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PORTFOLIO MANAGER’S REVIEW

A Monthly Publication of BeyondProxy LLC  www.manualofideas.com  editor@manualofideas.com  May 24, 2010

When asked how he became so successful, Buffett answered: “we read hundreds and hundreds of annual reports every year.”

Edited by the
Manual of Ideas
Research Team

“If our efforts can further the THE SUPERINVESTOR REPORT


goals of our members by giving
them a discernible edge over
other market participants, we ► Snapshot of 98 companies owned by superinvestors
have succeeded.” ► Latest holdings of 21 top investors
Top Five Ideas In This Report ► 19 companies profiled by MOI research team
► Proprietary selection of Top 5 candidates for investment
Baxter International
(NYSE: BAX) …………………. p. 28
CapitalSource
(NYSE: CSE) …………………. p. 32
DirecTV
(NYSE: DTV) …………………. p. 36 Superinvestor companies mentioned in this issue include
Sealed Air Abbott Labs, ADC Telecom, AIG, Airgas, Alleghany,
(NYSE: SEE) …………………. p. 40
American Public Education, Aon Corp., Aspen Technology,
Take-Two Interactive Bally Technologies, Bank of America, Baxter International, BioFuel Energy,
(Nasdaq: TTWO) …………….. p. 44
Brookfield Asset Management, CapitalSource, Cardinal Health, CareFusion,
Also Inside Chesapeake Energy, CIT Group, Citigroup, Coca-Cola,
Cognizant Technology, Comcast, Corrections Corp., Cresud, Dell,
Editor’s Commentary …………….. p. 4
Diamond Hill Investments, DineEquity, DIRECTV, Dun & Bradstreet, eBay,
Portfolios with Signal Value™ …. p. 5
EMC, Energizer Holdings, Enzon Pharma, Fairfax Financial, GameStop,
New/Increased Holdings ………. p. 46
Genzyme, Hillenbrand, Hyatt Hotels, Intelligent Systems,
Unchanged/Offsetting Holdings .. p. 72
Interactive Intelligence, International Assets, International Coal,
Reduced/Eliminated Holdings .... p. 96
Investors Title, Johnson & Johnson, Kraft Foods, Level 3 Comms,
98 Superinvestor Stocks ……… p. 100
Liberty Interactive, Lions Gate, Lockheed Martin, MasterCard, Merck,
About Portfolio Manager’s Review Microsoft, Molson Coors, Motorola, Omnicare, Oracle, OSI Pharma,
Overstock.com, Paychex, PetSmart, Pfizer, Philip Morris, Progressive Corp.,
Our goal is to bring you investment
QUALCOMM, Redwood Trust, Republic Airways, RSC Holdings, Ryanair,
ideas that are compelling on the
basis of value versus price. In our SandRidge Energy, Sealed Air Corp., Solar Capital, Take-Two Interactive,
quest for value, we analyze the top Target, Telephone & Data, Tesoro, Teva Pharma, Texas Industries,
holdings of top fund managers. We
also use a proprietary methodology
Theravance, Time Warner, TravelCenters, Tree.com, tw telecom,
to identify stocks that are not widely Union Pacific, USG, Valero Energy, Viacom, ViaSat, Visa, Vodafone,
followed by institutional investors. Walgreen, Wal-Mart, Weight Watchers, WellPoint, Wells Fargo,
Our research team has extensive Western Union, Winthrop Realty, WPCS International, Xerox,
experience in industry and security
analysis, equity valuation, and Yum! Brands, and more.
investment management. We bring a
“buy side” mindset to the idea
generation process, cutting across
industries and market capitalization (profiled companies are underlined)
ranges in our search for compelling
equity investment opportunities.

Copyright Warning: It is a violation of federal copyright law to reproduce all or part of this publication for any purpose without the prior written consent of
BeyondProxy LLC. Email support@manualofideas.com if you wish to have multiple copies sent to you. © 2008-2010 by BeyondProxy LLC. All rights reserved.
Table of Contents
EDITOR’S COMMENTARY .............................................................................4
PORTFOLIOS WITH SIGNAL VALUE™ ........................................................5
BILL ACKMAN, PERSHING SQUARE ............................................................................................ 6
ZEKE ASHTON, CENTAUR ......................................................................................................... 7
BRIAN BARES, BARES CAPITAL ................................................................................................. 8
BRUCE BERKOWITZ, FAIRHOLME............................................................................................... 9
RICHARD BREEDEN, BREEDEN CAPITAL .................................................................................. 10
WARREN BUFFETT, BERKSHIRE HATHAWAY ............................................................................ 11
IAN CUMMING & JOE STEINBERG, LEUCADIA ............................................................................ 12
DAVID EINHORN, GREENLIGHT ................................................................................................ 13
TOM GAYNER, MARKEL GAYNER ............................................................................................ 14
GLENN GREENBERG, BRAVE W ARRIOR ................................................................................... 15
MASON HAWKINS, SOUTHEASTERN ......................................................................................... 16
CHRIS HOHN, CHILDREN’S INVESTMENT .................................................................................. 17
CARL ICAHN, ICAHN CAPITAL .................................................................................................. 18
SETH KLARMAN, BAUPOST ..................................................................................................... 19
EDDIE LAMPERT, RBS PARTNERS .......................................................................................... 20
DAN LOEB, THIRD POINT ........................................................................................................ 21
STEVE MANDEL, LONE PINE ................................................................................................... 22
MOHNISH PABRAI, PABRAI FUNDS ........................................................................................... 23
DAVID TEPPER, APPALOOSA................................................................................................... 24
PREM WATSA, FAIRFAX.......................................................................................................... 25
WALLY W EITZ, WEITZ FUNDS ................................................................................................. 26

TOP FIVE SUPERINVESTOR SELECTIONS.............................................. 28


BAXTER INTERNATIONAL (BAX) – LONE PINE  ....................................................................... 28
CAPITALSOURCE (CSE) – BAUPOST , PABRAI , THIRD POINT  ...................................... 32
DIRECTV (DTV) – BAUPOST , SOUTHEASTERN , THIRD POINT , WEITZ  ........................ 36
SEALED AIR (SEE) – SOUTHEASTERN  .............................................................................. 40
TAKE-TWO INTERACTIVE (TTWO) – ICAHN  .......................................................................... 44

NEW OR INCREASED SUPERINVESTOR HOLDINGS ............................. 46


ASPEN TECHNOLOGY (AZPN) – THIRD POINT  ................................................................... 46
HILLENBRAND (HI) – BREEDEN  ........................................................................................... 50
PROGRESSIVE CORP. (PGR) – W EITZ  .............................................................................. 54
TEXAS INDUSTRIES (TXI) – SOUTHEASTERN  ........................................................................ 58
UNION PACIFIC (UNP) – CHILDREN’S  .................................................................................. 62
WEIGHT W ATCHERS (WTW) – BARES , WEITZ  ............................................................... 68
WPCS INTERNATIONAL (WPCS) – RILEY , MILLER  ...................................................... 70

UNCHANGED OR OFFSETTING SUPERINVESTOR HOLDINGS ............ 72


ORACLE (ORCL) – CHILDREN’S  ......................................................................................... 72
PAYCHEX (PAYX) – MARKEL  ............................................................................................. 76
SANDRIDGE ENERGY (SD) – FAIRFAX  ................................................................................ 80
USG CORP. (USG) – BERKSHIRE , FAIRFAX  ................................................................... 84
VISA (V) – CHILDREN’S , LONE PINE  ................................................................................ 88
WALGREEN (WAG) – BARES , LONE PINE , MARKEL , THIRD POINT  ......................... 92

REDUCED OR ELIMINATED SUPERINVESTOR HOLDINGS ................... 96


HYATT HOTELS (H) – PERSHING SQUARE  ......................................................................... 96

SNAPSHOT OF 98 SUPERINVESTOR HOLDINGS ................................. 100


IN ALPHABETICAL ORDER ..................................................................................................... 100
BY MARKET VALUE .............................................................................................................. 102
BY SECTOR......................................................................................................................... 104
STOCK PRICE PERFORMANCE .............................................................................................. 106
FREE CASH FLOW ............................................................................................................... 108
P/E MULTIPLES ................................................................................................................... 110
PERCENTILE RANK WITHIN INDUSTRY .................................................................................... 112
INSIDER BUYING AND OWNERSHIP ........................................................................................ 114

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 3 of 118
Editor’s Commentary
The quarterly fund holdings reports have been filed with the SEC, and we once
again shine a spotlight on the top ideas of top investment managers. Inside, you’ll
find one-page snapshots of the largest investments of 21 value-oriented funds, along
with our proprietary Signal Value™ ranking of each manager’s favorite ideas.
We also draw your attention to the following five investment candidates:
Baxter International (BAX) sells medically necessary products and has strong
franchises in medication delivery, hemophilia and kidney therapies. With a deep
drug pipeline and ~20% of revenue from developing countries, prospects for organic
growth appear favorable. While U.S. healthcare reform is pressuring profitability,
Baxter should preserve gross margins over time due to the strength of its products.
The shares are down 30% since March 31st and trade at an enticing 10x 2010E EPS.
Commercial lender CapitalSource (CSE) added retail deposits in 2008 and
managed to escape the fate of competitor CIT Group. Pre-provision earnings have
grown and should exceed credit-related charges by next year. The company has
extended debt maturities and monetized certain assets, strengthening the balance
sheet. Critically, the bulk of the legacy loan portfolio is securitized with non-
recourse debt. With shares trading at 0.9x tangible book value, the market may not
be ascribing sufficient value to the earning power of the CapitalSource franchise.
Superinvestor shareholders include Baupost Group and Pabrai Funds.
DirecTV (DTV) faces some headwinds in terms of subscriber acquisition costs
and churn in the relatively mature U.S. pay-TV market. However, the business has
grown in a weak economy and FCF has increased. The shares trade at a trailing FCF
yield of 9%, and the company appears likely to return cash to shareholders. Returns
to equity holders could be enhanced by adding balance sheet leverage. Superinvestor
shareholders include Baupost Group, Soros, Southeastern, Third Point, and Weitz.

Packaging provider Sealed Air (SEE) looks set to grow FCF in 2010 after
completing a multi-year manufacturing reorganization that required large capex.
Management is guiding for $300+ million of FCF in 2010, implying an 8+% yield
(13x 2010E EPS). We find this valuation noteworthy due to Sealed Air’s defensible
market position and roughly 300 bps of margin improvement potential by 2012-13.
Mason Hawkins’ Southeastern initiated a position in Sealed Air in the first quarter.
Take-Two Interactive (TTWO) owns the popular video game franchise Grand
Theft Auto. While the business is hit-driven and influenced by hardware launches,
the company’s core brands have achieved repeat blockbuster sales. Given large
equity ownership by activists Icahn and Falcone — Carl Icahn’s son Brett became a
director in April — the sale of the distribution business could be a precursor to a sale
of the company. With EV-to-revenue of 1.0-1.3x based on FY10 guidance and an
estimated FY’11 P/E of 8x, the valuation is compelling in a potential M&A scenario.
Finally, we invite you to send us one or two names of superinvestors whom we
don’t cover at the moment but should do so going forward. We are looking for value-
oriented investors with a strong long-term investment track record and a highly
concentrated equity portfolio. Email us at editor@manualofideas.com.
Sincerely,

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 4 of 118
Portfolios With Signal Value™

Revealing the Top Ideas of Top Investors

“Signal value” as opposed to “noise.” We present the MOI Signal Rank answers the question, “What are this
holdings of some of the world’s top investors. We look for investor’s top ten ideas right now?” Rather than simply
investors who have amassed impressive track records over presenting each investor’s largest holdings as of the recently
long periods of time. We choose these investors carefully filed quarter end, the MOI’s proprietary methodology ranks
to avoid the noise inherent in most 13F-HR filings. the companies in each investor’s portfolio based on the
investor’s current level of conviction in each holding, as
Top investors included in this section: judged by the MOI.
• William Ackman, Pershing Square Our proprietary methodology takes into account
• Zeke Ashton, Centaur a number of variables, including the size of a position in an
• Brian Bares, Bares Capital investor’s portfolio, the size of a position relative to the
• Bruce Berkowitz, Fairholme
market value of the corresponding company, the most recent
• Richard Breeden, Breeden Capital
quarterly change in the number of shares owned, and the
• Warren Buffett, Berkshire Hathaway
change in the stock price of a position since the most recent
• Ian Cumming & Joe Steinberg, Leucadia
• David Einhorn, Greenlight quarterly filing date.

• Glenn Greenberg, Brave Warrior For example, an investor might have the most
• Tom Gayner, Markel Gayner conviction in a position that is only the tenth-largest
• Mason Hawkins, Southeastern position in such investor’s portfolio. This might be the case
• Chris Hohn, Children’s Investment Fund if an investor invests in a small company, resulting in a
• Carl Icahn, Icahn
holding that is simply too small to rank highly based on size
• Seth Klarman, Baupost
alone. On the other hand, such a holding might represent
• Eddie Lampert, RBS (ESL)
19.9% of the shares outstanding of the subject company,
• Dan Loeb, Third Point
• Steve Mandel, Lone Pine suggesting a high level of conviction. Our estimate of the

• Mohnish Pabrai, Pabrai Funds conviction level would rise further if the subject company
• David Tepper, Appaloosa has a 20% poison-pill threshold, thereby suggesting that the
• Prem Watsa, Fairfax investor has bought as much of the subject company as is
• Wally Weitz, Weitz Funds practically feasible.

Missing your favorite superinvestor?


Let us know at editor@manualofideas.com.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 5 of 118
Bill Ackman, Pershing Square
Bill Ackman, managing member of Pershing Square Capital, is a value-oriented activist investor. He runs a concentrated
portfolio with the largest ten equity investments accounting for the vast majority of his long book. Before the credit crunch
developed into a full-blown economic crisis, Ackman made a strong case for why MBIA (MBI) and AMBAC (ABK) were
overvalued and fundamentally more distressed than the market had judged at the time. On the long side, Ackman has
approached large companies, including McDonald’s (MCD) and Target (TGT), with proposals for unlocking value.

MOI Signal Rank™ – Top Current Ideas of Pershing Square


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Kraft Foods / KFT 52,357 30.03 -1% 32,801 new 2% 29% 15x 13x n/m
2 Yum! Brands / YUM 18,964 40.57 6% 15,200 >100% 3% 18% 16x 15x n/m
3 General Growth / GGP 4,601 14.50 -10% 23,954 0% 8% 10% n/a n/a >9.9x
4 Corrections Corp. / CXW 2,319 20.39 3% 10,937 0% 10% 7% 17x 16x 1.6x
5 Borders Group / BGP 161 2.69 56% 10,598 0% 18% <1% 16x 6x 1.0x
6 Greenlight Re / GLRE 905 24.85 -7% 250 0% <1% <1% n/a n/a 1.3x
7 Landry's Restaurants / LNY 365 22.47 25% 1,554 0% 10% 1% 90x 43x 1.5x
8 Target / TGT 43,767 55.17 5% 20,686 -1% 3% 34% 14x 13x 2.9x

Top Holdings of Pershing Square – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Target / TGT 43,767 55.17 5% 20,686 -1% 3% 34% 14x 13x 2.9x
2 Kraft Foods / KFT 52,357 30.03 -1% 32,801 new 2% 29% 15x 13x n/m
3 Yum! Brands / YUM 18,964 40.57 6% 15,200 >100% 3% 18% 16x 15x n/m
4 General Growth / GGP 4,601 14.50 -10% 23,954 0% 8% 10% n/a n/a >9.9x
5 Corrections Corp. / CXW 2,319 20.39 3% 10,937 0% 10% 7% 17x 16x 1.6x
6 Landry's Restaurants / LNY 365 22.47 25% 1,554 0% 10% 1% 90x 43x 1.5x
7 Borders Group / BGP 161 2.69 56% 10,598 0% 18% <1% 16x 6x 1.0x
8 Greenlight Re / GLRE 905 24.85 -7% 250 0% <1% <1% n/a n/a 1.3x

New Positions Sold Out Positions


Kraft Foods / KFT Automatic Data / ADP
Hyatt Hotels / H

* *
Portfolio Metrics Sector Weightings

Portfolio size $3.4 billion


Top 10 as % of portfolio 100% Consumer
Non-
Median market value $5.8 billion
Cyclical
Average market value $15 billion 29%
Median P/E (this FY) 16x
Median P/E (next FY) 15x
Median P / tangible book 1.5x Services
71%
*
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 6 of 118
Zeke Ashton, Centaur
Zeke Ashton is founder and managing partner of Centaur Capital, a Dallas-based investment firm. Centaur Capital serves as
advisor to the Centaur family of private partnerships using a value-oriented long/short equity strategy. Centaur is also the
sub-advisor to the Tilson Dividend Fund, a mutual fund utilizing an income-oriented value investing strategy.

