1October 5, 2011

Bender TrustResearch Project

OverviewGreg Francfort

The Bender Trust

Started by alumni David Bender $120,000 principal Currently worth $1,600,000 Used for scholarships

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Greg Francfort

Rutgers undergraduate in engineering Wharton MBA graduate LIBOR co-founder First Boston Corp.

Sell-side analyst, Assoc. Research Director Neuberger Berman

Portfolio Manager, Research Director Securities Analysis at Columbia University

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Part I: Fundamentals

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Summary“There is no such thing as present tense in performance management.”

1980-2005S&P 500 12.5%Average mutual fund 10%Mutual fund investor 7.3%

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Anheuser Busch (BUD) $53.02

52 week range: 49.05 – 64.77 S&P 500: 1,156

2010A 2011E 2012E

EPS $3.13 $3.76 $4.22

P/E 16.9 14.0 12.5

S&P EPS $78 $85 $94

S&P P/E 14.9 11.9 10.9

Relative P/E 113% 118% 115%

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Hewlett Packard (HPQ) $24.72

52 week range: 21.50 – 49.39 S&P 500: 1,156

2010A 2011E 2012E

EPS $3.78 $4.84 $4.76

P/E 5.0 5.1 5.2

S&P EPS $78 $85 $94

S&P P/E 14.9 11.9 10.9

Relative P/E 34% 43% 48%

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Company Description

One paragraph What does the company do to make money? What products / services do they sell? What are the costs of production?

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Competitive Analysis

One page: Porters Five Forces Identify customers / suppliers What are the competitive advantages /

disadvantages? Size, market share? Is the business getting more or less

competitive? Is there a moat around the company? Be succinct!

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Part II: Analysis

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Earnings Outlook

What are the prospects the company can grow it’s business?

Growth from price or volume increases? What is the danger of cost increases? Likelihood of positive or negative earnings

surprise compared to consensus estimate of EPS for 2011?

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Build a Model? Revenue minus expenses = profits Profits / shares outstanding = EPS

Earnings Outlook

Forecast Revenue

Use 2010 as a base to forecast 2011 revenue Project 2011 growth for the industry What factors will drive growth? Try to use units or volume How might your company’s market share

change? Product or service price in 2011 vs. 2010?

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Case Study: BUD

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U.S. Beer Industry Unit Demand

Population Beer consumer specific

population Weather Income Gasoline prices, employment

rate Consumer taste Health issues Mad cow for beer? Low carb/healthier diets

Social trends Price of beer Price of substitutes Advertising by suppliers of

beer Advertising by suppliers of

substitutes Legal issues

Stricter penalties for DWI Changes in legal drinking age

New Products or Market segments

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Expenses

COGS Variable costs: raw materials to make and

deliver beer? Fixed costs: depreciation S,G&A Interest expense Income taxes

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Valuing the Earnings

Calculate P/E on consensus 2011 EPS forecast

Relative P/E to: S&P500 at 1097; S&P500 EPS 2010 est $85 S&P500 P/E on 2010 = 12.9x Does our Company deserve a premium or a

discount? Depends on growth and on risk

Other Valuation Tools

DCF P/Book Value per Share P/Asset value EV/EBITDA

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Recommendation

Convincing case of earnings surprise (positive or negative)

Persuasively assert the stock deserves a larger / smaller relative P/E multiple on 2009 EPS than present level

Possible takeover potential or some other corporate event that unlocks or reduces value

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Summary

Maximum three pages Five minute presentation

Only the important information

More effort = more knowledge

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Resources

Yahoo! Finance EDGAR

10-K, 10-Q, etc. Company websites Customers, employees, competitors,

suppliers Creative intellect!

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Stock List

Marlin Business Svcs. Corp. MRLN Traveler’s Insurance TRV

Oracle Corp. ORCL Fedex FDX

Apple AAPL BP BP

Wal-Mart Stores Inc. WMT Range Resources RRC

Lowe's Companies Inc. LOW Viacom, Inc. VIA-B

The Home Depot, Inc HD Valero Energy Corp. VLO

Comcast Corp. CMCSA Boeing Co. BA

CarMax Inc. KMX KapStone Packaging KS

Occidental Petroleum Corp. OXY Intel INTC

Packaging Corp. of America

AT&T

PKG

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Cedar Fair LP

Mohawk Industries

FUN

MHK

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Deadlines

Part I Late November/Early December

Part II April

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Questions?

gfrancfort@nb.com rulibor@gmail.com