2. Contents My Strategy and Outlook Portfolio Performance with Benchmark Significant Winners Significant Losers Analysis of Gains/Losses Future outlook on portfolio 2
3. Strategy Stock Picking – “seeking alpha” Trading on News Trading on my outlook for specific companies and industries Long and Short positions on U.S. Equities Diversification with ETFs Leveraging Portfolio through margin as well as leveraged ETFs 3
4. Economic Outlook Began with Bullish Outlook Mostly Long positions Took precautions as turmoil began in Egypt, Libya, and eventually Japan Began Taking More Short Positions Expected High Inflation Looked into Commodity ETFs Currently remain Bullish as turmoil eases and Corporate earnings have been surging. Intel, IBM, GE 4
5. Tech Sector/US Cellular Industry Expected Google to outperform Apple and RIM with Android gaining market share AT&T acquisition of T-Mobile Sprint should outperform after 15% drop Possible Acquisition of small US Cellular companies: Leap Wireless, MetroPCS, Clearwire Corp 5
6. Other Expectations Banking Industry: Long Citigroup Release from Federal Reserve Reverse Stock Split Short Bank of America High leverage in still sour US housing market Initially thought to be a good hedge due to pending wiki leaks release – turned out to be nothing very serious Retail Industry: Short Wal-mart: lost focus on having lowest prices Long Target: Business expanding, creating competition for Walmart 6
10. iShares Silver Trust (SLV) Protection against inflation Industrial demand that gold doesn’t have Precious metals should continue to be attractive Retail investors looking to hedge inflation Cheaper than gold Historical Gold/Silver Ratio says silver is undervalued 10
12. Recent fall of silver Monday, silver prices plunged 13% in 11 minutes Possible causes: CME Group decided to raise margin requirements Gold/Silver Ratio has deteriorated, bubble is bursting Silver up by over 150% since last August 12
14. AT&T Acquisition of T-Mobile Chance the deal will be rejected Sprint has options: Acquired by Verizon (unlikely but possible) Acquire smaller US Cellular Companies Catching up in smart phone market 14
15. Short salesforce.com (CRM) Sold short on 4/21 at $140.78, current price: $133.66 Enterprise cloud computing applications Very Expensive stock (P/E:277) Main Competitors: Oracle, SAP, among others 15
16. Cloud Computing Bubble? Earlier this year a UBS research note suggests there is a cloud computing bubble similar to the dot com bubble Overall P/E’s not quite to that level yet, but the industry is becoming highly priced 16
17. Salesforce.com’s Price CRM P/E is 14.5 times the industry average If value were to revert to average, earnings would have to increase by 1450% to $4.50 per share from $.31 per share Salesforce seems to have Less growth potential than Its competitors. 17
18. M&As in Cloud Computing Big Tech Companies like to takeover startups/small caps with growth potential Speculation about a takeover of CRM has faded due to its high price Oracle boosted position in Cloud Computing by acquisition of Sun Microsystems Any new M&As will hurt Salesforce 18
19. Google Purchased $603.98 Currently $533.89 Loss of 13% Fell 8% on reports of higher operating costs, specifically cost of employment 19
20. Why they are still a Buy High operating costs will reach it’s competitors too High demand for software engineers increases employment costs at coveted tech companies Google is investing for growth by paying for the best engineers Android Ad Revenue Expanding into new industries 20
21. Android Consistently stealing market share from competitors, stock price not reflecting it 350K Activations per day Verizon iPhone sales less than expected The OS is still being perfected 21
22. Increased Ad Revenue Shows Facebook, Yahoo, Microsoft have stopped gaining on Google Google will remain a strong competitor in its original business 22
24. Citigroup Trading in the $4.40-4.70 range all semester Never Broke out after being released There’s still hope: Reverse Stock split opens C to institutional investors UBS on Citi:“one of the few truly global consumer banks" More opportunity for growth 24
25. Future Outlook Economic Growth Especially Tech Sector Growth Stocks Hold Google Hold short in Salesforce Hold onto Citi Closed short position in Bank of America Possible buy if/when housing market begins to turn upward Look for silver sell-off to endand continue run US Credit Downgrade would hurt portfolio The more likely a downgrade looks the closer to half short/long positions 25