MOI Signal Rank™ – Top Current Ideas of Centaur


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 EMC / EMC 38,173 18.57 3% 230 new <1% 8% 16x 14x 7.1x
2 Fidelity National / FNF 3,372 14.68 -1% 298 30% <1% 8% 17x 13x 2.7x
3 Alleghany / Y 2,703 290.60 0% 16 2% <1% 8% 17x 17x 1.0x
4 PetSmart / PETM 4,010 33.27 4% 93 new <1% 6% 18x 16x 3.5x
5 MVC Capital / MVC 340 14.00 3% 313 0% 1% 8% 23x 31x .8x
6 eBay / EBAY 29,080 22.25 -18% 109 94% <1% 4% 13x 12x 4.0x
7 Biglari Holdings / BH 441 307.00 -19% 6 99% <1% 3% n/a n/a 1.6x
8 Vodafone / VOD 10,391 19.74 -15% 120 >100% <1% 4% 8x 8x .7x
9 GameStop / GME 3,339 21.85 0% 37 new <1% 2% 8x 8x 6.5x
10 Diamond Hill Invest. / DHIL 193 69.74 2% 14 new <1% 2% 17x 16x 8.4x

Top Holdings of Centaur – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Lab Corp. of America / LH 8,057 77.47 2% 60 -23% <1% 9% 14x 13x n/m
2 Alleghany / Y 2,703 290.60 0% 16 2% <1% 8% 17x 17x 1.0x
3 MVC Capital / MVC 340 14.00 3% 313 0% 1% 8% 23x 31x .8x
4 Fidelity National / FNF 3,372 14.68 -1% 298 30% <1% 8% 17x 13x 2.7x
5 EMC / EMC 38,173 18.57 3% 230 new <1% 8% 16x 14x 7.1x
6 Northrop Grumman / NOC 19,063 63.29 -3% 61 -14% <1% 7% 11x 9x n/m
7 PetSmart / PETM 4,010 33.27 4% 93 new <1% 6% 18x 16x 3.5x
8 Chipotle / CMG 4,361 138.61 23% 19 -54% <1% 5% 28x 24x 6.1x
9 Capital Southwest / CSWC 353 94.44 4% 27 0% <1% 5% n/a n/a .8x
10 eBay / EBAY 29,080 22.25 -18% 109 94% <1% 4% 13x 12x 4.0x

New Positions Sold Out Positions


Diamond Hill Invest. / DHIL Gravity / GRVY Cisco Systems / CSCO Seabridge Gold / SA
EMC / EMC MIND C.T.I. / MNDO Foot Locker / FL SPDR Gold Trust / GLD
GameStop / GME PetSmart / PETM P.F. Chang's / PFCB Yahoo! / YHOO

* *
Portfolio Metrics Sector Weightings

Portfolio size $54 million


Other Financial
Top 10 as % of portfolio 68%
32% 31%
Median market value $3.3 billion
Average market value $23 billion
Median P/E (this FY) 16x
Median P/E (next FY) 13x
Technology
Median P / tangible book 1.6x 10% Services
* 27%
Based on information provided to The Manual of Ideas. Excludes portfolio
cash, certain non-U.S. holdings, and non-equity securities (except options).

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 7 of 118
Brian Bares, Bares Capital
Brian Bares started his investment firm, Bares Capital Management, in 2000, focusing initially on micro-cap public
companies. The firm launched a small-cap institutional strategy in 2001 and now manages assets in two value-oriented
strategies. Bares Capital Management is quite unique in the institutional asset management world, as it has adhered to a
disciplined business strategy, limiting the growth of assets under management to benefit investment performance. Both of
Bares’s institutional strategies have beaten their respective benchmark indices by wide margins since inception.

MOI Signal Rank™ – Top Current Ideas of Bares Capital Management


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 International Assets / IAAC 294 16.76 12% 1,972 32% 11% 12% 93x 22x 1.3x
2 Hallmark Financial / HALL 226 11.24 25% 2,033 47% 10% 8% 11x 10x 1.4x
3 Interactive Intell. / ININ 333 19.25 3% 2,488 0% 14% 17% 17x 17x 4.6x
4 Tandy Leather / TLF 45 4.40 12% 1,643 0% 16% 3% n/a n/a 1.4x
5 Winmark / WINA 152 30.42 31% 845 1% 17% 9% 21x 19x 8.9x
6 American Public Ed. / APEI 825 44.94 -4% 164 34% <1% 3% 26x 19x >9.9x
7 TravelCenters / TA 53 3.08 -13% 30 new <1% <1% n/m n/a .2x
8 American Dental / ADPI 193 12.29 -6% 1,004 0% 6% 4% 18x 15x n/m
9 Exelon / EXC 27,533 41.68 -5% 7 new <1% <1% 11x 10x 2.5x
10 Western Union / WU 11,185 16.64 -2% 35 new <1% <1% 13x 11x n/m

Top Holdings of Bares Capital Management – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Interactive Intell. / ININ 333 19.25 3% 2,488 0% 14% 17% 17x 17x 4.6x
2 International Assets / IAAC 294 16.76 12% 1,972 32% 11% 12% 93x 22x 1.3x
3 Winmark / WINA 152 30.42 31% 845 1% 17% 9% 21x 19x 8.9x
4 Hallmark Financial / HALL 226 11.24 25% 2,033 47% 10% 8% 11x 10x 1.4x
5 Stratasys / SSYS 499 24.34 0% 857 -41% 4% 8% 39x 28x 3.9x
6 American Dental / ADPI 193 12.29 -6% 1,004 0% 6% 4% 18x 15x n/m
7 Rentrak / RENT 264 24.96 16% 493 0% 5% 4% >99x 33x 5.3x
8 Stamps.com / STMP 154 10.80 7% 1,024 0% 7% 4% 17x 14x 2.3x
9 Utah Medical / UTMD 102 28.09 0% 329 1% 9% 3% n/a n/a 3.3x
10 American Public Ed. / APEI 825 44.94 -4% 164 34% <1% 3% 26x 19x >9.9x

New Positions Sold Out Positions


Exelon / EXC TravelCenters / TA None
HEICO Corp. / HEI Western Union / WU
Omega Flex / OFLX

* *
Portfolio Metrics Sector Weightings

Portfolio size $275 million Other


Top 10 as % of portfolio 74% 15%

Median market value $1.9 billion Financial


Average market value $20 billion 35%
Services
Median P/E (this FY) 20x 21%
Median P/E (next FY) 17x
Median P / tangible book 2.3x
Technology
*
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes
29%
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 8 of 118
Bruce Berkowitz, Fairholme
Bruce Berkowitz, manager of The Fairholme Fund, has been one of the most successful value-oriented investors of the past
decade. From inception on December 29, 1999 through December 31, 2009, The Fairholme Fund delivered a cumulative
return, net of expenses, of 253%, versus a return of -9%, before expenses, for the S&P 500 Index. This translates into
annualized performance of 13.4% and -0.9% for The Fairholme Fund and the S&P 500 Index, respectively.

MOI Signal Rank™ – Top Current Ideas of Fairholme


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 AIG / AIG 26,501 39.72 16% 25,468 new 4% 9% 12x 9x >9.9x
2 RSC Holdings / RRR 878 8.49 7% 14,341 33% 14% 1% n/m 45x n/m
3 Bank of America / BAC 163,938 16.34 -8% 39,310 new <1% 6% 16x 9x 1.7x
4 Citigroup / C 115,340 3.98 -2% 227,461 6% <1% 8% 12x 9x 1.0x
5 Winthrop Realty / FUR 260 12.29 2% 4,831 12% 23% <1% 16x 15x 1.3x
6 Berkshire Hathaway / BRK.A 188,390 114,150 -6% 6 52% <1% 7% 20x 19x 1.9x
7 Regions Financial / RF 9,850 8.26 5% 75,816 75% 6% 6% n/m 31x 1.3x
8 Leucadia National / LUK 5,679 23.34 -6% 20,302 0% 8% 4% n/a n/a 1.3x
9 Comcast / CMCSA 49,661 17.60 -7% 30,222 28% 1% 5% 14x 13x n/m
10 St. Joe / JOE 2,737 29.53 -9% 26,799 0% 29% 7% n/m n/m 3.1x

Top Holdings of Fairholme – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Sears Holdings / SHLD 12,441 108.34 0% 14,714 -2% 13% 15% 39x 35x 2.8x
2 AIG / AIG 26,501 39.72 16% 25,468 new 4% 9% 12x 9x >9.9x
3 Citigroup / C 115,340 3.98 -2% 227,461 6% <1% 8% 12x 9x 1.0x
4 St. Joe / JOE 2,737 29.53 -9% 26,799 0% 29% 7% n/m n/m 3.1x
5 Humana / HUM 7,787 45.75 -2% 15,799 -1% 9% 7% 8x 9x 2.0x
6 Berkshire Hathaway / BRK.A 188,390 114,150 -6% 6 52% <1% 7% 20x 19x 1.9x
7 Hertz / HTZ 5,040 12.24 23% 56,179 -5% 14% 6% 27x 16x n/m
8 Bank of America / BAC 163,938 16.34 -8% 39,310 new <1% 6% 16x 9x 1.7x
9 Regions Financial / RF 9,850 8.26 5% 75,816 75% 6% 6% n/m 31x 1.3x
10 AmeriCredit / ACF 2,955 21.96 -8% 28,204 -20% 21% 6% 17x 16x 1.3x

New Positions Sold Out Positions


AIG / AIG Bristol Myers Squibb / BMY Pfizer / PFE
Bank of America / BAC Coca-Cola / KO United Rentals / URI
Forest Labs / FRX WellPoint / WLP
Marshall & Ilsley / MI White Mountains / WTM
Penn West Energy / PWE

* *
Portfolio Metrics Sector Weightings

Portfolio size $11 billion Capital Other


Goods 4%
Top 10 as % of portfolio 77% 5%
Median market value $7.7 billion
Average market value $34 billion
Median P/E (this FY) 15x Services Financial
36% 55%
Median P/E (next FY) 13x
Median P / tangible book 1.8x
*
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 9 of 118
Richard Breeden, Breeden Capital
Richard C. Breeden, born in 1949, is a former Chairman of the U.S. Securities and Exchange Commission. Breeden founded
Breeden Capital Management in 2006. The fund applies a concentrated, activist investment approach.

MOI Signal Rank™ – Top Current Ideas of Breeden Capital


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Bally Technologies / BYI 2,504 45.39 12% 2,464 97% 4% 9% 21x 17x 7.7x
2 Aon Corp. / AON 11,211 41.61 -3% 1,488 new <1% 5% 13x 12x n/m
3 Hillenbrand / HI 1,575 25.30 15% 5,069 28% 8% 11% 14x 12x 4.7x
4 H&R Block / HRB 5,587 16.97 -5% 13,292 0% 4% 19% 12x 11x n/m
5 Steris / STE 1,954 33.04 -2% 5,067 0% 9% 14% 15x 13x 4.3x
6 Zale / ZLC 96 2.98 9% 9,071 0% 28% 2% n/m n/m .4x
7 Dun & Bradstreet / DNB 3,778 74.98 1% 1,297 92% 3% 8% 13x 12x n/m
8 Raytheon / RTN 21,462 56.32 -1% 1,547 44% <1% 7% 11x 11x n/m
9 Burger King / BKC 2,702 19.91 -6% 4,356 9% 3% 7% 15x 13x >9.9x
10 Hewitt Associates / HEW 3,571 38.37 -4% 1,021 0% 1% 3% 13x 12x 8.7x

Top Holdings of Breeden Capital – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 H&R Block / HRB 5,587 16.97 -5% 13,292 0% 4% 19% 12x 11x n/m
2 Steris / STE 1,954 33.04 -2% 5,067 0% 9% 14% 15x 13x 4.3x
3 Helmerich & Payne / HP 3,971 37.56 -1% 3,689 -11% 3% 11% 16x 15x 1.4x
4 Hillenbrand / HI 1,575 25.30 15% 5,069 28% 8% 11% 14x 12x 4.7x
5 Bally Technologies / BYI 2,504 45.39 12% 2,464 97% 4% 9% 21x 17x 7.7x
6 Dun & Bradstreet / DNB 3,778 74.98 1% 1,297 92% 3% 8% 13x 12x n/m
7 Raytheon / RTN 21,462 56.32 -1% 1,547 44% <1% 7% 11x 11x n/m
8 Burger King / BKC 2,702 19.91 -6% 4,356 9% 3% 7% 15x 13x >9.9x
9 Aon Corp. / AON 11,211 41.61 -3% 1,488 new <1% 5% 13x 12x n/m
10 Hewitt Associates / HEW 3,571 38.37 -4% 1,021 0% 1% 3% 13x 12x 8.7x

New Positions Sold Out Positions


Aon Corp. / AON None

* *
Portfolio Metrics Sector Weightings

Portfolio size $1.2 billion


Top 10 as % of portfolio 94% Other
Median market value $3.2 billion 32%
Services
40%
Average market value $4.9 billion
Median P/E (this FY) 14x
Median P/E (next FY) 13x
Median P / tangible book 4.5x Financial
*
13% Health Care
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes 15%
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 10 of 118
Warren Buffett, Berkshire Hathaway
Warren Buffett has built an unparalleled investment track record over several decades, becoming widely regarded as the best
investor of all time. Buffett has embraced a long term-oriented investment approach with an emphasis on investing in
companies with durable competitive advantage, high returns on capital employed, and shareholder-friendly management.

MOI Signal Rank™ – Top Current Ideas of Berkshire Hathaway


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Wesco Financial / WSC 2,617 367.50 -5% 5,703 0% 80% 4% n/a n/a 1.1x
2 Coca-Cola / KO 123,002 53.34 -3% 200,000 0% 9% 21% 15x 14x 9.8x
3 American Express / AXP 48,819 40.64 -2% 151,611 0% 13% 12% 14x 12x 3.6x
4 Comdisco / CDCO 35 8.60 0% 1,538 0% 38% <1% n/a n/a .8x
5 Wells Fargo / WFC 166,933 32.04 3% 320,088 0% 6% 20% 17x 11x 3.1x
6 Washington Post / WPO 4,617 501.86 13% 1,728 0% 19% 2% 24x 18x 4.9x
7 USG / USG 2,084 20.95 22% 17,072 0% 17% <1% n/m n/m 2.8x
8 Wal-Mart / WMT 195,920 52.12 -6% 39,037 0% 1% 4% 13x 12x 3.6x
9 U.S. Bancorp / USB 48,900 25.51 -1% 69,039 0% 4% 3% 16x 11x 3.8x
10 Nalco Holding / NLC 3,341 24.16 -1% 9,000 0% 7% <1% 17x 14x n/m

Top Holdings of Berkshire Hathaway – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Coca-Cola / KO 123,002 53.34 -3% 200,000 0% 9% 21% 15x 14x 9.8x
2 Wells Fargo / WFC 166,933 32.04 3% 320,088 0% 6% 20% 17x 11x 3.1x
3 American Express / AXP 48,819 40.64 -2% 151,611 0% 13% 12% 14x 12x 3.6x
4 Procter & Gamble / PG 180,109 62.54 -1% 79,097 -10% 3% 10% 15x 16x n/m
5 Kraft Foods / KFT 52,357 30.03 -1% 106,735 -23% 6% 6% 15x 13x n/m
6 Wesco Financial / WSC 2,617 367.50 -5% 5,703 0% 80% 4% n/a n/a 1.1x
7 Wal-Mart / WMT 195,920 52.12 -6% 39,037 0% 1% 4% 13x 12x 3.6x
8 ConocoPhillips / COP 85,262 55.84 9% 34,179 -9% 2% 4% 9x 7x 1.5x
9 U.S. Bancorp / USB 48,900 25.51 -1% 69,039 0% 4% 3% 16x 11x 3.8x
10 Johnson & Johnson / JNJ 176,434 63.97 -2% 23,891 -12% <1% 3% 13x 12x 8.3x

New Positions Sold Out Positions


None SunTrust Banks / STI UnitedHealth / UNH
Travelers / TRV WellPoint / WLP

* *, **
Portfolio Metrics Sector Weightings
Portfolio size $50 billion
Top 10 as % of portfolio 88% Other
11%
Median market value $35 billion Services
10%
Average market value $63 billion Financial
Median P/E (this FY) 15x 42%
Median P/E (next FY) 13x
Median P / tangible book 3.0x
Consumer
*
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes Non-
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities. Cyclical
**
38%
A large portion of Berkshire’s asset value may be attributed to holdings that
are not publicly traded and are therefore not shown in the chart or tables.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 11 of 118
Ian Cumming & Joe Steinberg, Leucadia
Chairman Cumming and President Steinberg describe their approach in a 2008 letter: “We tend to be buyers of assets and
companies that are troubled or out of favor and as a result are selling substantially below the values, which we believe, are
there. From time to time, we sell parts of these operations when prices available in the market reach what we believe to be
advantageous levels. While we are not perfect in executing this strategy, we are proud of our long-term track record. We are
not income statement driven and do not run your company with an undue emphasis on either quarterly or annual earnings.
We believe we are conservative in our accounting practices and policies and that our balance sheet is conservatively stated.”

