives Deals
In mid March with the invasion of Iraq underway and Cash Equity Trading volumes
~50% of normal, UBS Analyst Sam Buttrick made a high Conviction call on the
Airlines that they weren't all going bankrupt and to "buy the casket". AMR which
was seeking labor concessions was his top pick after trading as low as $1.25 on
March 12
In late April following the fall of Baghdad, AMR promoted President Gerard Arpey to
CEO after negotiations faltered ahead of a May 1 deadline. Buttrick stayed with his
call based on his ongoing discussions with Arpey and his view that the CEO's
investor focus would lead him to opt for bankruptcy only as the last resort. With a
revamped proposal accepted by all unions within days, AMR proceeded to rally to
$7.59 by May 7
Afterwards, Arpey agreed to host a Headquarters Field Trip as the means to
reintroduce himself to the investor community in his new role. UBS later acted as
Lead Manager of AMR's next Secondary Offering
37. 3.14 Client Penetration
Fidelity Vote
• Peter Gallagher: 5 votes total from 3 different voters
- Transports Equity PM/Analyst (Oct ’03): “Great help on the Airlines. Thanks”
- High Yield Analyst (Aug ’03): “Thanks for the special attention”
- Transports/Defense Sector Analyst
• US Airlines Analyst: 11 votes from 3 voters (incl new Transports Nov ’03)
• US Transports Analyst: 8 votes from 4 voters (incl new Transports Oct ’03)
• European Airlines Analyst: 2 votes from 1 voter (1st Fidelity Boston votes)
• Asian Airlines Analyst: 2 votes from 1 voter (1st Fidelity Boston votes)
• Australian Airlines Analyst: 2 votes from 1 voter (1st Fidelity Boston votes)
38. 3.15 Recommendation
Robert Ashcroft, former UBS Airline Equity Analyst
“I was the Airline Equity Analyst -- Peter was Transportation Sector Sales, in which
role he was excellent, as attested to not only by the sell-side Analysts he supported
but also the buy-sider clients. He fully understood my calls and worked hard to
understand buy-side client requirements and how to marry the two. Several
prominent buy-siders told me Peter was the Best Salesperson who covered them.
From my standpoint, Peter made my life significantly easier. He was also
outstanding at understanding what I should be doing to effectively communicate my
message and coaching me to do so”
39. 3.16 Positive Feedback
“Distribute this commentary out of London and include in tomorrow’s Daily”
UBS Head of European Transportation Research
“Making progress with [Institutional Investor Best of the Buy Side] Wellington PM”
UBS US Regional Airline Analyst
“Client originally said didn’t need Specialist Sales complimented you on DAL call”
UBS Generalist Sales
“You are Transportation”, UBS Generalist Sales
“Thanks for arranging NDR & taking good care of us”, AMR Investor Relations
“My Best sales guy buy a mile”, Fidelity PM/Analyst
“Good on communication so give him my kudos”, T Rowe Price PM/Analyst
41. 4.1 Making Research Actionable
LEHMAN BROTHERS, NEW YORK
VP & Product Manager, Industrials & Materials Equity Research 2004 - 2005
• Responsible for management & distribution of Industrials, Materials & Services
Research across Lehman’s Equity business and into buy side accounts. Present
daily summary of Key ‘calls’ and breaking news to Sales Traders. Partner with
Trading to quickly interpret Information for clients
