Manual of Ideas Part.2

7/31/2019 Manual of Ideas Part.2

1/50

Value-oriented Equity Investment Ideas for Sophisticated Investors

2008-2012 by BeyondProxy LLC. All rights reserved. SUBSCRIBE TODAY! www.manualofideas.com March 2012 Page 51 of 169

MHR (Mark Rachesky)

Mark Rachesky worked for Carl Icahn from 1990 to 1996. He subsequently founded MHR Fund Management, which focuseson inefficient market sectors, including special situation equities and distressed investments. He runs a concentrated portfolio.

MOI Signal Rank Top Current Ideas of MHR Fund Management

Market Price Shares Owned Holdings P/E (Est.) Price/

Value Recent ' from Recent ' from as % of This Next Tang.

Company / Ticker ($mn) ($) Dec. 30 (000) Sep. 30 Co. Fund* FY FY Book

1 Key Energy Services / KEG 2,220 14.73 -5% 17,474 3% 12% 12% 16x 9x 5.1x

2 Leap Wireless / LEAP 715 9.09 -2% 23,534 0% 30% 10% n/m n/m n/m

3 Loral Space / LORL 2,081 67.76 4% 8,130 0% 26% 26% n/a n/a 2.3x

4 Ensco / ESV 12,869 55.80 19% 6,631 0% 3% 17% 18x 10x 1.7x

5 Lions Gate / LGF 1,698 11.84 42% 51,262 0% 36% 28% n/a n/a n/m

6 MetroPCS / PCS 3,554 9.81 13% 14,618 14% 4% 7% 13x 12x >9.9x

7 TIM Participacoes / TSU 21,391 27.63 7% 85 0% 9.9x

7 Rand Logistics / RLOG 136 7.69 18% 462 0% 3% 0% 26x 17x 2.9x

8 TIM Participacoes / TSU 21,391 27.63 7% 85 0%


2/50



MSD Capital (Glenn Fuhrman and John Phelan)

Glenn Fuhrman and John Phelan are co-managing partners and co-founders of MSD, having teamed up with Michael Dell tomanage his personal capital in the late 1990s. Fuhrman previously spent ten years at Goldman Sachs, where he was head ofthe Special Investments Group. Phelan previously spent five years at Eddie Lamperts ESL Investments.

MOI Signal Rank Top Current Ideas of MSD Capital




1 Bluenight Energy / BKEP 243 6.90 6% 3,577 0% 10% 3% n/m 20x n/m

2 Asbury Automotive / ABG 784 24.68 14% 3,686 0% 12% 12% 14x 12x 2.7x

3 DineEquity / DIN 898 49.77 18% 2,512 0% 14% 16% 12x 12x n/m

4 EchoStar / SATS 2,713 31.35 50% 3,615 4% 4% 14% >99x 68x 1.4x

5 First Opportunity Fund / FF 486 11.77 -5% 3,600 0% 9% 5% 15x 13x 1.8x

6 Tyler Tech / TYL 1,090 36.68 22% 1,356 0% 5% 6% 45x 37x n/m

7 Dominos Pizza / DPZ 1,889 32.46 -4% 2,886 -12% 5% 12% 20x 17x n/m

8 Macquarie Infrastr. / MIC 1,331 28.73 3% 3,095 -12% 7% 11% 10x 14x n/m

9 Wright Express / WXS 2,351 60.65 12% 1,609 -10% 4% 12% 14x 13x >9.9x

10 Energy XXI / EXXI 2,877 37.60 18% 550 0% 99x 68x 1.4x

3 Wright Express / WXS 2,351 60.65 12% 1,609 -10% 4% 12% 14x 13x >9.9x

4 Dominos Pizza / DPZ 1,889 32.46 -4% 2,886 -12% 5% 12% 20x 17x n/m

5 Asbury Automotive / ABG 784 24.68 14% 3,686 0% 12% 12% 14x 12x 2.7x

6 Macquarie Infrastr. / MIC 1,331 28.73 3% 3,095 -12% 7% 11% 10x 14x n/m

7 Tyler Tech / TYL 1,090 36.68 22% 1,356 0% 5% 6% 45x 37x n/m

8 First Opportunity Fund / FF 486 11.77 -5% 3,600 0% 9% 5% 15x 13x 1.8x9 Sunstone Hotel / SHO 1,156 9.74 20% 3,496 -11% 3% 4% n/a n/a 1.5x

10 Bluenight Energy / BKEP 243 6.90 6% 3,577 0% 10% 3% n/m 20x n/m

New Positions Sold Out Positions

None Atlas Pipeline Part. / APL

Portfolio Metrics Sector Weightings

Portfolio size $787 million

Top 10 as % of portfolio 97%

Median market value $1.2 billion

Average market value $1.4 billion

Median P/E (this FY) 14x

Median P/E (next FY) 14x

Median P / tangible book 1.7x

* Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludesportfolio cash, leverage, certain non-U.S. holdings, and non-equity securities.

Services70%

Transportation11%

Technology7%

Other11%


3/50



Pabrai Funds (Mohnish Pabrai)

Mohnish Pabrai is founder and managing partner of Pabrai Investment Funds, a family of value-oriented investmentpartnerships with a fee structure similar to that of the Buffett Partnerships of the 1950s and 60s, i.e. no management fee and25% performance fee above 6% annual hurdle rate. Pabrai Funds have a long-term track record vastly superior to that of theS&P 500 Index. Pabrai follows an investment strategy built upon the principles of Graham, Buffett and Greenblatt.

MOI Signal Rank Top Current Ideas of Pabrai Funds




1 Berkshire Hathaway / BRK.A 194,903 117,980 3% 0 >100% 9.9x

3 DIRECTV / DTV 32,111 45.51 6% 398 new


4/50



Paulson & Co. (John Paulson)

John Paulson founded his firm with $2 million in 1994. He gained notoriety by profiting hugely from the crisis of 2008.

MOI Signal Rank Top Current Ideas of Paulson & Co.



Company / Ticker ($mn) ($) Dec. 30 (000) Sep. 30 Co. Fund* FY FY Book1 Delphi Automotive / DLPH 9,861 30.04 39% 51,735 new 16% 12% 8x 7x 9.0x

2 SuperMedia / SPMD 44 2.84 8% 2,608 0% 17% 0% n/a n/a n/m

3 Motorola Mobility / MMI 11,815 39.45 2% 11,000 22% 4% 3% 64x 34x 3.2x

4 NovaGold / NG 2,347 8.48 0% 22,955 14% 8% 2% n/m n/m 9.0x

5 Goodrich Corp. / GR 15,694 125.35 1% 1,428 >100% 1% 1% 18x 16x >9.9x

6 AMC Networks / AMCX 3,032 42.19 12% 5,750 15% 8% 2% 22x 18x n/m

7 Medco Health / MHS 23,541 60.82 9% 2,000 >100% 100% 5% 0% n/m n/m 4.1x

Top Holdings of Paulson & Co. By Dollar Value

Market Price Shares Owned Holdings P/E (Est.) Price/Value Recent ' from Recent ' from as % of This Next Tang.


1 Delphi Automotive / DLPH 9,861 30.04 39% 51,735 new 16% 12% 8x 7x 9.0x

2 AngloGold Ashanti / AU 17,571 45.11 6% 34,291 -7% 9% 12% 10x 8x 3.9x

3 Anadarko Petroleum / APC 43,343 87.04 14% 9,580 -32% 2% 6% 26x 19x 3.5x

4 Hartford Financial / HIG 8,806 19.90 22% 37,520 -3% 8% 6% 6x 5x .4x

5 JPMorgan Chase / JPM 142,909 37.61 13% 18,520 0%


5/50



Pennant (Alan Fournier)

Alan Fournier started his career at Sanford Bernstein in 1988 and became a partner in 1990. He also worked for Rich Pzenasfirm and David Teppers Appaloosa, where he was responsible for global equities. Fournier founded Pennant in 2001.

MOI Signal Rank Top Current Ideas of Pennant Capital




1 Fidelity National / FIS 8,580 28.65 8% 8,815 11% 3% 6% 13x 11x n/m

2 Universal Stainless / USAP 267 39.01 4% 686 0% 10% 1% 10x 8x 1.7x

3 DaVita / DVA 7,851 83.97 11% 3,284 2% 4% 6% 17x 14x n/m

4 Apple / AAPL 460,050 493.42 22% 420 14%


6/50



Pershing Square (Bill Ackman)

Bill Ackman, managing member of Pershing Square Capital, is a value-oriented activist investor. He runs a concentratedportfolio with the largest ten equity investments accounting for the vast majority of his long book. Before the credit crunchdeveloped into a full-blown economic crisis, Ackman made a strong case for why MBIA (MBI) and AMBAC (ABK) wereovervalued and fundamentally more distressed than the market had judged at the time. On the long side, Ackman hasapproached large companies, including McDonalds (MCD) and Target (TGT), with proposals for unlocking value.

MOI Signal Rank Top Current Ideas of Pershing Square




1 Beam / BEAM 8,342 53.66 5% 20,819 new 13% 13% 23x 21x n/m

2 Fortune Brands Home / FBHS 3,070 19.72 16% 20,819 new 13% 5% 26x 20x n/m

3 Can. Pacific Railway / CP 12,742 74.63 10% 24,154 >100% 14% 21% n/a n/a 2.8x

4 General Growth / GGP 15,339 16.40 12% 72,234 0% 8% 14% n/m 96x 1.8x

5 J.C. Penney / JCP 9,063 42.44 21% 39,076 0% 18% 19% 35x 21x 2.0x

6 Alexander & Baldwin / ALEX 1,966 47.14 15% 3,562 0% 9% 2% 46x 25x 1.7x

7 Howard Hughes / HHC 1,941 51.15 16% 3,568 0% 9% 2% n/m >99x .9x

8 Kraft Foods / KFT 68,161 38.58 3% 21,161 -16% 1% 9% 17x 15x n/m

9 Family Dollar Stores / FDO 6,789 57.65 0% 8,385 -26% 7% 6% 16x 14x 5.9x10 Citigroup / C 96,263 32.93 25% 26,120 0% 100% 14% 21% n/a n/a 2.8x

2 J.C. Penney / JCP 9,063 42.44 21% 39,076 0% 18% 19% 35x 21x 2.0x

3 General Growth / GGP 15,339 16.40 12% 72,234 0% 8% 14% n/m 96x 1.8x

4 Beam / BEAM 8,342 53.66 5% 20,819 new 13% 13% 23x 21x n/m

5 Citigroup / C 96,263 32.93 25% 26,120 0% 99x .9x

10 Alexander & Baldwin / ALEX 1,966 47.14 15% 3,562 0% 9% 2% 46x 25x 1.7x


Beam (BEAM)

Fortune Brands Home / FBHS

Lowes / LOW


Portfolio size $8.7 billion



Average market value $23 billion





Services40%

Transportation23%

Consumer Non-Cyclical

22%

Other15%

FortuneBrandshasseparatedintoBeamandFortuneBrandsHome.

