1 Stock Presentation Financial Sector Roger Chan Chris Curtin Jack Lu

2 Sector Analysis Our Recommendation: Maintain weighting (approximately 1.67% above S&P) Our Recommendation: Maintain weighting (approximately 1.67% above S&P) Class Decision: Reduce weighting to S&P (approximately 2% reduction) Class Decision: Reduce weighting to S&P (approximately 2% reduction) Reasoning: Fear of a sub-prime meltdown, an impending economic downturn, and over-exposure in the SIM portfolio Reasoning: Fear of a sub-prime meltdown, an impending economic downturn, and over-exposure in the SIM portfolio

3 Current Sector Weighting Financial Sector as a part of the... Financial Sector as a part of the... SIM21.52 % S&P % Overweight 1.88 % as of 8/3/07

4 Current Holdings Berkshire Hathaway (BRK.A) 6.00 % Berkshire Hathaway (BRK.A) 6.00 % Property and casualty insuranceProperty and casualty insurance Bank of America (BAC) 5.50 % Bank of America (BAC) 5.50 % Money center bankMoney center bank JP Morgan Chase (JPM) 4.73 % JP Morgan Chase (JPM) 4.73 % Money center bankMoney center bank Goldman Sachs (GS) 3.54 % Goldman Sachs (GS) 3.54 % Investment brokerageInvestment brokerage Citigroup (C) 1.75 % Citigroup (C) 1.75 % Money center bankMoney center bank %

5 Recommendations Sell all JPM ~ 4.75 % Sell all JPM ~ 4.75 % Weakest of the three money center banksWeakest of the three money center banks Sell some BAC ~ 2.00 % Sell some BAC ~ 2.00 % Fairly valued, but more potential sub-prime riskFairly valued, but more potential sub-prime risk Buy more C ~ 1.75 % Buy more C ~ 1.75 % Fairly valued, well positioned, strong stock in sectorFairly valued, well positioned, strong stock in sector Buy some SFI ~ 2.00 % Buy some SFI ~ 2.00 % Not a MCB, undervalued, low sub-prime risk exposureNot a MCB, undervalued, low sub-prime risk exposure Keep all Brk-A & GS ~ 9.9 % Keep all Brk-A & GS ~ 9.9 %

6 General Strategy  Reduce Sector Weight by 2 % As determined last presentationAs determined last presentation 1.Reduce Money Center Bank Exposure Three similar MCB’s, constituting 12 % of the SIMThree similar MCB’s, constituting 12 % of the SIM 2.Concentrate on Favorite MCB(s) At least one of the three has to be weakerAt least one of the three has to be weaker 3.Diversify within the Sector Too much domestic MCB, little foreign banking, no REITToo much domestic MCB, little foreign banking, no REIT 4.Avoid Risks from Sub-Prime Crisis Don’t sell just to buy back into the crisisDon’t sell just to buy back into the crisis

7 Current Holdings Property and casualty insurance 6.00 % Property and casualty insurance 6.00 % Berkshire Hathaway (BRK.A)Berkshire Hathaway (BRK.A) Money center banks12.00 % Money center banks12.00 % Bank of America (BAC)Bank of America (BAC) JP Morgan Chase (JPM)JP Morgan Chase (JPM) Citigroup (C)Citigroup (C) Investment brokerage 3.50 % Investment brokerage 3.50 % Goldman Sachs (GS)Goldman Sachs (GS) % %

8 1. Reduce Money Center Bank Exposure Bank of America (BAC)5.50 % Bank of America (BAC)5.50 % Pros: size (#1 credit cards, #1 on-line banking)Pros: size (#1 credit cards, #1 on-line banking) Cons: sub-prime, expansion to date via M&ACons: sub-prime, expansion to date via M&A JP Morgan Chase (JPM)4.73 % JP Morgan Chase (JPM)4.73 % Pros: credit cards, broad customer basePros: credit cards, broad customer base Cons: sub-prime, inefficiency of M&ACons: sub-prime, inefficiency of M&A Citigroup (C) 1.75 % Citigroup (C) 1.75 % Pros: size, diversity, foreign exposurePros: size, diversity, foreign exposure Cons: sub-prime, economy (investment banking)Cons: sub-prime, economy (investment banking)

9 Money Center Banks Stock Current Price (8/3/07) Price- target Range U/D Ratio Loan Loss, as a % of EBT Div. Yield Inst. Owner LT Growth (est.) P/E C$47.24 $ $ % (28%) 4.15 % 65.4 % 6.69%10 BAC$47.78 $ $ % (26%) 4.44 % 60.3 % 4.99%10 JPM$44.59 $ $ % (59%) 3.05 % 68.8 % 6.51%10