MOI Signal Rank™ – Top Current Ideas of Leucadia


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 AmeriCredit / ACF 2,955 21.96 -8% 33,900 1% 25% 37% 17x 16x 1.3x
2 TravelCenters / TA 53 3.08 -13% 275 0% 2% <1% n/m n/a .2x
3 Endwave / ENWV 28 2.88 5% 70 new <1% <1% n/m n/m 1.0x
4 Capital Southwest / CSWC 353 94.44 4% 20 0% <1% <1% n/a n/a .8x
5 Jefferies / JEF 4,374 25.45 8% 48,585 0% 28% 62% 17x 15x 2.2x
6 International Assets / IAAC 294 16.76 12% 1,385 0% 8% 1% 93x 22x 1.3x
7 Millennium India / SMCG 18 2.17 32% 120 new 1% <1% n/a n/a .5x

Top Holdings of Leucadia – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Jefferies / JEF 4,374 25.45 8% 48,585 0% 28% 62% 17x 15x 2.2x
2 AmeriCredit / ACF 2,955 21.96 -8% 33,900 1% 25% 37% 17x 16x 1.3x
3 International Assets / IAAC 294 16.76 12% 1,385 0% 8% 1% 93x 22x 1.3x
4 Capital Southwest / CSWC 353 94.44 4% 20 0% <1% <1% n/a n/a .8x
5 TravelCenters / TA 53 3.08 -13% 275 0% 2% <1% n/m n/a .2x
6 Millennium India / SMCG 18 2.17 32% 120 new 1% <1% n/a n/a .5x
7 Endwave / ENWV 28 2.88 5% 70 new <1% <1% n/m n/m 1.0x

New Positions Sold Out Positions


Endwave / ENWV None
Millennium India / SMCG

* *, **
Portfolio Metrics Sector Weightings
Portfolio size $2.0 billion
Services
Top 10 as % of portfolio 100% 0%
Median market value $294 million
Average market value $1.2 billion
Median P/E (this FY) 17x
Median P/E (next FY) 16x
Median P / tangible book 1.0x
*
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes Financial
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities. 100%
**
A large portion of Leucadia’s asset value may be attributed to holdings that
are not publicly traded and are therefore not shown in the chart or tables.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 12 of 118
David Einhorn, Greenlight
David Einhorn is the founder of Greenlight Capital, a value-oriented, research-driven investment firm with a market-beating
long-term track record. From inception in May 1996 through yearend 2009, Greenlight Capital has returned, net of fees and
expenses, 1,397% cumulatively or 22% annualized. He is also author of Fooling Some of the People All of the Time.

MOI Signal Rank™ – Top Current Ideas of Greenlight


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 CIT Group / CIT 7,672 38.35 -2% 10,590 68% 5% 13% 34x 14x .9x
2 Pfizer / PFE 130,701 16.20 -6% 18,154 23% <1% 10% 7x 7x n/m
3 BioFuel Energy / BIOF 73 2.24 -24% 7,542 0% 23% <1% n/a n/a 1.0x
4 Cardinal Health / CAH 12,245 33.82 -6% 6,551 0% 2% 7% 15x 14x 4.0x
5 CareFusion / CFN 5,744 25.84 0% 8,719 0% 4% 7% 18x 16x 6.0x
6 Republic Airways / RJET 208 6.08 2% 3,443 0% 10% <1% 17x 4x .6x
7 MI Developments / MIM 627 13.42 3% 5,655 0% 12% 3% n/a n/a .4x
8 Einstein Noah / BAGL 216 13.12 8% 10,733 0% 65% 5% 17x 14x n/m
9 Gold Miners ETF / GDX 6,398 53.03 19% 3,200 0% 3% 6% n/a n/a 1.1x
10 EMC / EMC 38,173 18.57 3% 8,903 24% <1% 5% 16x 14x 7.1x

Top Holdings of Greenlight – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 CIT Group / CIT 7,672 38.35 -2% 10,590 68% 5% 13% 34x 14x .9x
2 Pfizer / PFE 130,701 16.20 -6% 18,154 23% <1% 10% 7x 7x n/m
3 CareFusion / CFN 5,744 25.84 0% 8,719 0% 4% 7% 18x 16x 6.0x
4 Cardinal Health / CAH 12,245 33.82 -6% 6,551 0% 2% 7% 15x 14x 4.0x
5 Gold Miners ETF / GDX 6,398 53.03 19% 3,200 0% 3% 6% n/a n/a 1.1x
6 EMC / EMC 38,173 18.57 3% 8,903 24% <1% 5% 16x 14x 7.1x
7 Einstein Noah / BAGL 216 13.12 8% 10,733 0% 65% 5% 17x 14x n/m
8 Aspen Insurance / AHL 2,045 26.45 -8% 4,140 0% 5% 4% 9x 7x .7x
9 Travelers / TRV 24,826 50.12 -7% 2,132 0% <1% 4% 9x 9x 1.1x
10 Microsoft / MSFT 253,538 28.93 -1% 3,400 0% <1% 3% 14x 13x 7.9x

New Positions Sold Out Positions


Coinstar / CSTR Barrick Gold / ABX McDermott / MDR
Flagstar Bancorp / FBC BJ Services / BJS MEMC Electronic / WFR
Iconix Brand Group / ICON Boston Scientific / BSX Nike / NKE
NVR / NVR Endurance Specialty / ENH Patterson-UTI Energy / PTEN
Symetra Financial / SYA Huntsman / HUN Sinclair Broadcast / SBGI
Xerox Corp. / XRX Live Nation / LYV

* *
Portfolio Metrics Sector Weightings

Portfolio size $3.0 billion


Top 10 as % of portfolio 64%
Median market value $3.0 billion Other Financial
Average market value $15 billion 22% 37%
Technology
Median P/E (this FY) 14x
13%
Median P/E (next FY) 13x
Median P / tangible book 1.5x
Health Care
*
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes
28%
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 13 of 118
Tom Gayner, Markel Gayner
Tom Gayner has been President of Markel Gayner Asset Management since 1990 and EVP and CIO of Markel, a Richmond,
Virginia-based international property and casualty insurance holding company, since 2004. Tom has been a disciplined
steward of capital on behalf of Markel shareholders, and his long-term investment record is one of the best in the business.

MOI Signal Rank™ – Top Current Ideas of Markel Gayner


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Union Bankshares / UBSH 1 434 16.74 11% 3,505 new 14% 4% 28x 15x 1.5x
2 Berkshire Hathaway / BRK.A 188,390 114,150 -6% 2 >100% <1% 14% 20x 19x 1.9x
3 Brookfield Asset / BAM 14,313 24.94 -2% 3,106 0% <1% 5% n/a n/a .9x
4 Fairfax Financial / FRFHF 7,942 372.05 -1% 279 0% 1% 7% n/a n/a 1.1x
5 Investors Title / ITIC 77 33.76 -1% 229 0% 10% <1% 29x 23x .8x
6 Heritage-Crystal / HCCI 104 9.66 -15% 83 >100% <1% <1% 37x 25x 2.5x
7 Calumet Specialty / CLMT 646 18.30 -12% 26 new <1% <1% 16x 11x 1.7x
8 Teva Pharma / TEVA 52,881 56.80 -10% 60 new <1% <1% 13x 11x >9.9x
9 Abbott Labs / ABT 74,863 48.50 -8% 70 >100% <1% <1% 12x 10x n/m
10 Air Products & Chem / APD 14,773 69.57 -6% 4 new <1% <1% 14x 12x 3.6x
1
Markel acquired UBSH shares in connection with a merger of a Markel subsidiary with First Market Bank, a private company in which Markel was a shareholder.

Top Holdings of Markel Gayner – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Berkshire Hathaway / BRK.A 188,390 114,150 -6% 2 >100% <1% 14% 20x 19x 1.9x
2 CarMax / KMX 5,181 23.22 -8% 5,308 0% 2% 8% 18x 16x 2.7x
3 Fairfax Financial / FRFHF 7,942 372.05 -1% 279 0% 1% 7% n/a n/a 1.1x
4 Diageo / DEO 39,965 63.81 -5% 1,256 0% <1% 5% 14x 13x n/m
5 Brookfield Asset / BAM 14,313 24.94 -2% 3,106 0% <1% 5% n/a n/a .9x
6 General Electric / GE 188,334 17.64 -3% 3,644 0% <1% 4% 16x 13x 4.9x
7 Union Bankshares / UBSH 1 434 16.74 11% 3,505 new 14% 4% 28x 15x 1.5x
8 Walt Disney / DIS 66,709 34.06 -2% 1,490 0% <1% 3% 17x 15x >9.9x
9 Marriott / MAR 12,506 34.61 10% 1,422 0% <1% 3% 34x 26x n/m
10 UPS / UPS 65,124 65.75 2% 706 0% <1% 3% 20x 17x >9.9x
1
Markel acquired UBSH shares in connection with a merger of a Markel subsidiary with First Market Bank, a private company in which Markel was a shareholder.

New Positions Sold Out Positions


Air Products & Chem / APD EOG Resources / EOG AFLAC / AFL McGraw-Hill / MHP
Anheuser-Busch / BUD Teva Pharma / TEVA CME Group / CME SAP / SAP
Calumet Specialty / CLMT Washington R. E. / WRE Manpower / MAN SL Green Realty / SLG

* *, **
Portfolio Metrics Sector Weightings
Portfolio size $1.6 billion
Top 10 as % of portfolio 55% Other
Median market value $21 billion 24%

Average market value $45 billion Financial


35%
Median P/E (this FY) 17x
Consumer
Median P/E (next FY) 15x Non-
Cyclical
Median P / tangible book 2.7x
8%
*
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes Services
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities. 33%
**
A large portion of Markel Corp.’s asset value may be attributed to holdings
that are not publicly traded and are therefore not shown in the chart or tables.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 14 of 118
Glenn Greenberg, Brave Warrior
Brave Warrior, formerly called Chieftain Capital Management, was founded in 1984 by Glenn Greenberg and John Shapiro.
The firm runs a concentrated portfolio focused on companies with high returns on capital and sustainable competitive
advantage. Brave Warrior’s long-term performance record is believed to feature mid teens annualized investment returns.

MOI Signal Rank™ – Top Current Ideas of Brave Warrior


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 6 Google / GOOG 161,642 507.53 -11% 134 new <1% 7% 18x 16x 5.0x
2 9 Arch Capital Group / ACGL 4,548 75.11 -1% 435 new <1% 4% 9x 8x 1.0x
3 15 Bank of America / BAC 163,938 16.34 -8% 15 new <1% <1% 16x 9x 1.7x
4 11 RenaissanceRe / RNR 3,251 56.15 -1% 452 new <1% 3% 7x 7x 1.1x
5 14 Tidewater / TDW 2,517 48.67 3% 20 new <1% <1% 9x 11x 1.2x
6 16 Freddie Mac / FRE 888 1.37 8% 72 new <1% <1% n/a n/a n/m
7 12 Crosstex Energy, L.P. / XTEX 519 10.44 -3% 1,585 -26% 3% 2% n/m >99x 1.5x
8 5 Ryanair / RYAAY 7,316 24.72 -9% 4,715 -45% 2% 12% 18x 14x 2.1x
9 1 Comcast / CMCSA 49,661 17.60 -7% 8,133 -52% <1% 15% 14x 13x n/m
10 2 U.S. Bancorp / USB 48,900 25.51 -1% 5,175 -52% <1% 14% 16x 11x 3.8x

Top Holdings of Brave Warrior – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Comcast / CMCSA 49,661 17.60 -7% 8,133 -52% <1% 15% 14x 13x n/m
2 U.S. Bancorp / USB 48,900 25.51 -1% 5,175 -52% <1% 14% 16x 11x 3.8x
3 Lockheed Martin / LMT 29,973 80.79 -3% 1,585 -59% <1% 14% 11x 10x n/m
4 Lab Corp. of America / LH 8,057 77.47 2% 1,552 -49% 1% 13% 14x 13x n/m
5 Ryanair / RYAAY 7,316 24.72 -9% 4,715 -45% 2% 12% 18x 14x 2.1x
6 Google / GOOG 161,642 507.53 -11% 134 new <1% 7% 18x 16x 5.0x
7 Dell / DELL 29,660 15.15 1% 3,813 -53% <1% 6% 12x 10x n/m
8 Varian Medical / VAR 6,527 52.83 -5% 980 -73% <1% 6% 18x 16x 5.6x
9 Arch Capital Group / ACGL 4,548 75.11 -1% 435 new <1% 4% 9x 8x 1.0x
10 Precision Castparts / PCP 17,034 120.23 -5% 264 -67% <1% 3% 16x 14x 7.3x

New Positions Sold Out Positions


Arch Capital Group / ACGL Google / GOOG Waters / WAT
Bank of America / BAC RenaissanceRe / RNR
Freddie Mac / FRE Tidewater / TDW

* *
Portfolio Metrics Sector Weightings

Portfolio size $934 million


Top 10 as % of portfolio 94% Financial
21%
Median market value $7.3 billion Other
Average market value $32 billion 43%

Median P/E (this FY) 15x Health Care


19%
Median P/E (next FY) 12x
Median P / tangible book 1.9x
Capital
*
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes Goods
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities. 18%

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 15 of 118
Mason Hawkins, Southeastern
Mason Hawkins is chairman and CEO of Southeastern Asset Management, a firm he founded in 1975. Southeastern serves as
investment adviser to the Longleaf Partners Funds, a family of value-oriented mutual funds. The firm has $22 billion of
assets under management, including $13 billion in separately managed accounts.

MOI Signal Rank™ – Top Current Ideas of Southeastern


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Level 3 Comms / LVLT 2,071 1.25 -23% 461,797 7% 28% 3% n/m n/m n/m
2 Texas Industries / TXI 1,049 37.77 11% 3,710 44% 13% <1% n/m n/m 1.4x
3 Chesapeake Energy / CHK 14,724 22.62 -4% 80,003 5% 12% 8% 8x 7x 1.3x
4 Cemex / CX 10,617 11.06 8% 131,406 26% 14% 7% n/m 25x .7x
5 Telephone & Data / TDS 3,509 33.24 -2% 13,703 3% 13% 2% 19x 20x 2.2x
6 tw telecom / TWTC 2,747 18.11 0% 24,956 3% 16% 2% 50x 31x 9.4x
7 Dell / DELL 29,660 15.15 1% 138,788 1% 7% 10% 12x 10x n/m
8 DineEquity / DIN 632 35.26 -11% 3,218 0% 18% <1% 12x 11x n/m
9 Yum! Brands / YUM 18,964 40.57 6% 50,922 6% 11% 9% 16x 15x n/m
10 Aon Corp. / AON 11,211 41.61 -3% 17,721 28% 7% 3% 13x 12x n/m

Top Holdings of Southeastern – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 DIRECTV / DTV 34,104 37.34 10% 76,072 -11% 8% 13% 16x 13x n/m
2 Dell / DELL 29,660 15.15 1% 138,788 1% 7% 10% 12x 10x n/m
3 Yum! Brands / YUM 18,964 40.57 6% 50,922 6% 11% 9% 16x 15x n/m
4 Walt Disney / DIS 66,709 34.06 -2% 54,786 -2% 3% 8% 17x 15x >9.9x
5 Chesapeake Energy / CHK 14,724 22.62 -4% 80,003 5% 12% 8% 8x 7x 1.3x
6 Cemex / CX 10,617 11.06 8% 131,406 26% 14% 7% n/m 25x .7x
7 Pioneer Natural / PXD 7,293 62.91 12% 21,696 -4% 19% 6% 31x 20x 2.1x
8 Liberty Interactive / LINTA 7,825 13.10 -14% 68,029 -20% 11% 4% 20x 16x n/m
9 Philips Electronics / PHG 28,783 30.99 -3% 26,481 -12% 3% 4% 20x 18x 9.2x
10 Aon Corp. / AON 11,211 41.61 -3% 17,721 28% 7% 3% 13x 12x n/m

New Positions Sold Out Positions


Sealed Air Corp. / SEE First American / FAF
Berkshire Hathaway / BRK.A

* *
Portfolio Metrics Sector Weightings

Portfolio size $22 billion


Other
Top 10 as % of portfolio 73% 26%
Median market value $5.4 billion
Average market value $17 billion
Services
Median P/E (this FY) 18x 48%
Median P/E (next FY) 15x Technology
12%
Median P / tangible book 2.1x Energy
14%
*
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 16 of 118
Chris Hohn, Children’s Investment
Chris Hohn is the founder of London-based The Children’s Investment Fund Management. TCI runs a concentrated portfolio
that has historically been heavily weighted in industrials. Hohn has acquired a reputation as an aggressive shareholder
activist, most notably forcing the resignation of the CEO of Deutsche Boerse after he refused to abandon a proposed takeover
of the London Stock Exchange. Hohn also agitated for a sale of ABN Amro, ultimately pushing it into the hands of RBS.