PershingSquarepreviouslyownedthecombinedcompany,FortuneBrands.


7/50



Sageview (Ed Gilhuly and Scott Stuart)

Ed Gilhuly and Scott Stuart were classmates at Stanford Business School. After graduating in 1986, Gilhuly joined KohlbergKravis Roberts & Co. in San Francisco, while Stuart started with KKR in New York. Each became a partner of KKR at theend of 1994. They continued serving in leadership roles at KKR until 2005, at which time they teamed up to start Sageview.The firm follows a highly concentrated, value-oriented investment approach.

MOI Signal Rank Top Current Ideas of Sageview Capital




1 COMSCORE / SCOR 744 22.51 6% 1,668 4% 5% 30% n/m >99x >9.9x

2 Liberty Interactive / LINTA 10,717 18.16 12% 1,550 0%


8/50



Scout (James Crichton)

James Crichton co-founded Scout with Adam Weiss in 1999. The firm runs a concentrated portfolio of undervalued equities.

MOI Signal Rank Top Current Ideas of Scout Capital


Value Recent'

from Recent'

fromas % of

This Next Tang.Company / Ticker ($mn) ($) Dec. 30 (000) Sep. 30 Co. Fund* FY FY Book

1 Google / GOOG 197,003 605.91 -6% 485 new


9/50



Second Curve (Tom Brown)

Tom Brown was a sell-side analyst focused on the financial services industry in the 1980s and 1990s, working at SmithBarney, PaineWebber and Donaldson Lufkin & Jenrette. In 1998, he joined Julian Robertsons Tiger Management. He struckout on his own two years later, founding Second Curve Capital, a value-oriented firm with a focus on the financial sector.

MOI Signal Rank Top Current Ideas of Second Curve




1 NewStar Financial / NEWS 499 10.08 -1% 2,434 16% 5% 12% n/a n/a .9x

2 Primus Guaranty / PRSG 197 5.60 14% 6,069 15% 17% 17% n/a n/a n/m

3 Taylor Capital / TAYC 269 13.17 35% 2,158 7% 11% 14% 18x 12x .9x

4 Bancorp / TBBK 269 8.10 12% 1,233 18% 4% 5% 13x 8x 1.0x

5 Synovus Financial / SNV 1,508 1.92 36% 4,300 30%


10/50



Southeastern (Mason Hawkins)

Mason Hawkins is chairman and CEO of Southeastern Asset Management, a firm he founded in 1975. Southeastern serves asinvestment adviser to the Longleaf Partners Funds, a family of value-oriented mutual funds. The firm has $22 billion ofassets under management, including $13 billion in separately managed accounts.

MOI Signal Rank Top Current Ideas of Southeastern




1 Quicksilver Resource / KWK 894 5.22 -22% 17,560 17% 10% 0% 44x n/m .8x

2 Level 3 Comms / LVLT 4,392 21.15 24% 40,013 >100% 19% 4% n/m n/m n/m

3 Saks / SKS 1,728 10.81 11% 17,815 31% 11% 1% 28x 22x 1.5x

4 Texas Industries / TXI 937 33.59 9% 8,194 5% 29% 1% n/m n/m 1.4x

5 Martin Marietta / MLM 3,985 87.20 16% 5,983 8% 13% 2% 35x 26x 5.1x

6 InterContinental H. / IHG 6,423 21.93 22% 19,837 76% 7% 2% 18x 17x >9.9x

7 Wendys Arbys / WEN 2,032 5.21 -3% 34,320 12% 9% 1% 29x 22x n/m

8 Travelers / TRV 24,511 59.38 0% 18,071 10% 4% 4% 10x 10x 1.2x

9 Lamar Advertising / LAMR 2,956 31.80 16% 8,146 24% 9% 1% >99x >99x n/m

10 Madison Sq. Garden / MSG 2,361 31.15 9% 5,941 8% 8% 1% 33x 25x 9.5x

Top Holdings of Southeastern By Dollar Value




1 Dell / DELL 31,888 17.75 21% 141,422 -3% 8% 10% 8x 9x >9.9x

2 Chesapeake Energy / CHK 14,590 22.13 -1% 87,391 -1% 13% 8% 8x 11x 1.1x

3 Cemex / CX 8,555 8.42 56% 174,985 -1% 17% 6% n/m n/m .6x

4 Loews Corp. / L 15,111 38.10 1% 37,636 -2% 9% 6% 12x 12x .8x

5 DIRECTV / DTV 32,111 45.51 6% 31,256 -9% 4% 6% 13x 10x n/m

6 Walt Disney / DIS 74,293 41.45 11% 33,123 -1% 2% 6% 14x 12x >9.9x

7 FedEx / FDX 29,961 95.27 14% 11,740 4% 4% 5% 15x 13x 2.2x

8 Aon / AON 15,699 48.56 4% 22,949 -1% 7% 5% 14x 12x n/m9 Travelers / TRV 24,511 59.38 0% 18,071 10% 4% 4% 10x 10x 1.2x

10 Liberty Interactive / LINTA 10,717 18.16 12% 53,770 -3% 9% 4% 25x 18x n/m


None Fair Isaac / FICO

News Corp. / NWSA

Telephone & Data / TDS


Portfolio size $24 billion



Average market value $21 billion





Services35%

Financial24%

Capital Goods13%

Other28%


11/50


12/50



Tiger Global (Chase Coleman)

Chase Coleman, a descendant of early New York Governor Peter Stuyvesant, worked for Julian Robertsons TigerManagement prior to founding Tiger Global in 2001. He has been an active investor in global technology companies.

MOI Signal Rank Top Current Ideas of Tiger Global




1 Google / GOOG 197,003 605.91 -6% 725 >100% 100% 3% 11% 24x 18x >9.9x

3 MakeMyTrip / MMYT 871 23.46 -2% 7,185 0% 19% 3% n/a n/a 8.7x

4 Liberty Global / LBTYA 13,172 48.55 18% 13,639 4% 5% 11% n/m 32x n/m

5 Polypore International / PPO 2,023 43.50 -1% 1,000 100% 2% 1% 19x 15x n/m

6 Baidu.com / BIDU 49,200 140.76 21% 2,387 31% 9.9x

7 Visa / V 92,635 113.90 12% 3,003 11% 9.9x

8 Liberty Media / LMCA 10,589 85.15 9% 1,908 >100% 2% 3% 33x 51x 2.6x

9 MasterCard / MA 50,284 396.14 6% 771 0% 9.9x

10 Coinstar / CSTR 1,745 56.40 24% 1,500 new 5% 1% 14x 12x 6.8x

Top Holdings of Tiger Global By Dollar ValueMarket Price Shares Owned Holdings P/E (Est.) Price/



1 Yandex / YNDX 6,870 21.27 8% 53,024 -2% 16% 18% 36x 26x 8.1x

2 Apple / AAPL 460,050 493.42 22% 1,620 -29% 100% 3% 11% 24x 18x >9.9x

4 Liberty Global / LBTYA 13,172 48.55 18% 13,639 4% 5% 11% n/m 32x n/m

5 Google / GOOG 197,003 605.91 -6% 725 >100%


13/50



ValueAct (Jeffrey Ubben)

Prior to founding ValueAct in 2000, Jeffrey Ubben was a managing partner at Blum Capital for more than five years.Previously, he spent eight years at Fidelity where he managed the Fidelity Value Fund. ValueActs strategy combinesintensive due diligence, a concentrated portfolio, and active involvement in the value creation at those investments.

MOI Signal Rank Top Current Ideas of ValueActMarket Price Shares Owned Holdings P/E (Est.) Price/



1 Adobe Systems / ADBE 15,905 32.21 14% 24,621 47% 5% 13% 13x 12x >9.9x

2 Motorola Solutions / MSI 15,430 47.40 2% 24,001 0% 7% 18% 16x 14x 4.1x

3 Valeant Pharma / VRX 14,310 47.91 3% 15,095 0% 5% 12% n/a n/a n/m

4 C.R. Bard / BCR 8,207 95.67 12% 5,873 0% 7% 9% 14x 14x >9.9x

5 Moodys / MCO 8,534 38.44 14% 16,577 0% 7% 10% 15x 13x n/m

6 CB Richard Ellis / CBG 5,861 17.87 17% 21,254 >100% 6% 6% 14x 12x n/m

7 Willis Group / WSH 6,776 39.04 1% 8,578 0% 5% 5% 14x 13x n/m

8 Sara Lee / SLE 11,714 19.80 5% 20,405 0% 3% 6% 21x 19x >9.9x

9 Rockwell Collins / COL 8,774 59.03 7% 9,342 0% 6% 9% 13x 12x >9.9x

10 Fidelity National / FNF 3,879 17.70 11% 12,583 0% 6% 4% 16x 12x 2.7x

Top Holdings of ValueAct By Dollar Value




1 Motorola Solutions / MSI 15,430 47.40 2% 24,001 0% 7% 18% 16x 14x 4.1x

2 Adobe Systems / ADBE 15,905 32.21 14% 24,621 47% 5% 13% 13x 12x >9.9x

3 Valeant Pharma / VRX 14,310 47.91 3% 15,095 0% 5% 12% n/a n/a n/m

4 Moodys / MCO 8,534 38.44 14% 16,577 0% 7% 10% 15x 13x n/m

5 C.R. Bard / BCR 8,207 95.67 12% 5,873 0% 7% 9% 14x 14x >9.9x

6 Rockwell Collins / COL 8,774 59.03 7% 9,342 0% 6% 9% 13x 12x >9.9x

7 Verisign / VRSN 5,823 36.61 2% 11,767 -8% 7% 7% 19x 16x n/m

8 Sara Lee / SLE 11,714 19.80 5% 20,405 0% 3% 6% 21x 19x >9.9x

9 CB Richard Ellis / CBG 5,861 17.87 17% 21,254 >100% 6% 6% 14x 12x n/m

10 Willis Group / WSH 6,776 39.04 1% 8,578 0% 5% 5% 14x 13x n/m


None Gartner / IT

World Fuel Services / INT


Portfolio size $6.2 billion



Average market value $7.2 billion





Capital Goods27%

Health Care21%

Technology20%

Other33%


14/50



Weitz Funds (Wally Weitz)

Wally Weitz, sometimes called The Other Oracle of Omaha, founded Wallace R. Weitz & Co. in 1983 with $10 millionunder management. The firm has since grown into a $2 billion asset manager best known for the Weitz Value Fund.

