1. Finance Club Feb-5

2. SMIF Investment process

3. Determining Needs : Materials Industrials Energy Utilities

4. SMIF Investment process

5.  Determine strategy fit:  GARP  Michael Kors, Tractor Supply, Intuitive Surgical, Factset Research  Market Leadership  McDonalds, Altria Group, Diageo, Wal-Mart, J&J, Visa, Potash  Income  AT&T, Windstream, American Capital Agency

6. SMIF Investment process  Growth At a Reasonable Price (GARP) – Michael Kors  PE = ~40  PEG = ~1.4

7. SMIF Investment process  Growth At an un-Reasonable Price (GARP) – Facebook  P/E = 2810.90  PEG = 94.23

8. SMIF Investment process  Market Leadership – Diageo  Leverage economies of scale  ROE = 36%  Stable, high, free cash flow generation  Free Cash Flow =Net Income + Depreciation/Amortization -Change in Net Working Capital -Capital Expenditures

9. SMIF Investment process  Market Leadership – McDonalds, J&J, Altria

10. SMIF Investment process Income – AT&T Current Yield = 5.11% Effective Yield = (1.8/27.53) = 6.54% Payout Ratio <85% Actual Payout Ratio = 139%

11. SMIF Investment process

13. The Buddy System All pitches are made by two people 1.Junior Analyst Active member of the SMIF Not graduating at the end of this academic year or next(Freshman/Sophmore) 2.Senior Analyst Two concurrent semesters with SMIF as Junior Analyst Graduating at the end of this academic year or next (Juniors/Seniors)

14. SMIF Investment process Two Pitch Process 1.Preliminary Pitch Short overview of the company Strategy (GARP, Market Leadership, Income) Investment Thesis 2.Formal Pitch In-depth view of business model Dissection of Financials Top-Down context of investment Monitor Points 1.Questions will follow preliminary presentation – Questions will help form Formal Pitch 2.May not be granted a formal pitch if a poor match in strategy fit, quality of investment thesis, adequate due diligence

15. SMIF Investment process 1.Idea Generation 2.Strategy Fit 3.Buddying Up 4.Primary Pitch 5.Formal Pitch Let us be very clear, this process and organization requires work from its members. Half-assing your due diligence will not cut it. Feel free to join SHRM or the Accounting Society if you're not willing to do extra curricular work.

16. SMIF Investment process

17. S&P Madness Saturday, February 16 th Start: 1pm

18. Manning & Napier Office Visit Friday, March 1 st Leave Geneseo: 11am Return: 3pm

19. Winstream Corp

20. Leveraged Growth

22. Aggressive Financial Risk, Weak business profile “The ratings on Windstream reflect an "aggressive" financial risk profile…” “…[We] expect leverage to remain high because of the company's aggressive acquisition strategy.” “…we expect secular industry declines to continue to hurt Windstream's overall operating and financial performance, despite growth in business services.”

23. Aggressive Financial Risk, Weak business profile “We consider the business risk profile "weak," based on industry-wide competitive pressures from wireless substitution and cable telephony. In the third quarter of 2012, pro forma revenue and EBITDA declined 1% and 2%, respectively, year-over-year, due primarily to consumer voice access line losses of about 4%.”

24. Sell Entire Holding Has not increased dividend since 2006 Payout Ratio = 426% “I have been stuck as a customer for almost 6 months. My contract is about to be up and I have to say that I have never been so happy to see a "service provider" go down the road. From the first they have been HORRIBLE with customer service.” -Dissatisfied Winstream Customer at pissedconsumer.com