1. Kick-Off September 30th

2.  This game will challenge MA1 student to invest in a virtual portfolio of 4 assets on the long run (1 year)  This is a chance for the students to put into practice their theoretical skills learned during their 3 last years (Macroeconomics, Corporate Finance, Accounting, Control, Marketing..)  You will have to select 4 stocks  2 Long positions = 2 stocks which are underestimated by the market (Consensus)  2 Short positions = 2 stocks which are overestimated by the market (Consensus) Introduction MaterialStep by StepYour Work Scoring/Reward Introduction

3.  Among those 4 stocks, one pair has to be chosen (2 companies in the same sector) in 2 different directions (long and short)  Stocks' selection is limited to Europe, US and Japan.  Selection is based on fundamental analysis VS. Introduction MaterialStep by StepYour Work Scoring/Reward Introduction

4.  GLG case study 1 : Fortis, Long Share Price, Pence Exposure, % 13 brokers covered Fortis 3 long 10 short 5 brokers covered Fortis 1 long 4 short 8 brokers covered Fortis 7 long 1 short 10 brokers covered Fortis GLG was long on Fortis from November 2008 to June 2009 Introduction MaterialStep by StepYour Work Scoring/Reward Introduction

5. Step 1: Idea Generation  Following the “collapse” of Fortis, the Dutch and Belgian governments intervened to establish a solution.  As a result, the main brokerage firms dropped coverage of the stock which made the situation all the more opaque  Market was focusing on liabilities : vote, spv (Special purpose Vehicle)…We were focusing on assets: Value of insurance companies [Companies with a little Cash Flow].  Balance sheet: Fortis had excess cash and could create lot of value by buying its debt at a discount price.  Having been active in Fortis since 2007, we were aware of the sum valuation of their assets; upon collapse, we decided to revisit the stock and form a new opinion. CF = 1 X10 [Multiple and DCF]  10 Assets =100 X1.5-3 [Multiple]  150-300 Market focused on liabilities and cash flows We focused on assets ≠ Introduction MaterialStep by StepYour Work Scoring/Reward Introduction

6. Step 2: Hypothesis Verification  Working alongside GLG’s credit teams, we analysed all of Fortis’s debt instruments and structured credit portfolio as well as their insurance and banking businesses  We spoke to specialist Belgian and Dutch lawyers, activist groups and the company at great lengths Step 3: Investment Structuring  Given the high risk (volatility), we decided to take a reduced position of around 2% within the fund, despite our high conviction rate Step 4: Execution  We starting building our position in Fortis at 59 cents and traded around our price target, trimming and building positions where based on earning releases and news flow >< The markets Introduction MaterialStep by StepYour Work Scoring/Reward Introduction

7.  GLG case study 2 : Burberry, Long GLG bought at the end of March Introduction MaterialStep by StepYour Work Scoring/Reward Introduction

8. Step 1: Idea Generation  The consumption of luxury goods declined due to the credit crunch => Sales growth was down for luxury sector  But Burberry was more vulnerable due to its distribution strategy. Burberry had 15% of own distribution channel and 85% of wholesale >< Competitors (Louis Vuitton)  Spain was down, and Burberry market concerned by Geographical exposure strongly relied on Spain and Japan  As results, Burberry had a high level of inventories and working capital requirement, and Profit margin (EBIT margin ) was under pressure (Burberry Net Income was low compared to the sector).  But Burberry had the same margin gross than the sector  Burberry had to have a product problem. (Costs were too high compared to competitors (i.e. LVMH) ). Gross Margin 60 60 sectorBurberry Net Income 25 10-12  CF Multiple was lower than the sector Introduction MaterialStep by StepYour Work Scoring/Reward Introduction

9. Step 2: Hypothesis Verification  Working alongside GLG’s analysts teams, we analysed Burberry cost cutting program implemented by the Management.  We spoke to McKinsey to review product positioning and to assess SAP implementation potential. Step 3: Today Results  Management now focus on getting the back end operations as good as the front end operations with the help of their new global head of supply chain and the final roll out of SAP.  Burberry is now shipping product rather than air freighting.  Purchasing is being done at group level not by product line. Improving EBIT margin will have a double leverage effect on Burberry valuation CF Multiple X = Valuation Introduction MaterialStep by StepYour Work Scoring/Reward Introduction

10. Presentation Team registrati on Stocks selection Stocks/Firms va luations Report Uploadi ng Follow-upScoringEnd Final Speech an d Best teams pr esentations On October 2 2009On November 30 2009 End of November 2010 February 2011 Kick-off Introduction MaterialStep by StepYour Work Scoring/Reward Stock Simulation Step by Step

11. AssetsLong 1Short 1Long 2Short 2 Choicepair (in the same sector)No constraints External Analysis1 quantitative argument 1 qualitative argument Internal Analysis 2 qualitative arguments which might significantly impact company ’ s valuation Valuation using the 3FCF methods (WACC, Adjusted present value and Flow to equity) Assumptions (Revenue growth rate, Capital expenditures, Cost of equity, cost of assets, Cost of debt…) Questions: 1) Which value drivers (Revenue Growth, Sales margin, ….) are changing and what the market is missing? 2) Compare the intrinsic value calculated and the market cap observed ( In Millions) 3) Which FCF-valuation method is for you the most accurate one in this case? 4) Compare enterprise ratios with sector and/or peer ratios Risks2 risks which might modify your thesis Stocks’ selection Introduction MaterialStep by StepYour Work Scoring/Reward Your Work