MOI Signal Rank™ – Top Current Ideas of Children’s Investment Fund


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Union Pacific / UNP 37,544 74.18 1% 11,019 40% 2% 19% 16x 13x 2.2x
2 Viacom / VIA.B 20,450 33.67 -2% 6,796 new 1% 5% 12x 11x n/m
3 Lockheed Martin / LMT 29,973 80.79 -3% 4,782 0% 1% 9% 11x 10x n/m
4 WellPoint / WLP 22,679 53.09 -18% 4,674 >100% 1% 6% 9x 8x 7.4x
5 Philip Morris / PM 86,223 46.56 -11% 2,697 34% <1% 3% 12x 11x n/m
6 Moody's / MCO 5,112 21.57 -27% 56 new <1% <1% 11x 10x n/m
7 Molson Coors / TAP 7,926 42.70 2% 8,459 56% 5% 8% 13x 11x 7.1x
8 Time Warner / TWX 34,830 30.56 -2% 573 new <1% <1% 14x 12x n/m
9 Co. Bebidas Americas / ABV 60,577 98.27 7% 459 0% <1% 1% 16x 14x >9.9x
10 MasterCard / MA 27,791 212.45 -16% 6 8% <1% <1% 16x 13x 8.9x

Top Holdings of Children’s Investment Fund – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Visa / V 64,880 77.26 -15% 15,534 -1% 2% 28% 20x 16x >9.9x
2 Union Pacific / UNP 37,544 74.18 1% 11,019 40% 2% 19% 16x 13x 2.2x
3 Coca-Cola / KO 123,002 53.34 -3% 8,480 -18% <1% 11% 15x 14x 9.8x
4 Oracle / ORCL 119,354 23.78 -8% 16,787 -2% <1% 9% 15x 13x n/m
5 Lockheed Martin / LMT 29,973 80.79 -3% 4,782 0% 1% 9% 11x 10x n/m
6 Molson Coors / TAP 7,926 42.70 2% 8,459 56% 5% 8% 13x 11x 7.1x
7 WellPoint / WLP 22,679 53.09 -18% 4,674 >100% 1% 6% 9x 8x 7.4x
8 Viacom / VIA.B 20,450 33.67 -2% 6,796 new 1% 5% 12x 11x n/m
9 Philip Morris / PM 86,223 46.56 -11% 2,697 34% <1% 3% 12x 11x n/m
10 Co. Bebidas Americas / ABV 60,577 98.27 7% 459 0% <1% 1% 16x 14x >9.9x

New Positions Sold Out Positions


Moody's / MCO Altria Group / MO SAP / SAP
Time Warner / TWX Fiserv / FISV Virgin Media / VMED
Viacom / VIA.B PepsiCo / PEP

* *
Portfolio Metrics Sector Weightings

Portfolio size $4.3 billion Other


24%
Top 10 as % of portfolio 99%
Median market value $35 billion Financial
34%
Average market value $45 billion
Median P/E (this FY) 14x
Median P/E (next FY) 12x
Transportation
Median P / tangible book 7.4x 19% Consumer
*
Non-Cyclical
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities.
23%

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 17 of 118
Carl Icahn, Icahn Capital
Carl Icahn is an activist investor with a long track record of success agitating for change at underperforming companies. Carl
publishes an activist investing blog entitled The Icahn Report at www.icahnreport.com.
Below we exclusively show holdings disclosed by Icahn Capital LP. Certain other entities controlled by Carl are excluded.

MOI Signal Rank™ – Top Current Ideas of Icahn Capital


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Genzyme / GENZ 13,458 50.43 -3% 10,480 >100% 4% 18% 20x 13x 3.3x
2 Adventrx Pharma / ANX 25 2.39 -56% 3,459 0% 34% <1% n/a n/a 1.3x
3 Motorola / MOT 15,781 6.79 -3% 156,220 30% 7% 36% 17x 13x 2.4x
4 Amylin Pharma / AMLN 2,445 17.02 -24% 12,971 0% 9% 7% n/m n/m 5.8x
5 Take-Two / TTWO 936 11.07 12% 9,296 39% 11% 3% n/m 8x 4.8x
6 Chesapeake Energy / CHK 14,724 22.62 -4% 2,123 new <1% 2% 8x 7x 1.3x
7 Biogen Idec / BIIB 13,385 50.13 -13% 12,860 0% 5% 22% 11x 10x 4.5x
8 Lions Gate / LGF 790 6.70 7% 17,582 6% 15% 4% n/a n/a n/m
9 Cyberonics / CYBX 523 18.81 -2% 2,108 0% 8% 1% 16x 20x 5.3x
10 Forest Labs / FRX 8,025 26.54 -15% 1,213 0% <1% 1% 7x 7x 1.8x

Top Holdings of Icahn Capital – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Motorola / MOT 15,781 6.79 -3% 156,220 30% 7% 36% 17x 13x 2.4x
2 Biogen Idec / BIIB 13,385 50.13 -13% 12,860 0% 5% 22% 11x 10x 4.5x
3 Genzyme / GENZ 13,458 50.43 -3% 10,480 >100% 4% 18% 20x 13x 3.3x
4 Amylin Pharma / AMLN 2,445 17.02 -24% 12,971 0% 9% 7% n/m n/m 5.8x
5 Lions Gate / LGF 790 6.70 7% 17,582 6% 15% 4% n/a n/a n/m
6 Take-Two / TTWO 936 11.07 12% 9,296 39% 11% 3% n/m 8x 4.8x
7 Regeneron Pharma / REGN 2,242 27.37 3% 2,444 -3% 3% 2% n/m n/m 5.8x
8 Yahoo! / YHOO 22,701 16.39 -1% 4,041 -66% <1% 2% 24x 21x 2.7x
9 Chesapeake Energy / CHK 14,724 22.62 -4% 2,123 new <1% 2% 8x 7x 1.3x
10 Cyberonics / CYBX 523 18.81 -2% 2,108 0% 8% 1% 16x 20x 5.3x

New Positions Sold Out Positions


Chesapeake Energy / CHK CIT Group / CIT

* *, **
Portfolio Metrics Sector Weightings
Portfolio size $3.0 billion Other
Services 2%
Top 10 as % of portfolio 97%
6%
Median market value $2.2 billion
Average market value $6.2 billion
Median P/E (this FY) 17x Technology
Median P/E (next FY) 13x 39% Health Care
53%
Median P / tangible book 2.7x
*
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities.
**
A large portion of assets controlled by Carl Icahn may be attributed to entities
other than Icahn Capital LP and are therefore not shown in the chart or tables.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 18 of 118
Seth Klarman, Baupost
Seth Klarman, founder and president of The Baupost Group, is the author of Margin of Safety and one of the most widely
respected value-oriented investors. From inception in February 1983 through December 2008, The Baupost Group has
delivered an annual compounded return of approximately 20%.

MOI Signal Rank™ – Top Current Ideas of Baupost


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 ViaSat / VSAT 1,228 33.80 -2% 8,707 77% 24% 18% 22x 18x 2.7x
2 Theravance / THRX 1,060 14.49 9% 13,000 29% 18% 12% n/m n/m n/m
3 Solar Capital / SLRC 694 21.00 -1% 2,011 new 6% 3% 9x 8x .9x
4 Enzon Pharma / ENZN 663 10.93 7% 9,203 14% 15% 6% >99x n/m 1.8x
5 ADC Telecom / ADCT 752 7.75 6% 5,000 new 5% 2% 16x 11x 2.9x
6 BreitBurn Energy / BBEP 808 15.16 2% 8,496 0% 16% 8% 11x 15x .7x
7 CapitalSource / CSE 1,552 4.81 -14% 20,278 0% 6% 6% n/m 13x .9x
8 Ituran Location / ITRN 348 14.84 -7% 1,721 0% 7% 2% 15x 13x 3.0x
9 Alliance One / AOI 443 4.97 -2% 8,800 0% 10% 3% 6x n/a 1.3x
10 DIRECTV / DTV 34,104 37.34 10% 1,617 0% <1% 4% 16x 13x n/m

Top Holdings of Baupost – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 News Corp. / NWSA 37,396 13.95 -3% 23,140 -5% <1% 20% 14x 13x >9.9x
2 ViaSat / VSAT 1,228 33.80 -2% 8,707 77% 24% 18% 22x 18x 2.7x
3 Theravance / THRX 1,060 14.49 9% 13,000 29% 18% 12% n/m n/m n/m
4 Domtar / UFS 2,843 65.88 2% 2,677 -8% 6% 11% 10x 12x 1.1x
5 BreitBurn Energy / BBEP 808 15.16 2% 8,496 0% 16% 8% 11x 15x .7x
6 Enzon Pharma / ENZN 663 10.93 7% 9,203 14% 15% 6% >99x n/m 1.8x
7 CapitalSource / CSE 1,552 4.81 -14% 20,278 0% 6% 6% n/m 13x .9x
8 DIRECTV / DTV 34,104 37.34 10% 1,617 0% <1% 4% 16x 13x n/m
9 Alliance One / AOI 443 4.97 -2% 8,800 0% 10% 3% 6x n/a 1.3x
10 Solar Capital / SLRC 694 21.00 -1% 2,011 new 6% 3% 9x 8x .9x

New Positions Sold Out Positions


ADC Telecom / ADCT CIT Group / CIT
Solar Capital / SLRC

* *, **
Portfolio Metrics Sector Weightings
Portfolio size $1.6 billion
Top 10 as % of portfolio 90%
Other
Median market value $780 million 30% Services
28%
Average market value $5.2 billion
Median P/E (this FY) 15x
Median P/E (next FY) 13x
Median P / tangible book 1.4x
Technology
*
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes Health Care 22%
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities. 20%
**
A large portion of assets managed by Seth Klarman may be invested in non-
equity securities and are therefore not shown in the chart or tables.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 19 of 118
Eddie Lampert, RBS Partners
Eddie Lampert, founder and managing member of ESL Investments, is a value investor who started out working under Bob
Rubin at the arbitrage desk of Goldman Sachs. When he left Goldman to start ESL in 1988, he received the support of Texas
investor Richard Rainwater. Lampert compounded ESL’s capital at rates of more than 25% per annum for many years. His
largest investment was the much-publicized taking control of Kmart during Kmart’s bankruptcy process in 2002. Lampert
engineered the merger of Kmart and Sears in 2004. He is currently chairman and chief capital allocator of the combined firm,
Sears Holdings (SHLD). He also still manages his investment partnership, which holds a concentrated investment portfolio.

MOI Signal Rank™ – Top Current Ideas of RBS Partners


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 CIT Group / CIT 7,672 38.35 -2% 4,528 0% 2% 1% 34x 14x .9x
2 Genworth Financial / GNW 7,625 15.59 -15% 8,100 -8% 2% 1% 14x 8x .7x
3 Sears Holdings / SHLD 1 12,441 108.34 0% 61,409 -7% 53% 54% 39x 35x 2.8x
4 Capital One / COF 19,521 42.76 3% 9,143 -5% 2% 3% 12x 10x 2.0x
5 AutoZone / AZO 1 8,792 180.31 4% 19,291 -4% 40% 28% 13x 12x n/m
6 AutoNation / AN 1 3,273 19.46 8% 77,070 -3% 46% 12% 14x 12x 3.2x
7 SLM Corp. / SLM 5,717 11.77 -6% 1,097 -62% <1% <1% 7x 8x 2.6x
8 Acxiom / ACXM 1,478 18.67 4% 1,000 -60% 1% <1% 25x 22x n/m
9 Wells Fargo / WFC 166,933 32.04 3% 559 -63% <1% <1% 17x 11x 3.1x
1
Reduction in ownership of shares may represent share transfers between various affiliated entities rather than outright sales of securities.

Top Holdings of RBS Partners – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Sears Holdings / SHLD 1 12,441 108.34 0% 61,409 -7% 53% 54% 39x 35x 2.8x
2 AutoZone / AZO 1 8,792 180.31 4% 19,291 -4% 40% 28% 13x 12x n/m
3 AutoNation / AN 1 3,273 19.46 8% 77,070 -3% 46% 12% 14x 12x 3.2x
4 Capital One / COF 19,521 42.76 3% 9,143 -5% 2% 3% 12x 10x 2.0x
5 CIT Group / CIT 7,672 38.35 -2% 4,528 0% 2% 1% 34x 14x .9x
6 Genworth Financial / GNW 7,625 15.59 -15% 8,100 -8% 2% 1% 14x 8x .7x
7 Acxiom / ACXM 1,478 18.67 4% 1,000 -60% 1% <1% 25x 22x n/m
8 Wells Fargo / WFC 166,933 32.04 3% 559 -63% <1% <1% 17x 11x 3.1x
9 SLM Corp. / SLM 5,717 11.77 -6% 1,097 -62% <1% <1% 7x 8x 2.6x
1
Reduction in ownership of shares may represent share transfers between various affiliated entities rather than outright sales of securities.

New Positions Sold Out Positions


None Bank of America / BAC
Citigroup / C

* *
Portfolio Metrics Sector Weightings
Financial
Portfolio size $12 billion 6%
Top 10 as % of portfolio 100%
Median market value $8.8 billion
Average market value $47 billion
Median P/E (this FY) 14x
Median P/E (next FY) 11x
Median P / tangible book 2.0x
*
Services
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes 94%
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 20 of 118
Dan Loeb, Third Point
Loeb is the founder of long/short activist fund Third Point, which has amassed a respectable long-term investment record.

MOI Signal Rank™ – Top Current Ideas of Third Point


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 OSI Pharma / OSIP 3,660 59.80 0% 1,200 new 2% 5% 41x 29x 5.1x
2 WellPoint / WLP 22,679 53.09 -18% 1,500 36% <1% 6% 9x 8x 7.4x
3 CIT Group / CIT 7,672 38.35 -2% 2,350 34% 1% 7% 34x 14x .9x
4 Liberty Interactive / LINTA 7,825 13.10 -14% 4,800 new <1% 5% 20x 16x n/m
5 BioFuel Energy / BIOF 73 2.24 -24% 5,579 0% 17% <1% n/a n/a 1.0x
6 Airgas / ARG 5,137 62.09 -2% 925 new 1% 4% 21x 18x >9.9x
7 Aspen Technology / AZPN 1,065 11.60 13% 5,021 new 5% 4% n/m n/m 6.2x
8 TransDigm / TDG 2,722 55.51 5% 1,800 0% 4% 7% 18x 16x n/m
9 DepoMed / DEPO 197 3.77 6% 6,790 0% 13% 2% n/m 15x >9.9x
10 Xerox / XRX 13,818 10.02 3% 7,000 75% <1% 5% 11x 9x n/m

Top Holdings of Third Point – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 TransDigm / TDG 2,722 55.51 5% 1,800 0% 4% 7% 18x 16x n/m
2 PHH / PHH 1,227 22.14 -6% 4,500 -8% 8% 7% 11x 8x >9.9x
3 CIT Group / CIT 7,672 38.35 -2% 2,350 34% 1% 7% 34x 14x .9x
4 WellPoint / WLP 22,679 53.09 -18% 1,500 36% <1% 6% 9x 8x 7.4x
5 OSI Pharma / OSIP 3,660 59.80 0% 1,200 new 2% 5% 41x 29x 5.1x
6 Xerox / XRX 13,818 10.02 3% 7,000 75% <1% 5% 11x 9x n/m
7 Health Net / HNT 2,310 23.24 -7% 3,000 0% 3% 5% 10x 9x 2.3x
8 Liberty Interactive / LINTA 7,825 13.10 -14% 4,800 new <1% 5% 20x 16x n/m
9 Aspen Technology / AZPN 1,065 11.60 13% 5,021 new 5% 4% n/m n/m 6.2x
10 Airgas / ARG 5,137 62.09 -2% 925 new 1% 4% 21x 18x >9.9x

New Positions Sold Out Positions


Airgas / ARG Madison Sq. Garden / MSG Affiliated Computer / ACS Hewlett-Packard / HPQ
Alkermes / ALKS OSI Pharma / OSIP American Water Works / AWK Liberty Starz / LSTZA
Aspen Technology / AZPN Pall Corp. / PLL Bank of America / BAC Life Partners / LPHI
Brocade Comms / BRCD Phillips-Van Heusen / PVH Barclays / BCS Pain Therapeutics / PTIE
Coca-Cola Enterprise / CCE RF Micro Devices / RFMD Cablevision / CVC Yahoo! / YHOO
Emmis Comms / EMMS Strategic Hotels / BEE CapitalSource / CSE
Kraft Foods / KFT Toyota / TM Citigroup / C
Lear / LEA VIVUS / VVUS Coinstar / CSTR
Liberty Interactive / LINTA Walgreen / WAG Energy Partners / EPL
Macy's / M Washington Post / WPO Greenlight Re / GLRE

* *
Portfolio Metrics Sector Weightings

Portfolio size $1.4 billion


Financial
Top 10 as % of portfolio 56% Other 29%
Median market value $2.9 billion 36%

Average market value $17 billion


Median P/E (this FY) 16x
Median P/E (next FY) 13x
Services
Median P / tangible book 2.4x Technology 18%
* 17%
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 21 of 118
Steve Mandel, Lone Pine
Mandel founded long/short firm Lone Pine in 1997. He previously worked for Tiger Management, Goldman Sachs and Mars.