• Partner with Industrials, Materials & Services Equity Research Analysts - act as a
sounding board in developing Impact calls; Drive Content creation; participate in
Investment Policy Committee meetings for initiations & ratings Changes; provide
Feedback to Analysts; provide Trading color; encourage quick response to events
Industrials, Materials & Services represented 36% of 2004 US Equity and Equity
related issuance, including $9.2B in IPO’s and $42B in follow-ons
42. 4.2 Product Management
Content is King: Trusted Advisor responsible for shaping more Actionable calls
Foster Idea Generation and Drive Themes within & across sectors that can be
Expressed across asset classes & product types
Increase Consistency of high Conviction, Differentiated fundamental Research
Commercialize Actionable Research, minimize maintenance noise
Maximize Information Flow between Analysts, Sales, Trading, investors & issuers
Develop Key franchise stocks with Dominant market shares
Think Strategically, Act Tactically = Think Globally, Transact Locally
Risk: Too closely Aligned with Research rather than independent judgement
43. 4.3 Sector Coverage
As the Industrials & Materials Product Manager, sector coverage included:
• Aerospace & Defense
#3 ranked II Analyst
• Airlines
#2 ranked II Analyst
• Autos & Auto Parts
R/U ranked II Analyst
• Business Services • Chemicals/Commodity
#2 ranked II Analyst
• Chemicals/Specialty
R/U ranked II Analyst
• Diversified Industrials • Educational Services
#2 ranked II Analyst
• Environmental Services
#3 ranked II Analyst
• Homebuilders • Machinery
#2 ranked II Analyst
Metals & Mining
#1 ranked II Analyst
• Multi-Industry
#2 ranked II Analyst
• Paper & Packaging
#3 ranked II Analyst
• Small Cap Industrials
44. 4.4 Daily Routine
Lehman Brothers Before the Bell (“BTB”)
- Sales Trader ‘talking points’ of 2-3 most Actionable Research calls by sector
Lehman Industrials & Materials Catalist (“Catalist”)
- Product Manager commentary
- Technology solution aggregates bullets from Research notes published overnight
- Calendar of Data Points, earnings, conferences and proprietary events
Product Managers speak in Sales Trader Morning Call
Product Management runs Research Morning Call
Idea Generation Bloombergs
Visit Analyst floors regarding Research pipeline
45. 4.5 Research Morning Call
Convince Sales why they NEED to actively call clients to Transact
Recognize Sales may not have read your report or remember your prior stance
Hook Sales: A headline to remember
Lead with Conclusion: Ground Research with what to do with the stock
Key Selling Points: ‘3 reasons’ in short, punchy sentences; Context with
preexisting facts/view; Why call worthy and how Differentiated from consensus
Be Brief: Don’t let your message get lost in too many details; “Less is More” allows
Sales to follow up with questions when their interest is peaked
46. 4.6 Event Commentary
LMT Georgia Field Trip: Aero Facility Tour & F/A-22 Raptor Program Update
Is there a case to shut the line building the F/A-22 Raptor fighter?
• Judging from enthusiasm, threats and aircraft’s progress, there might be upside
- Company Overview
- Aircraft Operational Requirements
- Current Contract
- Investor Concerns
- Alternatives
- R&D Funding
- Potential Enemy Threat Requirements
- Upcoming Program Milestones/Catalysts
- Sense of Growing Support for Production Increases