12. AssetsLong 1Short 1Long 2Short 2 Choicepair (in the same sector)No constraints External Analysis1 quantitative argument 1 qualitative argument Internal Analysis 2 qualitative arguments which might significantly impact company ’ s valuation Valuation using the 3FCF methods (WACC, Adjusted present value and Flow to equity) Assumptions (Revenue growth rate, Capital expenditures, Cost of equity, cost of assets, Cost of debt…) Questions: 1) Which value drivers (Revenue Growth, Sales margin, ….) are changing and what the market is missing? 2) Compare the intrinsic value calculated and the market cap observed ( In Millions) 3) Which FCF-valuation method is for you the most accurate one in this case? 4) Compare enterprise ratios with sector and/or peer ratios Risks2 risks which might modify your thesis Stocks’ selection Example: Share price vs. Interest rate Introduction MaterialStep by StepYour Work Scoring/Reward Your Work

13. AssetsLong 1Short 1Long 2Short 2 Choicepair (in the same sector)No constraints External Analysis1 quantitative argument 1 qualitative argument Internal Analysis 2 qualitative arguments which might significantly impact company ’ s valuation Valuation using the 3FCF methods (WACC, Adjusted present value and Flow to equity) Assumptions (Revenue growth rate, Capital expenditures, Cost of equity, cost of assets, Cost of debt…) Questions: 1) Which value drivers (Revenue Growth, Sales margin, ….) are changing and what the market is missing? 2) Compare the intrinsic value calculated and the market cap observed ( In Millions) 3) Which FCF-valuation method is for you the most accurate one in this case? 4) Compare enterprise ratios with sector and/or peer ratios Risks2 risks which might modify your thesis Stocks’ selection Examples: New regulation, new competitors, new markets, new Policy… Introduction MaterialStep by StepYour Work Scoring/Reward Your Work

14. AssetsLong 1Short 1Long 2Short 2 Choicepair (in the same sector)No constraints External Analysis1 quantitative argument 1 qualitative argument Internal Analysis 2 qualitative arguments which might significantly impact company ’ s valuation Valuation using the 3FCF methods (WACC, Adjusted present value and Flow to equity) Assumptions (Revenue growth rate, Capital expenditures, Cost of equity, cost of assets, Cost of debt…) Questions: 1) Which value drivers (Revenue Growth, Sales margin, ….) are changing and what the market is missing? 2) Compare the intrinsic value calculated and the market cap observed ( In Millions) 3) Which FCF-valuation method is for you the most accurate one in this case? 4) Compare enterprise ratios with sector and/or peer ratios Risks2 risks which might modify your thesis Stocks’ selection Examples: Management Shift, New products, Capital structure, Bond rating change, Restructuration, New acquisition… Introduction MaterialStep by StepYour Work Scoring/Reward Your Work

15. AssetsLong 1Short 1Long 2Short 2 Choicepair (in the same sector)No constraints External Analysis1 quantitative argument 1 qualitative argument Internal Analysis 2 qualitative arguments which might significantly impact company ’ s valuation Valuation using the 3FCF methods (WACC, Adjusted present value and Flow to equity) Assumptions (Revenue growth rate, Capital expenditures, Cost of equity, cost of assets, Cost of debt…) Questions: 1) Which value drivers (Revenue Growth, Sales margin, ….) are changing and what the market is missing? 2) Compare the intrinsic value calculated and the market cap observed ( In Millions) 3) Which FCF-valuation method is for you the most accurate one in this case? 4) Compare enterprise ratios with sector and/or peer ratios Risks2 risks which might modify your thesis Stocks’ selection Introduction MaterialStep by StepYour Work Scoring/Reward Your Work

16. AssetsLong 1Short 1Long 2Short 2 Choicepair (in the same sector)No constraints External Analysis1 quantitative argument 1 qualitative argument Internal Analysis 2 qualitative arguments which might significantly impact company ’ s valuation Valuation using the 3FCF methods (WACC, Adjusted present value and Flow to equity) Assumptions (Revenue growth rate, Capital expenditures, Cost of equity, cost of assets, Cost of debt…) Questions: 1) Which value drivers (Revenue Growth, Sales margin, ….) are changing and what the market is missing? 2) Compare the intrinsic value calculated and the market cap observed ( In Millions) 3) Which FCF-valuation method is for you the most accurate one in this case? 4) Compare enterprise ratios with sector and/or peer ratios Risks2 risks which might modify your thesis Stocks’ selection Introduction MaterialStep by StepYour Work Scoring/Reward Your Work

17. AssetsLong 1Short 1Long 2Short 2 Choicepair (in the same sector)No constraints External Analysis1 quantitative argument 1 qualitative argument Internal Analysis 2 qualitative arguments which might significantly impact company ’ s valuation Valuation using the 3FCF methods (WACC, Adjusted present value and Flow to equity) Assumptions (Revenue growth rate, Capital expenditures, Cost of equity, cost of assets, Cost of debt…) Questions: 1) Which value drivers (Revenue Growth, Sales margin, ….) are changing and what the market is missing? 2) Compare the intrinsic value calculated and the market cap observed ( In Millions) 3) Which FCF-valuation method is for you the most accurate one in this case? 4) Compare enterprise ratios with sector and/or peer ratios Risks2 risks which might modify your thesis Stocks’ selection Introduction MaterialStep by StepYour Work Scoring/Reward Your Work

18. Website Handbook Answer-Template Registration/ uploading forms Up-to-date Performance data (follow-up) + Examples Introduction MaterialStep by StepYour Work Scoring/Reward Material

19. Valuation Stocks selection Calculations Questions Data/Resources Charts/Calculations Statements Justifications/ Arguments Report scores (30% of your Advanced finance grade) _____ _____Report and Performance prize 3 days in New York - 4 Flight tickets - 2 nights in Manhattan - Visit of the NY Stock Exchange Introduction MaterialStep by StepYour Work Scoring/Reward