MOI Signal Rank™ – Top Current Ideas of Lone Pine


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Cognizant Tech / CTSH 14,938 49.89 -2% 10,900 new 4% 5% 24x 21x 5.7x
2 Yum! Brands / YUM 18,964 40.57 6% 12,273 88% 3% 5% 16x 15x n/m
3 QUALCOMM / QCOM 61,186 37.30 -11% 14,872 14% <1% 6% 16x 15x 3.8x
4 JPMorgan Chase / JPM 158,710 39.89 -11% 17,815 2% <1% 7% 12x 8x 1.8x
5 Live Nation / LYV 2,309 13.45 -7% 9,585 new 6% 1% >99x 25x n/m
6 Longtop Fin. Tech / LFT 1,749 31.14 -3% 3,094 new 6% <1% 22x 19x 4.2x
7 DaVita / DVA 6,551 63.05 -1% 4,646 new 4% 3% 14x 14x n/m
8 New Oriental Edu. / EDU 3,550 92.81 9% 2,740 >100% 7% 3% 46x 33x 8.7x
9 Walter Industries / WLT 3,907 72.80 -21% 1,622 new 3% 1% 8x 6x >9.9x
10 Accenture / ACN 24,980 39.21 -7% 12,480 21% 2% 5% 15x 13x 9.5x

Top Holdings of Lone Pine – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 JPMorgan Chase / JPM 158,710 39.89 -11% 17,815 2% <1% 7% 12x 8x 1.8x
2 Apple / AAPL 230,961 253.82 8% 2,350 -11% <1% 6% 19x 17x 6.0x
3 QUALCOMM / QCOM 61,186 37.30 -11% 14,872 14% <1% 6% 16x 15x 3.8x
4 Cognizant Tech / CTSH 14,938 49.89 -2% 10,900 new 4% 5% 24x 21x 5.7x
5 Yum! Brands / YUM 18,964 40.57 6% 12,273 88% 3% 5% 16x 15x n/m
6 Accenture / ACN 24,980 39.21 -7% 12,480 21% 2% 5% 15x 13x 9.5x
7 McDonald's / MCD 74,865 69.59 4% 6,953 -9% <1% 5% 15x 14x 6.4x
8 Wells Fargo / WFC 166,933 32.04 3% 14,681 34% <1% 5% 17x 11x 3.1x
9 Strayer Education / STRA 3,255 233.91 -4% 1,285 -5% 9% 3% 24x 20x >9.9x
10 DaVita / DVA 6,551 63.05 -1% 4,646 new 4% 3% 14x 14x n/m

New Positions Sold Out Positions


Activision Blizzard / ATVI Longtop Fin. Tech / LFT Autodesk / ADSK Melco Crown / MPEL
Amazon.com / AMZN O'Reilly Automotive / ORLY Deltek / PROJ MSCI / MXB
Ameriprise Financial / AMP PNC Financial / PNC Discovery Comms / DISCA Precision Castparts / PCP
Amphenol / APH Polo Ralph Lauren / RL E*Trade Financial / ETFC Smithfield Foods / SFD
Apollo Group / APOL salesforce.com / CRM eBay / EBAY Southwestern Energy / SWN
Coca-Cola / KO Umpqua Holdings / UMPQ FLIR Systems / FLIR VistaPrint / VPRT
Cognizant Tech / CTSH UPS / UPS Grupo Aero. Pacifico / PAC Walgreen / WAG
DaVita / DVA Walter Industries / WLT Grupo Aero. Sureste / ASR Walt Disney / DIS
Invesco / IVZ Wyndham / WYN Henry Schein / HSIC
Live Nation / LYV HSBC Holdings / HBC

* *
Portfolio Metrics Sector Weightings

Portfolio size $9.9 billion Other


21% Services
Top 10 as % of portfolio 50% 28%
Median market value $9.8 billion
Average market value $32 billion
Median P/E (this FY) 17x
Financial
Median P/E (next FY) 15x 23%
Median P / tangible book 4.8x Technology
27%
*
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 22 of 118
Mohnish Pabrai, Pabrai Funds
Mohnish Pabrai is founder and managing partner of Pabrai Investment Funds, a family of value-oriented investment
partnerships with a fee structure similar to that of the Buffett Partnerships of the 1950s and ‘60s, i.e. no management fee and
25% performance fee above 6% annual hurdle rate. Pabrai Funds have a long-term track record vastly superior to that of the
S&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


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Fairfax Financial / FRFHF 7,942 372.05 -1% 81 0% <1% 9% n/a n/a 1.1x
2 Berkshire Hathaway / BRK.A 188,390 114,150 -6% 0 >100% <1% 7% 20x 19x 1.9x
3 Goldman Sachs / GS 73,733 143.23 -16% 111 0% <1% 5% 7x 7x 1.2x
4 International Coal / ICO 909 4.46 -2% 2,513 new 1% 3% 19x 8x 1.2x
5 Cresud / CRESY 649 12.93 -7% 1,719 0% 3% 7% 22x 28x n/m
6 Leucadia National / LUK 5,679 23.34 -6% 791 0% <1% 6% n/a n/a 1.3x
7 Horsehead / ZINC 497 11.47 -3% 1,358 0% 3% 5% 14x 11x 1.5x
8 CapitalSource / CSE 1,552 4.81 -14% 2,813 0% <1% 4% n/m 13x .9x
9 Potash / POT 30,497 102.93 -14% 332 -2% <1% 10% n/a n/a 4.5x
10 Terex / TEX 2,664 24.51 8% 531 0% <1% 4% n/m 26x 1.7x

Top Holdings of Pabrai Funds – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Harvest Natural / HNR 284 8.55 14% 4,772 -15% 14% 12% n/m n/a .9x
2 Brookfield Prop. / BPO 7,767 15.49 1% 2,359 0% <1% 11% n/a n/a 1.1x
3 Potash / POT 30,497 102.93 -14% 332 -2% <1% 10% n/a n/a 4.5x
4 Air Transport / ATSG 357 5.63 68% 5,381 0% 8% 9% 7x 6x 2.4x
5 Fairfax Financial / FRFHF 7,942 372.05 -1% 81 0% <1% 9% n/a n/a 1.1x
6 Berkshire Hathaway / BRK.A 188,390 114,150 -6% 0 >100% <1% 7% 20x 19x 1.9x
7 Cresud / CRESY 649 12.93 -7% 1,719 0% 3% 7% 22x 28x n/m
8 Leucadia National / LUK 5,679 23.34 -6% 791 0% <1% 6% n/a n/a 1.3x
9 Goldman Sachs / GS 73,733 143.23 -16% 111 0% <1% 5% 7x 7x 1.2x
10 Horsehead / ZINC 497 11.47 -3% 1,358 0% 3% 5% 14x 11x 1.5x

New Positions Sold Out Positions


International Coal / ICO None

* *
Portfolio Metrics Sector Weightings

Portfolio size $334 million


Financial
Top 10 as % of portfolio 80% 29%
Other
Median market value $2.7 billion
40%
Average market value $30 billion
Median P/E (this FY) 17x
Median P/E (next FY) 12x
Energy
Median P / tangible book 1.4x 16%
Basic Materials
*
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes 15%
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 23 of 118
David Tepper, Appaloosa
Tepper heads Appaloosa Management, which he founded in 1993 after leaving Goldman Sachs, where he had been the head
trader on Goldman’s high-yield desk. Tepper’s specialty is in distressed investments and special situations.

MOI Signal Rank™ – Top Current Ideas of Appaloosa


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Pfizer / PFE 130,701 16.20 -6% 6,452 new <1% 3% 7x 7x n/m
2 YRC Worldwide / YRCW 463 0.44 -19% 29,631 new 3% <1% n/m n/m n/m
3 American Commercial / ACLI 271 21.18 -16% 27 new <1% <1% 29x 15x 1.6x
4 Merck / MRK 102,528 32.88 -12% 1,724 new <1% 2% 10x 8x >9.9x
5 Hartford Financial / HIG 11,640 26.21 -8% 6,586 5% 1% 6% 9x 7x .7x
6 Newcastle Investment / NCT 202 3.26 1% 4,191 18% 7% <1% 1x 3x n/m
7 SuperMedia / SPMD 587 37.87 -7% 500 new 3% <1% 4x 7x n/m
8 Tesoro / TSO 1,828 12.94 -7% 1,256 new <1% <1% n/m 11x .7x
9 Continental Airlines / CAL 2,884 20.65 -6% 528 new <1% <1% 8x 7x n/m
10 Arkansas Best / ABFS 718 28.36 -5% 186 new <1% <1% n/m 30x 1.4x

Top Holdings of Appaloosa – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Bank of America / BAC 163,938 16.34 -8% 30,343 -36% <1% 16% 16x 9x 1.7x
2 AIG / AIG 26,501 39.72 16% 7,467 -54% 1% 10% 12x 9x >9.9x
3 Wells Fargo / WFC 166,933 32.04 3% 8,960 -19% <1% 9% 17x 11x 3.1x
4 Citigroup / C 115,340 3.98 -2% 62,392 -55% <1% 8% 12x 9x 1.0x
5 Fifth Third Bancorp / FITB 11,191 14.08 4% 17,009 -30% 2% 8% >99x 15x 1.7x
6 Hartford Financial / HIG 11,640 26.21 -8% 6,586 5% 1% 6% 9x 7x .7x
7 SunTrust Banks / STI 14,907 29.82 11% 5,493 -36% 1% 5% n/m 32x 1.6x
8 Royal Bank Scotland / RBS 38,780 13.76 4% 11,233 -1% <1% 5% n/a n/a .4x
9 Capital One / COF 19,521 42.76 3% 2,586 -23% <1% 4% 12x 10x 2.0x
10 Pfizer / PFE 130,701 16.20 -6% 6,452 new <1% 3% 7x 7x n/m

New Positions Sold Out Positions


American Commercial / ACLI Sunoco / SUN Hospitality Properties / HPT
Arkansas Best / ABFS SuperMedia / SPMD Rite Aid / RAD
Continental Airlines / CAL Tesoro / TSO
Con-way / CNW Valero Energy / VLO
Johnson & Johnson / JNJ Yahoo! / YHOO
Merck / MRK YRC Worldwide / YRCW
Pfizer / PFE

* *
Portfolio Metrics Sector Weightings

Portfolio size $3.1 billion Other


13%
Top 10 as % of portfolio 74% Transportation
Median market value $3.5 billion 5%
Health Care
Average market value $30 billion 8%
Median P/E (this FY) 13x
Median P/E (next FY) 11x
Median P / tangible book 1.7x Financial
74%
*
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 24 of 118
Prem Watsa, Fairfax
Prem Watsa is the founder, chairman and CEO of Fairfax (FFH), a Canadian property/casualty insurance and reinsurance
firm. While managing Fairfax’s investment portfolio over the past couple of decades, Watsa has built a reputation as an
astute value investor. Some have called him “Warren Buffett of Canada.” In recent years, Watsa’s firm successfully defended
itself against short sellers who allegedly conspired to drive down the price of Fairfax stock and hurt the company’s business.

MOI Signal Rank™ – Top Current Ideas of Fairfax


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 International Coal / ICO 909 4.46 -2% 45,156 0% 22% 6% 19x 8x 1.2x
2 Johnson & Johnson / JNJ 176,434 63.97 -2% 6,884 0% <1% 14% 13x 12x 8.3x
3 Kraft Foods / KFT 52,357 30.03 -1% 9,950 0% <1% 9% 15x 13x n/m
4 Overstock.com / OSTK 523 22.71 40% 3,389 0% 15% 2% 30x 22x >9.9x
5 Zenith National / ZNT 1,438 37.90 -1% 3,118 42% 8% 4% 86x 56x 1.4x
6 Level 3 Comms / LVLT 2,071 1.25 -23% 139,276 0% 8% 5% n/m n/m n/m
7 SuperMedia / SPMD 587 37.87 -7% 363 new 2% <1% 4x 7x n/m
8 Berkshire Hathaway / BRK.A 188,390 114,150 -6% 0 >100% <1% <1% 20x 19x 1.9x
9 Int’l Absorbents / IAX 30 4.71 2% 44 new <1% <1% n/a n/a 1.4x
10 Baldwin & Lyons / BWINB 359 24.28 1% 970 0% 7% <1% 24x 16x 1.0x

Top Holdings of Fairfax – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Wells Fargo / WFC 166,933 32.04 3% 14,074 -30% <1% 14% 17x 11x 3.1x
2 Johnson & Johnson / JNJ 176,434 63.97 -2% 6,884 0% <1% 14% 13x 12x 8.3x
3 General Electric / GE 188,334 17.64 -3% 20,008 -32% <1% 11% 16x 13x 4.9x
4 Dell / DELL 29,660 15.15 1% 23,117 -34% 1% 11% 12x 10x n/m
5 Kraft Foods / KFT 52,357 30.03 -1% 9,950 0% <1% 9% 15x 13x n/m
6 U.S. Bancorp / USB 48,900 25.51 -1% 11,307 -29% <1% 9% 16x 11x 3.8x
7 International Coal / ICO 909 4.46 -2% 45,156 0% 22% 6% 19x 8x 1.2x
8 Level 3 Comms / LVLT 2,071 1.25 -23% 139,276 0% 8% 5% n/m n/m n/m
9 USG / USG 2,084 20.95 22% 7,312 0% 7% 5% n/m n/m 2.8x
10 Frontier Comms / FTR 2,457 7.84 5% 18,620 0% 6% 5% 14x 13x n/m

New Positions Sold Out Positions


3Com (acquired by HPQ) Magna International / MGA
Int'l Absorbents / IAX
SuperMedia / SPMD

* *, **
Portfolio Metrics Sector Weightings
Portfolio size $3.2 billion
Top 10 as % of portfolio 89% Financial
27%
Median market value $3.1 billion
Average market value $38 billion Other
45%
Median P/E (this FY) 16x
Median P/E (next FY) 13x
Services
Median P / tangible book 2.0x 14%
*
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes Health Care
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities. 14%
**
A large portion of Fairfax’s asset value may be attributed to holdings that are
not publicly traded and are therefore not shown in the chart or tables.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 25 of 118
Wally Weitz, Weitz Funds
Wally Weitz, sometimes called “The Other Oracle of Omaha,” founded Wallace R. Weitz & Co. in 1983 with $10 million
under 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


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Berkshire Hathaway / BRK.A 188,390 114,150 -6% 2 >100% <1% 9% 20x 19x 1.9x
2 Redwood Trust / RWT 1,169 15.01 -3% 6,934 4% 9% 6% 10x 8x 1.2x
3 Dell / DELL 29,660 15.15 1% 5,966 6% <1% 5% 12x 10x n/m
4 Intelligent Systems / INS 11 1.25 4% 2,270 0% 25% <1% n/a n/a 2.3x
5 Tree.com / TREE 78 7.02 -23% 20 new <1% <1% n/m n/m 1.5x
6 Energizer Holdings / ENR 3,914 55.89 -11% 90 >100% <1% <1% 11x 10x n/m
7 Omnicare / OCR 3,150 26.21 -7% 2,562 3% 2% 4% 10x 9x n/m
8 Comcast / CMCSA 49,661 17.60 -7% 4,267 1% <1% 4% 14x 13x n/m
9 Accenture / ACN 24,980 39.21 -7% 603 >100% <1% 1% 15x 13x 9.5x
10 Microsoft / MSFT 253,538 28.93 -1% 2,485 4% <1% 4% 14x 13x 7.9x