MOI Signal Rank Top Current Ideas of Weitz



1 Intelligent Systems / INS 15 1.64 2% 2,270 0% 25% 0% n/a n/a 2.5x

2 FLIR Systems / FLIR 3,883 24.90 -1% 591 >100% 100%


15/50



West Coast (Lance Helfert and Paul Orfalea)

Lace Helfert and Paul Orfalea co-founded West Coast Asset Management in 2000. Helfert, who directs the firmsinvestments, previously oversaw a $1 billion portfolio at Wilshire Associates. Orfalea is the founder of Kinkos copy shops.West Coast invests in undervalued equities and follows a concentrated investment approach.

MOI Signal Rank Top Current Ideas of West Coast Asset Management




1 Chevron / CVX 209,664 105.28 -1% 1 0%


16/50



Wintergreen (David Winters)

David Winters joined Mutual Series in 1987 and was mentored by famed value investor Michael Price. Winters becamepresident and CIO of Mutual Series in 2001. He left in 2005 to form Wintergreen Advisers and manage the WintergreenFund, a mutual fund that follows an active, value-oriented investment approach.

MOI Signal Rank Top Current Ideas of Wintergreen Advisers




1 Philip Morris / PM 139,723 80.44 2% 948 2%


17/50



WL Ross & Co. (Wilbur Ross)

Wilbur Ross, born in 1937, has become well-known for restructuring failed companies in a variety of industries. He has beena leveraged buyout and distressed investor in steel, coal, telecom, financial and other companies.

MOI Signal Rank Top Current Ideas of WL Ross & Co.



1 EXCO Resources / XCO 1,514 7.05 -33% 28,426 3% 13% 12% 11x 15x 1.0x

2 Bank of Ireland / IRE 5,603 7.35 73% 73,333 new 10% 32% n/a n/a .7x

3 BankUnited / BKU 2,221 22.83 4% 13,721 0% 14% 19% 13x 14x 1.5x

4 Air Lease / AL 2,545 25.27 7% 4,250 0% 4% 6% 46x 19x 1.2x

5 Assured Guaranty / AGO 3,189 17.50 33% 19,835 14% 11% 21% 6x 6x .7x

6 Sun Bancorp NJ / SNBC 240 2.80 16% 21,279 0% 25% 4% 93x 23x .9x

7 Cascade Bancorp / CACB 277 5.86 34% 11,469 0% 24% 4% n/m n/m 1.8x

8 Key Energy Services / KEG 2,220 14.73 -5% 348 -5%


18/50



Profiling 20 Superinvestor Holdings

Ambassadors Group (EPAX) Lane Five

Services: Personal Services SPOKANE WA, 509-568-7901 www.ambassadorsgroup.com

Trading Data Consensus EPS Estimates Valuation

Price: $5.45 (as of 2/24/12) Month # of P/E FYE 1/1/12 32x

52-week range: $3.88$11.11 Latest Ago Ests P/E FYE 12/31/12 32x

Market value: $95 million This quarter -$0.49 -$0.48 1 P/E FYE 12/31/13 24x

Enterprise value: $37 million Next quarter 0.75 0.69 1 P/E FYE 12/31/14 n/a

Shares outstanding: 17.5 million FYE 12/31/12 0.17 0.09 1 EV/ LTM revenue 0.6x

Ownership Data FYE 12/31/13 0.23 0.18 1 EV/ LTM EBIT 17x

Insider ownership: 2% FYE 12/31/14 n/a n/a n/a P / tangible book 1.5x

Insider buys (last six months): 7 LT growth n/a n/a n/a Greenblatt Criteria

Insider sales (last six months): 4 EPS Surprise Actual Estimate LTM EBIT yield 6%

Institutional ownership: 83% 2/8/12 -$0.45 -$0.45 LTM pre-tax ROC n/m

Operating Performance and Financial Position

($ millions, except Fiscal Years Ended December 31, LTME FQE FQE

per share data) 2005 2006 2007 2008 2009 2010 2011 12/31/11 12/31/10 12/31/11

Revenue 69 89 115 98 99 76 66 66 5 2

Gross profit 67 78 96 79 84 66 59 59 4 2

Adjusted operating income 31 34 42 25 30 10 2 2 -11 -11

Adjusted net income 22 27 31 19 20 8 3 3 -7 -8Adjusted diluted EPS 1.10 1.30 1.58 0.96 1.06 0.42 0.17 0.17 -0.35 -0.45

Dividend 0.28 0.37 0.46 0.46 0.24 0.24 0.24 0.24 0.06 0.06

Shares out (avg) 20 21 20 19 19 19 18 18 19 17

Cash from operations 38 37 16 25 16 22 -7 -7 13 8

Capex 2 7 19 5 6 5 4 4 1 1

Free cash flow 36 31 -3 20 10 16 -10 -10 12 7

% of revenue:

Gross profit 96.0% 87.1% 83.8% 80.6% 85.0% 86.9% 88.9% 88.9% 91.7% 95.0%

Adjusted operating income 44.3% 38.4% 36.5% 25.9% 30.6% 13.1% 3.2% 3.2% -218.8% -560.0%

Capex 3.3% 7.3% 16.9% 5.3% 6.0% 7.1% 5.4% 5.4% 22.9% 35.0%

Cash, investments 117 133 85 74 81 79 59 59 79 59

Total current assets 119 140 93 83 88 86 74 74 86 74

PP&E, net 5 12 28 29 29 28 26 26 28 26

Total assets 125 154 122 124 128 129 114 114 129 114

Tangible assets 125 154 122 115 118 116 101 101 116 101

Current liabilities 58 70 49 55 36 41 35 35 41 35

Debt 1 0 0 0 0 0 0 0 0 0

Total liabilities 59 70 49 57 37 43 37 37 43 37

Tangible equity 67 84 72 58 81 73 64 64 73 64

TBV / tangible assets 53% 55% 59% 50% 69% 63% 63% 63% 63% 63%

TBV per share 3.27 4.09 3.69 3.02 4.25 3.82 3.60 3.65 3.86 3.65

Ten-Year Stock Price Performance and Trading Volume Dynamics

$0

$5

$10

$15

$20

$25

$30

$35

$40

$45

Feb 12Feb 11Feb 10Feb 09Feb 08Feb 07Feb 06Feb 05Feb 04Feb 03


19/50



BUSINESS OVERVIEW

Ambassadors is an educational travel company focused oninternational travel for students. The company has operatedthe People to People travel programs since 1967.

People to People is a non-profit organization founded byPresident Eisenhower and originally administered by theU.S. State Department. Ambassadors Group has exclusiverights to develop student programs for kindergarten throughhigh school students through 2020 and non-exclusive rightsto develop other programs using the People to People brand.

INVESTMENT HIGHLIGHTS

x Competitive edge due to association with People

to People, 45 years of travel experience, andacademic credit granted for the programs by highschools and colleges. The company also benefitsfrom the perception that its programs improvestudents chance of admission to top colleges.

x Strong results prior to latest recession.Netincome per share grew from $0.56 in 2000 to $1.55

in 2007 and enrolled delegates more than doubled.Bookings were slow to recover after the 2001recession but growth accelerated rapidly after 2003.

x Cash and securities of $58.6 million and no debt

as of 12/31/2011 provide downside protection.

INVESTMENT RISKS & CONCERNS

x 55% decline in participants since 2007. Declinecoincided with a severe recession, but enrollmenthas continued to decline during the recovery. As ofFeb. 8, enrolled revenue for 2012 programs wasdown 10.5% from the same point in 2011*.

x Opex control has been lacking. Management aimsto cut expenses by $4.5-$5.5 million in 2012.* Opexremains elevated as a percentage of revenue.

x Geopolitical risks. Despite the companys goodreputation for safety, perceived increases in the riskof terrorism or war may decrease future enrollment.

x People to People deal expires in 2020. Renewalterms may have a large impact on equity value.

CATALYSTS

x Management forecasts a decline in revenues to$135-145 million in 2012 with net income of $3-5million, reflecting travel decisions made in 2011.The market may not fully appreciate the fact thateconomic strength this year will not be fullyapparent until 2013 bookings are made in late 2012.

* Q4 2011 earnings release: http://bit.ly/wYBPqC

We thank Ravi Nagarajan for his analysis of Ambassadors Group.