10 Money Center Banks Stock Current Price (8/3/07) Price- target Range U/D Ratio Loan Loss, as a % of EBT Div. Yield Inst. Owner LT Growth (est.) P/E C$47.24 $ $ % (28%) 4.15 % 65.4 % 6.69%10 BAC$47.78 $ $ % (26%) 4.44 % 60.3 % 4.99%10 JPM$44.59 $ $ % (59%) 3.05 % 68.8 % 6.51%10

11 Citigroup (C)

12 Bank of America (BAC)

13 JP Morgan Chase (JPM)

14 Money Center Banks Stock Current Price (8/3/07) Price- target Range U/D Ratio Loan Loss, as a % of EBT Div. Yield Inst. Owner LT Growth (est) P/E C$47.24 $ $ % (28%) 4.15 % 65.4 % 6.69%10 BAC$47.78 $ $ % (26%) 4.44 % 60.3 % 4.99%10 JPM$44.59 $ $ % (59%) 3.05 % 68.8 % 6.51%10

15 Money Center Banks Stock Current Price (8/3/07) Price- target Range U/D Ratio Loan Loss, as a % of EBT Div. Yield Inst. Owner LT Growth (est.) P/E C$47.24 $ $ % (28%) 4.15 % 65.4 % 6.69%10 BAC$47.78 $ $ % (26%) 4.44 % 60.3 % 4.99%10 JPM$44.59 $ $ % (59%) 3.05 % 68.8 % 6.51%10

16 1. Reduce Money Center Bank Exposure So... Reduce MCB’s from 12% to 7%... Reduce MCB’s from 12% to 7%... Old ActionNew C1.75% % = 3.5 % BAC5.50% % =3.5 % JPM4.75% % = 0 % Total 12.0 %7.0 %

17 General Strategy Reduce Sector Weight by 2 % Reduce Sector Weight by 2 % As determined last presentationAs determined last presentation Reduce Money Center Bank Exposure Reduce Money Center Bank Exposure Three similar MCB’s facing, constituting 12 % of the SIMThree similar MCB’s facing, constituting 12 % of the SIM 2.Concentrate on Favorite MCB(s) At least one of the three has to be weakerAt least one of the three has to be weaker 3.Diversify within the Sector Too much domestic MCB, little foreign banking, no REITToo much domestic MCB, little foreign banking, no REIT 4.Avoid Risks from Sub-Prime Crisis Don’t sell just to buy back into the crisisDon’t sell just to buy back into the crisis

18 2. Concentrate on Favorite MCB(s)  Eliminate more JPM than necessary to reduce 2.0% and allow room to diversify  Add to C, as the favored MCB  Reduce BAC, to put in line with C

19 General Strategy Reduce Sector Weight by 2 % Reduce Sector Weight by 2 % As determined last presentationAs determined last presentation Reduce Money Center Bank Exposure Reduce Money Center Bank Exposure Three similar MCB’s facing, constituting 12 % of the SIMThree similar MCB’s facing, constituting 12 % of the SIM Concentrate on Favorite MCB(s) Concentrate on Favorite MCB(s) At least one of the three has to be weakerAt least one of the three has to be weaker 3.Diversify within the Sector Too much domestic MCB, little foreign banking, no REITToo much domestic MCB, little foreign banking, no REIT 4.Avoid Risks from Sub-Prime Crisis Don’t sell just to buy back into the crisisDon’t sell just to buy back into the crisis

20 3. Diversify within the Sector Add 2.0% = iStar Financial, Inc. (SFI) Primary business is lending and corporate tenant leasing Primary business is lending and corporate tenant leasing Web-site: Web-site: Part REIT and part financial services Part REIT and part financial services Business is high-end commercial real estate financing Business is high-end commercial real estate financing But, it pays dividends like a REIT (i.e., taxed like a REIT) But, it pays dividends like a REIT (i.e., taxed like a REIT) Market Cap: $4.45 B (mid-cap; $1 - $10 B) Market Cap: $4.45 B (mid-cap; $1 - $10 B) Shares outstanding: M Shares outstanding: M Average volume: 1.2 M/day Average volume: 1.2 M/day Beaten down by the sub-prime crisis, even though its not a sub-prime player and has little sub-prime exposure Beaten down by the sub-prime crisis, even though its not a sub-prime player and has little sub-prime exposure

21 Compare to Money Center Banks Stock Current Price (8/3/07) Price- target Range U/D Ratio Loan Loss, as a % of EBT Div. Yield Inst. Owner LT Growth (est.) P/E C$47.24 $ $ % (28%) 4.15 % 65.4 % 6.69%10 BAC$47.78 $ $ % (26%) 4.44 % 60.3 % 4.99%10 JPM$44.59 $ $ % (59%) 3.05 % 68.8 % 6.51%10 SFI$34.74 $34.74 – $83.24 NA 6 % (4%) 8.87 % 76.1 % 6.67%15

