Sector Recap

Sector Weighting The sector was over weighted by 178 bps on 7/14/09. As of 7/31/09, the sector was over weighted by 239 bps.

Sector Recommendation Original Recommendation: Maintain the current overweight of 178 basis points (SIM 11.57% vs. S&P %) Positives:  During the recession most of industrial stocks are undervalued  Most of the stocks should have an upside when economy turns around  Increased government spending (i.e. OSK, GE, Shaw)  Low interest rates Risks:  Double-dip recession driving prices further down  Lag between GDP growth and Industrial growth  Companies have divested most of the assets due to the prolonged recession  Excess capacity in the housing market and commercial real estate

Current Holdings/Company Weightings As of July 31, 2009 ** Oshkosh recently issued 13 million shares, diluting the value from the July 31 value of $849,714 (4.92%) at a share price of $27.45 to approximately $800,000 (4.62%) at a share price of $25.80.

Proposed Holdings/Company Weightings Canadian Pacific Railway$ % Emerson Electric Co.$184, % General Electric Co.$409, % Oshkosh Truck Corp.$677, % Shaw Group$ % First Solar, Inc.$400, % UTI Worldwide, Inc.$400, % Industrials$2,072, % Portfolio$2,072, %

Sector Weighting Recommendation The proposed sales/purchases result in an overweighting of 202 bps.

Canadian Pacific Railway Company Overview Holding company whose direct and indirect subsidiaries operate railways in North America Own/leases 15,500 miles of track mostly in western Canada and the US Midwest Grain, industrial products, and intermodal freight account for 75% of their revenue Acquired Dakota, Minnesota and Eastern Railroad Corporation in SEP ‘07 which opened them up to the US Midwest region

Canadian Pacific Railway P/E

Canadian Pacific Railway P/S P/CF

Canadian Pacific Railway Valuation

Canadian Pacific Railway DCF

Pros/Cons Pros  Current price = $46.98; Price target = $41.64; 12.8% downside  CP restructured their contract with Teck Coal this year to an unfavorable outcome  Growth is limited to M&A  US GDP slow to recover will continue to eat away at their revenue  Additional government regulation on grain transport rates (grain is 2 nd largest revenue driver) Cons  They are integrating some trip planning software that will decrease fuel expense by estimated 10% (fuel only makes up ~15% of total operating expenses)

Oshkosh Corporation Latest Developments SIM ownership of Oshkosh is near 5%. We decided to sell 100 basis points At $23.69 per share, Oshkosh had about 97% upside In June and July 2009 Oshkosh won $2.8 billion army contract for M-ATV vehicles with the March 2010 delivery date On August 5 th, 2009 Oshkosh announced an offering of 13 million shares of common stock. The company currently has 74.4 million shares outstanding The company priced its public offering of new shares at $25 per share. Assuming no overallotment by the underwriters, Oshkosh expects to receive net proceeds from this offering of around $ million after deducting the underwriting commissions Oshkosh plans to use the net proceeds of the offering to repay a portion of the term loan borrowings under its credit agreement

The Shaw Group Company Overview Expertise with engineering, technology, construction, fabrication, environmental, and industrial services. Fossil and Nuclear segment handles designing, building, and running refineries and nuclear power facilities (plants, subs, etc.) Environmental and Infrastructure segment has a lot of government contracts. Owns 20% stake in Westinghouse (nuclear synergies.) Fabrication and Manufacturing of piping systems.

