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 Announcements  Investment competition update  Government Shutdown?  BBRY  Volume and Volatility  JC Penny  Bonds

 We meet every Sunday at 7:15PM – 8:15PM at W151 in PBB  Membership Dues: $20/semester  Food/Drinks every meeting  Investment information and education  Great trading tips and strategies  Investment Competition: $15/semester  Best way to gain experience and learn  Past prizes include iPads, Apple TVs, gift cards  Fun Discussion atmosphere, member involvement

 $15 to enter competition  All money goes to prizes so more people = better prizes  Must attend 50% of meetings in order to be eligible for prizes  Top 8 get prizes (tentatively)  Won’t allow high frequency trading or anything that is unrealistic

 BJgM BJgM

 Fiscal year for the government ends Monday  Republicans want to delay Affordable Care Act (Obamacare) a year and that is in the spending bill they passed  Democrats want Obamacare and won’t take any negotiation to the spending bill  If no spending deal is passed, government shutdown will occur at 12:01 A.M. Tuesday

 Mail still comes; airports still function; checks still go out (Medicare, food stamps); prisons stay open  National Parks shut down; no new clinical research patients taken in; IRS stops audits; FDA stops safety inspections; loans for houses would stop being issued; military paychecks delayed

 17 government shutdowns since 1976  Historically, down 2.5% in 10 days  1.4% if 5 days or fewer

 Earnings Report  Q2 loss: $0.47/share  Estimated growth rate of -81.5% for Q3  Write-off of $934 million for unsold phones  Announced layoffs of 4000 employees  Approximately 40% of its workforce  T-Mobile Pulled Blackberry from shelves  Going Private  To be bought out by largest shareholder, Fairfax Financial after 16 years of being public

 Fairfax Financial  Called the Berkshire Hathaway of Canada  Largest shareholder (10%)  Six week shop period  Can solicit, receive, and enter into negotiations for other offers  General consensus – going private would be beneficial

 Is the failure of “alternative” providers inevitable?  Nokia  Recently purchased by Microsoft, uses Windows OS  Lumina has arguably best camera on the market  HTC  Once a legitimate competitor for second place, has fallen behind in marketshare  Motorola  Introduced Moto X to directly challenge Galaxy S4  Bought by Google

Source: Nielsen

 Volume  Measure of number of shares or contracts changing hands over a given period of time  Infers interest or changing expectations in the underlying security

 Volume  A spike in volume can validate or nullify trends:  If a stock traded upwards after an earnings report, but with low volume, this suggests the trend is weak because expectations are not significantly changing

 Volume  Conversely, a spike in volume after an earnings announcement while trending downward signals a strong bearish trend  Retail investors often follow market movers in separate order flows, perpetuating the trend

~28 million shares

 Volatility  Measure in variation of price of a financial instrument over time  Measure of risk, can show consensus of opinion  In short; certainty vs. uncertainty

 Volatility  Does not measure the direction of price changes, merely their dispersion  Presents opportunity to buy assets cheaply and sell when overpriced

 Volatility  ^VIX  Ticker symbol for the Chicago Board Options Exchange Market Volatility Index  Popular measure of the implied volatility of S&P 500 index options  Measures the market’s expectation of stock market volatility over the next 30-day period

 Volatility  ^VIX  Also known as the fear index  Uses a series of options to measure volatility on the S&P 500

 Volatility  ^VIX The VIX is quoted in percentage points and translates, roughly, to the expected movement in the S&P 500 index over the next 30-day period, which is then annualized. For example, if the VIX is 15, this represents an expected annualized change of 15% over the next 30 days; thus one can infer that the index option markets expect the S&P 500 to move up or down 15%/√12 = 4.33% over the next 30-day period. Source: Wikipedia

 Other volatility indexes: 10-year treasury

If I had a chance I’d short JC Penny:Pro Fri 27 Sep 13 | 12:15 PM ET Stop at 2:20

 CEO Mike Ullman had meeting Wednesday and people reported he said they would not have a stock offering  Announced Thursday an 84 million share offering  Says it’s just to give a vote of confidence to vendors

 2 nd Quarter results  Net sales of $2.66 billion, compared to $3.02 billion last year  Comparable store sales declined 11.9%  Net loss of $586 million, or $2.66 per share  Gross margin was 29.6% of sales, compared to 33.2% last year

Activist helping or hurting JCP? Fri 27 Sep 13 | 2:15 PM ET

 Buys a large percentage of a company  With large holding they influence board and other members to make changes  How they choose companies:  Mismanaged  Excessive costs  Could be run more profitably as a private company  Other problems

 In Fall 2011, bought 14,259,888 shares or 13.85% of Canadian Pacific Railway (CP) worth $1.4 billion  Believed he could streamline production and enhance profitiblity  Shares of CP tripled as Bill Ackman changed the board of directors and put in handpicked CEO

3 RD QUARTER 2011 (INITIAL PURCHASE)  Revenue $1.3 billion  Net income $168.8 million  Operating margin 24.19%  Operating ratio 75.8%  Share price $60.62 FIRST QUARTER 2013 (BEGAN SELLING)  Revenue $1.495 billion  Net income $217 million  Operating margin 24.21%  Operating ratio 75.8%  Share price $125.96

 Bought 39,100,000 shares or 18% of company at $25/share over 3 years ago  Was on Board of Directors and picked Rob Johnson as CEO  Brought back former CEO Mike Ullman  Got in argument with other board members and left board  Sold shares all his shares between $ $12.90  Loss of approximately $490 million

 · Larry Robbins with 20,060,830 shares, representing 9.1%Larry Robbins  George Soros with 19,986,361 shares, representing 9.09% George Soros  Richard Perry with 19,000,000 shares, representing 8.65% Richard Perry  Kyle Bass with 11,428,450 shares, representing 5.2% Kyle Bass  Total = 32.04% of company

 Debt security with a face value  Has a maturity date  Has a coupon rate  Fixed intervals of payments  Have credit qualities  Negotiable market prices

 Government, Municipal, Corporate  Fixed rate  Floating rate  Zero-coupon  High-Yield  Convertible  Asset-backed securities  CMOs, MBS’s  Bearer bond

 Texbook: $1,000  Real world: $100  A price of $76.56 corresponds to a price of $  Spread: the difference of the buy price to sell price  Changing rates  Interest rate rises, bond values decrease  Interset raes fall, bond values increase

 Verizon issued $49 billion dollars worth of bonds  Biggest since Apple’s bond offering of $17 billion  Received over $90 billion in orders for the debt  Using capital to buy out their side of their Vodafone joint venture

GOVERNMENT YIELD  3 year: 0.64%  5 year: 1.40%  7 year: 2.02%  10 year: 2.64%  30 year: 3.68% VERIZON YIELD  3 year: 2.5%  5 year: 3.65%  7 year: 4.5%  10 year: 5.192%  30 year: 6.559%