22 iStar Financial, Inc. (SFI)

23 Money Center Banks Stock Current Price (8/3/07) Price- target Range U/D Ratio Loan Loss, as a % of EBT Div. Yield Inst. Owner LT Growth (est.) P/E C$47.24 $ $ % (28%) 4.15 % 65.4 % 6.69%10 BAC$47.78 $ $ % (26%) 4.44 % 60.3 % 4.99%10 JPM$44.59 $ $ % (59%) 3.05 % 68.8 % 6.51%10 SFI$34.74 $34.74 – $83.24 NA 6 % (4%) 8.87 % 76.1 % 6.67%15

24 Money Center Banks Stock Current Price (8/3/07) Price- target Range U/D Ratio Loan Loss, as a % of EBT Div. Yield Inst. Owner LT Growth (est.) P/E C$47.24 $ $ % (28%) 4.15 % 65.4 % 6.69%10 BAC$47.78 $ $ % (26%) 4.44 % 60.3 % 4.99%10 JPM$44.59 $ $ % (59%) 3.05 % 68.8 % 6.51%10 SFI$34.74 $34.74 – $83.24 NA 6 % (4%) 8.87 % 76.1 % 6.67%15

25 Money Center Banks Stock Current Price (8/3/07) Price- target Range U/D Ratio Loan Loss, as a % of EBT Div. Yield Inst. Owner LT Growth (est.) P/E C$47.24 $ $ % (28%) 4.15 % 65.4 % 6.69%10 BAC$47.78 $ $ % (26%) 4.44 % 60.3 % 4.99%10 JPM$44.59 $ $ % (59%) 3.05 % 68.8 % 6.51%10 SFI$34.74 $34.74 – $83.24 NA 6 % (4%) 8.87 % 76.1 % 6.67%15

26 Money Center Banks Stock Current Price (8/3/07) Price- target Range U/D Ratio Loan Loss, as a % of EBT Div. Yield Inst. Owner LT Growth (est.) P/E C$47.24 $ $ % (28%) 4.15 % 65.4 % 6.69%10 BAC$47.78 $ $ % (26%) 4.44 % 60.3 % 4.99%10 JPM$44.59 $ $ % (59%) 3.05 % 68.8 % 6.51%10 SFI$34.74 $34.74 – $83.24 NA 6 % (4%) 8.87 % 76.1 % 6.67%15

27 Money Center Banks Stock Current Price (8/3/07) Price- target Range U/D Ratio Loan Loss, as a % of EBT Div. Yield Inst. Owner LT Growth (est.) P/E C$47.24 $ $ % (28%) 4.15 % 65.4 % 6.69%10 BAC$47.78 $ $ % (26%) 4.44 % 60.3 % 4.99%10 JPM$44.59 $ $ % (59%) 3.05 % 68.8 % 6.51%10 SFI$34.74 $34.74 – $83.24 NA 6 % (4%) 8.87 % 76.1 % 6.67%15

28 SFI’s Story Market Psychology: Price has been falling in concert with sub-prime residential lenders, due to the overall sub-prime risk. Price has been falling in concert with sub-prime residential lenders, due to the overall sub-prime risk. Fell further when REIT sector was downgraded in June, on fears of a slowing economy, increasing interest rates, lack of investor confidence, and prospect of decreasing dividend yields. Fell further when REIT sector was downgraded in June, on fears of a slowing economy, increasing interest rates, lack of investor confidence, and prospect of decreasing dividend yields.

29 S&P 500 Index (3-year)

30 Financial Sector (3-year)

31 MCB’s = e.g., JPM (3-year)

32 iStar Financial (3-year)

33 SFI’s Story Market Psychology: Price has been falling in concert with sub-prime residential lenders, due to the overall sub-prime risk. Price has been falling in concert with sub-prime residential lenders, due to the overall sub-prime risk. Fell further when REIT sector was downgraded in June, on fears of Fell further when REIT sector was downgraded in June, on fears of 1. a slowing economy, 2. increasing interest rates, 3. lack of investor confidence, and 4. prospect of decreasing dividend yields.