47. 4.7 Trade Idea Performance
Trading Ideas Performance Review
Ticker Call Open Price Status Date Last Δ% SPX Last SPX Δ% Over/Under
BA Long 5/11/05 $61.04 Closed 12/30/05 $70.24 15.1% 1166.22 1248.29 7.0% 8.0%
CAT Long 5/11/05 $44.83 Closed 12/30/05 $57.77 28.9% 1166.22 1248.29 7.0% 21.8%
TRW Long 5/11/05 $19.96 Closed 12/30/05 $26.35 32.0% 1166.22 1248.29 7.0% 25.0%
GM Short 5/11/05 $31.53 Closed 12/30/05 $19.42 38.4% 1166.22 1248.29 7.0% 45.4%
GM Short 10/6/05 $28.63 Closed 12/30/05 $19.42 32.2% 1196.39 1248.29 4.3% 36.5%
BA Long 9/21/05 $63.45 Closed 12/30/05 $70.24 10.7% 1221.34 1248.29 2.2% 8.5%
UTX Long 10/19/05 $49.95 Closed 12/30/05 $55.91 11.9% 1178.14 1248.29 6.0% 6.0%
UTX Long 10/27/05 $50.90 Closed 12/30/05 $55.91 9.8% 1191.38 1248.29 4.8% 5.1%
BA Long 10/27/05 $65.10 Closed 12/30/05 $70.24 7.9% 1191.38 1248.29 4.8% 3.1%
LMT Short 10/27/05 $60.07 Closed 12/30/05 $63.63 (5.9%) 1191.38 1248.29 4.8% (1.1%)
CD Short 10/24/05 $20.09 Closed 12/30/05 $17.25 14.1% 1179.59 1248.29 5.8% 20.0%
PCAR Short 10/4/05 $68.34 Closed 12/30/05 $69.23 (1.3%) 1226.7 1248.29 1.8% 0.5%
ARM Short 11/15/05 $17.28 Closed 12/30/05 $14.39 16.7% 1233.76 1248.29 1.2% 17.9%
AMR Long 10/20/05 $12.40 Closed 12/30/05 $22.23 79.3% 1195.76 1248.29 4.4% 74.9%
LUV Short 10/20/05 $15.58 Closed 12/30/05 $16.43 (5.5%) 1195.76 1248.29 4.4% (1.1%)
PNR Short 10/25/05 $36.26 Closed 12/30/05 $34.52 4.8% 1199.38 1248.29 4.1% 8.9%
BOW Short 10/4/05 $28.15 Closed 12/30/05 $30.72 (9.1%) 1226.7 1248.29 1.8% (7.4%)
SBL Long 10/28/05 $8.20 Closed 12/30/05 $12.82 56.3% 1178.9 1248.29 5.9% 50.5%
BXC Short 10/28/05 $12.10 Closed 12/30/05 $11.25 7.0% 1178.9 1248.29 5.9% 12.9%
48. 4.8 Performance Review
Peter has done a very good job at developing several Themes in conjunction with
his sector Analysts
Peter does an exceptional job Expressing himself verbally in the 7:05AM Sales
Trader meeting
Feedback on the GM Equity/Debt/Convert coordination was very Strong across
the organization
His thoughts are well organized and well written
Peter has developed additional product industry knowledge by doing joint marketing
with senior Analysts and senior management teams
Global cross border Content has been managed effectively
50. 5.1 Monetizing Content
BARCLAYS CAPITAL / LEHMAN BROTHERS, NEW YORK
VP & Content Manager, Equity Trading Desk Analyst, 2006 - 2008
• Manage market Driven morning Sales Trader meeting, seeking to generate
Content Complementary to published Research based on breaking news and
position Trader insights Expressed through Cash and non-Cash Equity products
• Review Content for Prop opportunities, monitor Risk positions and track
Performance as well as managing Thematic Investing process, evaluating Best
Execution, recommending Trades and monitoring the FID JV portfolio
• The success of Lehman's Desk Analytics model increased Commissions
+8% ($50MM annualized), reduced Facilitation Costs from 30% to 15%
($90MM annualized) and doubled Prop Revenues on the US Cash Trading desk
($80MM annualized)
51. 5.2 Desk Based Analytics
Going to Market Together
Content Driven Revenue model with greater mind/market share & Commissions
Lowers Facilitation Costs through enhanced Risk Taking
Monetizes Idea Generation through customer Trades & Prop positions
Seeks Origination opportunities through Block Trades, Reverse Inquiries,
Secondary Offerings and New Issuance