SELECTED OPERATING DATA

FYEDecember31 2006 2007 2008 2009 2010 2011Revenue($mn)1 219 277 229 204 162 155Change(y-y) 22% 26% -17% -11% -20% -4%Enrolleddelegates2 (000) 43.1 52.7 41.9 34.2 26.7 23.9Change(y-y) 14% 22% -20% -18% -22% -10%Selecteditemsas%ofrevenue1:Sales&marketing 14% 14% 18% 19% 26% 26%General&administrative 5% 6% 5% 7% 8% 11%Depreciation 1% 1% 1% 2% 3% 3%Capex3 3% 7% 2% 3% 3% 2%Grossmargin 35% 35% 34% 41% 41% 38%Operatingincome 16% 15% 11% 15% 6% 1%Netincome 12% 11% 8% 10% 5% 2%Freecashflow4 14% 4% 9% 5% 11% -6%%ofrevenuebytraveldestination:Europe 49% 57% 61% 57% 55% n/aSouthPacific 29% 24% 16% 19% 24% n/aAsia(primarilyChina) 14% 14% 17% 20% 14% n/aOther 8% 5% 6% 4% 7% n/a

Selecteditemsas%oftotalassets:Cashandequivalents 24% 14% 6% 6% 5% 17%Securities 63% 56% 56% 58% 57% 35%Prepaidprogramcosts 2% 3% 3% 2% 3% 12%Propertyandequipment 8% 23% 23% 23% 21% 23%Intangiblesandgoodwill5 0% 0% 8% 8% 10% 12%Selectedstatistics($000):Revenueperdelegate 5.1 5.3 5.4 5.9 6.0 6.3Grossmarginperdelegate 1.8 1.8 1.8 2.4 2.4 2.3Marketingspend/delegate6 0.6 0.6 0.9 1.2 1.5 1.8Dilutednetincome/share 1.25 1.55 0.95 1.05 0.42 0.17Dividendspershare 0.37 0.46 0.46 0.24 0.24 0.24Returnonequity 35% 40% 27% 26% 9% 4%' sharesoutstanding 0% -6% -3% 1% -4% -4%

1 Includes gross revenue from non-directly delivered programs. All revenue,percent of revenue, and margin figures in the table are calculated based ontotal gross revenues including non-directly delivered programs. The companysGAAP financial statements report revenue as net revenue from non-directlydelivered programs plus revenue from directly delivered programs.2 Delegates are mostly student participants of Ambassadors travel programs.3 2007 capex of $19.3 million included $12.8 million for construction of new HQ.4 FCF = Cash from operations less purchase of property, plant, and equipment.5 Substantially all of the goodwill is related to 2008 acquisition of BookRags for$12.3 million, of which $9.3 million was paid in cash with the balance paid viaissuance of 233,584 shares valued at $2.9 million.6 Spending on marketing primarily generate business the following year.Therefore, we track marketing spending per delegate t raveled the next year (forexample, marketing spending in 2010 per delegate traveled in 2011).

MAJOR HOLDERS

Chairman Ueberroth 4% | CEO Thomas 4% | Other insiders2% | Stadium Capital 8% | FMR 7% | Bandera 7%

RATINGS

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss? MANAGEMENT Capable and properly incentivized?

FINANCIAL STRENGTH Solid balance sheet? MOAT Able to sustain high returns on invested capital?

EARNINGS MOMENTUM Fundamentals improving? MACRO Poised to benefit from economic and secular trends?

THE BOTTOM LINE

Ambassadors has a long-term record of impressive growth and returns on capital. Recent profitability has been pressured byrevenue declines and high opex. The company has a strong balance sheet and should benefit from a recovery, assumingenrollment eventually returns to the 40-50,000 level that prevailed prior to the recession. Improving economic conditions in2012 will not be fully reflected in travel bookings until 2013. It is worth noting that Ambassadors was slow to bounce backafter the 2001 recession. Similar dynamics may be at work currently due to the long lead time required to generate travelbookings. The current valuation appears to be giving little credit to recovery potential over the next two to three years.


20/50



AMBASSADORS GROUP EQUITY FAIR VALUE UNDER SELECTED VALUATION SCENARIOS

(in thousands except per-share amounts) Conservative Base Case Aggressive

Valuation MethodologyValuation for the operating business is based on forecasted 2013 revenue

and net earnings by business segment with various P/E multiples assigned.We add back deployable cash not used in the operating business.

Ambassador Programs and other:

Managements 2012 revenue guidance (direct & indirect) 130,000 135,000 140,000Revenue growth in 2013 0% 10% 20%

Projected revenue in 2013 (direct & indirect) 130,000 148,500 168,000

Gross margin percentage 36% 37% 38%

Projected gross margin in 2013 - Ambassador Programs 46,800 54,945 63,840

BookRags segment:

Projected 2013 revenue 3,500 3,750 4,000

Gross margin percentage 85.0% 87.5% 90.0%

Projected gross margin in 2013 - BookRags 2,975 3,281 3,600

Total gross margin - 2013, both segments 49,775 58,226 67,440

Sales and marketing expense - 2013:

Sales and marketing as percentage of total revenue 26.0% 24.0% 22.0%

Sales and marketing expenses 34,710 36,540 37,840

General and administrative expense - 2013:

General and administrative as percentage of total revenue 10.0% 9.0% 8.0%

General and administrative expenses 13,350 13,703 13,760

Operating income - 2013: 1,715 7,984 15,840

Tax rate 30% 30% 30%

Net income - 2013 1,201 5,589 11,088

Earnings multiple 10 12 14

Valuation of operating business excluding cash 12,005 67,064 155,232

Plus deployable cash as of 12/31/2011 38,580 38,580 38,580

Valuation of Ambassadors Group 50,585 105,644 193,812Shares outstanding at 11/2/2011 17,493 17,493 17,493

Valuation per share 2.89 6.04 11.08

Implied upside/downside to recent price ($5.50 as of 2/14/12) -47% 10% 101%

Implied valuation to tangible book at 12/31/11 0.79 1.66 3.04

Ambassador Programs and Other: Based on 2/8/2012 press release, management is guiding fo r total revenues between $135-$145 million for all operations.We use a range from $130-$140 million for the Ambassador program given that guidance also includes revenue from BookRags. We assume revenue growth of 0to 20% for 2013. Gross margin is between 36-38% based on managements guidance for 2012. Note that even the aggressive case projects revenues for 2013only slightly higher than 2010 and well below 2009 revenue.

BookRags Segment: Projection of between $3.5-$4.0 million in revenue for 2013 with margins between 85% and 90%. Management has not provided specificguidance for this segment and the estimate is approximate. BookRags was acquired for $12.3 million on May 15, 2008.

Sales and Marketing Expense: Sales and marketing expense as a percentage of total gross revenues (direct and indirect) averaged 16% from 2001 to 2009before climbing to 26% in 2010 and 2011. Sales and marketing spending was $40.4 million in 2011. We assume some success in cost cutting over the next twoyears based on managements guidance but have not assumed a return to 2001-2009 levels as a percentage of total gross revenues.

General and Administrative Expense: General and administrative expense as a percentage of total gross revenues (direct and indirect) averaged 5% from 2001

to 2009 but climbed to 11% for 2011. Spending was $16.6 million in 2011 but this included $1.9 million in legal fees that should be non-recurring. We do notassume a full return to 2001-2009 averages but anticipate spending to be at levels materially lower than 2011 and on par with 2010 levels.

Tax Rate and Net Income: We do not include investment income in this calculation as we are attempting to evaluate the value of the operating business only andwill add back deployable cash separately. As a result, we assume a tax rate closer to the statutory rate compared to the actual rate in recent years which hasbeen influenced by a large portfolio of municipal securities with tax exempt status.

Valuation: We use an earnings multiple between 10 and 14 to arrive at an intrinsic value estimate for the operating business and then add back deployable cashas of 12/31/2011. Deployable Cash is a non-GAAP metric defined by management as the sum of cash equivalents, short term securities and pre-paid programcosts less participants deposits, accounts payable, accruals, and other liabilities. The intent is to measure the cash available for investment opportunities. Thiscash is theoretically available for distribution to shareholders.

Source: Company filings, Ravi Nagarajan analysis, assumptions and estimates, The Manual of Ideas.

2008 2012 by BeyondProxy LLC. All rights reserved. SUBSCRIBE TODAY! www.manua o i eas.com March 2012

Managementsguidancefor2012from2/8/2012earningsreleaseandQ42011conferencecall:- Consolidatedgrossrevenuesforallprogramsandoperationsbetween$135-$145million.- Consolidatedgrossmarginas%ofgrossrevenuesof36to38percent- Netincomebeforeanyspecialitemsbetween$3millionand$5million- Variableexpensestobecutby$4.5to$5.5million,butnetcutmaybelowerduetoredirectingsomeofsavingstorestructuremarketinginitiatives.


21/50



AMBASSADORS GROUP CASH FLOW ANALYSIS, 2002-2011

($inthousands) 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002Cashflowsfromoperatingactivities:NetIncome 2,956 8,116 20,337 18,546 31,047 26,692 22,410 15,647 10,154 10,798AdjustmentstoreconcilenetincometoOCF:Depreciationandamortization 4,742 4,646 4,364 3,426 2,532 1,447 1,175 962 935 775Stock

-basedcompensation 1,475 2,022 1,989 2,061 1,952 2,057 455 45 - -

Deferredincometaxbenefit 420 1,399 568 1,034 (71) (748) 130 894 44 157LossondispositionandimpairmentofPP&E 246 1,480 428 (25) 155 - - - - -Excess(shortfall)taxbenefitfromstockcomp (160) 441 (92) 134 (2,707) (2,376) - - - -Lossonforeigncurrencycontracts - - 962 759 - - - - - -Equityinearningsoninvestment - - - - - (25) (11) - (33) -Changeinassetsandliabilities:Accountsreceivableandotherassets 581 68 (45) (1,147) 34 (608) 57 110 (142) 52Prepaidprogramcostsandexpenses (10,069) (55) 985 (533) 162 (2,190) 865 (853) (92) (15)Accountspayable,accruedexpenses,other 194 223 (329) (966) 1,260 (230) 3,856 713 4,070 265Participants deposits (7,040) 3,299 (13,029) 1,443 (17,928) 13,188 8,855 10,388 2,319 9,350

Netcashprovidedbyoperatingactivities (6,655) 21,639 16,138 24,732 16,436 37,207 37,792 27,906 17,255 21,382Cashflowsfrominvestingactivities:Purchaseofavailable-for-salesecurities (48,693) (59,331) (58,039) (138,995)

28,948 (6,468) (13,296) (19,086) (12,069) 1,459Proceedsfromavailable-for-salesecurities 83,035 59,764 52,716 137,385PurchaseandconstructionofPP&E (3,101) (4,461) (5,157) (5,042) (19,271) (6,455) (2,296) (1,911) (1,070) (200)ProceedsfromsaleofPP&E 49 253 19 51 - - - - - -Purchaseofintangibles (493) (941) (726) (207) - - - - - -Adjustmentstogoodwill - - (13) - - - - - - -Netcashpaidforacquisition - - - (9,373) - - - - - -Netcashprovidedbyinvestingactivities 30,797 (4,716) (11,200) (16,181) 9,677 (12,923) (15,592) (20,997) (13,139) 1,259Cashflowsfromfinancingactivities:Contributionfromparentcompany - - - - - - - - - 10,400Dividendtoparentcompany - - - - - - - - - (20,493)Repurchaseofcommonstock (7,590) (13,406) (609) (10,156) (41,163) (10,710) (3,741) (2,568) - -Dividendpaymenttoshareholders (4,258) (4,594) (4,581) (8,801) (8,940) (7,655) (5,729) (4,630) (1,100) -Proceedsfromexerciseofstockoptions 227 700 838 398 1,969 1,753 3,328 1,515 1,147 425Excesstaxbenefitfromstockcomp 160 (441) 92 (134) 2,707 2,376 - - - -Capitalleasepaymentsandother - - (11) (150) (189) (180) (178) (142) (13) -Netcashprovidedbyfinancingactivities (11,461) (17,741) (4,271) (18,843) (45,616) (14,416) (6,320) (5,825) 34 (9,668)Netincreaseincashequivalents 12,681 (818) 667 (10,292) (19,503) 9,868 15,880 1,084 4,150 12,973