Top Holdings of Weitz – By Dollar Value


Market Price Shares Owned Holdings P/E (Est.) Price/
Value Recent ∆ from Recent ∆ from as % of This Next Tang.
Company / Ticker ($mn) ($) Mar. 31 ('000) Dec. 31 Co. Fund* FY FY Book
1 Berkshire Hathaway / BRK.A 188,390 114,150 -6% 2 >100% <1% 9% 20x 19x 1.9x
2 Liberty Interactive / LINTA 7,825 13.10 -14% 8,223 -4% 1% 6% 20x 16x n/m
3 Redwood Trust / RWT 1,169 15.01 -3% 6,934 4% 9% 6% 10x 8x 1.2x
4 Liberty Global / LBTYA 6,677 25.50 -13% 3,774 -14% 1% 5% 29x >99x n/m
5 Dell / DELL 29,660 15.15 1% 5,966 6% <1% 5% 12x 10x n/m
6 Liberty Capital / LCAPA 4,031 41.43 14% 2,064 -29% 2% 5% n/m n/m 4.6x
7 Coinstar / CSTR 1,756 55.36 70% 1,437 5% 5% 4% 31x 20x >9.9x
8 Comcast / CMCSA 49,661 17.60 -7% 4,267 1% <1% 4% 14x 13x n/m
9 Microsoft / MSFT 253,538 28.93 -1% 2,485 4% <1% 4% 14x 13x 7.9x
10 Omnicare / OCR 3,150 26.21 -7% 2,562 3% 2% 4% 10x 9x n/m

New Positions Sold Out Positions


Ascent Media / ASCMA Convera / CNVR
Progressive Corp. / PGR HSN / HSNI
Tree.com / TREE Lowe's / LOW
Weight Watchers / WTW

* *
Portfolio Metrics Sector Weightings

Portfolio size $1.8 billion Other


19%
Top 10 as % of portfolio 51%
Median market value $5.4 billion
Average market value $28 billion
Financial Services
Median P/E (this FY) 15x 14% 51%
Median P/E (next FY) 13x
Median P / tangible book 2.5x
Technology
*
Based on equity holdings disclosed in 13F-HR filings with the SEC. Excludes 16%
portfolio cash, leverage, certain non-U.S. holdings, and non-equity securities.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 26 of 118
Excerpt from latest issue of 10x45 Bargain Hunter:

Do you benefit from 10x45 Bargain Hunter, our bi-weekly stock screening report?

As a subscriber to Portfolio Manager’s Review, you already have FREE access to 10x45 Bargain Hunter.

Simply visit the members-only section of the Manual of Ideas website:


www.manualofideas.com/members/members_index.html

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 27 of 118
Top Five Superinvestor Selections
Baxter International (BAX) – Lone Pine  Deerfield, IL, 847-948-2000
Health Care: Medical Equipment & Supplies, Member of S&P 500 www.baxter.com
Trading Data Consensus EPS Estimates Valuation
Price: $43.53 (as of 5/14/10) Month # of P/E FYE 12/31/09 12x
52-week range: $43.16 - $61.88 Latest Ago Ests P/E FYE 12/31/10 11x
Market value: $26.0 billion This quarter $0.92 $1.06 14 P/E FYE 12/31/11 10x
Enterprise value: $28.0 billion Next quarter 0.98 1.08 13 P/E FYE 12/30/12 9x
Shares out: 596.5 million FYE 12/31/10 3.93 4.23 17 EV/ LTM revenue 2.2x
Ownership Data FYE 12/31/11 4.28 4.73 17 EV/ LTM EBIT 12x
Insider ownership: 0% FYE 12/30/12 4.73 5.26 9 P / tangible book 6.7x
Insider buys (last six months): 0 LT growth 10.3% 11.7% 6 Greenblatt Criteria
Insider sales (last six months): 4 EPS Surprise Actual Estimate LTM EBIT yield 8%
Institutional ownership: 83% 4/22/10 $0.93 $0.93 LTM pre-tax ROC 35%
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 3/31/10 3/31/09 3/31/10
Revenue 8,904 9,509 9,849 10,378 11,263 12,348 12,562 12,665 2,824 2,927
Gross profit 3,953 3,915 4,093 4,737 5,519 6,130 6,525 6,080 1,488 1,043
Operating income 1,258 606 1,639 1,833 2,191 2,549 2,823 2,345 665 133
Net income 953 388 956 1,397 1,707 2,014 2,205 1,626 516 (63)
Diluted EPS 1.64 0.62 1.52 2.13 2.61 3.16 3.59 2.66 0.83 (0.10)
Shares out (avg) 599 614 622 651 644 625 607 606 613 602
Cash from operations 1,426 1,380 1,550 2,183 2,305 2,515 2,909 2,951 237 279
Capex 792 558 444 526 692 954 1,014 1,073 171 230
Free cash flow 634 822 1,106 1,657 1,613 1,561 1,895 1,878 66 49
Cash & investments 925 1,109 841 2,485 2,539 2,131 2,786 2,673 1,703 2,673
Total current assets 5,360 6,019 5,116 6,970 7,555 7,148 8,271 8,015 6,690 8,015
Intangible assets 2,210 2,195 2,046 2,098 2,145 2,044 2,338 2,558 2,043 2,558
Total assets 13,707 14,147 12,727 14,686 15,294 15,405 17,354 17,166 14,953 17,166
Short-term debt 153 361 924 234 425 394 711 697 235 697
Total current liabilities 3,698 4,286 4,165 3,610 3,812 3,635 4,464 4,284 3,122 4,284
Long-term debt 4,421 3,933 2,414 2,567 2,664 3,362 3,440 4,056 3,675 4,056
Total liabilities 10,325 10,442 8,428 8,414 8,378 9,176 10,163 10,737 8,854 10,737
Common equity 3,382 3,705 4,299 6,272 6,916 6,229 7,191 6,429 6,099 6,429
EBIT/capital employed 23% 11% 31% 35% 38% 41% 43% 35% n/m n/m
Ten-Year Stock Price Performance and Trading Volume Dynamics

$80

$70

$60

$50

$40

$30

$20

$10

$0
Apr 01 Apr 02 Apr 03 Apr 04 Apr 05 Apr 06 Apr 07 Apr 08 Apr 09 Apr 10

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 28 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA
Baxter provides pharmaceuticals and medical devices. It has YTD 1
~50,000 employees and operates in three main segments: FYE December 31 2005 2006 2007 2008 2009 3/31/10
∆ revenue 4% 5% 9% 10% 2% 11%
BioScience: Provides recombinant and plasma-based proteins ∆ revenue, constant forex 2% 5% 4% 6% 7% 5%
to treat hemophilia and other bleeding disorders. Other Revenue ($bn) 9.8 10.4 11.3 12.3 12.6 3.1
products include regenerative drugs and vaccines. % of revenue by segment:
BioScience 39% 42% 41% 43% 44% 43%
Medication delivery: Manufactures intravenous products, Medication delivery 41% 38% 38% 37% 37% 38%
premixed drugs, pre-filled vials and syringes for injectable Renal 20% 20% 20% 19% 18% 19%
drugs, infusion pumps, and other drug delivery products. Other 0% 0% 1% 1% 1% 0%
Revenue growth by segment:
Renal: Provides products to treat irreversible kidney failure BioScience 10% 14% 6% 14% 5% 9%
including peritoneal dialysis and hemodialysis therapies. Medication delivery -1% -2% 8% 8% 2% 14%
Renal 3% 3% 8% 3% -2% 13%
Pre-tax margin by segment:
INVESTMENT HIGHLIGHTS BioScience 26% 34% 39% 41% 41% 41%
• History of medical “firsts” in medication delivery Medication delivery 15% 14% 16% 13% 16% 21%
(plastic intravenous containers and premixed drugs), Renal 16% 18% 17% 14% 14% 15%
hemophilia treatment (concentrated clotting factor), Corporate -5% -6% -7% -5% -5% -6%
Total pre-tax margin 15% 17% 19% 20% 22% 22%
and kidney therapies (home-based dialysis). % of revenue by geography:
• Pipeline includes 14 drugs and biologics in phase U.S. 45% 44% 43% 41% 42% 41%
III stage at yearend 2009 (versus ten in 2008 and International 55% 56% 57% 59% 58% 59%
five in 2007). Hemostatic agent TachoSil received Revenue growth by geography:
U.S. -2% 5% 5% 5% 5% 4%
U.S. approval and should be launched in 2H10. International 8% 6% 11% 13% -1% 17%
• Chairman and CEO Robert Parkinson (59) has Selected items as % of revenue:
served in current roles since 2004. Parkinson was at Gross profit 42% 46% 49% 50% 52% 52%
Abbott (ABT) for 25 years, including as COO. R&D 5% 6% 7% 7% 7% 7%
EBIT 2 16% 18% 20% 21% 23% 23%
• Repurchased 89 million shares for $5.1 billion Net income 10% 13% 15% 16% 18% 17%
from 2007 to 2009 including 23 million shares for D&A 6% 6% 5% 5% 5% 5%
$1.2 billion in 2009. Baxter also paid cash dividends Capex 5% 5% 6% 8% 8% 7%
% of revenue by major product line:
of $1.9 billion during 2007-09 (2009: $632 million). Recombinants 3 14% 15% 15% 16% 16% 16%
• Shares trade at 7% trailing free cash flow yield. Peritoneal dialysis 16% 16% 16% 15% 15% 15%
Based on cash flow guidance, 2010 free cash flow Global injectables 4 16% 14% 13% 13% 14% 14%
should remain roughly flat y-y at $1.9 billion. Intravenous therapies 12% 12% 12% 13% 12% 13%
Antibody therapy n/a n/a 9% 10% 11% 10%
Plasma proteins 7% 8% 9% 10% 11% 9%
INVESTMENT RISKS & CONCERNS Other 35% 35% 26% 23% 21% 22%
• Lowered 2010 guidance in April to 1-3% constant Days sales outstanding 55.1 52.9 53.3 50.6 51.2 53.0
currency revenue growth y-y (prior: 5-7%). EPS Inventory turns 2.6 2.7 2.5 2.5 2.5 2.2
∆ shares out (avg) 1% 5% -1% -3% -3% -2%
before special items* is expected at $3.92-4.00 1
Figures exclude $588 million charge related to the recall of Colleague pumps.
(prior: $4.20-4.28; 2009: $3.80) and operating cash 2
Excludes restructuring charges.
3
flow at $2.7 billion (prior and 2009: $2.9 billion). Genetically engineered products.
4
Consists of enhanced packaging, premixed drugs, and other products.
• Revised guidance “reflects the impact of recent
healthcare reform legislation in the U.S. and our MAJOR HOLDERS
outlook for continued plasma market pressures.” Insiders 1% | BlackRock 5% | State Street 4% | Cap World
U.S. reforms include higher Medicaid rebates and a 4% | Vanguard 4% | GS 3% | Barrow, Hanley 2%
tax change for retiree prescription drug benefits.
• Competition includes CSL Behring (subsidiary of RATINGS
Australia-based CSL Ltd.) and Talecris (TLCR). VALUE Intrinsic value materially higher than market value? 
Both are strong rivals in plasma-derived medicines. DOWNSIDE PROTECTION Low risk of permanent loss? 
• $1.4 billion of net debt. Baxter also has $1.7 billion MANAGEMENT Capable and properly incentivized? 
of net post-retirement liabilities, including $4.0 FINANCIAL STRENGTH Solid balance sheet? 
billion of gross pension liabilities, at yearend 2009. MOAT Able to sustain high returns on invested capital? 
*
Excludes, among others, a pre-tax charge of $588 million in 1Q10 related EARNINGS MOMENTUM Fundamentals improving? 
to the U.S. recall of Colleague infusion pumps announced in May. MACRO Poised to benefit from economic and secular trends? 
THE BOTTOM LINE
Baxter has strong franchises in medication delivery, hemophilia and kidney therapies. The business is defensible as products
are medically-necessary. A large presence in developing countries (~20% of 2009 revenue) and a deep drug pipeline should
sustain organic growth. While U.S. healthcare reform is pressuring profitability, Baxter is likely to preserve gross margin
over time as many of its products are best-in-class. Shares are modestly undervalued at an estimated 7% 2010 FCF yield.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 29 of 118
…additional insight into Baxter:

SLIDES FROM COMPANY PRESENTATION, MAY 2010

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 30 of 118
…additional insight into Baxter:

SLIDES FROM ANNUAL MEETING PRESENTATION, MAY 2010

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 31 of 118
CapitalSource (CSE) – Baupost , Pabrai , Third Point  Chevy Chase, MD, 800-370-9431
Financial: Regional Banks www.capitalsource.com

Trading Data Consensus EPS Estimates Valuation


Price: $4.81 (as of 5/14/10) Month # of P/E FYE 12/31/09 n/m
52-week range: $2.99 - $6.32 Latest Ago Ests P/E FYE 12/31/10 n/m
Market value: $1.6 billion This quarter -$0.10 -$0.04 11 P/E FYE 12/31/11 13x
Enterprise value: n/m Next quarter 0.01 0.03 10 P/E FYE 12/30/12 9x
Shares out: 322.6 million FYE 12/31/10 -0.69 -0.15 10 EV/ LTM revenue n/m
Ownership Data FYE 12/31/11 0.36 0.42 11 EV/ LTM EBIT n/m
Insider ownership: 2% FYE 12/30/12 0.53 0.53 4 P / tangible book 0.9x
Insider buys (last six months): 2 LT growth 13.5% 10.7% 2 Greenblatt Criteria
Insider sales (last six months): 0 EPS Surprise Actual Estimate LTM EBIT yield n/m
Institutional ownership: 67% 5/3/10 -$0.66 -$0.17 LTM pre-tax ROC n/m
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 3/31/10 3/31/09 3/31/10
Revenue 175 314 515 1,017 1,367 1,200 863 752 246 170
Gross profit 0 0 0 0 0 0 0 0 0 0
Operating income 124 209 263 328 429 (87) (421) (536) (39) (117)
Net income 108 125 165 279 159 (220) (869) (976) (104) (212)
Diluted EPS 1.01 1.06 1.33 1.65 0.67 (1.04) (2.92) (3.12) (0.40) (0.67)
Shares out (avg) 105 116 121 166 192 251 306 310 290 320
Cash from operations 90 141 (225) (3) (767) 2,957 1,910 306 1,598 (7)
Capex 5 3 5 5 5 6 19 14 5 1
Free cash flow 85 137 (229) (8) (773) 2,951 1,892 292 1,592 (7)
Cash & investments 70 206 687 6,247 6,242 4,755 1,269 791 2,649 791
Total current assets 0 0 0 0 0 0 0 0 0 0
Intangible assets 0 0 0 0 5 173 173 173 173 173
Total assets 2,567 4,737 6,987 15,211 18,040 18,420 12,247 11,642 15,792 11,642
Short-term debt 8 0 358 3,511 3,910 1,596 0 0 0 0
Total current liabilities 0 0 0 0 0 0 0 0 0 0
Long-term debt 1,661 3,706 5,017 9,350 11,058 6,784 3,499 4,561 7,906 4,561
Total liabilities 1,700 3,790 5,787 13,118 15,458 15,589 10,064 9,679 12,974 9,679
Preferred stock 0 0 0 0 0 0 0 0 0 0
Common equity 867 946 1,200 2,093 2,582 2,830 2,183 1,964 2,818 1,964
EBIT/capital employed n/m n/m n/m n/m n/m n/m n/m n/m n/m n/m
Ten-Year Stock Price Performance and Trading Volume Dynamics