“Star Alignment”: Shared Research and Trading high Conviction
Risk: Overly focused on Trading P&L rather than selling ideas; Who you sit with is
how you are Aligned and how you are compensated
52. 5.3 Idea Generation
A good Analyst has a top down approach that focuses on major fundamental
Themes, identifies what's incremental to their thesis then selects outlier stocks that
haven't moved yet ahead of specific Catalysts. This includes seeing Laterals
across sub-sectors. Analysts also gain Conviction from sentiment, Flows and
technicals
While having a Strategic framework, a good Analyst is also willing to act Tactically
in Changing his pecking order of top recommendations based on price
movements, to Change ratings when a price target has been achieved and
fundamentals are Unchanged and to move on when circumstances Change
Underlying this top down approach is an Analyst's ability to generate a better
Revenue forecast than consensus on a sector/company basis, as this involves the
most guesswork by the sell side whereas costs are relatively predictable. An ability
to add Alpha can also be enhanced by understanding what Options are pricing in
ahead of events in order to the determine the best way to Express an idea
53. 5.4 Trading Morning Call
Flows have Themes, Beget more Flows
Thresholds: High Conviction ideas, Block names, high volumes/market shares
Axes/Flows: Focus on Naturals where they are axed and how they are set up;
Why they are involved and what’s Driving the stock
Themes/Differentiated Data Points: 1 or 2 Thematic reasons regarding a stock/
sector; Data Points that Impact a Global sector value chain; levels where Trading
would provide Liquidity and Laterals which haven’t reacted
Ahead of the Market: Proactive so clients can position ahead of Catalysts rather
than reporting yesterday’s event Driven trade
Broadened Sources: In addition to Research Driven Cash Equity Strategies,
include Vol, Converts, Programs, Fixed Income as alternative ways to Express
54. 5.5 JV Portfolio Performance
LBO Candidates Thematic Investment JV Portfolio Performance
Ticker Sector Call Open Basis Price Δ% Floor Risk Ceiling Return SPX Δ vs. SPX Comments Shares Cost P&L
ABC Industrial Long 3/14/07 $29.78 $36.99 24.2% $27.00 -27.0% $40.00 8.1% 11.3% 12.9% Adding on Correction 150,000 $4,467,000 $1,081,500.00
DEF TMT Long 3/15/07 $43.40 $49.70 14.5% $38.00 -23.5% $50.00 0.6% 10.6% 3.9% Scaling Out on Spin 95,000 $4,123,000 $598,500.00
GHI Financial Long 4/10/07 $27.95 $30.25 8.2% $26.00 -14.0% $36.00 19.0% 6.2% 2.0% Built on Pullback 450,000 $12,577,500 $1,035,000.00
JKL TMT Long 2/28/07 $5.24 $5.59 6.7% $5.00 -10.6% $8.00 43.1% 9.7% -3.0% Lower Cost on Fall 2,375,000 $12,445,000 $831,250.00
MNO TMT Long 3/28/07 $36.29 $38.36 5.7% $33.25 -13.3% $42.50 10.8% 7.4% -1.7% Adding on Pullback 284,380 $10,320,150 $588,666.60
PQR Industrial Long 5/3/07 $48.46 $50.05 3.3% $45.00 -10.1% $60.00 19.9% 2.5% 0.8% Built on EPS Decline 250,000 $12,115,000 $397,500.00
STU Retail Long 5/10/07 $46.10 $47.58 3.2% $40.00 -15.9% $52.00 9.3% 1.4% 1.8% Profit Taking in CDS 100,000 $4,610,000 $148,000.00
VWX Financial Long 2/5/07 $22.10 $22.45 1.6% $20.00 -10.9% $27.75 23.6% 5.9% -4.3% Lower Cost on Fall 805,000 $17,790,500 $281,750.00
YZA Industrial Long 1/25/07 $33.14 $33.63 1.5% $30.00 -10.8% $40.00 18.9% 6.5% -5.0% Built on EPS Decline 375,000 $12,427,500 $183,750.00
