Upcoming Finance Club Speaker Event

The Bay Area Working Professionals Finance Association has an exciting speaker event in November!

Speaker: Norman Praught Director of Finance, Lucasfilm
Date: November 7th, 2008
Time: 5.00-6.00 p.m.
Location: Bishop Ranch 15
Room: 1504

Since the seating is limited please e-mail (RSVP) the Bay Area Finance Association VP of Events, Alex Flores (alexaflo@cisco.com) Lucie von Scheliha (lvonscheliha@ucdavis.edu) as soon as possible to reserve your spots.

This speaker event is free for first year WP students. Speaker events are free for the Bay Area WP Finance association members. Non Finance association members are welcome to the speaker events. Your cost will be $5 for each event.

The fee can be paid to the Finance Association VP’s of Finance Ahmed Aly (ibnadel@hotmail.com) or Damien Mar Chong (dmarchong@ucdavis.edu)

If you interested in joining the club click here

CA Department of Finance Exam Announcement - Assistant Finance Budget Analyst position

From: Sullivan, Liz [mailto:Liz.Sullivan@dof.ca.gov]
Sent: Tuesday, October 21, 2008 2:05 PM
Subject: CA Department of Finance Exam Announcement - Assistant Finance Budget Analyst position



Dear Program Director/Coordinator,
The Department of Finance (Finance) invites your students who meet the minimum qualifications and are interested to apply for the position of Assistant Finance Budget Analyst. Finance is holding an open examination and all positions exist in Sacramento, California. Current employment with the State of California is not required.

We are looking for high performing individuals who are interested in being part of a professional and respected team. As a budget analyst, individuals deal with public policy issues and assist the Governor in making fiscal decisions that impact the people of California. Excellent opportunities for training, personal development, and career advancement are also available. Enclosed is a job bulletin which highlights the duties of the position. In addition, Finance's home page (http://www.dof.ca.gov/) has other important employment information that includes the Exam Bulletin for the Assistant Finance Budget Analyst that describes the minimum qualifications, and the testing and application process.

We plan to schedule interviews during the months of January/February 2009 and these would be to fill any upcoming or unanticipated vacancies.

Finance is an equal employment opportunity employer. We encourage students with disabilities to apply for these civil service positions. Please forward this information to any advocacy groups or programs for disabled persons at your campus / organization. If there is a contact(s) for such an entity, we would appreciate it if you would provide us with their name(s) and telephone number(s). We will include them in our direct distribution for future employment opportunities.

If you have any questions, please feel free to contact Dana Bralley, Training Officer, (916) 445-5532 or me at (916) 445-3358, extension 3086.

Thank you for passing along this career opportunity.
Sincerely,

Liz Sullivan
Selection Services Manager
Department of Finance
915 L Street
Sacramento, CA 95814

Part-time position - in an International Asset Management firm

Hello Finance students,

I wanted to bring the following new opportunity to your attention.

1- A part-time position (working remotely) with an international Asset Management firm –MEAG

Working Professional - Send resume directly to Professor Barber at bmbarber@ucdavis.edu

Day Time students apply on eRecruiting.com



Employer Profile

Employer Code:

Description:
MEAG – A strong asset management partner
MEAG MUNICH ERGO AssetManagement GmbH (MEAG) is a major asset management force in the European financial sector with responsibility for over EUR 181 billion (31 December 2007). We are also the asset manager for the Munich Re Group. We invest in securities, real estate and funds, offering our expertise to both institutional and private investors.



Know-how for private and institutional investors
We are the ideal partner for both private and institutional investors, bundling extensive know-how in all key asset classes under one roof and ensuring that your money is in good hands. We compile fund, security and real-estate portfolios based on your earnings specifications.
Our size and the volume of funds under our management enable us to offer you highly competitive conditions for the reinvestment and security of your investments.

Industry:
Finance/Banking - Asset Management

URL:
www.meag.com/default2006_en.asp







Job Title:
Part-Time Asset Manager

Description:
1) Description of MEAG: MEAG is the asset manager for Munich Re and ERGO Insurance Group. In addition to managing the Group's own assets, we also work for other partners outside the Group. With management units in New York and Hong Kong and managed assets amounting to around Euro 176 billion (30 June 2008), we are one of Europe's leading asset management companies. MEAG manages around Euro 2.3 billion in mutual funds for private investors (30 June 2008).

Munich Re Group's asset management has been in the hands of MEAG since 1999. Our key customers are of course Munich Re, as one of the world's leading reinsurers, and ERGO, Germany's second largest insurance group, with the brands Victoria, Hamburg - Mannheimer, DKV, D.A.S. and KarstadtQuelle Versicherungen.

MEAG supports its partners in their global activities. We also offer our international competence gained from managing the assets of the Munich Re Group to private investors, in award-winning mutual funds. Munich Re's global presence gives MEAG access to all the world's capital markets.

2) MEAG NY's manages both equity and fixed income assets, with fixed income representing by far the largest percent of our holdings. Within fixed income, our focus covers a variety of asset types including corporate bonds, structured products, US government securities, municipals and emerging markets.

3) We have identified the following four projects for the intern to work on and have included expected hours to complete. The rate for an intern at our company is $12.50/hour. The completion of the projects depends on the interns time schedule given the course work load they may be carrying. My own estimate would be for the intern to commit 5-8 hours per week on the projects.

• Build a database of public companies that participate in technologies that promote the development of clean air and water. For instance, technologies that allow utilities to remove mercury from the smokestack. Besides the company names, we would also like the business segment or unit that the technology belongs to and any current revenue associated with the technology. SEC filings can be used to research company business segments. One possible avenue for finding these companies would be to look at the holdings of RI-related mutual funds. Also as part of this topic, determine if new financing is flowing into these companies via either public markets (bonds/equity) or private placements. 20 hours
• Participate in developing proxy guidelines for our internal RI equity funds. The intern should help formulate a list of hotbutton issues (from an environmental, social and governance standpoint) that a proxy framework should address. For instance, what percentage of stock options, as a percentage of total shares, can the company grant on an annual basis? While there is no "right" answer, the intern can help to determine industry best practice. Websites and prospectus from public RI mutual funds would be helpful to examine what other similar funds are doing. 20 hours
• Research the investment opportunities in "Carbon Emission Trading". While this might be a well known concept in Europe, it's still relatively new and undeveloped in U.S. The intern can research into the background, the size of the market in Europe, what has been the result in Europe in terms of investment trends, returns, etc. In addition, the intern can research any developments in the U.S. in terms of Carbon Emission Trading, the major players and their track record. The Kyoto Protocol makes a reference to it. There is also IETA (International Emission Trading Association) where the intern can obtain additional information. 20 hours
• Research and put together a list of legislative initiatives, approved and in discussion that will foster the expansion of responsible and sustainable investment. This should categorize legislation by targeted industry or broader environmental objective. For the second phase of the project, we will identify some of the major legislative initiatives the intern has done preliminary research on and ask for an assessment of the economic impact as well as potential costs, financing, and investment opportunity (benefits, risks, returns) that may originate. 20 hours

4) I will be the primary contact for the intern, although they will talk with several other members of the credit team and should reach out to them to complete the projects. The intern can email or call me at anytime to discuss the projects and meet the other members of our team. I would expect a phone call at least every two weeks to touch base on developments.

5) As part of a successful completion of the project work, it is envisaged that the intern may travel to New York at MEAG New York's expense. The decision on whether or not a trip shall take place will depend on our assessment of and satisfaction with the work product.

Opportunity Type:
Part-time job

Contact:
Brad Barber

Status:
Part-time

Classification:
Internship

Job Locations:
New York, New York (work remotely)

Job Function:
Accounting/Auditing, Finance

Compensation Type:
Paid

UCD GSM Bay Area Finance club By-laws

Bay Area Finance Association
University of California, Graduate School of Management

Bylaws for Governance
Revised: July 20, 2008

Submitted by:
Juliet Hodder: Founder and Co-President
Amit Shah: Founder and Co-President

I. Overview
II. Mission
III. Membership
IV. Dues
V. Meetings
VI. Voting on Finance Association Decisions
VII. Officers and Responsibilities
VIII. Elections of Finance Association Officers
IX. Term of Office, Replacement and Removal of Officers
X. Changes to the Bylaws
XI. Dissolve the club

I. Overview

UCD Graduate School of Management (GSM) Bay Area campus at San Ramon is home to over 180 students with a significant interest in Finance and related fields. The Bay Area is an international hub and financial center that guarantees a wealth of opportunity for GSM students to further their learning and influence in the financial sector. This club will collaborate with the GSM Daytime Finance Association to achieve synergies for their respective members and to create an enriching and educational experience for all its members.

Our goals include facilitating knowledge sharing among GSM students, networking with industry professionals and bring industry recruitment to the UC Davis GSM, connecting students from the three GSM sites, and inviting renowned faculty & industry professional for interactive discussions.


II. Mission
Our mission is to build awareness and generate excitement among students about different careers within the finance function. We aim to expand our classroom educational experience to real world practical learning, to discuss developments in the world of investments and corporate finance, and share knowledge among members. We also aspire to expand the experiences and opportunities available to our members by organizing finance related speaker events, alumni outreach, networking opportunities, social events, and cross-campus programming with the Daytime and Sacramento MBA programs.

III. Membership

The membership of the Finance Association is comprised of current Working Professional Bay Area MBA students at the Graduate School of Management (GSM). Current working professional GSM students who have paid their dues are members of the Finance Association. Membership entitles full access to and support from the Finance Association Board, activities, etc.

IV. Dues

Dues are collected upon admission to the Finance Association which covers the entire time the student is enrolled in the GSM. Membership is allowed on a case by case basis. Dues are determined by the Finance Association Board.

V. Meetings

The Finance Association will schedule meetings on an as needed basis. Minutes will be taken and posted.


VI. Voting on Finance Association Decisions

Decisions of the GSM officers may be made by simple consensus. When a consensus is difficult to accomplish, a vote may be taken following these guidelines:

1. One vote per officer. Only elected officers may vote, though they represent the membership.
2. Simple majority determines the decision.
3. A quorum (six officers) is necessary to vote on any motion.
4. Voting can be done with non-GSM officers present.

VII. Officers and Responsibilities

Club Officers

1. President:
Responsible for representing the Finance Association when required and during GSM sponsored events. Responsible for coordinating Finance Association activities, facilitating meetings, encouraging participation in events, growing membership, oversight and advising of Finance Association Board members, upholding parliamentary procedures , oversight of elections, and direct liaison to current GSM faculty, staff, and students.

2. VP of External Relations:
Responsible for alumni relations, external partnerships, consulting projects, and general enhancement of external opportunities for club members.

3. VP of Communications:
Responsible for internal and external communication, web-site/blog development & maintenance, assisting in elections, and marketing communication.

4. VP of Finance:
Responsible for managing club membership fees, oversight of club budget and fundraising, allocation of resources for club events, liaison with ASM regarding financial matters

5. VP of Events:
Responsible for oversight of events including networking programs, alumni panels, speaker series, finance competitions, fundraisers, and general internal and external programming.


VIII. Elections of Finance Association Officers

Election of the Officers

Schedule: Fall Quarter; New Board convenes on January 1st.
Voters: Finance Association Members in good standing
Procedure: Determined by the Finance Association Board

The Finance Association officers may determine the timeline and the specific procedures used for the elections. The following principles should serve as a guide:

1. One vote per person.
2. Candidates may vote.
3. Only Finance Association members may vote.
4. Voting may be by paper ballot, electronic survey ballet or email ballot.
5. Voting should be anonymous. In the case of email voting or electronic voting, where the identity of the voter is obvious, the ballots should be counted privately by one person or a small number of elections officials.
6. Candidates may be nominated by others or self-nominate. They must accept the nomination before being added to the ballot. Only Finance Association members may be candidates.

Board transition procedures:
The new Finance Association officers should be brought into their new responsibilities with an organized transition program run by the old officers. This process will be determined by the old officers but should include ample assistance and training. Possibilities include a joint meeting of all old and new officers, scheduled one-on-one time, and a social event.


IX. Term of Office, Replacement and Removal of Officers

Officers:
Term begins January 1st and ends December 31st.

Replacement of Officers:
Candidates should run for a Finance Association office only if they are reasonable sure of being able to serve the full term. However, should unforeseen circumstances arise, officers can be replaced if the other Finance Association officers determine it is necessary. A new election may be held to elect a new officer. The Finance Association officers may determine procedures and scheduling.

Replacement of the President:
If the President cannot complete the term of office, the Finance Association officers may hold an election for a new President as specified above, or the duties of the office may be passed to another officer, as determined by a majority vote of the Finance Association officers. The officer serving as the new President may retain the duties of the previous officer position, or a replacement can be elected.

Removing an officer:
An officer may only be removed from office by the unanimous vote of all other officers. This is an extreme situation and must be exercised only if the officer in question has committed a gross dereliction of duty determined to harm the Finance Association.


X. Changes to the Bylaws

Changes can be made through a simple majority vote by the Finance Association officers. Once a change is made, the by-laws may be rewritten. Maintaining a list of changes is not necessary.

X1. Dissolve the club

If a situation arises where the Finance Association needs to be dissolved, all the club assets would return to the GSM to be used for educational or scholarship purposes, or be donated to a non-profit organization.

By-Laws v1.2/2008

Secrets of the Private Equity Trade (From Wharton Article)

Private equity firms manage some $1 trillion of global capital, yet because they are highly secretive, much remains unknown about their internal economics. How do PE firms organize themselves, for example, and how do they capitalize on their success?

Some answers emerge from a paper by Wharton finance professor Ayako Yasuda and Yale School of Management finance professor Andrew Metrick titled, "The Economics of Private Equity Funds." The paper was presented at a recent Wharton conference, sponsored by the Weiss Center for International Financial Research, whose theme was "A Global Perspective on Alternative Investments." The authors gained access to an unusually fertile data set, the private equity portfolio of one of the world's largest limited partner investors. On condition of anonymity, the investor furnished data on 238 different PE funds in which it had invested between 1992 and 2006. Of those 238 investments, 144 were buyout funds and the other 94 venture capital funds.

Stable Fee Revenues

The study's most important conclusions, according to Yasuda: First, some 60% of PE firm revenues come from fixed-revenue components that are unaffected by performance; and second, while venture capital firms tend to earn more than buyout firms per dollar under management, buyout funds are substantially more scalable and, therefore, can earn much more per partner and per employee. In addition, managers of successful funds can command better terms for themselves as they launch new, larger funds.

Most private equity funds take the form of limited partnerships, with a PE firm serving as general partner; the limited partners -- large institutions and wealthy individuals -- put up the bulk of the capital. Each limited partnership typically lasts for 10 years, with terms of the general partner's compensation spelled out at the fund's inception. The general partner's compensation contains a fixed component -- an annual management fee of 2% or more -- plus a variable component that includes carried interests in partnership holdings. Successful buyout firms often lay claim to some of the transactions fees that their funds generate. In addition, the most powerful limited partners -- large state pension funds, for instance -- may also command a share of the carried interest.

Private equity firms stay in business by launching new funds every three-to-five years. If a firm's previous funds have been successful, it can generally earn higher revenues with the new one by setting higher fees, demanding more variable compensation and raising more capital.

But there are striking differences in strategy and practice between venture capital and buyout funds -- the principal components of the private equity industry. To begin with, Yasuda notes, the study confirms what many investors already sense -- that the economics of venture capital and buyout firms are different, even though both depend upon fixed management fees for the preponderance of their revenues. The differences lie not only in the superior scalability of buyout versus venture capital funds, but also in the fundamental skill sets required.

Early-Stage Investing

Venture capitalists tend to be scientists and engineers by training, with the necessary experience in operations, marketing, management and related skills to help small companies grow. Early-stage investing is time- and labor-intensive, notes Yasuda, and even experienced VC professionals have difficulty overseeing more than five companies at once.

The typical venture capital firm has five partners and invests in five companies per year over the first five years of a fund's 10-year life, with the value of each early-stage investment rarely exceeding $100 million. On average, each VC professional is apt to be responsible for one new investment a year during the fund's first five years -- for an aggregate investment of $350 million to $500 million. That professional typically spends the fund's second five years aggressively fostering and monitoring those five companies.

VC funds tend to derive the bulk of their revenues from just 20% of their investments. They depend on hitting a "home run" -- a return five times greater than invested capital -- with one in every five investments. Another 20% of VC investments can be expected to fail or achieve minimal returns, with the remaining 60% returning an average 2.5-to-3 times invested capital -- not a fabulous result, considering the risks, but one most firms can live with.

Larger, more successful VC firms -- like Kleiner Perkins Claufield & Byers, known for such home runs as Amazon, Compaq, Genentech and Netscape; and Sequoia Capital (Google, Yahoo!, PayPal, Apple and YouTube) -- can raise substantially more capital in launching new funds, but they, too, are constrained by the time-consuming nature of VC work. To invest in more small companies with outsized potential, they must hire more VC professionals. Thus, in the world of VC firms, larger scale does not necessarily mean greater profitability.

Less Hand-Holding

The reason buyout funds are much more scalable than VC funds is that they invest in larger, more mature companies that typically need less hand-holding. In Metrick and Yasuda's sample, the median buyout fund began with $600 million in capital and invested an average $50 million in 10 to 12 different companies over its 10-year lifespan. By applying substantial leverage, buyout funds can acquire very large businesses -- on the order of Chrysler, RJR Nabisco or Hilton Hotels.

Because buyout funds invest in businesses already equipped with sophisticated management structures, a buyout firm partner can oversee large investments without a proportionate increase in personnel. The job is not to supply needed management skills, but rather to make sure there is effective management in place, to oversee financial strategy and to help identify new efficiencies.

Buyout partners are usually grounded in finance and operations. And because buyout funds invest in larger, more sophisticated businesses, the typical buyout partner need monitor no more than two or three investments at a time.

The paucity of debt capital available to private equity firms has had relatively little effect on venture capitalists, Yasuda says, because the investments they make are seldom highly leveraged. Right now, venture capital firms are much more concerned about the long-term drought in the IPO market, which limits their ability to exit investments and makes them more dependent upon selling their businesses to larger companies.

The depressed IPO market dates from the post-2000 technology crash, which occurred just after VC firms had launched their largest funds ever. Those funds are now eight or nine years old, Yasuda notes, and will have to exit their investments over the next two years. Should they fail to do so successfully, a number of venture capital firms could themselves go out of business.

By contrast, illiquid credit markets do direct harm to buyout firms because few investments look attractive to them without a heavy dollop of leverage. The buyout firms raised record amounts of equity capital before the debt markets collapsed last summer, and many now find it difficult to put that money to work. The longer the credit markets remain in the doldrums, the higher the odds that some funds will have to return capital to their limited partners or else start investing in a greater number of small- or mid-sized companies requiring greater oversight.

Should that happen, the buyout business might become a lot less scalable, and the economic differences between buyout and venture capital funds may be somewhat harder to discern.

Speaker Series in July - Joel Falcone from PerkinElmer

The Bay Area Working Professionals Finance Association has an exciting
new speaker event scheduled in July!

Our Speaker, Joel Falcone is CFO of PerkinElmer’s Optoelectronic
division. (http://optoelectronics.perkinelmer.com/)


Topic: Joel Falcone (CFO) “ Life as a CFO of a $500M+ Company”

Date: Saturday, July 26, 2008

Time: 12-1.00 Pm Lunch

Location: SRVCC

Room: TBD


Seating is limited please e-mail (RSVP) the Bay Area Finance
Association VP of Events, Alex Flores (alexaflo@cisco.com) or
Soyen Shih (sxshih@ucdavis.edu) or Lucie von Scheliha
(lvonscheliha@ucdavis.edu)as soon as possible to reserve your spots.

Speaker events are free for the Bay Area WP Finance association members.
Non Finance association members are welcome to the speaker events.
Your cost will be $5 for each event.

You can pay the Finance Association VP’s of Finance Ahmed Aly
(ibnadel@hotmail.com) or Damien Mar Chong (dmarchong@ucdavis.edu)

American Finance Association: The American Finance association is an excellent opportunity for students to be part of an academic community that discusses finance and economics theory.

The student membership is only 10$ /year.

The website iss as follows: http://www.afajof.org/

Announcing the GSM Investment Game - Register Now

Dear MBA Bay Area Working Professionals,

The GSM Finance Associations are hosting an Investment Game. The investment competition officially begins on May 8 and will run until June 5. Participants can register at anytime, before or during the competition period. After which time, winners (1st to 3rd) will be selected and announced accordingly.

There is a $5 entry fee to participate in the competition. The fee for members of the Bay Area Finance Association is waived. For non-members, please remit your payment by check payable to "UC Davis GSM Finance Club" or pay Cash to Damien Mar Chong / Ahmed Aly . (Note: The $5 entry fees will be used for UC Davis charity program.)

To join the competition, please register your full name using the following link.

Game ID: GSM_Investments
Open this link and read the competition summary including the rules:

http://vse.marketwatch.com/Game/StartViewGame.aspx?id=GSM_Investments

Click on the 'Join Game' link. If you are an existing Virtual Stock Exchange member, enter your Email address and Password in the login panel and get set to trade. If you are a new user, follow the link to register - it's easy!

Follow the instructions and start trading!

If you have questions or encounter any problems, please contact Colin Crane (MBA Day-Time Program) at 317.430.3813 or Alex Flores at 925.963.5124.

US Economy outlook from CFO perspective

After months of steady decline, the economic outlook can now only be described as bleak. Speaking at CFO's annual CFO Rising conference last month, veteran finance chief Jerry York said, "It's going to be a very bad recession, perhaps the worst I've seen in the 46 years I've been working." A majority of finance chiefs are similarly gloomy.

Optimism among finance executives reached a new low in this quarter's Duke University/CFO magazine Global Business Outlook Survey, with 72 percent of CFOs more pessimistic about the economy than they were last quarter and only 8 percent more optimistic. Pessimists outnumber optimists nine to one. CFOs also expressed less optimism about their own companies than ever before.

Click here if you are interested in knowing more...

History lessons from Bear Stearn crises

How to deal with banking crises

THE decline and fall of Bear Stearns illustrates both an old truth and a new one. The old truth is that when cash is scarce, he who has deep pockets is king. Bear Stearns is still standing only because JPMorgan Chase was solid enough to prop it up. The new truth lies in the Federal Reserve's role as matchmaker of last resort, smoothing the deal with a temporary loan of $30 billion. This shows just how far a financial supervisor's purview now extends. Even though Bear is not a fully regulated institution, the investment bank was deemed too central to the complex web of America's financial system to be allowed to fail.

Private-sector solutions to banking crises, in which strong institutions buy the weak, demand well-heeled banks. Just now, these are in short supply. Few institutions have been left unscathed by bad mortgage debts; JPMorgan Chase is a rare exception. When banks are threatened with insolvency, it is often the government—with the deepest pockets of all—that has to make good their losses. But how much might the state have to stump up? And how should it go about it? As today's credit crisis widens, commentators are turning to history as a guide.....

For the full story click here

Berkshire Hathaway 2007 Annual Report

Here is an excerpt from Berkshire Hathaway 2007 Annual Report


You may recall a 2003 Silicon Valley bumper sticker that implored, “Please, God, Just One More Bubble.” Unfortunately, this wish was promptly granted, as just about all Americans came to believe that house prices would forever rise. That conviction made a borrower’s income and cash equity seem unimportant to lenders, who shoveled out money, confident that HPA – house price appreciation – would cure all problems. Today, our country is experiencing widespread pain because of that erroneous belief. As house prices fall, a huge amount of financial folly is being exposed. You only learn who has been swimming naked when the tide goes out – and what we are witnessing at some of our largest financial institutions is an ugly sight.

Here is the link to 2007 annual report

http://www.berkshirehathaway.com/2007ar/2007ar.pdf

The Economic Stimulus Package: Will It Work, and for Whom?

Congress and the White House recently settled on an economic stimulus package with unusual speed, pushing the throttle to pull the economy out of a nosedive. Is this just election-year grandstanding, or does economic stimulus really work? And if it can work, what works best?

While some experts argue that priming the economy now is unnecessary, ill-timed or even counter-productive, those who support the concept applaud the design of the recently approved $168 billion package, centered on rebates of $600 to $1,200 for more than 130 million households. "They have moved remarkably quickly, so maybe this time it will, in fact, be well-timed," says Nicholas S. Souleles, finance professor at Wharton. Souleles conducted a study titled, "Household Expenditure and the Income Tax Rebates of 2001," that found a 2001 stimulus package did indeed help the economy recover from recession....but will the same help the 2008 economy...why is it different now...to read more

click here

World of investment banking

This video introduces students to the exciting world of investment banking. The project was generously funded and co-produced by UBS. So watch out the video is about 30 minutes and sometimes a UBS (a leading financial firm) promotional...here you go.

4 Ways to Pay - Join Our Club!

The membership dues are a single payment of $60. This entails a "lifetime" membership which will cover you for all three years at the GSM. You will maintain your membership as an alumni once you graduate.

FOUR WAYS TO PAY:

1. Pay using PayPal. E-mail Ahmed at gsmbafinance@gmail.com.
2. Put a check in Damien Mar Chong's box at the SRVCC.
3. Mail a check to: Damien Mar Chong or Ahmed Aly(see distribution email for their addresses

4. Give your check to any of the Finance Association officers.

Payment will only be accepted in the form of checks or via PayPal. Your returned check will be your receipt. Please make the check payable to: "UC Davis GSM Finance Club"

Thank you,
Damien Mar Chong, Co-VP Finance
Ahmed Aly, Co-VP Finance

Buffet comes to rescue

In a live telephone call to Squawk Box of CNBC, Buffett offered to reinsure $800 billion in municipal bonds now insured by Ambac, MBIA and FGIC, effectively giving them a AAA credit rating. Those insurers are in danger of losing their AAA credit ratings due to problems with subprime mortgages and other loans.

Buffett told that he sent that offer to the bond insurers last week, and that he's giving them 30 days to find a better deal.

According to Buffett one bond insurer turned him down, and he hasn't yet heard from the other two.Buffett wouldn't say which company turned him down. He said he didn't think regulators could do much to force the bond insurers to accept his offer, unless they took over the companies themselves.

Here is the link to that letter sent by Ajit Jain (CEO of several reinsurance businesses for Berkshire)

Link to article

What do you think about this offer?

BNET.com

Here is a great web resource full of free management and business advice for MBA students. Topics include interviewing tips, management advice, strategy, investing, reference library, etc, etc.

www.bnet.com

Microsoft Eyes Debt Sale to Finance Yahoo Bid

Finance Students following Microsoft's intended acquisition of Yahoo might find this interesting if you've ever... "wondered why Microsoft sits on the pile of cash. It doesn’t make a lot of financial sense.”

The New York Times
February 5, 2008

Microsoft said on Monday it might borrow money for the first time in its history to fund a portion of its $44.6 billion unsolicited offer for Yahoo.

Microsoft’s chief financial officer, Chris Liddell, said the software company might issue some debt to finance the cash portion of its 50-50 stock and cash offer for Yahoo, instead of drawing down its entire $21 billion cash pile.

“It’s likely we’re actually going to borrow for the first time,” Mr. Liddell said in an annual strategy meeting with analysts. “It’s going to be a mixture of the cash we have on hand plus debt.”

Mr. Liddell declined to say whether Microsoft was already buying Yahoo stock on the open market. He also did not give any information on what form of debt Microsoft will seek in the capital markets.

Microsoft may attain the highest AAA rating, James Crandall, head of syndication at Calyon New York, told Bloomberg News. A Microsoft bond maturing in 2018 might yield 1.60 to 1.70 percentage points more than a United States Treasury security of the same maturity, Mr. Crandall told Bloomberg.

That would be a total yield of 5.2 percent to 5.3 percent, based on current Treasury prices.
Analysts applauded Microsoft’s decision to take on debt.

“Microsoft can probably get a lower price of debt than equity,” said Kim Caughey, senior analyst at the Fort Pitt Capital Group. “I’ve often wondered why Microsoft sits on the pile of cash. It doesn’t make a lot of financial sense.”

Mr. Liddell, when asked why Microsoft chose to dilute its stock instead of making an all-cash offer, said analysts need to keep the offer in perspective with the $31 billion that Microsoft spent in share buybacks and dividends in fiscal 2007.

Microsoft shares fell 26 cents to $30.19 in Nasdaq trading, while Yahoo shares rose 95 cents to $29.33.

Some Thoughts on "Value Investing" Philosophy

First of all, I would like to thank everyone who supported our efforts to start WP Finance Association. The response has been beyond anyone’s imagination. Few weeks back, it was just an idea like many other great things in life, but with your dedicated work and support we have one of the largest student associations in UCD GSM history.

I know that in very near future, some of you will get to meet one the best investor of all time - Mr. Warren Buffett. I was fortunate enough to be part of Omaha trip last year and it was one of the best experiences of my life. Ever since, meeting Oracle of Omaha (and riding with him on front sit in his car), I have been studying his life work and his style of investing. Buffet’s investing style is heavily influenced by two legends of investing world

1. Benjamin Graham: Buffet’s mentor and one of biggest proponent of “Value Investing”
2. Philips Fisher: “One of the great investors of all time” according to Morningstar

I wanted to share some thoughts with you about Value investing and Warren Buffet’s approach.

Who is a value investor?

The value investor, perhaps more than any other type of investor, is more concerned with the business and its fundamentals than other influences on the stock’s price. Fundamentals, such as earnings growth, dividends, cash flow, and book value are more important than market factors on the stock’s price or chart patterns (Remember Professor Barber’s comments on this?). Value investors are also “buy and hold” investors who are with a company for the long term. If the fundamentals are sound, but the stock’s price is below its obvious value, the value investor knows this is a likely investment candidate. The market has incorrectly valued the stock. When the market corrects that mistake, the stock’s price should experience a nice rise.

Here are some of the criteria I use to find “Value Stock”


• A Price Earnings Ratio (P/E) in the bottom 10 percent of its sector.
• A PEG of less than one. A PEG of less than one may indicate the stock is undervalued.
• A Debt to Equity Ratio of less than one.
• Strong earnings growth over an extended period. A realistic number might be in the 6% - 8% range over 7 to 10 years.
• A Price to Book ratio of one or less.
• Don’t pay more that 60% to 70% of the stock’s intrinsic per share price
• Above average growth on ROE for last five year




As mentioned earlier, one of the biggest challenges in Value investing is to understand the business model itself. Phil Fisher came up with a series of questions that helps to evaluate a company for investment perspective. These questions should be asked to key suppliers, customers and competitors.


1. Does the company have products or services with sufficient market potential to make possible a sizable increase in sales for at least several years?
2. Does the management have a determination to continue to develop products or processes that will further increase total sales potentials when the growth potentials of currently attractive product lines have largely been exploited?
3. How effective are the company's research and development efforts in relation to its size?
4. Does the company have an above-average sales organization?
5. Does the company have a worthwhile profit margin?
6. What is the company doing to maintain or improve profit margins?
7. Does the company have outstanding labor and personnel relations?
8. Does the company have outstanding executive relations?
9. Does the company have depth to its management?
10. How good are the company's cost analysis and accounting controls?
11. Are there other aspects of the business, somewhat peculiar to the industry involved, which will give the investor important clues as to how outstanding the company may be in relation to its competition?
12. Does the company have a short-range or long-range outlook in regard to profits?
13. In the foreseeable future will the growth of the company require sufficient equity financing so that the larger number of shares then outstanding will largely cancel the existing stockholder's benefit from this anticipated growth?
14. Does the management talk freely to investors about its affairs when things are going well but "clam up" when troubles and disappointments occur?
15. Does the company have a management of unquestionable integrity?



I strongly believe the Buffett’s style of invest is amalgamation of these two legendry investors along with his own genius.

The following are some questions to determine what business to buy, based on the book Buffettology by Mary Buffett:

1. Is the company in an industry with good economics, i.e., not an industry competing on price. Does the company have a consumer monopoly or brand name that commands loyalty? Can any company with an abundance of resources compete successfully with the company?
2. Are the Owner Earnings on an upward trend with good and consistent margins?
3. Is the debt-to-equity ratio low or is the earnings-to-debt ratio high, i.e. can the company repay debt even in years when earnings are lower than average?
4. Does the company have high and consistent Returns on Invested Capital?
5. Does the company retain earnings for growth?
6. The business should not have high maintenance cost of operations, high capital expenditure or investment cash outflow. This is not the same as investing to expand capacity.
7. Does the company reinvest earnings in good business opportunities? Does management have a good track record of profiting from these investments?
8. Is the company free to adjust prices for inflation?
9. Buffett also concentrates when to buy. He does not want to invest in businesses with indiscernible value. He will wait for market corrections or downturns to buy solid businesses at reasonable prices, since stock market downturns present buying opportunities.

He is known for being conservative when speculation is rampant in the market and being aggressive when others are fearing for their capital. This contrarian strategy is what led Buffett's company through the Internet boom and bust without significant damage, although critics have also noted that it may have led Berkshire to miss out on potential opportunities during the same period.


One of the biggest questions in investing is – when to sell? Buffets’s preferred holding period is forever, but recently he has sold stocks in few companies for e.g. PetroChina. I personally believe that one should sell their investment for one of these reasons only.

• Fundamental shift in economics or strategy of the business
• Health or Education related expenses
• Liquidity concerns (assuming you exhausted all credit opportunities)
• Better investment opportunity

Also, it is very important to keep tax consequences in mind when one does that (learned that after taking Tax Class from Professor Yetman).

In summary I believe value style of investing demands emotional discipline, understanding of core business and above all patience.

Here is a quote I think reflects mentality some of so called “Investment Houses”

We believe that according the name 'investors' to institutions that trade actively is like calling someone who repeatedly engages in one-night stands a 'romantic.'

Warren Buffett

Congratulations Bay Area WP Finance Assoc. Officers

We are thrilled to announce the officers of the inaugural GSM Bay Area Finance Association! We have 11 great candidates on our team, and we can't wait to start working with the Daytime and Sacramento programs to create new friendships, opportunity, and learning for all GSM students.

Congratulations to our inaugural leadership team!

GSM Bay Area Finance Association 2008 Officers:

Co-Presidents
Juliet Hodder, 3rd year
Amit Shah, 2nd year

Co-VP's Events
Alex Flores, 2nd year
Soyen Shih, 1st year
Lucie von Scheliha, 1st year

Co-VP's Finance
Damien Mar Chong, 2nd year
Ahmed Aly, 1st year

Co-VP's Communications
Sekhar Varanasi, 2nd year
Faris Fyzee, 1st year

Co-VP's External Relations
Daniel Zizmor, 2nd year
Ashok Shivarudraiah, 1st year