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© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 32 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA
CapitalSource is a U.S. commercial lender. Three segments: YTD
FYE December 31 2006 2007 2008 2009 3/31/10
CapitalSource Bank: Formed in 2008, the bank has 22 retail Total assets ($bn) 15.2 18.0 18.4 12.2 11.6
branches in California with deposits of $4.6 billion. Total Selected balance sheet items as % of total assets:
assets are $5.7 billion and tangible book equity $659 million. Total loans, net 49% 52% 48% 62% 62%
Assets are mainly loans to small-to-medium size businesses. Mortgage-related receivables 15% 11% 10% 0% 0%
Direct real estate investments 5% 6% 5% 3% 3%
Other commercial finance business: Represents legacy loans Cash incl. restricted cash 4% 4% 10% 11% 7%
including commercial lending and real estate. This portfolio, Investment securities 1% 1% 4% 10% 15%
Other assets 25% 26% 24% 14% 13%
which has loans of $4.8 billion, is managed as a run-off.
Deposits 0% 0% 27% 37% 39%
Healthcare net lease business: Represents direct real estate Credit facilities 15% 12% 8% 4% 4%
investments into 181 long-term care facilities in the U.S. The Term debt 38% 40% 29% 24% 23%
Other borrowings 8% 9% 9% 12% 13%
company is exiting this business and has announced a sale of Other liabilities 25% 25% 12% 5% 5%
143 facilities to Omega Healthcare (OHI) in November 2009. Shareholders' equity 14% 14% 15% 18% 17%
Tangible equity to total assets 14% 14% 14% 16% 15%
INVESTMENT HIGHLIGHTS Consolidated income statement data ($mn):
Net inv. income, pre-provision 611 690 637 482 117
• CapitalSource Bank is future growth platform. Provision for loan losses 82 79 593 846 219
Management expects over 80% of commercial Net inv. income, post-provision 529 611 44 -364 -102
lending assets to reside within the bank in 2-3 years. Net income 279 176 -223 -894 -215
The bank has excess liquidity and is writing new CapitalSource Bank income statement data ($mn): 1
Net inv. income, pre-provision 72 202 65
loans primarily to small-to-medium sized firms.
Provision for loan losses 56 213 88
• Growing pre-tax, pre-provision earnings at Net inv. income, post-provision 16 -11 -23
CapitalSource Bank (from $20 million in 3Q08 to Net finance margin n/a 3.6% 4.6%
$48 million in 1Q10). Capital and projected Tangible equity/tangible assets n/a 12.6% 11.9%
earnings are “sufficient to support strong balance ∆ shares out (avg) 37% 15% 31% 22% 10%
1
CapitalSource Bank was created in July 2008 when the company took over
sheet growth and to absorb short-term credit the deposit base from Fremont Bank in California. 2008 includes 160 days only.
shocks.” Ongoing charge-offs relate mainly to $2.2
billion loan purchase from parent at inception. • Risk of rising interest rates. Even if charge-offs
• 70% of $4.8 billion consolidated debt is non- decline from current levels, profitability may be
recourse. CapitalSource has residual ownership squeezed as 5% net finance margins don’t look
interests in related securitizations, which is sustainable (1Q10 cost of funds was <1.5%).
maximum parent exposure. This is effectively a call • Value transfer from common equity to other
option on potential value creation from loan run-off. securities if company needs to raise further capital.
• Trades at 0.9x tangible equity and 8x pre-tax, pre- • Founder and ex-CEO Delaney (46) became
provision profit at the Bank based on 1Q10 run-rate. executive chairman in January. Ex-chief legal
officer Museles (46) and ex-healthcare business
INVESTMENT RISKS & CONCERNS executive Pieczynski (47) became co-CEOs.
• Is CSE the next CIT? Likely not, as it cut reliance
on wholesale funding by forming CapitalSource MAJOR HOLDERS
Bank. It is also not exposed to factoring receivables. Ex-CEO Delaney 2% | Other insiders <1% | FMR 10% |
• Liquidity risk from unfunded commitments and Madison Dearborn 7% | Baupost 6% | Wells 6% | SAC 3%
debt maturities. Unfunded commitments were $2.7
billion at parent-level as of March 31. Recourse RATINGS
debt totaled $1.4 billion with ~$500 million due in VALUE Intrinsic value materially higher than market value? 
2011 and ~$250 million in 2012 (mostly converts). DOWNSIDE PROTECTION Low risk of permanent loss? 
• “Greatest stress continues to be associated with MANAGEMENT Capable and properly incentivized? 
our $1.25 billion legacy commercial real estate FINANCIAL STRENGTH Solid balance sheet? 
portfolio.”However, $286 million of reserves MOAT Able to sustain high returns on invested capital? 
“should be sufficient” to cover future charge-offs. EARNINGS MOMENTUM Fundamentals improving? 
MACRO Poised to benefit from economic and secular trends? 
THE BOTTOM LINE
Commercial lender CapitalSource has likely avoided the fate of CIT by diversifying its funding sources to retail deposits in
2008 via formation of CapitalSource Bank. The bank should drive pre-provision earnings in excess of credit charges by 2011,
based on management projections. In the meantime, management is minimizing liquidity risk by extending debt maturities
and monetizing healthcare assets. Critically, the bulk of legacy loan portfolio is securitized with non-recourse debt, reducing
risk to the parent while providing it with a call option on the portfolio runoff. With shares trading below tangible book,
investors may be exaggerating the risk to the equity and ignoring the growth in earning power at CapitalSource Bank.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 33 of 118
…additional insight into CapitalSource:

CAPITALSOURCE BANK SEGMENT – PORTFOLIO COMPOSITION


($ in thousands)
December 31,
2009 2008
Assets:
Cash and cash equivalents 1 $821,980 $1,238,173
Investment securities, available-for-sale 901,764 642,714
Investment securities, held-to-maturity 242,078 14,389
Commercial real estate “A” Participation Interest, net 530,560 1,396,611
Loans 2 3,076,267 2,702,135
FHLB SF stock 20,195 20,195
Total $5,592,844 $6,014,217
Liabilities:
Deposits $4,483,879 $5,043,695
FHLB SF borrowings 200,000 —
Total $4,683,879 $5,043,695

1
As of December 31, 2009 and 2008, the amounts include restricted cash of $65.9 million and $17.4 million, respectively.
2
Excludes unamortized premiums and discounts and the allowance for loan losses.
Source: CapitalSource 10-K.

CAPITALSOURCE BANK SEGMENT – LOAN PORTFOLIO BY LOAN TYPE


($ in thousands)
December 31,
2009 2008
Commercial $1,599,667 52% $1,445,678 54%
Real estate 1,095,780 36% 812,333 30%
Real estate — construction 380,820 12% 444,124 16%
Total $3,076,267 100% $2,702,135 100%

HIGHLIGHTS FROM COMPANY PRESENTATION, MAY 2010

CapitalSource Bank – Pretax, Pre-Provision Earnings

(1) Includes $3 million in gain on sale of loans and $1.4 million of accelerated discount accretion on the “A” Participation Interest.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 34 of 118
CapitalSource Bank – Comparative Capital Ratios

CapitalSource Bank – Margin Expansion

CapitalSource Bank – Comparison of Loan Loss Reserves

(1) Excludes the “A” Participation Interest.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 35 of 118
DirecTV (DTV) – Baupost , Southeastern , Third Point , Weitz  El Segundo, CA, 310-964-5000
Services: Broadcasting & Cable TV, Member of S&P 500 www.directv.com

Trading Data Consensus EPS Estimates Valuation


Price: $37.34 (as of 5/14/10) Month # of P/E FYE 12/31/09 39x
52-week range: $21.47 - $38.56 Latest Ago Ests P/E FYE 12/31/10 16x
Market value: $34.1 billion This quarter $0.58 $0.57 20 P/E FYE 12/31/11 13x
Enterprise value: $39.4 billion Next quarter 0.57 0.54 19 P/E FYE 12/30/12 10x
Shares out: 913.3 million FYE 12/31/10 2.31 2.18 21 EV/ LTM revenue 1.8x
Ownership Data FYE 12/31/11 2.93 2.84 21 EV/ LTM EBIT 14x
Insider ownership: 0% FYE 12/30/12 3.65 3.48 14 P / tangible book n/m
Insider buys (last six months): 1 LT growth 19.2% 18.0% 2 Greenblatt Criteria
Insider sales (last six months): 32 EPS Surprise Actual Estimate LTM EBIT yield 7%
Institutional ownership: 92% 5/6/10 $0.59 $0.45 LTM pre-tax ROC 58%
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 3/31/10 3/31/09 3/31/10
Revenue 9,372 11,360 13,165 14,756 17,246 19,693 21,565 22,272 4,901 5,608
Gross profit 4,205 5,584 6,697 7,443 8,660 10,105 10,976 11,351 2,524 2,899
Operating income (350) (2,076) 633 2,357 2,486 2,695 2,103 2,781 424 1,023
Net income (362) (1,949) 336 1,420 1,451 1,521 942 1,299 201 558
Diluted EPS (0.27) (0.76) 0.22 1.12 1.19 1.36 0.95 1.34 0.20 0.59
Shares out (avg) 1,383 1,385 1,388 1,262 1,195 1,110 985 972 1,018 931
Cash from operations 1,192 505 1,172 3,162 3,645 3,910 4,431 4,939 996 1,504
Capex 747 1,023 889 1,976 2,692 2,229 2,071 2,005 539 473
Free cash flow 444 (518) 283 1,186 953 1,681 2,360 2,934 457 1,031
Cash & investments 1,780 2,830 4,385 2,669 1,093 2,005 2,605 3,488 2,105 3,488
Total current assets 10,416 4,771 6,096 4,556 3,146 4,044 5,055 5,728 4,035 5,728
Intangible assets 3,603 5,271 4,923 5,326 5,246 4,925 5,295 5,283 4,829 5,283
Total assets 19,037 14,324 15,630 15,141 15,063 16,539 18,260 18,826 16,406 18,826
Short-term debt 226 20 10 220 48 108 1,510 360 120 360
Total current liabilities 5,899 2,695 2,828 3,322 3,434 3,585 5,701 4,400 3,562 4,400
Long-term debt 2,435 2,490 3,456 3,442 3,390 6,267 7,037 8,438 5,696 8,438
Total liabilities 9,406 6,817 7,690 8,460 8,761 11,908 15,349 15,895 11,888 15,895
Preferred stock 0 0 0 0 0 0 0 0 0 0
Common equity 9,631 7,507 7,940 6,681 6,302 4,631 2,911 2,931 4,518 2,931
EBIT/capital employed -5% -46% 32% 91% 64% 56% 42% 58% n/m n/m
Ten-Year Stock Price Performance and Trading Volume Dynamics

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© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 36 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA
DirecTV provides satellite television services. YTD
FYE December 31 2005 2006 2007 2008 2009 3/31/10
∆ revenue 16% 12% 17% 14% 10% 14%
INVESTMENT HIGHLIGHTS Revenue ($bn) 13.2 14.8 17.2 19.7 21.6 5.6
• Largest U.S. satellite TV provider with 18.7 % of revenue by segment:
million subscribers as of March 31, 2010, ahead of U.S. 93% 93% 90% 88% 87% 85%
DISH Network’s 14.3 million subscribers. Total Latin America 6% 7% 10% 12% 13% 14%
Corp./Sports Networks 1 2% 0% 0% 0% 0% 1%
U.S. housing units are approximately 129 million. Revenue growth by segment:
• 19% subscriber share of total pay-TV industry, U.S. 25% 13% 13% 11% 8% 11%
which includes cable (62% share), satellite (33%), Latin America 10% 37% 70% 39% 21% 30%
and, increasingly, telephone companies (5%). EBIT margin by segment:
U.S. 7% 17% 15% 13% 13% 17%
• Good performance in weak economy. Subscribers Latin America -3% 8% 9% 18% 12% 16%
are up 11% since 2007, while average revenue per Corp./Sports Networks -1% 0% 0% 0% 0% 0%
user is up 8%. Subscriber acquisition costs have Total EBIT margin 5% 16% 14% 14% 12% 17%
risen 3% since 2007. Monthly churn is flat at 1.5%. Selected items as % of revenue:
Gross profit 2 49% 49% 48% 49% 49% 50%
• Owns fast-growing satellite TV assets across Subscriber acq. costs 21% 13% 12% 12% 13% 12%
Latin America. Wholly-owned PanAmericana and Net income 2% 10% 8% 8% 4% 10%
74%-owned Sky Brazil have 4.8 million subscribers D&A 6% 7% 10% 12% 12% 11%
Capex 7% 13% 16% 11% 10% 8%
and 41%-owned Sky Mexico (accounted for under
Net op. cash flow ($bn) 1.2 3.2 3.6 3.9 4.4 1.5
the equity method) another 2.2 million subscribers. FCF ($bn) 0.3 1.2 1.0 1.7 2.4 1.0
• Announced plan to collapse dual-share structure, Selected operational metrics:
removing 24% vote by chairman John Malone (68). DirecTV U.S.:
Subscribers (mn) 15.1 16.0 16.8 17.6 18.6 18.7
This is to satisfy FCC concerns regarding Malone’s
∆ subscribers 9% 5% 6% 5% 5% 3%
control of DirecTV and Liberty Media. Malone and ARPU 3 $70 $74 $79 $84 $85 $85
two other directors are to resign from the board. ∆ ARPU 4% 6% 7% 6% 2% 6%
• Another $4+ billion of capital return on the way? Avg SAC 4 $642 $641 $692 $715 $712 $768
DirecTV has a yearend 2011 total debt target of ∆ avg SAC 0% 0% 8% 3% 0% 8%
Avg monthly churn 1.7% 1.6% 1.5% 1.5% 1.5% 1.5%
2.5x U.S. segment EBITDA. Share buybacks and DirecTV Latin America:
“alternative ways of returning capital” are targeted. Subscribers (mn) 5 1.6 2.7 3.3 3.9 4.6 4.8
Debt was $8.8 billion and cash $3.5 billion at March ∆ subscribers -3% 70% 21% 18% 18% 19%
31. 1Q annualized U.S. EBITDA is $5.2 billion. ARPU $39 $42 $48 $55 $57 $55
∆ ARPU 9% 6% 16% 14% 4% 10%
• Shares trade at 9% trailing FCF yield. Avg monthly churn n/a n/a 1.4% 1.8% 1.8% 1.9%
Tang. equity to assets 27% 21% 10% 2% -11% -11%
INVESTMENT RISKS & CONCERNS ∆ shares out (avg) 0% -9% -5% -7% -11% -9%

1
Added only 100,000 net U.S. subscribers in 1Q10, Includes three U.S. regional sports networks acquired in November 2009.
2
Stated after programming, subscriber service, broadcast ops and other costs.
down from 460k in 1Q09. Monthly churn rose from 3
ARPU = average revenue per user.
4
1.33% a year-ago to 1.48% in 1Q10, while average SAC = subscriber acquisition cost.
5
Excludes Sky Mexico subscribers.
subscriber acquisition costs rose 8% y-y.
• Competition from telcos, which offer similar MAJOR HOLDERS *
services via upgraded fiber optic networks. Like John Malone 3% | Other insiders <1% | Southeastern 9% |
cable rivals, telcos offer bundled service on one bill. BlackRock 5% | Primecap 5% | State Street 4% | FMR 4%
• Internet video may be a long-term threat, as * Assumes elimination of dual-share structure as announced in April 2010.
Hulu, Netflix, YouTube and others gain popularity.
RATINGS
COMPARABLE PUBLIC COMPANY ANALYSIS VALUE Intrinsic value materially higher than market value? 
P/ This Next DOWNSIDE PROTECTION Low risk of permanent loss? 
MV EV EV / Tang. FY FY
($mn) ($mn) Rev. Book P/E P/E
MANAGEMENT Capable and properly incentivized? 
CMCSA 49,660 77,060 2.1x n/m 14x 13x
FINANCIAL STRENGTH Solid balance sheet? 
TWC 18,290 39,370 2.2x n/m 15x 12x
MOAT Able to sustain high returns on invested capital? 
DISH 10,260 14,300 1.2x n/m 12x 10x
EARNINGS MOMENTUM Fundamentals improving? 
DTV 34,100 39,410 1.8x n/m 16x 13x
MACRO Poised to benefit from economic and secular trends? 