BCD Retail Long 5/25/07 $31.97 $32.10 0.4% $30.50 -5.0% $40.00 24.6% 1.8% -1.4% Adding before BTS 250,000 $7,992,500 $32,500.00
EFG TMT Long 2/13/07 $15.70 $15.57 -0.8% $14.00 -10.1% $25.00 60.6% 7.0% -7.8% Lowered Basis 800,000 $12,560,000 ($104,000.00)
HIJ Retail Long 3/12/07 $33.42 $31.96 -4.4% $29.00 -9.3% $38.00 18.9% 9.4% -13.8% Adding on Correction 350,000 $11,697,000 ($511,000.00)
$123,125,150 $4,563,416.60
Ticker Sector Maturity Open Basis Price Δ% FV + / - FV Horizon Return CDX.IG7 Δ vs. IG7 Comments Call Notional MTM
ABC Retail 7 yr 2/12/07 94 bps 89 bps -5.3% 81 bps 8 bps 203 bps 128.1% 3 bps -7 bps >FV, Consider Equity Long $40,000,000 -$116,000.00
DEF Retail 5 yr 1/29/07 24 bps 13 bps -46.4% 203 bps 1,461.5% 2 bps -13 bps Consider Steepener Long $55,000,000 -$266,062.50
DEF Retail 7 yr 1/19/07 38 bps 20 bps -46.7% 39 bps -19 bps 203 bps 915.0% 1 bps -20 bps Consider Steepener Long $15,000,000 -$152,250.00
DEF Retail 10 yr 1/29/07 47 bps 31 bps -33.3% 203 bps 554.8% 2 bps -18 bps Consider Steepener Long $13,000,000 -$151,125.00
GHI Retail 10 yr 1/24/07 39 bps 41 bps 5.1% 36 bps 5 bps 203 bps 395.1% 2 bps 0 bps Consider Scale Out Long $50,000,000 $93,750.00
JKL Health 10 yr 2/6/07 76 bps 72 bps -5.0% 56 bps 16 bps 203 bps 181.9% 3 bps -6 bps Maintain CDS Long $50,000,000 -$84,375.00
MNO Retail 7 yr 2/8/07 52 bps 62 bps 19.2% 50 bps 12 bps 203 bps 227.4% 4 bps 8 bps Profit Taking in CDS Long $25,000,000 $145,000.00
PQR Industrial 7 yr 1/31/07 82 bps 58 bps -29.5% 68 bps -10 bps 203 bps 250.0% 2 bps -26 bps Consider Steepener Long $40,000,000 -$533,600.00
PQR Industrial 10 yr 2/5/07 105 bps 82 bps -21.9% 203 bps 147.6% 3 bps -25 bps Consider Steepener Long $10,000,000 -$172,500.00
STU Retail 7 yr 2/5/07 83 bps 66 bps -20.0% 66 bps 0 bps 203 bps 207.6% 3 bps -19 bps Consider Exit on B/B Long $50,000,000 -$442,250.00
$348,000,000 -$1,679,412.50
55. 5.6 Performance Review
You have taken both the Content captain and idea capture roles to a new and great
level for the Trading and Desk Analyst teams
Morning meeting Content has improved dramatically including topical speakers
from off the floor. Continue to follow your gut on the structure
You have owned the ideas, improved Execution and even raised the P&L Impact
through better structuring
Your role in organizing, filtering ideas and combing two organizations (FID and EQ)
for ideas has been positively noted by members of FID management
58. A.1 Professional Background
Mr. Gallagher has an extensive Investment Banking career servicing both
Corporate & Government entities including Global experience providing Equity
Research & Offerings, Privatization Advisory, Debt Raising and Structured
Products. He has been responsible for 1) making recommendations to institutional
investors, 2) marketing Global Financial Services including Capital Markets, Risk
Management & Credit Products and 3) structuring Corporate Finance solutions by
combining industry expertise with geographic client coverage & product capabilities
As an Equity Analyst, Mr. Gallagher’s insights & client service were recognized in
Research votes by firms as diverse as Fidelity and Tiger Management. As a
Corporate Finance Officer, he provided risk/return analysis for new transactions and
negotiated Credit Facilities, Structured Financings and Derivative transactions. Mr.
Gallagher also supervised junior staff and sought to identify potentially deteriorating
situations in order to reduce holdings or improve collateral
His activities have involved advising government entities or their applicants
including the Republic of France, the Government of Sri Lanka, The Export-Import
Bank of the United States and regulators from the Federal Reserve
59. A.2 Equity Research
U.S. BANCORP PIPER JAFFRAY, NEW YORK
Research Analyst, IT Services Technology Equity Research, 2000 - 2001
• Forecast slowing IT spending as consulting engagement sales cycle lengthened
• Developed long term IT Services valuation framework
LAZARD FRERES & CO. LLC, NEW YORK
Vice President & Research Analyst, Airline Equity Research, 1998 - 1999
• Initiated coverage of domestic growth Airlines (“LCC’s”) in Fall 1998
• Provided analysis of pilot contracts for Air France Advisory prior to 1999 IPO
• Provided analytical support for #1 Institutional Investor Distressed Debt team
PAINEWEBBER INCORPORATED, NEW YORK
Associate Analyst, Airline Equity Research, 1996 - 1998
• Associate Analyst to #1 Institutional Investor Airline Equity Research Analyst
• Published notes, maintained earnings models and updated statistical databases
• Conducted due diligence of China Southern Airlines prior to 1997 IPO
60. A.3 Corporate Finance
THE CHASE MANHATTAN BANK, NEW YORK
Associate, Global Aerospace Group/Global Transportation Group, 1992 - 1996
• Corporate Finance Officer with Airline & Aerospace/Defense client relationships
• Structured, negotiated, and documented Privatization Advisory, Aircraft Finance &
Derivative transactions
• Advised Air Lanka’s privatization, Mexican industrialist’s CAL Ch 11 investment
• Financed aircraft for VARIG Brazil, Royal Air Maroc and Cathay Pacific
• Restructured USAir credit in exchange for collateral after 1991 Gulf War
Associate, US Corporate Markets, 1987 - 1991
• Previously as a generalist, coverage included Airlines & Shipping, Real Estate &
REITS, Retail, Home Builders & Building Products, Financials, Pharmaceuticals,
Technology & Telecommunications and HLT’s/LBO’s
• Completed credit training program, prepared new credit approvals and supervised
annual reviews of existing loans
61. A.4 Equity Recommendations
Reno Air
Mr. Gallagher initiated coverage of Reno Air with a Speculative Buy
recommendation just prior to the company’s acquisition by American Airlines. Mr.
Gallagher had also been quoted in BusinessWeek and his firm named a share
buyback participant
62. A.5 Advisory
Republic of France/Air France
Advisor to the Republic of France for the privatization of Air France and Underwriter
of Air France’s IPO. Mr. Gallagher provided analysis of U.S. Airline concessionary
contracts as a benchmark for seeking labor cost savings during a pilot strike prior to
Air France’s partial privatization. Mr. Gallagher recommended methods of capital
markets distribution and marketed the shares to investors
Government of Sri Lanka/Air Lanka
Advisor to the Government of Sri Lanka’s Public Enterprise Reform Commission to
privatize the national carrier Air Lanka in the midst of an ongoing religious/ethnic
civil war. Mr. Gallagher prepared the Technical Proposal and negotiated the
Contract of assignment milestones & associated fee payments
Continental Airlines/Houston Air
Advisor to Houston Air’s bid for Continental during bankruptcy. Mr. Gallagher
conducted due diligence and provided industry expertise to the M&A deal team
63. A.6 Ex-Im Bank
VARIG Brazil
As Arranger, underwrote Ex-Im Bank guaranteed notes to finance a VARIG Brazil
McDonnell Douglas MD-11 aircraft. The transaction utilized a trust structure through
which the loan notes were securitized and sold into the public capital markets to
institutional investors. Mr. Gallagher’s analysis of VARIG’s credit risks led to
obtaining credit enhancement from the export manufacturers McDonnell Douglas &
General Electric in the form of a subordinated loan tranche to assure that the
purchase obtained Ex-Im Bank’s guarantee commitment. The manufacturers’
subordinated notes were later sold to international banks
Royal Air Maroc
As Trustee, arranged the private placement of Ex-Im Bank guaranteed notes to
finance two Royal Air Maroc Boeing 737-400 aircraft. Mr. Gallagher negotiated the
mandate letter, term sheet & fee structure and proposed Ex-Im Bank guaranteed
alternatives when the transaction was at risk of failing to close
64. A.7 Aircraft Finance
Cathay Pacific Airways/Wilmington Trust as Trustee
As Agent and Underwriter, provided financing for a U.S. Ownership Foreign Sales
Corporation (FSC) lease financing of a Cathay Pacific Airways Boeing 747-400
aircraft. The borrower was a special purpose grantor trust whose principal asset
consisted of the stock of a foreign sales corporation (FSC lessor) which was
pledged to the lenders as security for the loan. The FSC lessor invested the loan
proceeds by purchasing the aircraft. The aircraft was leased to a special purpose
Bermuda trust and subleased to Cathay Pacific. Mr. Gallagher conducted due
diligence, prepared credit approvals & negotiated documentation and marketed the
loan to international banks
65. A.8 Structured Products
Cathay Pacific Airways
Concurrent with the FSC financing, lenders entered into an interest rate swap to
pay Cathay Pacific fixed payments and receive Libor based floating payments. Mr.
