1. UAB Green and Gold Fund Waddell & Reed Financial Inc. (WDR)
Buy Presentation
January 19, 2012

2. Asset Management
Highly competitive industry, but offers significant economic profits (ROIC > WACC)
3 Levers for Earnings
Fund Flows
Market Appreciation
Economies of Scale (Operating Leverage)

3. Waddell & Reed Asset management and financial planning
Ivy Funds and Waddell & Reed Advisors Funds
Consistently ranked in top decile for fund families
Historical focus in large cap growth equities
Distribute funds through Advisor, Wholesale, and Institutional Channels
Future growth catalysts – promote Ivy Funds brand and focus on diversification of product line

4. Historical Fund Performance (2010)

5. Growth relative to peers

6. Fund Flows
Advisors channel was historically chief source of fund flows
Sticky AUMs with redemptions ~ 10%
Wholesale and institutional channels will drive future growth

7. Fund Flows and AUM by Channel

8. Valuation

9. Historical P/Es

10. Fundamental Data
This increase in energy will create a substantial increase in revenue since Energy makes up 25% of total revenue.

11. Key stats relative to peers

12. Why is WDR undervalued relative to peers?
Ivy Asset Strategy – flagship product with 33% of WDR’s AUM
World Allocation strategy targets all asset classes
Sharp 19% drop in fund value from July – Oct.
Recently downgraded to 3 from 4 stars by Morningstar

13. WASAX fund flows

14. WASAX Top Holdings

15. Long-term Outperformance

16. Stock Price: Buy Low, Sell High
This increase in energy will create a substantial increase in revenue since Energy makes up 25% of total revenue.

17. Stock Price
This increase in energy will create a substantial increase in revenue since Energy makes up 25% of total revenue.

18. SWOT Analysis Strengths Weaknesses Good relative performance
Product concentration
Historically strong fund flows
Financial market sensitivity
Strong advisor base reduces redemptions
Asset Strategy fund underperformance
Opportunities
Threats
Diversification among products
Deterioration in global equity markets
Inexpensive beta play
Higher correlation among asset classes
Growing awareness of Ivy Funds brand
Fierce competition for fund flows

19. Investment Thesis
As one of the more attractively priced asset managers, WDR currently provides a discounted beta play on the broader U.S. equity market. Longer-term, the successful performance and growing name recognition of the Ivy Funds brand should contribute to above average growth in AUM.

20. Portfolio Recommendation
BUY 500 shares of WDR at limit of ~$27 ($13,500)
Total position: 500 shares / 2.8% of portfolio (after purchase)
Financials
Target Sector Allocation: 10.5%,
Current Sector Allocation: 11.1%
Allocation after purchase: 13.9%
This increase in energy will create a substantial increase in revenue since Energy makes up 25% of total revenue.