Freecashflow:Cashflowfromoperatingactivities (6,655) 21,639 16,138 24,732 16,436 37,207 37,792 27,906 17,255 21,382LesspurchaseofPP&E (3,101) (4,461) (5,157) (5,042) (19,271) (6,455) (2,296) (1,911) (1,070) (200)AdjustmentforHQbuildingin2007 - - - - 12,800 - - - - -Freecashflow (9,756) 17,178 10,981 19,690 9,965 30,752 35,496 25,995 16,185 21,182

FCF asapercentageofnetincome n/a 212% 54% 106% 32% 115% 158% 166% 159% 196%D&A as%ofgrossrevenue (indirect&direct) 3% 3% 2% 1% 1% 1% 1% 1% 1% 1%Capexas%ofgrossrevenue (indirect&direct) 2% 3% 3% 2% 7% 3% 1% 1% 1% 0%FCF as% ofgrossrevenue (indirect&direct) -6% 11% 5% 9% 4% 14% 20% 18% 15% 22%

Source: Company filings, Ravi Nagarajan analysis, The Manual of Ideas.

- -

- -

Increaserepresentsacceleratedpaymentsmadeforairlinecostsrelatedto2012travelpro ram

- - - - - -

- - - - - -

- - - - - -

BookRagsacquisition:TotalpurchasepriceforBookRagswas$12.3million,ofwhich$9.4millionwaspaidincashwiththebalanceinstock(233,584sharesworth$2.9million .Therehavebeennootherac uisitionsoverthepastten

- - - -

-

$140million,or79%ofFCF,returnedtoshareholders


22/50



Baker Hughes (BHI) GreenhavenEnergy: Oil Well Services & Equipment, Member of S&P 500 HOUSTON TX, 713-439-8600 www.bakerhughes.com




Market value: $22.7 billion This quarter $1.12 $1.15 30 P/E FYE 12/31/13 9x

Enterprise value: $25.7 billion Next quarter 1.12 1.15 30 P/E FYE 12/31/14 8xShares outstanding: 436.5 million FYE 12/31/12 4.91 5.08 33 EV/ LTM revenue 1.3x


Insider ownership:


23/50



BUSINESS OVERVIEW

Baker Hughes is an integrated oilfield service company withworldwide operations. The company has 57,000+ employees.Baker Hughes products and services fall into two groups:

Drilling and Evaluation includes drill bits, drilling services,wireline services, and drilling and completion fluids.

Completion and Production includes completion, wellboreintervention, intelligent production systems, artificial lift,tubular services, upstream chemicals, and pressure pumping.


x Large supplier of oilfield services to oil and gas

industry,benefiting from E&P companies capexfor exploration, field development and production.Baker Hughes has a global presence, with slightlymore than one-half of revenue from North America.The latter has had a better pretax margin profile.

x Technology leader. In the GOM, oil productionbegan in 2011 from the worlds deepest water depthsub-sea wells using an innovative subsea separation

and boosting system. Baker Hughes also completedthe installation of the worlds first deepwater, fixed-fiber integration into the sand face completion.

x Acquired BJ Services for $6.9 billion in cash andstock in April 2010, adding a leader in the areas ofpressure pumping, stimulation and fracturing.

x Earnings growth continues, with EPS rising from$2.06 in 2010 to $4.20 in 2011. Analyst estimatescall for EPS of $4.91 in 2012 and $5.76 in 2013.


x Cyclical, rather capital-intensive business,

dependent on expectations for oil and natural gasprices, economic growth, and hydrocarbon demand.In 2011, capex of $2.5 billion materially exceededD&A of $1.3 billion, negatively impacting FCF. Wedo not endorse managements use of EBITDA dueto the very significant capex needs of the business.

x Well-served, competitive market that includes themajor companies such as Schlumberger, Halliburtonand Weatherford, where the breadth of capabilitiesis a key differentiator. Other competitors participatein only a few product lines, for example, NationalOilwell Varco, Champion Technologies, Ecolab,Newpark Resources, and Frac Tech Services.

POTENTIAL CATALYSTS

x Continuing industry shift to oil could increasedemand by ~20% due to greater service intensity

MAJOR HOLDERS

Management


24/50



BAKER HUGHES EQUITY FAIR VALUE UNDER SELECTED VALUATION SCENARIOS

Conservative Base Case Aggressive

Valuation methodology: Valuation methodology: Valuation methodology:Based on revenue for the twelve monthsended December 31, 2011 and averageEBIT margin for past seven fiscal years

Based on average diluted EPS fromcontinuing operations for the past seven

fiscal years

Based on median consensus EPSestimate for the fiscal year ending

December 30, 2013

TTM net sales: $20 billion average of Consensus FY13 EPS estimate: $5.76

multiplied by FY05 continuing ops EPS: $2.56 minusAverage 7-year EBIT margin: 16.3% FY06 continuing ops EPS: $7.21 Assumed haircut to FY13 consensus

equals FY07 continuing ops EPS: $4.73 EPS estimate: 5% * $5.76

Estimated EBIT: $3.2 billion FY08 continuing ops EPS: $5.29 equals

multiplied by FY09 continuing ops EPS: $1.35 Revised FY13 EPS estimate: $5.47

Assumed fair value multiple of EBIT: FY10 continuing ops EPS: $2.06 multiplied by6x FY11 continuing ops EPS: $3.97 Corresponding industry P/E: 13.5x (*)

equals equals equals

Estimated fair enterprise value of Average seven-year EPS: $3.88 Industry multiple-implied fair value:Baker Hughes: $19 billion minus $32 billion ($74 per share)

plus Assumed adjustment to average multiplied by

Cash, ST investments: $1.1 billion seven-year EPS: 20% * $3.88 Assumed BHI multiple as aminus equals percentage of the industry multiple:

Total debt: $4.1 billion Revised normalized EPS: $4.66 110%

equals multiplied by (14.9x fair value P/E multiple)

Estimated fair value of the common Assumed fair value P/E: 15x equalsequity of Baker Hughes: equals Estimated fair value of the common

$16 billion, or $38 per share Estimated fair value of the common equity of Baker Hughes:

(based on 440 million shares out) equity of Baker Hughes: $35 billion ($81 per share)

28% downside from the recent $30 billion ($70 per share) (based on 440 million shares out)

stock price ($52 per share) (based on 440 million shares out) 56% upside to the recent

34% upside to the recent stock price ($52 per share)

stock price ($52 per share)

(*) Represents Oil Well Services & Equipment industry median multiple.Source: Company filings, The Manual of Ideas analysis, assumptions and estimates.

BAKER HUGHES ANALYSIS OF SELECTED COMPARABLE COMPANIES

TradingData PublicMarketValuation OperatingPerformance Tang.(Clicktovisit WR5HDFK Tang. TTM EPSYield LTM Rev./ 5HY %TTMRev. Equity/relevantwebsites) 7-Year MV EV Book/ FCF This Next Rev./ Empl. Last Gross Adj. Tang.

Low High ($mn) ($mn) MV Yield TTM FY FY EV ($000) TTM Q Profit EBIT AssetsHalliburton/HAL -67% 50% 35,544 37,516 32% 2% 8% 10% 12% 66% 365 38% 37% 20% 19% 52%Schlumberger/SLB -60% 44% 106,502 111,608 11% 2% 4% 6% 7% 36% 351 37% 21% 21% 17% 34%Weatherford/WFT -53% 203% 12,467 19,810 38% -6% 2% 5% 9% 62% 210 25% 33% 26% 10% 31%BakerHughes/BHI -53% 93% 22,679 25,698 39% -4% 8% 9% 11% 77% 373 38% 22% 23% 15% 50%

Abbreviations: MV = market value | EV = enterprise value | TTM = trailing twelve months | FY = fiscal year | Empl. = employee | Rev. = revenue |FKDQJHExplanations: UHYHQXH\HDU-over-year change | EPS yield for this and next FY is based on consensus EPS estimates | EBIT adjusted for certain unusual itemsSource: Company and market data, The Manual of Ideas analysis.

BAKER HUGHES FINANCIAL HIGHLIGHTS

2011 Financial Snapshot:

1 Chargeof$315millionbefore-tax($220millionafter-tax)inthefourthquarter,themajorityofwhichrelatestothenoncashimpairment associatedwiththedecisiontominimizetheuseoftheBJServicestradenameaspartofouroverallbrandingstrategyforBakerHughes.2 Noncashtaxbenefitof$214millionassociatedwithreorgofforeignsubsidiariesin3Q11.3 $40millionloss($26millionafter-tax)relatedtoextinguishmentof$500millionnotesdue2013.4 Expensesof$70million(beforeandafter-tax)associatedwithincreasingtheallowancefordoubtfulaccountsandreserves in2Q11 asaresultofcivilunrestinLibya.

2012 Management Guidance:

Source: Company presentation dated January 2012.

BakerHughespublishesausefulindustryrigcountmapandrelatedstatistics.


25/50



BAKER HUGHES SELECTED PRO FORMA FINANCIALS, 1Q08-4Q11 ($ in millions)

1 The presentation of Proforma Segment financial information includes results previously reported by BJ Services for the quarters ended March 31, 2008 throughDecember 31, 2009 and estimated BJ Services results for the quarter ended March 31, 2010 and the month of April 2010. The amounts for revenue and profitbefore tax have been reclassified into Baker Hughes five reportable segments. Operating Profit before tax and segment profit for tax for these periods includes apro forma charge of $33 million per quarter, primarily for depreciation and amortization of tangible and intangible assets associated with the acquisition of BJServices. This pro forma charge has been allocated to the five reportable segments based on the actual allocation of these charges in May and June 2010. Noadjustments have been made for cost or revenue synergies or any other integration related items that may have affected these quarters.2 Operating profit before tax is defined as profit before tax (income before income taxes) excluding certain identified costs.3 Management identifies certain items to exclude from operating profit before tax.4 The performance of the companys segments is evaluated based on segment profit before tax, which is defined as income before income taxes, interestexpense, interest income, and certain gains and losses not allocated to the segments.5 Corporate and other profit before tax includes those corporate expenses previously reported by BJ Services for the quarters ended March 31, 2008 throughDecember 31, 2009 and estimated BJ Services results for the quarter ended March 31, 2010 and the month of April 2010. Also included in each of these periods isa pro forma credit of $3 million to interest expense.6 The presentation of Proforma financials includes results previously reported by BJ Services for the quarters ended March 31, 2008 through December 31, 2009and estimated BJ Services results for the quarter ended March 31, 2010 and the month of April 2010. Segment profit before tax for these periods includes proforma charges of $33 million per quarter primarily for depreciation and amortization of tangible and intangible assets associated with the acquisition of BJ Services.7 In 2Q10 Baker Hughes results included results for BJ Services for May and June 2010. BJ Services supplied estimated results for the month of April 2010.8 2Q11 includes expenses of $70 million (before and after-tax) associated with increasing reserves for doubtful accounts, inventory and certain other assets as aresult of civil unrest in Libya.9 3Q11 includes a loss on early extinguishment of our 6.5% senior note due 2013 of $40 millions ($26 million after-tax).10 4Q11 includes a charge of $315 million before-tax ($220 million after-tax), the majority of which related to the noncash impairment associated with the decisionto reduce the use of the BJ Services trade name as part of our overall branding strategy for Baker Hughes.

Source: Company supplemental financial information (Excel file).

ProformaSegmentRevenue1 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q2107 Q310 Q410 Q111 Q211 Q311 Q411NorthAmerica 1,916$ 1,999$ 2,180$ 2,224$ 1,607$ 1,070$ 1,170$ 1,306$ 1,641$ 1,728$ 2,006$ 2,210$ 2,352$ 2,368$ 2,716$ 2,821$LatinAmerica 357 386 431 472 408 386 400 433 399 424 431 482 473 542 568 600Europe/Africa/Russia/Caspian 819 975 943 899 843 804 716 806 815 767 757 793 771 806 850 898

MiddleEast/AsiaPacific 596 652 664 706 610 617 572 571 554 579 606 657 659 701 708 752IndustrialandOther 248 297 303 302 247 239 252 244 248 247 278 281 270 324 336 316

ProformaTotal 3,936$ 4,309$ 4,521$ 4,603$ 3,715$ 3,116$ 3,110$ 3,360$ 3,657$ 3,745$ 4,078$ 4,423$ 4,525$ 4,741$ 5,178$ 5,387$SpecialItems Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q2107 Q310 Q410 Q111 Q211 Q311 Q4111Total

-$

-$ 5$ 16$ 100$ 69$ 35$ 48$ -$ -$ -$ -$ -$ 70$ -$ 315$

ProformaSegmentProfitBeforeTax1, Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q2107 Q310 Q410 Q111 Q211 Q311 Q4111NorthAmerica 442$ 441$ 461$ 503$ 125$ (100)$ (32)$ 35$ 176$ 223$ 340$ 478$ 460$ 440$ 607$ 422$LatinAmerica 64 56 75 90 40 42 28 14 5 9 9 43 63 71 71 22Europe/Africa/Russia/Caspian 138 195 184 157 164 139 83 105 84 69 47 64 91 47 105 99

MiddleEast/AsiaPacific 114 119 124 148 80 89 64 55 43 41 39 68 79 88 84 70IndustrialandOther 42 75 80 55 25 23 28 27 18 20 36 28 14 34 28 (23)

ProformaTotal 800$ 886$ 924$ 953$ 434$ 193$ 171$ 236$ 326$ 362$ 471$ 681$ 707$ 680$ 895$ 590$CorporateandOtherProfitbeforeTax Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q2107 Q310 Q410 Q111 Q211 Q3119 Q411Corporate,netinterestandother (80)$ (165)$ (110)$ (157)$ (125)$ (151)$ (145)$ (163)$ (130)$ (153)$ (105)$ (161)$ (119)$ (117)$ (176)$ (121)$ProformaCombinedDepreciationandAmortization Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q2107 Q310 Q410 Q111 Q211 Q311 Q411

Asreportedby BakerHughes 147$ 155$ 158$ 177$ 173$ 182$ 177$ 179$ 189$ 261$ 293$ 326$ 315$ 331$ 332$ 343$Asreportedorestimatedby BJServ ices 64 66 73 69 76 73 78 75 78 27 - - - - - -IncrementalDepreciationandAmortization 33 33 33 33 33 33 33 33 33 13 - - - - - -

ProformaCombined 244$ 254$ 264$ 279$ 282$ 288$ 288$ 287$ 300$ 301$ 293$ 326$ 315$ 331$ 332$ 343$ProformaCombinedCapitalExpenditures Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q2107 Q310 Q410 Q111 Q211 Q311 Q411

Asreportedby BakerHughes 227$ 312$ 301$ 463$ 281$ 291$ 222$ 292$ 190$ 349$ 466$ 486$ 429$ 594$ 628$ 810$Asre

porte

dorestimate

dby

BJServ ices 149 121 173 117 121 76 80 41 37 25 - - - - - -ProformaCombined 376$ 433$ 474$ 580$ 402$ 367$ 302$ 333$ 227$ 374$ 466$ 486$ 429$ 594$ 628$ 810$ProformaCombinedRevenue Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q2107 Q310 Q410 Q111 Q211 Q311 Q411

NorthAmerica 1,073$ 1,152$ 1,185$ 1,281$ 972$ 692$ 714$ 787$ 919$ 1,486$ 2,006$ 2,210$ 2,352$ 2,368$ 2,716$ 2,821$LatinAmerica 227 258 276 328 277 264 257 296 272 384 431 482 473 542 568 600Europe/Africa/Russia/Caspian 722 863 828 796 742 710 626 696 720 736 757 793 771 806 850 898

MiddleEast/AsiaPacific 481 528 520 561 502 503 463 469 439 545 606 657 659 701 708 752IndustrialandOther 167 197 201 220 175 167 172 180 189 223 278 281 270 324 336 316

Asreportedby BakerHughes 2,670 2,998 3,010 3,186 2,668 2,336 2,232 2,428 2,539 3,374 4,078 4,423 4,525 4,741 5,178 5,387Asreportedorestimatedby BJServ ices 1,266 1,311 1,511 1,417 1,047 780 878 932 1,118 371 - - - - - -

ProformaCombined 3,936$ 4,309$ 4,521$ 4,603$ 3,715$ 3,116$ 3,110$ 3,360$ 3,657$ 3,745$ 4,078$ 4,423$ 4,525$ 4,741$ 5,178$ 5,387$ProformaCombinedSegmentProfitBeforeTax , Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q2107 Q310 Q410 Q111 Q211 Q311 Q4111

NorthAmerica 311$ 312$ 298$ 328$ 115$ (14)$ 28$ 72$ 141$ 204$ 340$ 478$ 460$ 440$ 607$ 422$LatinAmerica 43 40 47 66 22 32 16 8 9 13 9 43 63 71 71 22Europe/Africa/Russia/Caspian 130 180 171 148 153 133 79 93 80 69 47 64 91 47 105 99MiddleEast/AsiaPacific 96 101 95 122 72 74 50 45 30 40 39 68 79 88 84 70IndustrialandOther 32 56 59 45 18 14 14 24 17 18 36 28 14 34 28 (23)

Asreportedby BakerHughes 612$ 689$ 670$ 709$ 380$ 239$ 187$ 242$ 277$ 344$ 471$ 681$ 707$ 680$ 895$ 590$Asreportedorestimatedby BJServ ices 221 230 287 277 87 (13) 17 27 82 31 - - - - - -IncrementalDepreciationandAmortization (33) (33) (33) (33) (33) (33) (33) (33) (33) (13) - - - - - -

BJServ ices 188 197 254 244 54 (46) (16) (6) 49 18 - - - - - -ProformaCombined 800$ 886$ 924$ 953$ 434$ 193$ 171$ 236$ 326$ 362$ 471$ 681$ 707$ 680$ 895$ 590$ProformaCombinedCorporateandOtherCosts5,6 Q108 Q208 Q308 Q408 Q109 Q209 Q309 Q409 Q110 Q2107 Q310 Q410 Q111 Q211 Q3119 Q411

Asreportedby BakerHughes (43)$ (138)$ (80)$ (100)$ (96)$ (117)$ (104)$ (120)$ (83)$ (142)$ (105)$ (161)$ (119)$ (117)$ (176)$ (121)$Asreportedorestimatedby BJServ ices (40) (30) (33) (60) (32) (37) (44) (46) (50) (12) - - - - - -Decreasetointerestexpense 3 3 3 3 3 3 3 3 3 1 - - - - - -

ProformaCombined (80)$ (165)$ (110)$ (157)$ (125)$ (151)$ (145)$ (163)$ (130)$ (153)$ (105)$ (161)$ (119)$ (117)$ (176)$ (121)$


26/50



Boston Scientific (BSX) Appaloosa

Health Care: Medical Equipment & Supplies, Member of S&P 500 NATICK MA, 508-650-8000 www.bostonscientific.com





Enterprise value: $13.1 billion Next quarter 0.10 0.11 23 P/E FYE 12/31/14 12x

Shares outstanding: 1,451.3 million FYE 12/31/12 0.42 0.46 24 EV/ LTM revenue 1.7x


Insider ownership:


27/50



BUSINESS OVERVIEW

Boston Scientific provides less-invasive medical devicesused in a broad range of interventional medical specialties. In1969, a predecessor introduced steerable catheters used insome of the first less-invasive procedures performed.

MARKET SHARE1

Representsrevenue share inmedical devicemarkets served byBoston Scientific2 Excludes

Neurovascularbusiness($340 million inBSX revenue,divested in 2011)


x Share leader in $30 billion market that includesinterventional cardiology, endoscopy, and cardiac

rhythm management (see above chart). BSX focuseson medical devices that are least- or less-invasive,reducing risk, trauma, and the need for aftercare.The company has an opportunity to gain share inEurope and Asia to bring it in line with the U.S.

x Major provider in cardiac rhythm management

market following Guidant acquisition in 2006.

The deal established BSX as one of the worldslargest cardiovascular device companies and aglobal leader in microelectronic therapies.

x Guiding for cumulative FCF of $7.5 billion overthe next five years. FCF should benefit from $650-$750 million in targeted near-term cost reductions.

x Repurchased ~5% of stock in 2H11 under ~$1.3billion plan. BSX has cut debt to the targeted levelof $4 billion and has gained investment grade status.


x Pricing pressure due to competition, greater powerof consolidating clients, and the impact of managedcare and other payors. Pricing pressure has beenparticularly acute in drug-eluting coronary stentsystems, which saw a 7% ASP decline in 2011.

x Operates in stagnant or slow-growing markets,

including $4+ billion drug-eluting stent and ~$7billion implantable cardioverter defibrillatorsegments growing in the low single digits, and thestagnant $4+ billion pacemaker market.

POTENTIAL CATALYSTS

x Continued FCF of $1+ billion, plus stock buybacks

x Market share gains, especially in Europe and Asia

SELECTED OPERATING DATAFYEDecember31 2007 2008 2009 2010 2011UHYHQXH 7% -4% 2% -5% -2%JURVVSURILW 7% -7% 1% -7% -5%DVVHWV 1% -13% -7% -12% -4%ERRNYDOXH -1% -13% -7% -8% 1%%9SHUVKDUH -15% -13% -7% -9% 1%

Revenue($mn) 8,357 8,050 8,188 7,806 7,622%ofrevenue

bygeo

gra

phy

:

U.S. 54% 56% 56% 54% 53%

EMEA 21% 23% 22% 23% 23%Japan 10% 10% 12% 11% 11%Inter-Continental 8% 8% 8% 9% 10%

Pretaxmarginbygeography:U.S. 27% 22% 23% 17% 16%

EMEA 52% 48% 45% 42% 41%Japan 63% 60% 59% 46% 44%Inter-Continental 41% 43% 44% 37% 37%%ofrevenuebysegment:Interventionalcardiology 36% 36% 35% 33% 33%Peripheralinterventions 8% 8% 8% 9% 10%Cardiacrhythmmanagement 25% 28% 29% 28% 27%Endoscopy 10% 12% 12% 14% 16%Urology/womenshealth 5% 5% 6% 6% 7%Neuromodulation 2% 3% 3% 4% 4%

Electrophysiology 2% 2% 2% 2% 2%Selecteditemsas%ofrevenue:Grossprofit 72% 69% 69% 67% 65%R&D 13% 12% 13% 12% 12%

EBIT(adjusted) 1 8% 19% 15% 13% 23%Pretaxincome(adjusted)1 1% 12% 10% 8% 20%Netincome(adjusted)1 2% 12% 14% 8% 17%D&A 9% 11% 11% 11% 11%

Capex 5% 6% 5% 5% 4%Industrygrossmargin2 51% 53% 52% 51% 52%IndustryEBITmargin2 -4% -5% -7% -7% -5%Tangibleassets($mn) 8,130 7,474 6,574 5,599 5,056Selecteditemsas%oftangibleassets:Cash,investments 18% 22% 13% 4% 5%Inventory 9% 11% 14% 16% 18%

PP&E,net 21% 23% 26% 30% 33%ST

de

bt 3% 0% 0% 9% 0%

LTdebt 98% 90% 90% 88% 84%Tangibleequity -98% -87% -96% -93% -97%Sharesout(avg)(mn) 1,487 1,499 1,508 1,518 1,509VKDUHVRXWDYJ 17% 1% 1% 1% -1%

1Adjusted for unusual items of -$647 million in 2007, -$3.0 billion in 2008, -$2.1billion in 2009, -$1.7 billion in 2010, and -$862 million in 2011.2 Medical Equipment & Supplies industry median.

MAJOR HOLDERS

Management 2% | Dodge & Cox 8% | Primecap 4% | Cap Re4% | GS 3% | Franklin 3% | Wellington 3% | Oakmark 3%

RATINGS

VALUE Intrinsic value materially higher than market value? DOWNSIDE PROTECTION Low risk of permanent loss?

MANAGEMENT Capable and properly incentivized? FINANCIAL STRENGTH Solid balance sheet?

MOAT Able to sustain high returns on invested capital?

EARNINGS MOMENTUM Fundamentals improving?

MACRO Poised to benefit from economic and secular trends?

THE BOTTOM LINE

Boston Scientific has been in turnaround mode over the past two years, as slower-than-expected growth in cardiovasculardevice end markets produced disappointing financial performance. While the stock price has stagnated, BSX has madeprogress on cutting costs, improving the balance sheet, and reducing the share count. BSX should generate ~$1 per share ofannual FCF over the next few years, rendering the shares quite cheap, especially if management allocates capital prudently.


28/50



BOSTON SCIENTIFIC EQUITY FAIR VALUE UNDER SELECTED VALUATION SCENARIOS


Valuation methodology: Valuation methodology: Valuation methodology:

Based on revenue for the twelve monthsended December 31, 2011 and averageEBIT margin for past seven fiscal years


December 30, 2013

Based on free cash flow for the twelvemonths ended December 31, 2011

TTM net sales: $7.6 billion Consensus FY13 EPS estimate: $0.48 Operating cash flow: $1.0 billion

multiplied by minus minus

Average 7-year EBIT margin: 17.9% Assumed haircut to FY13 consensus Capex: $320 million

equals EPS estimate: 5% * $0.48 equals

Estimated EBIT: $1.4 billion equals Free cash flow: $690 million

multiplied by Revised FY13 EPS estimate: $0.46 divided by

Assumed fair value multiple of EBIT: multiplied by Industry median FCF yield: 4.5% (*)

6x Corresponding industry P/E: 16.2x (*) equals

equals equals Industry FCF yield-implied fair value:

Est imated fair enterprise value of Industry multiple-implied fair value: $16 billion ($11 per share)

Boston Scientific: $8.2 billion $11 billion ($7.40 per share) multiplied by

plus multiplied by Assumed required FCF yield as aCash, ST investments: $267 million Assumed BSX multiple as a percentage of the industry FCF yield:

minus percentage of the industry multiple: 90%

Total debt: $4.3 billion 105% (4.0% required FCF yield)

equals (17.0x fair value P/E multiple) equals

Estimated fair value of the common equals Estimated fair value of the commonequity of Boston Scientific: Estimated fair value of the common equity of Boston Scientific:

$4.2 billion, or $2.90 per share equity of Boston Scientific: $17 billion, or $12 per share

(based on 1.5 billion shares out) $11 billion ($7.80 per share) (based on 1.5 billion shares out)

54% downside from the recent (based on 1.5 billion shares out) 90% upside to the recentstock price ($6.30 per share)

24% upside to the recentstock price ($6.30 per share)

stock price ($6.30 per share)

(*) Represents Medical Equipment & Supplies industry median multiple.

Source: Company filings, The Manual of Ideas analysis, assumptions and estimates.

BOSTON SCIENTIFIC MANAGEMENTS CAPITAL ALLOCATION STRATEGY


AdjustedFreeCashFlowexcludesanypotentialamountsrelatedtoacquisition-,divestiture- andlitigation-relateditems,significanttaxauditsettlementsandrestructuringand restructuring-relateditems.


29/50



BOSTON SCIENTIFIC COST REDUCTION OPPORTUNITY

1 Substantially complete end of Q4 2011. 2 Expected implementation in 2013.


BOSTON SCIENTIFIC COMPETITIVE MATRIX MARKET SHARE POSITION IN SELECTED MARKETS


CostcutsshouldhelpBSXgenerateroughly$7.5billionofcumulativeFCFoverthenextfiveyears.


30/50



Canadian Natural (CNQ) BP Capital, Pershing Square, WintergreenEnergy: Oil & Gas Operations CALGARY AB, Canada, 403-517-6700 www.cnrl.com





Enterprise value: $51.2 billion Next quarter 0.68 0.83 4 P/E FYE 12/30/13 9xShares outstanding: 1,100.2 million FYE 12/31/11 2.27 2.26 9 EV/ LTM revenue 4.0x


Insider ownership:


31/50



BUSINESS OVERVIEW

Canadian Natural Resources is an oil and gas E&P company.


x Major oil sands player.* Synthetic crude and thermal

oil (bitumen) accounted for 43% and 19% of netproved reserves of 3.7 billion barrel of oil equivalent

(BOE) at yearend 2010. Natural gas was 17%, withthe remaining 21% comprised of other oils/liquids.

x 90% of reserves are in politically stable North

America, mainly in Canada. This is likely to makethe companys reserves an attractive alternative forU.S. energy consumption needs in the future.

x Returns-focused management with a strong trackrecord of per share value creation. NAV per sharehas compounded 15% per year on average sinceyearend 2006. Insiders own 4% of shares, which areworth $1.5+ billion at recent market prices.

x Generated ~$30 billion of net cash from operations

in the last five years (70%+ of recent market

value). While production and reserve expansion hasalso led to high capex, reserve life is ~20 years on2010 production andprovedreserves only. ~70% ofproved reserves are developed and producing.

x Guiding for net cash from operations of $8.2-8.6

billion in 2012based on average annual WTI strippricing of US$88/bbl and AECO strip pricing ofC$3.45/GJ. FCF is targeted at $1.1-1.5 billion and isto be used for opportunistic acquisitions, increaseddividends, and debt reduction.


x Recent enterprise value approximates the after-

tax PV-10 of proved and probable net reserves of$54 billion as of yearend 2010 (based on 5.7 billionBOE of reserves and forecast prices and costs).

x Highly sensitive to price of oil. Production costs inCanadas oil sands are generally higher than in otheroil regions, resulting in greater operating leveragefor oil sands producers. Should oil prices return topast lows, the economic viability of oil sands mightbe constrained (despite technological progress).

x Higher oil/gas prices may not translate into

higher profits over time. Production expenses perbarrel of oil equivalent increased at a 7% CAGRfrom 2005 to 2010 and are up 7% y-y YTD. This, aswell as increasing royalties, will continue to

pressure netbacks even if sales prices increase.x $9.3 billion of net debt (1.3x TTM EBITDA).

* Oil sands are a natural mixture of sand, water, clay and bitumen. Bitumenis oil that is too heavy or thick to flow or be pumped without being dilutedor heated. With conventional oil supply declining, the need forunconventional resources, like oil sands, is likely to increase.