The Shaw Group Valuation $23.69

The Shaw Group Valuation Firm:The Shaw Group Ticker:SGRPrice: $ 31.13As of 2:00 p.m. Relative to SectorHighLowMedianCurrent P/TE P/FE P/B P/S <-- Coincidence? P/CF Relative to S&PHighLowMedianCurrent P/TE P/FE P/B P/S <-- Coincidence? P/CF ABSOLUTEHighLowMedianCurrentTarget Multiple Target E, S, B, etc/shareTarget Price P/FE $ P/S $ P/B $ P/EBITDA $ P/CF $ Average Valuation: $ Current price: $ Upside/(Downside):29.2%

The Shaw Group Valuation ABSOLUTETarget Price (7/14)Target Price (8/10) P/FE $ $ P/S $ $ P/B $ $ 31.13

The Shaw Group DCF DCF from 7/14 Terminal Discount Rate = 10% Terminal FCF Rate = 4.5% Current Price (7/14) = $25.46 Implied equity value/share (7/14) = $25.57 Upside/(Downside) to DCF on 7/14 = 0.4% Current data Current Price 2:00 p.m.) = $31.13 Implied equity value/share (7/14) = $25.57 Upside/(Downside) to DCF on 8/10 = (17.9%)

The Shaw Group Pros/Cons Pros  Current price = $31.13; DCF Price target = $25.57; 17.9% downside  Westinghouse is a drain on their bottom line since they bought a 20% stake. Cons  They have a $22.3 Billion back log of work.  $1.3 Billion Cash on hand. First time ever of $1 Billion.  Still made a profit during this recession ($7.9 Million)  Nuclear power will be a big industry as the US looks into the next generation of plants (2016.)

GE Company Overview Industrial Conglomerate Develops manufactures and markets products for generation, transmission, distribution, control and utilization of electricity. Operating Segments: Infrastructure, Commercial Finance, GE Money, Healthcare, NBC Universal and Industrial Products range from aircraft engines, power generation, water processing and security technology to medical imaging, business and consumer financing Has continued to meet earnings for several quarters, despite a blip in reporting which cost them $50 million Future of GE looks bright according to analysts who support a buy or hold on this stock due to its high correlation to the S&P 500 performance and the economy as a whole

GE P/E

GE P/S

GE Valuation DCF Valuation 7/17/2009 Ticker: GETerminal Discount Rate =10.5% Terminal FCF Growth =3.0% ForecastTerminal Year2009E2010E2011E2012E2013E2014E2015E2016E2017E2018E2019EValue Revenue 166, , , , , , , , , , ,370 % Growth-1.09%2.92%4.00%4.50%5.00%5.50%5.00% 4.00% Operating Income 19,087 19,378 21,142 22,888 23,918 25,114 28,533 29,960 31,458 33,031 34,352 Operating Margin11.48%11.78%12.49%13.00% 14.00% Corp items and elimin (2,495) (2,467) (2,116) (2,201) (2,300) (2,415) (2,548) (2,675) (2,809) (2,949) (3,067) % of Sales-1.50% -1.25% Interest/oth finl charges (1,663) (1,645) (1,693) (1,761) (1,840) (1,932) (2,038) (2,140) (2,247) (2,359) (2,454) % of Sales-1.00% Taxes (3,471) (3,511) (3,987) (5,264) (5,501) (5,776) (6,563) (6,891) (7,235) (7,597) (7,901) Tax Rate-23.3%-23.0% Net Income 11,125 11,426 13,008 13,662 14,277 14,991 17,385 18,254 19,167 20,125 20,930 % Growth3%14%5%4%5%16%5% 4% Add Depreciation/Amort11,31610,64410,52810,94911,44112,01312,67413,30813,97314,67215,259 % of Sales6.80%6.47%6.22% Plus/(minus) Changes WC2,6392,266(273)(352)(368)(386)(408)(428)(449)(472)(491) Initial Working Capital1.6%1.4%-0.2% Subtract Cap Ex15,51412,47312,33713,20512,87912,94313,04413,69614,38115,10015,704 Capex % of sales9.33%7.58%7.29%7.50%7.00%6.70%6.40% Free Cash Flow9, , , , , , , , , , ,994.4 YOY growth24%-8%1%13%10%21%5% 4% Terminal 274,590.0 P/E 13.1 NPV of free cash flows$85, %EV/EBITDA 13.9 NPV of terminal value$101, %Free Cash Yield7.28% Projected Equity Value 186,936.7 Free Cash Flow Yield5.12% Shares Outstanding10,564 Current Price $14.50 Implied equity value/share $17.70 Upside/(Downside) to DCF22.0% Total Debt 514,100 Total Cash 97,500