34 Deebo

35 iStar Financial (3-year)

36 SFI’s Story “iStar Financial is one of those guilt-by- association companies.” “iStar Financial is one of those guilt-by- association companies.” “[T]he company has very different risk exposures from those of subprime residential lenders such as Countrywide and American Home Mortgage.” “[T]he company has very different risk exposures from those of subprime residential lenders such as Countrywide and American Home Mortgage.” -- Emil Lee, TheMotleyFool.com (July 31, 2007) (July 31, 2007)

37 SFI’s Story More conservative lender, and uses less leverage More conservative lender, and uses less leverage D/E D/E  iStar (SFI) 2.93  Countywide (CFC) 5.40  American Home Mort. (AHM) 8.96  Annaly Capital Management (NLY)  Redwood Trust Inc. (RWT) Has not increased reserve for potential loan losses this year (still anticipating 6%) Has not increased reserve for potential loan losses this year (still anticipating 6%)

38 SFI’s Story May 22, 2007  Acquired Fremont General’s commercial real estate division for $1.9 B (immediately changed compensation structure from volume-based to profitability-based) May 22, 2007  Acquired Fremont General’s commercial real estate division for $1.9 B (immediately changed compensation structure from volume-based to profitability-based) July 2, 2007  Announced an increased dividend = 5% increase on dividend 5 years in a row July 2, 2007  Announced an increased dividend = 5% increase on dividend 5 years in a row July 31, 2007  increased 2007 earnings expectations from $2.74 to $2.90 per share July 31, 2007  increased 2007 earnings expectations from $2.74 to $2.90 per share August 1, 2007  Reactivated stock repurchase program, up to 2.7 M shares (open market) August 1, 2007  Reactivated stock repurchase program, up to 2.7 M shares (open market) Current Price  $18.31 (35%) off 52-week high Current Price  $18.31 (35%) off 52-week high

39 General Strategy Reduce Sector Weight by 2 % Reduce Sector Weight by 2 % As determined last presentationAs determined last presentation Reduce Money Center Bank Exposure Reduce Money Center Bank Exposure Three similar MCB’s facing, constituting 12 % of the SIMThree similar MCB’s facing, constituting 12 % of the SIM Concentrate on Favorite MCB(s) Concentrate on Favorite MCB(s) At least one of the three has to be weakerAt least one of the three has to be weaker Diversify within the Sector Diversify within the Sector Too much domestic MCB, little foreign banking, no REITToo much domestic MCB, little foreign banking, no REIT Avoid Risks from Sub-Prime Crisis Avoid Risks from Sub-Prime Crisis Don’t sell just to buy back into the crisisDon’t sell just to buy back into the crisis

40 Recommendations Sell all JPM ~ 4.75 % Sell all JPM ~ 4.75 % Weakest of the three money center banksWeakest of the three money center banks Sell some BAC ~ 2.00 % Sell some BAC ~ 2.00 % Fairly valued, but more potential sub-prime riskFairly valued, but more potential sub-prime risk Buy more C ~ 1.75 % Buy more C ~ 1.75 % Fairly valued, well positioned, strong stock in sectorFairly valued, well positioned, strong stock in sector Buy some SFI ~ 2.00 % Buy some SFI ~ 2.00 % Not a MCB, undervalued, low sub-prime risk exposureNot a MCB, undervalued, low sub-prime risk exposure

41 Proposed Holdings Old New Old New Berkshire Hathaway (BRK.A)6.00% 6.00% Berkshire Hathaway (BRK.A)6.00% 6.00% Property and casualty insuranceProperty and casualty insurance Bank of America (BAC)5.50% 3.50% Bank of America (BAC)5.50% 3.50% Money center bankMoney center bank JP Morgan Chase (JPM)4.75 % 0% JP Morgan Chase (JPM)4.75 % 0% Money center bankMoney center bank Goldman Sachs (GS)3.50 % 3.50% Goldman Sachs (GS)3.50 % 3.50% Investment brokerageInvestment brokerage Citigroup (C)1.75 % 3.50% Citigroup (C)1.75 % 3.50% Money center bankMoney center bank iStar Financial, Inc. (SFI) 0 % 2.00% iStar Financial, Inc. (SFI) 0 % 2.00% Credit servicesCredit services % 19.50%

42 Questions

43 Bank of America

44

45 Citigroup

46

47 JP Morgan Chase

48

49 iStar Financial

50

51 Berkshire Hathaway (BRK-A) Hold: Upside potential – 4.08% ($114,382/share) Insurance Outlook in 2007 Slower premium growth Slower premium growth Weak pricing Weak pricing Underwriting becomes less profitable Underwriting becomes less profitable No exposure to subprime mortgage No exposure to subprime mortgage Berkshire’s Source of growth Non-insurance business Non-insurance business Investment income Investment income

52 Goldman Sachs (GS) Hold: Realize a significant loss (21%) if sell GS now Stock is undervalued DCF DCF Comparables Comparables Analyst Report Analyst Report Positive Economic outlook in 2008 GS will recover from recent stock slump Well diversified business Well diversified business

53

54 Goldman Sachs (GS)

55

56 S&P 500 Index (3-year)

57 Citigroup (3-year)

58 Bank of America (3-year)

59 JP Morgan Chase (3-year)

60 iStar Financial (3-year)

61 Berkshire Hathaway (3-year)

62 Goldman Sachs (3-year)

63 Countrywide (3-year)