Gallagher analyzed credit, cross default, intercreditor & indemnification risks /
mitigants, prepared credit approvals and negotiated documentation
HK Telecom
Chase participated in the sale and leaseback of an aircraft portfolio that resulted in
the acceleration of foreign source income and the utilization of associated tax
credits. Mr. Gallagher provided industry expertise to accounting & tax deal team
members, conducted due diligence on the structure & related cash flows and
participated in preparing the transaction approval memo
Interest Rate & Fuel Price Hybrid Hedging Strategies
Mr. Gallagher marketed Strategies to lower costs up to 30% through the correlation
benefits of hedging aggregate exposures
66. A.9 Credit
Delta Air Lines
As a Lead Bank, provided a commitment for a bank letter of credit after assessing
that the risk profile would remain Unchanged under an existing credit agreement.
The commitment was required to credit enhance outstanding ESOP notes
guaranteed by Delta pursuant to a trust indenture upon Moody's action
downgrading the credit rating of Delta's long-term senior unsecured debt. Mr.
Gallagher evaluated intercreditor risks and negotiated the commitment letter, term
sheet & credit agreement amendment for a $1 million fee
USAir
As Agent, advised management of the necessity to provide security for its revolving
credit in order to gain covenant relief & financing flexibility in the aftermath of the
1991 Gulf War. Mr. Gallagher modeled the financial covenants, evaluated collateral
values & indemnification risks, negotiated the amendment & fleet mortgage and
successfully sought the approval of a majority of bank participants for transaction
fees totaling $1.2 million
67. A.10 Risk Management
USAir / Shared National Credit Program
As Agent, Mr. Gallagher met with Federal Reserve Bank examiners to assess
USAir’s creditworthiness, probability of default, collateral as a secondary means of
repayment and the risk of loss during the annual review of syndicated loans
68. A.11 Academic Background
BOSTON COLLEGE, CHESTNUT HILL
Bachelor of Arts Degrees in Economics & History, 1983 - 1987
- Gasson Scholar: The 30 most distinguished members of Freshman class
- Ignatian Scholar: Cited for Academic Excellence
- Educational Policy Committee: One of 4 Student Representatives
- University Relations Office: Administrative Assistant writing fundraising speeches
REGIS HIGH SCHOOL, NEW YORK
Jesuit high school which all students attend on full scholarship, 1979 - 1983
Chase Manhattan Bank Corporate Credit Training
Four month program of Financial Risk Analysis & Cash Flow Lending, 1987 - 1988
Boeing Airplane Evaluation Seminar, July 1993
Series 24, 7 & 63, passed Level II CFA
69. A.12 Personal Background
Matrimony, 1993
- Barbara (nee Bucher)
- William born ‘98, Mary Anne born ’01
Citizenship
- US by Birth
- EU via Marriage
Volunteering
- The Leukemia & Lymphoma Society Westchester/Hudson Valley Chapter
Larchmont Shore Club, Member
Tennis, Biking, Skiing
