Goizueta Investors
February 28, 2008
Agenda Market Recaps
Domestic International
Stock Market Game Update Book Review: Liar’s Poker GI Challenge
Guess the Dow Contest Winner M&Ms Contest Winner
Upcoming Events
Weekly Newsletter Your one-stop shop for all things financial
Published every Monday
Located at select GBS classes, all GI events
Features Weekly Market Recaps and Special Interest Articles
Available at www.GoizuetaInvestors.com
Dow 198.29, 1.6%
12,582.18
Nasdaq 18.34, 0.78%
2,331.57
S&P 13.71, 1.01%
1,367.68
Domestic Market RecapFebruary 2008
A: UBS write-down (1/30)B: ISM disappoints (2/5)C: Buffett offer to bond insurers (2/12)D: Fed minutes (2/20)E: Bernanke testimony (2/28)
BC
D E
A
DJIA: January - February 2008
Economy
Crude oil at record prices
Weak economic data across the board
Stagflation back in investors’ vocabulary
Interesting News
Microsoft offers $44.6 billion for Yahoo (2/1)
Research in Motion sells more BlackBerries to consumers (2/21)
Delta and Northwest discuss merger, held back by disagreements (2/26)
Market Recap: International 1/30/08 – 2/27/08
England FTSE 100 6,076.50 213.90 3.6%
Germany XETRA-DAX 6,997.85 110.93 1.6%
France CAC 40 4,968.82 27.37 0.6%
Hong Kong HANG SENG 24,483.84 192.04 0.8%
Japan NIKKEI 225 14,031.30 530.78 3.9%
Market Recap: International
US Dollar Index
Market Recap: International
Commodities surge continues Gold: $973.40 per troy oz. Crude Oil: $102.49 per barrel MGE Wheat: $24 per bushel
Inflationary pressures felt throughout the world PPI: +7.4% year over year
Market Recap: International
Sovereign Wealth Funds $3 trillion in total assets ADIA: $900B Govt. Investment Corp. of Singapore: $300B
Nearly $40B invested in US financials
Very little disclosure No regulation, no disclosure requirements
IMF working on “best practices” code
Private Equity What is it and what do they do? Who are the big names? How does a private equity fund make money? What does a private equity deal look like? Why has private equity been all over the news? I want to work in private equity, what should I do?
What Private Equity Does
Buys private firms, or buys publicly traded companies and takes them private.
Leveraged buyouts (LBO’s) Uses money from institutional or wealthy individual investors. Borrows money against these investments for more capital. Industry has $2 trillion under management (est.) $782 billion of PE deals in 2007 (down 53% YTD 2008) Largest PE transaction is the $45 billion buyout of TXU lead
by KKR ($8b equity) First PE buyout of a public company was done by KKR in
1979 in a deal totaling $355 million
How Private Equity Makes Money
50006000
1000
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6000
10000
0
2000
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6000
8000
10000
12000
T=0 T=1
Equity
Debt
50006000
1000
4000
6000
10000
0
2000
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10000
12000
T=0 T=1
Equity
Debt
Effect of Leverage:Return w/o leverage: 66.7%Return w/ leverage: 300.0%
Effect of Leverage:Return w/o leverage: 66.7%Return w/ leverage: 300.0%
($k)
The Big Players
First firm to take a public company private
Henry Kravis made $51,369/hr last year
First PE firm to offer an IPO Founder Steven Schwarzman
richest man in private equity
Berkshire Hathaway While not strictly considered a PE firm,
Berkshire Hathaway is very similar This makes it the largest PE firm, worth
over $200 billion A shares go for $140k, B for $4,675 The Big Players won’t talk to you unless
you have at least $10 million Smaller middle market firms will want at
least $500k Warren Buffet is the only PE fund
manager who will reveal his strategy You can read his investor letters Or go meet him next year, but still read
the letters, there’s great stuff there
11
Fantasy Stock Market Rankings
DateRankin
g UserGain since
InceptionTotal Portfolio
Value
2/ 27/2008 1 tmac001 65.16% $16,516
2 Pear 40.54% $14,054
3 micht1986 37.17% $13,717
4 pwehttam 29.87% $12,987
5 gautam8 16.29% $11,629
6 gregoryrives 12.05% $11,205
7 lazehaze 9.66% $10,966
8 meanspride 8.53% $10,853
9 McLaughlin 8.32% $10,832
10 jbasago 8.25% $10,825
Fantasy Stock Market Game
Book Review Liar’s PokerBy Michael Lewis
VSVS
GI Market ChallengeDJIA on 2/22: 12,381.02
Max Ogienko 12,171.00 -210.02
M&Ms in the Bottle: 432
Rebecca Dodson 448 +16
GI Market Challenge
At what level will the Dow close on 3/21? Email guesses to [email protected] Check it at: Blog.GoizuetaInvestors.com Deadline: 11:59pm on Thursday, 3/6 Winner announced at next meeting
Resume Drop Box
Upcoming Events 3/6: Bowling Night
3/10: Spring Break
3/18: GI Day
3/26: Movie Night: Boiler Room
Private Equity Seminar
Third General Body Meeting