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Standpoint Presentation 03 01 09 Y


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Standpoint Presentation 03 01 09 Y

  1. 1. Stand p oint Re s e ar ch Balancing Quantitative Research with a Subjective and Fundamental Overlay
  2. 2. Outline About Standpoint Research Research Performance Research Methodology Our Services Equity and Portfolio Diagnostics Schedule of Reports Current Sector Allocation Ronnie Moas Bio Recent Developments March 1, 2009 2
  3. 3. About Standpoint Research Founded by Ronnie Moas in 2003 Standpoint Research provides independent equity research that is based on a 155-variable valuation and diagnostics model with a fundamental and subjective overlay that has been proven to add value For the 52 weeks ending 03/01/09, “Investars” has Standpoint Research +166bp versus the S&P. This ranks the firm 8th out of 46 small and mid-sized firms. Standpoint Research ranks 3rd or better for the 5-, 4-, 3- and 2-year periods ending 03/01/09 ahead of the S&P by more than 1800bp since 07/01/03 March 1, 2009 3
  4. 4. Standpoint Research versus the S&P-500 Time Frame Standpoint vs. the S&P (in basis points) For the four years + 1,151 ending February 1, 2009 For the three years + 356 ending February 1, 2009 For the two years + 293 ending February 1, 2009 For the 52 weeks ending March 1, 2009, “Investars” has Standpoint Research ahead of the S&P by 166bp. “Investars” has time-stamped all of our recommendations since September 19, 2006. We beat the S&P via stock-picking and industry bets; we do not take big sector bets. We are diversified and currently have 105 stocks on our open list of recommendations spread out across all ten sectors. At the time this document was prepared, the two-, three- and four-year tables at “Investars” were not updated to reflect February performance. “Investars” has been referred to by major media organizations, including the U.S. Congress, the Consumer Federation of America, and the New York Attorney General’s Office. March 1, 2009 4
  5. 5. Standpoint Research Track Record 231 RECOMMENDED AND CLOSED TO DATE (LONG) 160 PROFITABLE (69.3%) 71 NOT PROFITABLE (30.7%) 36.30% AVERAGE GAIN (231) 63.44% STANDARD DEVIATION (231) 63.54% AVERAGE GAIN ON PROFITABLE (160) 28.73% AVERAGE LOSS ON NOT PROFITABLE (71) + 1,724 bp FIVE YEARS THRU FEBRUARY 1, 2009 VS. S&P AVERAGE HOLDING PERIOD PER 23.86 Months RECOMMENDATION This section is updated once per year. The detailed track record document for the six years ending December 31, 2009 will be updated and posted on our website in Q1, 2010. March 1, 2009 5
  6. 6. Standpoint Research Rank Rank Research Firm On File 1 Trading Central 440 Returns according to quot;Investarsquot; 2 Standpoint Research 327 for the two years ended February 1, 2009 3 Independent II Research 440 (out of 46 firms) 4 Boenning & Scattergood 119 5 First Analysis 134 Number of recommendations on file is listed in the right 6 Leering Swann 202 hand column 7 Ameriprise Financial 198 8 Janney Montgomery Scott 456 Only the top 15 are shown 9 Keefe Bruyette & Woods 458 At the time this document was 10 Riley & Co. 198 prepared, the two-year table at 11 Pacific Crest 301 “Investars” was not updated to reflect February performance. 12 Hilliard Lyons 154 13 BMO Capital Markets 321 14 Davidson & Co. 301 15 Merriman Curhan & Ford 421 March 1, 2009 6
  7. 7. A Hybrid Methodology Proprietary 155- Balanced with a variable valuation subjective and and diagnostic model fundamental overlay Developed over several This subjective overlay years (1998-2003) allowed us to avoid the widely-publicized Combines fundamental, troubles that plagued technical, valuation, other quant models and accounting and hedge funds in 2008 proprietary variables The human element Running weekly since has improved our June 2003 performance March 1, 2009 7
  8. 8. Beyond a Quantitative Model Pure quantitative models are widely used and have lost their edge. They need to be overhauled. We saw this problem coming years ago, and that is why we use a hybrid methodology In an internal review of our performance, it was found that the subjective/fundamental overlay we apply has led to improved returns We currently cover more than 2,000 stocks (including > 200 ADRs) $5.00 minimum stock price and at least $200M market cap Stocks divided into ten sectors: Consumer Discretionary, Consumer Staples, Energy, Financials, Healthcare, Industrials, Materials, Technology, Telecom and Utilities We monitor more than 100 Exchange Traded Funds (ETF) Model also generates rankings on an industry and sector level March 1, 2009 8
  9. 9. Standpoint Research Services and Products INDIVIDUAL SECTOR CUSTOM WRITE-UPS REPORTS REPORTS • 4-6 individual stock • Published weekly • Thorough, absolute, reports per month relative, and • Reports cover all comparative analysis • Stocks are selected major sectors on client holdings after applying a • Mid-quarter updates and focus lists fundamental and available for each subjective overlay to • Buy, Increase, Hold, report upon request the computer driven Reduce and Sell • We also prepare recommendations ratings are given reports on the • On-demand service • On “ Sell ” Russell, ADRs and for individual write- recommendations, S&P. ups is available we provide alternate See Page 11 for Q2 ideas for where to reporting schedule invest the proceeds March 1, 2009 9
