Materials Sector Ticker: XLB Frank McLaughlin Walter Nabarrete

Overview  Includes companies that are involved with the discovery and processing of raw materials  Ranges from chemical producers to forestry product manufacturers to companies that mine and refine metals  Largest holdings: Mansanto – 11.34%, DuPont – 9.11% and Dow Chemical – 8.41%

MAT – Last Semester 08/20/2012 – 1/24/2013

XLB vs S&P 500

Current State of Sector  Professional Viewpoint: Slightly Bullish  Good performer in 2012 & off to quick start in 2013  Relying heavy on chemical sector  Currently outperforming S&P  Macroeconomic Threats  Crude oil prices could rise  Gold & mining companies not performing well  Sector depends heavily on strong economy

Biggest Movers  Positive:  Monsanto %  Dow Chemical %  Negative:  Newmont Mining Corp %  Freeport-McMoran Copper & Gold % (Past 3 Months)

Recent Headlines  China Rallying Economic Strength  Great news for manufacturing & raw materials  Monsanto Ends Patent Dispute with Brazilian Farmers  Dow Chemical Resigns from National Association of Manufacturers (NAM)  Opposes natural gas exports

Key Drivers  Increase in World Population  More Food  World Population 9.3 Billion by 2050  Health of Economy  Increased Consumption  Available Land  New Crop Growing Technology

Key Drivers  Cost of Energy  Natural Gas  Government Regulation  Safety of Product  Supply and Demand

Relevant Valuation Matrices  P/E Ratio  P/S Ratio  Materials Sector is Sensitive to the Business Cycle  Keep Debt and Profit Margins in Mind  P/B Ratio  A lot of Capital

The Mosaic Company (MOS)  Date Presented: Oct. 16 th  Recommendation: No  Vote: N/A  Price Then: $54.49  Price Now: $59.46  MOS announced it has plans to open a $700 million Ammonia plant.  Expanding its Potash operation.

The Mosaic Company

Freeport-McMoRan Copper & Gold Inc. (FCX)  Date Presented: Nov. 1 st  Recommendation: No  Vote: N/A  Price Then: $40.50  Price Now: $35.02  Merger with Plains Exploration & Production Company and McMoRan Exploration Co. on December 5, 2012.

Freeport-McMoRan Copper & Gold

Sigma-Aldrich Corporation  Date Presented: Nov.27 th  Recommendation: No  Vote: N/A  Price Then: $72.20  Price Now: $76.91  Agreed to 50/50 joint venture with Soulbrain Co. Ltd. On December 21, (Ticker: SIAL)

Sigma-Aldrich Corporation

Sources   Finance.yahoo.com  Reuters.com  seasonality-all-pointing-to-higher-crude-prices?source=yahoo seasonality-all-pointing-to-higher-crude-prices?source=yahoo  us-again?source=yahoo us-again?source=yahoo  to.html to.html  and-ed-markeys-opposition-to-natural-gas-exports-cripple-americas-energy- advantage/     power.asp#axzz2IqZOVAIT 