SELECTED OPERATING DATA1

FYEDecember31 2006 2007 2008 2009 2010 YTD9/30/11' provednetreserves 22% 1% 0% 81% 5% 22%' grossproduction 5% 5% -7% 2% 10% -8%' grossrevenue 5% 8% 29% -32% 29% 2%Period-endnetreserves(BOEinbillions):Provednetreserves 1.9 2. 2.0 3.6 3.7 n/aProbablenetreserves 1.0 1.0 1.0 1.9 1.9 n/aGrossproduction(MMBOE) 212 222 206 210 231 211%ofgrossproductionbytype:Crudeoil&NGLs 57% 54% 56% 62% 67% 64%Naturalgas 43% 46% 44% 38% 33% 36%Netback-- barrelsofoilequivalent($/BOE):Salesprice2 48 49 69 45 50 56Royalties 6 6 10 5 7 7Productionexpense 9 10 12 12 11 12Netback 33 33 47 28 32 36

' netback -3% 0% 42% -40% 13% 13%

Gross revenue($bn) 11.6 12.5 16.2 11.1 14.3 10.7Selecteditemsas%ofgrossrevenue:Royalties 11% 11% 12% 8% 10% 11%Production 17% 17% 15% 27% 24% 25%Transportation/blending 12% 13% 12% 11% 12% 16%DD&A 21% 23% 17% 25% 28% 24%

Riskmgmt(gain)/loss 3% 12% -8% 7% -1% -1%Forex(gain)/loss 1% -4% 4% -6% -1% 1%Other 3% 4% 1% 6% 4% -3%

EBIT 33% 24% 46% 22% 23% 27%

Adj.netincome3 14% 19% 22% 24% 18% 15%Netcashfromoperations 36% 46% 42% 52% 44% 37%Netcapex 62% 51% 46% 27% 37% 41%FCF -26% -4% -4% 26% 7% -4%

Returnontang.equity4 18% 20% 22% 14% 13% 7%Tangible equity/assets 34% 35% 40% 45% 48% 50%

' sharesout(avg) 0% 0% 0% 0% 0% 1%1 Based on Canadian GAAP and Canadian dollars. Gross/net figures arestated before/after royalties.2 Stated net of transportation and blending costs and excluding riskmanagement activities.3 Excludes stock-based compensation, unrealized risk management and

foreign exchange transactions, the effect of statutory tax rate and otherlegislative changes on future income tax liabilities, as well as impairments.4 Based on adjusted net income.

CATALYSTS

x Continued high oil price (viability of oil sands)

x Production and reserve growth

x Continued dividend increases and debt reduction

MAJOR HOLDERS

Insiders 4%* | BlackRock 5% | Wintergreen


32/50



CANADIAN NATURAL RESOURCES EQUITY FAIR VALUE UNDER SELECTED VALUATION SCENARIOS

(C$ in billions) Conservative Base Case Aggressive

Valuation methodology PV-10 of 1P reserves 7x TTM EBITDA PV-10 of 2P reserves

Conservative case:

After-tax PV-10 of net proved reserves at yearend 20101 $38.9 billion

Fair value multiple 1.0x

Estimated enterprise value $38.9 billionBase case:

TTM EBIT $3.0 billion

Add: DD&A $4.1 billion

TTM EBITDA $7.1 billion


Estimated enterprise value $49.4 billion

Aggressive case:

After-tax PV-10 of net 2P reserves at yearend 20101 $54.3 billion


Estimated enterprise value $54.3 billion

Minus: Net debt -$9.3 billion -$9.3 billion -$9.3 billion

Estimated fair value of the equity of Canadian Natural2 $29.6 billion $40.1 billion $45.0 billion

$27 per share $37 per share $41 per share

Implied upside/(downside) to recent price ($38 per share) -29% -4% 8%

Implied valuation metrics based on trailing financials:

EV to EBITDA ($7.1 billion) 5.5x 7.0x 7.6x

Adjusted earnings yield ($2.3 billion)3 8% 6% 5%

Net cash from operations yield ($5.5 billion) 18% 14% 12%

Other implied valuation metrics:

Price to tangible book ($22.1 billion) 1.3x 1.8x 2.0x

EV per BOE of 1P reserves ($/BOE) $10 $13 $14

EV per BOE of 2P reserves ($/BOE) $7 $9 $10 1 Based on forecast prices and costs; discounted at 10%; prior to the provision for interest, general and administrative expenses and the impact of any riskmanagement activities.2 Based on 1,095 million shares outstanding.3 Excludes stock-based compensation, unrealized risk management and foreign exchange transactions, the effect of statutory tax rate and other legislativechanges on future income tax liabilities, as well as impairments.


CANADIAN NATURAL RESOURCES MANAGEMENTS PRODUCTION TARGETS THROUGH 2018

Source: Company presentation dated February 2012.

Withmanagementexpectingthatnaturalgaspriceswillbelowfor5to10years,CNQwillfocusprimarilyonliquidsproductions.


33/50



CANADIAN NATURAL RESOURCES MANAGEMENT GUIDANCE


Thecapexbudgetwillgrownearly20%in2012.


34/50



Corning (GLW) Century, Dodge & Cox, SequoiaTechnology: Electronic Instruments & Controls, Member of S&P 500 CORNING NY, 607-974-9000 www.corning.com





Enterprise value: $17.4 billion Next quarter 0.33 0.34 20 P/E FYE 12/31/14 9xShares outstanding: 1,518.3 million FYE 12/31/12 1.39 1.50 23 EV/ LTM revenue 2.2x


Insider ownership:


35/50



BUSINESS OVERVIEW

Corning dates back to 1851 and provides specialty glass.


x Display (40% of sales): Corning and 50%-ownedSamsung Corning Precision are the top producers ofglass substrates for active matrix LCD displays used

in notebooks, flat panel monitors, and LCD TVs,ahead of Asahi Glass, Nippon Electric Glass, andAvan Strate. Corning is differentiated throughproducts such as Corning Lotus glass, and aproprietary fusion manufacturing process, whichallows for glass that is larger, thinner and lighter.

x Telecommunications (26%): Corning is a leader inoptical fiber/cable, along with Furukawa Electric,Fujikura, Sumitomo Electric, and Prysmian.Corning is a low-cost producer due to scale, fiberprocess, technology leadership, and IP assets.

x Environmental technologies (13%): Corning is aleader in automotive ceramic substrate products.

Competitors include NGK, Denso, and Ibiden.x 4,750 patents, including 2,500 in the U.S. While

8% will expire by 2014, Corning has 7,400+ patentapplications in process, including 1,700 in the U.S.

x Longtime management, with chairman and CEOWendell Weeks (52) and CFO Jim Flaws (63)having joined Corning in 83 and 73, respectively.

x Expects moderate growth in 2012, led bytelecom and environmental tech segments. Globaldemand for LCD glass should increase from 3.2billion square feet to 3.6 billion square feet in 2012.


x Pricing pressure in display segment. Corning hasrecently experienced double-digit price declines indisplay, with management hopeful that sequentialquarterly price declines in 2012 will be moderate.In response, Corning is reducing capacity by ~25%.

x 50%-owned Dow Corning hurt by major

upheaval in solar panel industry. Managementexpects lower equity earnings from Dow Corning,driven by lower demand and price declines insilicon products and at Hemlock Semiconductor,which makes high purity polycrystalline silicon.

x Capital-intensive business, with 2012E capex of$1.8 billion, $800 million of which in display unit.

x Customer concentration, with Cornings tenlargest customers accounting for 51% of revenue.

MAJOR HOLDERS

Management


36/50



CORNING EQUITY FAIR VALUE UNDER SELECTED VALUATION SCENARIOS


Valuation methodology: Valuation methodology: Valuation methodology:

Based on free cash flow for the twelvemonths ended December 31, 2011

Based on tangible book value as ofDecember 31, 2011


December 30, 2013

Operating cash flow: $3.2 billion Book value: $21 billion Consensus FY13 EPS estimate: $1.52

minus minus minus

Capex: $2.4 billion Intangibles: $930 million Assumed haircut to FY13 consensus

equals equals EPS estimate: 5% * $1.52

Free cash flow: $760 million Tangible book value: $20 billion equals

divided by multiplied by Revised FY13 EPS estimate: $1.44

Industry median FCF yield: 5.6% (*) Industry price to book: 1.4x (*) () multiplied by

equals equals Corresponding industry P/E: 12.4x (*)

Industry FCF yield-implied fair value: Industry multiple-implied fair value: equals

$14 billion ($9.00 per share) $29 billion ($19 per share) Industry multiple-implied fair value:

multiplied by multiplied by $27 billion ($18 per share)

Assumed required FCF yield as a Assumed GLW multiple as a multiplied bypercentage of the industry FCF yield: percentage of the industry multiple: Assumed GLW multiple as a

125% 105% percentage of the industry multiple:

(6.9% required FCF yield) (1.5x multiple of tangible book) 125%

equals equals (15.5x fair value P/E multiple)

Estimated fair value of the common Estimated fair value of the common equals

equity of Corning: equity of Corning: Estimated fair value of the common$11 billion, or $7.20 per share $30 billion ($20 per share) equity of Corning:

(based on 1.5 billion shares out) (based on 1.5 billion shares out) $34 billion ($22 per share)

48% downside from the recent 45% upside to the recent (based on 1.5 billion shares out)

stock price ($14 per share) stock price ($14 per share)63% upside to the recent

stock price ($14 per share)

(*) Represents Electronic Instruments & Controls industry median multiple.() In order to be conservative, we apply the industry median multiple of book value to the companys tangible book value.


CORNING FREE CASH FLOW, 2004-2011 ($ in millions)


Freecashflowhastrendedhigherunevenlyoverthepastseveralyears.


37/50



CORNING USE OF CUMULATIVE CASH FLOW, 2007-2011


CORNING MANAGEMENTS OUTLOOK FOR CAPITAL SPENDING ($ in millions)


CORNING MANAGEMENTS DIRECTIONAL OUTLOOK FOR GROSS MARGIN, 2012-2014


Whilethebusinesshasrequiredsignificantcapitalinvestments,managementhasalsoallocatedcashtorepurchasesanddividends.

Capitalinvestmentisexpectedtodecreasegoingforward,freeingupcashthatcouldbeusedforadditionalbuybacksanddividends.

Managementexpectsgrossmargintoremainstableorincreasegoingforward.


38/50



Covidien (COV) FPA Crescent, HeartlandHealth Care: Medical Equipment &

Manual of Ideas Part.2

Documents

Transcript of Manual of Ideas Part.2