GE Pros/Cons Pros  if economic outlook is stable to positive, GE’s returns are highly correlated to the overall economy and S&P 500  Huge growth potential in energy due to renewable legislation  Recent stock rebound  Purchased stock at average price of $34.79/share, currently trading at $14.57/share  gaining about $1/share per week for last 3 weeks  Recently signed $115 million deal with Chinese energy company, Fujian Jingjiang Gas Power Co. Cons  Earnings have severely declined 2009 v  Recent issue of $1.5 billion of global medium-term notes  Recent issue of $2 billion in 10-year notes

First Solar Company Overview First Solar designs and makes solar modules using proprietary thin film semiconductor technology to convert sunlight into electricity First Solar was formed in 1999 and launched production of commercial products in It had IPO in 2006 First Solar is the largest manufacturer of thin film solar modules. It plans to expand its capacity from 735MW in 2008 to more than 1 GW by the end of 2009 In 2008 company generated 94% if revenues from customers in Europe, mainly Germany, which accounted for 74%. The company is also targeting other markets as well, including China, India and Australia In 2008 First Solar reported $1.2 billion in revenue, an increase of $498 million over 2007 First Solar has achieved the lowest manufacturing cost per watt in the industry - $.87 per watt First Solar developed the first pre-funded module collection and recycling program in the industry

First Solar P/E

First Solar P/S P/CF

First Solar Valuation

First Solar Pros/Cons Cons :  Some investors worry about the competition from China (Yingli Green Energy). Experts do not expect Chinese competitors to match First Solar module manufacturing costs over the next months  Difficult financial environment for the companies to invest into the renewable energy development  The storage of renewable electricity (batteries) is underdeveloped Pros:  Carbon legislature is working its way through Congress  Pros: Fossil fuel sources are finite  Pros: U.S. attempt to decrease its dependency on foreign oil  Pros: U.S. green energy movement. Several states require utility companies to increase the percentage of its renewable assets

UTI Worldwide Inc. Company Overview International, non-asset-based supply chain services and solutions company  air and ocean freight forwarding  contract logistics  customs brokerage Provide total logistics solutions Cyclical industry Revenues down 35% in 1 st Qtr FY10 and Net Income was down 27%  Attributed to cost cutting efforts

UTI Worldwide Inc. P/E

UTI Worldwide, Inc. P/S P/CF

UTI Worldwide, Inc. Valuation

UTI Worldwide, Inc. Pros/Cons Pros  Current price = $12.55; Price target = $19.83; 58% upside  Increased global trade and outsourcing of logistics solutions  Network of freight forwarding offices and contract logistics and distribution centers in a total of 62 countries with an additional 79 countries serviced through independent offices  Room for growth in these 79 countries  Taken measures to reduce their cost structure saving $50m in expenses in FY2010 (began 1 FEB) Cons  Until demand spikes they will continue to see revenues at lower levels  Global recession could last longer than predicted

Summary Recommendation Sell 167 basis points of Canadian Pacific Railway  7.9% downside  Unfavorable restructuring Sell 334 basis points of Shaw Group  17.9% downside  Westinghouse purchase Buy 232 basis points of First Solar, Inc.  50.8% upside  Future Renewable legislation and state requirement Buy 232 basis points of UTI Worldwide, Inc.  58% upside  Revamped cost structure

Summary Recommendation Cont’d Sell 100 basis points of Oshkosh Truck Corp.  Approaching 5% maximum holding cap  Still has upside potential Buy 100 basis points of General Electric  22% upside potential  Future looks healthy for many segments, especially energy

Questions?