  10. 10. Equity & Portfolio Diagnostics The 155-variable model scoring is summarized in the 32 categories below -- from ‘roe’ through ‘peg’. The number in each of the cells is the rank in the respective category – in this case it was out of 500 stocks. The seven cells to the right of the peg cell are coded and for internal use. Before recommending a stock we investigate all orange and red areas regardless of how high the computer ranking is. rank ticker roe roa roc ebitda npm acct epsm revgr epsgr beta debt stabgr div I 169 / 500 BNI 279 265 290 159 219 69 215 173 133 250 322 80 283 pbk base relma inside safe pcf I fcf relstr prmo ps relps pred pcf II div II off hi lo 351 310 464 47 98 98 395 45 228 81 137 306 413 407 221 pertix perhis blend peg deducts val fund prop misc tech tot score 409 404 279 148 16482 6141 5665 3130 864 682 55.45% Note: Clients receive a key/legend detailing all 155-variables in our model along with the color code. Our model is not a black box; it is transparent and we try to be as open as possible. Only the weight given to each variable is not disclosed. The variables are not equally weighted and a few are negatively weighted. March 1, 2009 10
  11. 11. Schedule of Reports Our quarterly reporting schedule covers each of the major sectors in great detail including analysis on the industry (sub-sector) level MARCH 2009 APRIL 2009 MAY 2009 March 10: April 06: May 04: Materials 100 Energy 200 Healthcare 200 March 17: April 13: May 11: Industrials 300 S&P 500 ADR 200 March 24: April 20: May 18: Staples 100 Dividends 200 Financials 200 Utilities and Telecom each carry less than 5.00% weight in the S&P and are not included in our regular quarterly reporting schedule. Those sectors are included in our S&P, ADR and Russell reports. Consumer Discretionary, Technology and Short Interest reports (not listed above) are included in our regular quarterly reporting rotation. March 1, 2009 11
  12. 12. Current Sector Allocation Standpoint Research sector allocation as of March 1, 2009 Industrials are one of the high-beta sectors we would Net Standpoint S&P Over / over-weight. If you do not over-weight one or two (of the four) high beta sectors, you will be in trouble if the Sector Open Weight Weight Under market grinds higher from here. We have gradually shifted from defense to offense in recent months and Industrials 17 16.19% 9.79% 6.40% are now left with slight under-weights in all three low- beta sectors (Utilities, HC and Staples). We were Consumer Disc 14 13.33% 8.40% 4.93% ‘playing defense’ for the last 18 months but always keep some high-beta in the portfolio because we don't Materials 5 4.76% 3.13% 1.63% believe in taking big sector and directional bets. It is Financials 10 9.52% 9.82% -0.30% more important to focus on which industries within the sector we are in, what the average beta is and what Technology 18 17.14% 17.44% -0.30% stocks we choose (than to focus merely on the sector bet itself). If and when oil prices re-test their lows, we Telecom 3 2.86% 4.06% -1.20% may go over-weight Energy. Yes, we are now equal- weight Financials for the first time in 12 months, but Health Care 14 13.33% 15.61% -2.28% we have little exposure to banks and have had no exposure there since Q1, 2008. Our current open Energy 12 11.43% 13.84% -2.41% positions in Financials are: XLF, HCC, WRB, MMC, ZNT, CIB, WTNY, STT, MET and LM. Utilities 2 1.90% 4.51% -2.61% Cons Staples 10 9.52% 13.40% -3.88% Totals 105 100.0% 100.0% 0.00% One of our areas of focus is ADR / International stocks. We currently have 23 out of 105 positions (21.9%) in the International space. March 1, 2009 12
  13. 13. Ronnie Moas Standpoint Research President & Director of Research Former analyst and market strategist at Herzog Heine Geduld Created the Standpoint 155-variable equity valuation and diagnostics model Authored and distributed more than 400 research reports since 1998 In 2003, was one of the first analysts to forecast bull markets in commodities, Brazil, Russia, India, China and other emerging markets. Mr. Moas also exited in a timely manner in mid-2007 (and re-entered in Q4 2008) Wrote a 284-page research report back-testing more than one-dozen different trading strategies on 20 years of data in 2002 Recently received a performance award at The Cornell Club (in NY) from the Investorside Research Association for beating the S&P (five consecutive years) B.S. Economics and Business from the State University of NY at Stony Brook Masters Degree (MBA) in Finance and Investments from Baruch College (CUNY) March 1, 2009 13
  14. 14. Conflict-free Research Standpoint Research, Inc. is a member of the Investorside Research Association; a Washington D.C. based non-profit organization. Investorside certifies that its members have no investment banking or other conflicts. Note: The Standpoint Research 155-variable model is complex. It took many years to develop and back-test. It runs off hundreds of variables and calculations. This presentation is merely a brief summary and only scratches the surface regarding the methodology and product description, while protecting the proprietary nature of what we do. We would welcome the opportunity to discuss our service with you in person in greater depth. March 1, 2009 14
  15. 15. Recent Developments First quarter, 2009 - Ronnie Moas quoted in several publications and invited to appear on CNBC October 2008 – Ronnie Moas received a performance award at The Cornell Club (in NY) from the Investorside Research Association for beating the S&P (five consecutive years) February 2008 - Standpoint Research to support Action for Brazil’s Children. We will be actively involved with that charity and have devoted an entire page to the ABC Trust at our website November 2007 - Accepted to the Yahoo! Finance and platforms September 2007 - Founder of Standpoint Research (Ronnie Moas) was chosen and participated in the “Investars” pilot at S&P studios in New York. The technology sector roundtable discussion was moderated by Tom Conigliaro from Goldman Sachs and hosted by analyst tracking service “Investars”. Mr. Moas participated in the discussion alongside Scott Kessler from Standard & Poor’s March 1, 2009 15
  16. 16. Standpoint Research Parker Towers, 104-60 Queens Blvd., Suite 8K Forest Hills, NY 11375 Tel: 212.752.0330 E-mail: