| APM Alumni Updates:
Matt Brunner (APM S07) has accepted a position as an Associate at Sandler O'Neill in the Fixed Income division in New York.Phil Linville (APM F08) is now a Senior Analyst at Petro Capital, Dallas,TX
Charlie Shreve (APM F08) has moved to a new position as an analyst with the Industrials group at Jefferies & Company in New York.
Tom John (APM S08) has accepted a position as CFO at Deborah John and Associates.
Trevor Nohe (APM S07) is Venture Fellow at EdgeHill Capital Partners in Austin, TX
Rob Ralston (APM S08) has accepted a position at Mission Peak Capital in Kansas City.
Mark Robinson (APM S07) accepted a position as an associate at Great Range Capital, a private equity group in Kansas City.
James Coder (APM F10) has passed level 1 of the CFA exam.
Michael Quinn (APM F03) has accepted a position as a Business Consultant with Navistar Inc.
Alex Vezendan (APM F10) is now an Investment Banking Analyst at Stifel Nicolaus Weisel in San Francisco.
Peggy Cameron Wysocki (APM S05) was married in June 2010. Her first child was born in April, 2011. She serves as Supervisor of Portfolio Administration for Calamos Investments in Naperville, IL.
Rekha Patnaik (APM F07) has been promoted to VP/Manager, Corporate Development at UMB Bank, Kansas City.
Rex Reinhardt (APM F05) has accepted a position as a VP with Valgard Capital Partners, Kansas City.
John Krenger (APM F08) is now Energy Lending Credit Specialist with BOK Financial.
Daniel Sailors (APM F05) has been promoted to Vice President at Riverston Holdings, New York.
Eric Gephart (APM S03) in now Commodities and Freight Logistics provider at North American Van Lines, Inc.
Kelly Robin Miller (APM S02) has left JP Morgan and New York after almost 10 years. She has accepted a position as the new role with US Bank in their private bank in Minneapolis.
Derek Smashey (APM F04) has been promoted to Co-Portfolio Manager at Scout Investments, Kansas City.
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School of Business Endowment
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KU School of Business
1300 Sunnyside Avenue
Lawrence, KS 66045-7585
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| Thanks to our donors
Gary Abernathy
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Dear APM reader,
The APM students, Jeff Morrison, and I wish you a very happy holiday season. The class is winding down and will be finished on Dec 7. We finished the third quarter with $855,549. Since the end of the third quarter, we're up almost 8 percent to $923,698.
We had a great group of speakers. Thanks to all our speakers.
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Kent McCarthy
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John Dicus
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Todd Preheim
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Steve Koenig
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Kent Townsend
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Aaron Mesmer
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Dan Drake
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Bob McAdoo
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Wit Solberg
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Tim Burger
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Jack Gaumnitz
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Suresh Ramamurthi
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Steve Kovzan
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FX Pointers from the Street
By Group 1: Brian Braham, Jared Nuss, Aditya Rastogi and Thad Sieracki
On August 31, 2011, Steve Koenig, a 25-year Wall Street veteran with extensive FX experience and Latin America exposure, provided the class with numerous perspectives of risks experienced by Interceramic. Interceramic's financial statements and accounting are in Mexican Pesos. However, 35% of Interceramic's revenues are generated in the United States. Thus, it is exposed to currency exchange risk. The company currently does not appear to hedge the currency risk, although it does hedge interest-rate risk and natural-gas-price risk. Steve also discussed the liquidity risks and lack of trading volume associated with Interceramic's stock, and compared it to that of a private equity investment. Interceramic has been very volatile and has traded in the range of $1.11 and $1.71 in the last 52 weeks.
Steve also cautioned the class about Interceramic's China market strategy, stating that a small show room investment should warrant skepticism about future growth opportunities. He further challenged the China-focused strategy, making the point that because of the weakening Peso, sales in the United States and Latin America (particularly Brazil) should be more attractive.
Understanding these risks will help us, as analysts, make better decisions and recommendations. Global risks such as foreign currency and interest rate fluctuations, as well as risks related to trading volume and liquidity, are important factors when analyzing companies with global operations.
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"Skin in the Game" - A New Private Equity Addition to APM
By Group 2: Ryan Widrig, Jake Painter and Derek Dixon
Tim Burger, an MBA alumnus of the University of Kansas, finished the CFA program and went to work for UMB as a Scout Funds analyst. In 2008 Tim joined Waddell and Reed where he is an investment analyst and works on a $30 billion asset strategy fund.
Tim came to our class and spoke to us about two assets management (AUM) companies, Apollo Global Management (APO) and Kohlberg Kravis Roberts & Co (KKR). Tim discussed the many ways to look at the companies but focused on valuing their business utilizing a sum-of-the-parts valuation. . Tim effectively employed the Socratic Method as he engaged each group on their valuation technique and assumptions. In particular he questioned how to value companies that have a significant amount of their own capital invested in both liquid and illiquid investments. Tim's discussion and presentation answered many of the questions that challenged our APM class. He helped broaden our outlook on how to value these AUM firms.
Tim left the APM class with one big question to keep in mind that stems from what Warren Buffet likes to tell investors: if you don't understand the business, then throw it in the "hard pile". Tim's keen insights on KKR and APO helped us to understand their businesses so we could keep it out of the "hard pile".
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APM gets a lesson in overcoming failure and successful entrepreneurship
By Group 3: Richard Cornett, Jace Frizell and Neil Wiese
 | | Drake and longtime KU business professor Mark Hirschey |
Dan Drake, a former APM student and KU alumni, recently gave a presentation to the APM class about his most recent venture, MoJack Distributors. His discussion included a brief history of his previous endeavors, and how he took the lessons he learned from those letdowns and applied them to help make Mojack into a successful enterprise. Dan is currently Chairman of MoJack Distributors, a lawn services product manufacturer. MoJack is an innovative startup whose flagship products, mower lifts, provide a niche product that has been wildly successful.
Dan was one of the first students in the pioneering APM class and later went to work for Kent McCarthy's hedge fund as a trader and analyst specializing in IPOs. Currently, Dan owns Liberty Asset Management, in addition to his interest in Mojack. He discussed his previous experiences in venture capital and the value drivers that helped Mojack Distributors have an astounding 520% sales growth in 2010. Dan has been key in developing an extremely capital-efficient company with sales expected to double in 2011.
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A Community Bank's Great Navigation of the U.S. Financial Overhaul
By Group 4: Maxim Belousuv, James Lemos, Richard Linkesch and Bel McCoy
 On September 28, 2011, senior executives from Capitol Federal, Inc., Kent Townsend, CFO; John Dicus, CEO; Tim Winfield, Head of Investor's relations, honored APM class by their visit to present a newly restructured company. The ownership structure of Capitol Federal before restructuring consisted of public shareholders (including APM) and a mutual holding company owning 70% of Capitol Federal. The mutual holding company waived its right for dividends, significantly boosting dividends payout for public shareholders. However, after the Dodd-Frank legislation, such structure is no longer allowed, and Capitol Federal raised equity in 2010 to become Capitol Federal, Inc. trading under ticker CFFN.
We spent class talking mostly about current industry trends and challenges (e.g. flattening of yield curve) and executives' view of the future for Capitol Federal. The most interesting part of the discussion was evaluating possible alternatives, how to use excess capital after the restructuring. The most compelling choices under consideration were special dividends for the next two years, a share buy-back program, or possible acquisition of a similar company within the Midwest region. All of these options create value for the current shareholders, further encouraging the possible addition of this stock to our portfolio.
Capitol Federal has remained in a very strong financial position after the financial crisis. With its great reputation in the Midwest region, juxtaposed with current restructuring, Capitol Federal has caught the eye of APM and will stay on its radar.
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Third Quarter Performance Update
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Current
Quarter
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Year to
Date
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Last 4
Quarters
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Last 3
Years
| | SP500 | -13.8 | -8.7 | 1.2 | -5.8 | | SP600 | -19.8 | -13.8 | 0.2 | 1.3 | | NASDAQ | -12.7 | -8.3 | 3.0 | 12.0 | | APM | -16.7 | -17.9 | -9.0 | 2.6 |
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