THE BOTTOM LINE


DirecTV faces ongoing concerns about rising subscriber acquisition costs and higher churn due to increasing competition in a
relatively mature U.S. pay-TV market. Despite such concerns, the business has grown in a weak economy and is generating
increasing free cash flow. While the exit of industry veteran and shrewd capital allocator John Malone is a blow, he retains a
3% stake. Trading on a trailing FCF yield of 9%, and more capital return on the way, shares offer an attractive risk-reward.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 37 of 118
…additional insight into DirecTV:

SLIDES FROM COMPANY PRESENTATION, MARCH 2010

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 38 of 118
…additional insight into DirecTV:
SELECTED SEGMENT INFORMATION, 2007-2009
Years Ended December 31,
($ in millions, unless stated otherwise) 2007 2008 2009
DIRECTV U.S.
Revenues 15,527 17,310 18,671
% of total revenues 90.0% 87.9% 86.6%
Operating profit 2,402 2,330 2,410
Add: Depreciation and amortization expense 1,448 2,061 2,275
Operating profit before depreciation and amortization 3,850 4,391 4,685
Operating profit margin 15.5% 13.5% 12.9%
Operating profit before depreciation and amortization margin 24.8% 25.4% 25.1%
Segment assets 12,297 12,546 12,408
Capital expenditures 2,326 1,765 1,485
Total number of subscribers (000's) 1 16,831 17,621 18,560
ARPU ($) 79.05 83.9 85.48
Average monthly subscriber churn 1.51% 1.47% 1.53%
Gross subscriber additions (000's) 3,847 3,904 4,273
Subscriber disconnections (000's) 2,969 3,043 3,334
Net subscriber additions (000's) 878 861 939
Average subscriber acquisition costs—per subscriber (SAC) ($) 692 715 712
DIRECTV Latin America
Revenues 1,719 2,383 2,878
% of total revenues 10.0% 12.1% 13.3%
Operating profit 159 426 331
Add: Depreciation and amortization expense 235 264 366
Operating profit before depreciation and amortization 394 690 697
Operating profit margin 9.2% 17.9% 11.5%
Operating profit before depreciation and amortization margin 22.9% 29.0% 24.2%
Segment assets 2,456 3,301 3,772
Capital expenditures 336 447 584
ARPU ($) 48.33 55.07 57.12
Average monthly subscriber churn 2 1.38% 1.78% 1.75%
Total number of subscribers (000's) 3 3,279 3,883 4,588
Gross subscriber additions (000's) 1,080 1,393 1,575
Net subscriber additions (000's) 588 623 692
Sports Networks, Eliminations and Other
Revenues — — 16
Operating loss before depreciation and amortization (74) (66) (69)
Segment assets 310 692 2,080
Capital expenditures 30 17 2
Total
Revenues 17,246 19,693 21,565
Operating profit 2,486 2,695 2,673
Add: Depreciation and amortization expense 1,684 2,320 2,640
Operating profit before depreciation and amortization 4,170 5,015 5,313
Operating profit margin 14.4% 13.7% 12.4%
Operating profit before depreciation and amortization margin 24.2% 25.5% 24.6%
Total assets 15,063 16,539 18,260
Capital expenditures 2,692 2,229 2,071
1
In 2008, the company had a one-time downward adjustment to subscriber count of 71,000 subscribers related to commercial equivalent viewing units. This
adjustment did not affect revenue, operating profit, cash flows, net subscriber additions or average monthly subscriber churn.
2
In the year ended December 31, 2008, DIRECTV Latin America had a subscriber adjustment totaling 78,000 subscribers in Sky Brazil as a result of the
inconsistent application of churn policies in previous periods and the completion of the Sky Brazil and DIRECTV Brazil business integration.
3
DIRECTV Latin America data excludes subscribers of the Sky Mexico platform. The company migrated 3,000 subscribers from DIRECTV Latin America to Sky
Mexico in 2009 and 19,000 subscribers from DIRECTV Latin America to Sky Mexico in 2008 (20,000 in 2007). DIRECTV also migrated 16,000 subscribers from a
local pay TV service provider in Latin America to Sky Brazil in 2009. Net subscriber additions as well as churn exclude the effect of these migrations.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 39 of 118
Sealed Air (SEE) – Southeastern  Elmwood Park, NJ, 201-791-7600
Basic Materials: Containers & Packaging, Member of S&P 500 www.sealedair.com

Trading Data Consensus EPS Estimates Valuation


Price: $21.14 (as of 5/14/10) Month # of P/E FYE 12/31/09 16x
52-week range: $17.10 - $23.43 Latest Ago Ests P/E FYE 12/31/10 13x
Market value: $3.4 billion This quarter $0.37 $0.38 12 P/E FYE 12/31/11 12x
Enterprise value: $4.3 billion Next quarter 0.42 0.42 11 P/E FYE 12/30/12 10x
Shares out: 159.5 million FYE 12/31/10 1.61 1.60 12 EV/ LTM revenue 1.0x
Ownership Data FYE 12/31/11 1.81 1.81 12 EV/ LTM EBIT 9x
Insider ownership: 2% FYE 12/30/12 2.10 2.12 7 P / tangible book 14.4x
Insider buys (last six months): 2 LT growth 6.8% 6.8% 3 Greenblatt Criteria
Insider sales (last six months): 4 EPS Surprise Actual Estimate LTM EBIT yield 11%
Institutional ownership: 89% 4/28/10 $0.36 $0.35 LTM pre-tax ROC 45%
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 3/31/10 3/31/09 3/31/10
Revenue 3,532 3,798 4,085 4,328 4,651 4,844 4,243 4,316 989 1,061
Gross profit 1,113 1,162 1,158 1,240 1,301 1,237 1,219 1,233 286 300
Operating income 505 469 508 525 549 361 483 486 120 123
Net income 187 216 256 274 350 178 242 246 58 61
Diluted EPS 0.99 1.12 1.35 1.47 1.88 0.99 1.35 1.35 0.32 0.35
Shares out (avg) 169 168 164 161 160 158 157 157 157 158
Cash from operations 470 436 363 433 378 404 552 579 56 83
Capex 124 103 97 168 254 181 80 71 24 15
Free cash flow 345 334 266 265 124 224 472 508 32 68
Cash & investments 365 412 500 407 430 129 695 628 426 628
Total current assets 1,471 1,611 1,695 1,757 1,936 1,673 2,073 2,036 1,909 2,036
Intangible assets 1,956 1,934 1,920 1,974 2,040 2,002 2,007 1,997 1,995 1,997
Total assets 4,704 4,855 4,864 5,021 5,438 4,986 5,420 5,336 5,181 5,336
Short-term debt 21 24 263 26 340 189 35 22 186 22
Total current liabilities 1,190 1,304 1,534 1,406 1,742 1,622 1,434 1,387 1,537 1,387
Long-term debt 2,260 2,088 1,813 1,827 1,532 1,290 1,626 1,561 1,590 1,561
Total liabilities 3,581 3,522 3,472 3,366 3,419 3,061 3,221 3,105 3,263 3,105
Preferred stock 0 0 0 0 0 0 0 0 0 0
Common equity 1,124 1,334 1,392 1,655 2,020 1,925 2,200 2,231 1,918 2,231
EBIT/capital employed 52% 49% 58% 59% 52% 31% 45% 45% n/m n/m
Ten-Year Stock Price Performance and Trading Volume Dynamics

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© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 40 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA
Sealed Air provides packaging materials. YTD
FYE December 31 2005 2006 2007 2008 2009 3/31/10
∆ revenue 8% 6% 7% 4% -12% 7%
INVESTMENT HIGHLIGHTS Components of y-y revenue growth:
• Invented “Bubble Wrap” (trademarked). Brands volume—units 3% 2% 3% -2% -8% 4%
also include Jiffy protective mailers, Instapak foam- volume—net M&A 0% 2% 0% 1% 0% 0%
product price/mix 3% 3% 1% 3% 0% -3%
in-place systems, and Cryovac packaging.
currency impact 2% 0% 4% 2% -5% 6%
• Food industry applications typically account for Revenue ($bn) 4.1 4.3 4.7 4.8 4.2 1.1
60% of revenue. Another ~30% of revenue is % of revenue by segment:
derived from industrial packaging, while the rest is Food packaging 1 41% 40% 40% 41% 43% 42%
from specialty material and medical applications. Food solutions 2 19% 19% 20% 20% 21% 21%
Protective packaging 3 35% 34% 32% 31% 28% 29%
• Core products include shrink bags to vacuum- Other 4 4% 6% 7% 8% 8% 8%
package fresh food such as meat and ready-meals in Revenue growth by major segment: 5
order to minimize shrinkage and spoilage. Food packaging n/a 3% 8% 5% -7% 5%
Food solutions n/a 7% 12% 5% -10% 7%
• Invests about “double the industry average” on Protective packaging n/a 4% 2% -2% -19% 9%
R&D as a percentage of revenue (2009: 1.9%). It EBIT margin by segment (excludes restructuring charges): 6
owns 3,000+ patents and patent applications. Food packaging 14% 12% 12% 11% 14% 13%
• Opportunities to achieve 15% EBIT margin by Food solutions 11% 10% 9% 8% 10% 10%
Protective packaging 12% 14% 14% 11% 13% 13%
2012/13 include 5-6% revenue CAGR from 2009 Other 10% 11% 9% 4% 4% 9%
base and cost reduction in SG&A and cost of sales. Total EBIT margin 13% 12% 12% 10% 12% 12%
• “Volume growth in all of our businesses, led by % of revenue by geography:
protective packaging and by developing regions.” U.S. 48% 48% 46% 45% 46% 46%
International 52% 52% 54% 55% 54% 54%
Protective packaging volume grew 8% y-y in 1Q10. Revenue growth by geography:
• Guiding for EPS of $1.50-1.70 in 2010 (+11-26% U.S. 7% 5% 3% 3% -10% 3%
y-y) on 4-6% y-y constant currency revenue growth. International 9% 7% 12% 5% -14% 12%
This assumes other currencies will “neutralize” Selected items as % of revenue:
Gross profit 28% 29% 28% 26% 29% 28%
impact of weaker euro, includes asbestos-related R&D 2% 2% 2% 2% 2% 2%
new share issuance, and excludes a $0.02 charge. EBIT (as reported) 12% 12% 12% 8% 12% 12%
• Trades on 8% FCF yield on 2010 guidance of Net income 6% 6% 8% 4% 6% 6%
D&A 4% 4% 3% 3% 4% 4%
$300+ million FCF (after $80-100 million of capex)
Capex 2% 4% 5% 4% 2% 1%
FCF ($mn) 266 265 167 224 472 68
INVESTMENT RISKS & CONCERNS Tangible equity to assets -19% -14% -5% -2% 2% 2%
• Expects “low double-digit percent increase in the ∆ shares out (avg) -3% -2% 0% -2% 0% 1%
1
Provides packaging for perishable foods such as meat, seafood and cheese.
average cost of resin” in 2010. However, increased 2
Includes packaging materials for ready-meals, among other products.
costs should be “largely” recovered by yearend 3
Includes air cellular packaging used in industrial and consumer applications.
4
through announced global price increases of 4-9%. Includes specialty materials, medical applications, and new ventures.
5
2005 figures are not available due to changes in segment reporting.
• Asbestos-related claims arising from a 1998 deal 6
Corporate overhead is allocated to the segments.
with W. R. Grace. Sealed Air’s balance sheet
reflects a $757 million liability. 18 million shares MAJOR HOLDERS
may also be issued in a potential settlement. CEO Hickey <1% | Other insiders 1% | Davis 37% |
• $955 million of net debt as of March 31. Earliest BlackRock 6% | Vanguard 5% | State Street 4% | Cap Re 2%
significant debt maturity is in 2013.
RATINGS
COMPARABLE PUBLIC COMPANY ANALYSIS VALUE Intrinsic value materially higher than market value? 
P/ This Next DOWNSIDE PROTECTION Low risk of permanent loss? 
MV EV EV / Tang. FY FY MANAGEMENT Capable and properly incentivized? 
($mn) ($mn) Rev. Book P/E P/E
FINANCIAL STRENGTH Solid balance sheet? 
SON 3,220 3,610 1.0x 6.9x 14x 13x
MOAT Able to sustain high returns on invested capital? 
PTV 3,190 4,520 1.3x n/m 11x 10x
EARNINGS MOMENTUM Fundamentals improving? 
BMS 3,100 4,570 1.2x 5.1x 13x 12x
MACRO Poised to benefit from economic and secular trends? 
SLGN 2,250 3,010 1.0x 6.5x 13x 12x
SEE 3,370 4,320 1.0x 14.4x 13x 12x
THE BOTTOM LINE
What’s changed at Sealed Air is that free cash flow is set to rise in 2010 after completion of a multi-year manufacturing
reorganization which required significant capex. Management is guiding for $300+ million of FCF in 2010, implying the
shares trade on an 8%+ yield. We find this enticing given the company’s defensible market position, ~300 bps of margin
improvement potential by 2012/13 and continued growth based on product innovation and penetration of developing markets.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 41 of 118
…additional insight into Sealed Air:

EXCERPTS FROM COMPANY PRESENTATION, FEBRUARY 2010

Strategy Overview by Business Segment

Overview and Impact of Cost Cutting Initiatives

Free Cash Flow, 2005-2010E

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 42 of 118
Capital Expenditures, 2005-2010E

Near-Term Liquidity Position

Feedstock and Raw Material Index, January 2003 – January 2010

1
Oil represents the average monthly Crude Oil West Texas Intermediate price.
2
Natural Gas represents the average monthly North American contract burner tip price.
Source: CMAI, EIA.DOE.GOV, Sealed Air analysis.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 43 of 118
Take-Two Interactive (TTWO) – Icahn  New York, NY, 646-536-2842
Technology: Software & Programming, Member of S&P SmallCap 600 www.take2games.com

Trading Data Consensus EPS Estimates Valuation


Price: $11.07 (as of 5/14/10) Month # of P/E FYE 10/31/09 n/m
52-week range: $7.00 - $12.57 Latest Ago Ests P/E FYE 10/31/10 n/m
Market value: $936 million This quarter $0.26 $0.26 19 P/E FYE 10/31/11 8x
Enterprise value: $929 million Next quarter -0.47 -0.47 18 P/E FYE 10/30/12 11x
Shares out: 84.6 million FYE 10/31/10 -0.43 -0.44 19 EV/ LTM revenue 1.1x
Ownership Data FYE 10/31/11 1.41 1.40 15 EV/ LTM EBIT n/m
Insider ownership: 3% FYE 10/30/12 1.05 1.05 2 P / tangible book 4.8x
Insider buys (last six months): 13 LT growth 10.5% 10.5% 4 Greenblatt Criteria
Insider sales (last six months): 9 EPS Surprise Actual Estimate LTM EBIT yield -11%
Institutional ownership: 95% 3/3/10 -$0.31 -$0.51 LTM pre-tax ROC -76%
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 10/31/03 10/31/04 10/31/05 10/31/06 10/31/07 10/31/08 10/31/09 1/31/10 1/31/09 1/31/10
Revenue 1,034 1,128 1,201 1,038 982 1,538 969 875 149 163
Gross profit 396 378 415 212 247 549 251 258 47 63
Operating income 163 97 38 (189) (128) 116 (130) (106) (56) (27)
Net income 98 62 35 (185) (138) 97 (138) (122) (50) (34)
Diluted EPS 1.51 0.91 0.50 (2.60) (1.93) 1.28 (1.80) (1.57) (0.71) (0.43)
Shares out (avg) 63 67 70 71 72 75 77 77 76 78
Cash from operations 81 21 40 43 (64) 151 (210) (149) (57) 4
Capex 46 64 91 25 27 20 17 11 2 2
Free cash flow 35 (44) (51) 18 (91) 132 (227) (160) (59) 2
Cash & investments 184 155 107 133 78 280 102 106 218 106
Total current assets 513 715 613 545 499 724 628 521 545 521
Intangible assets 163 187 261 262 271 319 320 314 317 314
Total assets 707 945 935 869 831 1,083 1,009 893 901 893
Short-term debt 0 0 0 0 0 0 0 0 0 0
Total current liabilities 165 307 247 264 312 365 354 274 244 274
Long-term debt 0 0 0 0 18 70 138 99 70 99
Total liabilities 174 310 249 318 360 468 503 383 348 383
Preferred stock 0 0 0 0 0 0 0 0 0 0
Common equity 534 636 686 550 471 615 506 511 552 511
EBIT/capital employed 87% 41% 13% -75% -73% 88% -84% -76% n/m n/m
Ten-Year Stock Price Performance and Trading Volume Dynamics

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© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 44 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA 1
Take-Two provides gaming software for leading video game YTD
consoles as well as for PCs and other device platforms. FYE October 31 2005 2006 2007 2008 2009 1/31/10
∆ revenue 11% -12% -8% 78% -43% 9%
Revenue ($mn) 852 753 692 1,230 701 163
INVESTMENT HIGHLIGHTS Selected items as % of revenue:
• Owns popular video game franchises including Gross margin 45% 25% 32% 42% 33% 39%
Grand Theft Auto, Sid Meier’s Civilization, Max R&D 9% 9% 7% 5% 9% 9%
EBIT 2 3% -17% -11% 8% -12% -16%
Payne, and Manhunt. Licensed brands include Net income 2 3% -18% -14% 6% -14% -21%
sports games MLB 2K, NBA 2K, and NHL 2K. D&A 2 9% 17% 14% 11% 13% 15%
• Completed sale of distribution business to Capex 2 4% 2% 2% 1% 1% 1%
% of revenue by product platform:
Synnex (SNX) for $44 million cash in February. Xbox 360 0% 23% 30% 40% 40% 41%
Up to $7 million of proceeds is pending earn-out. PlayStation 3 0% 0% 10% 34% 16% 19%
• Activist investors Carl Icahn and Phil Falcone Wii 0% 0% 5% 9% 11% 13%
are large shareholders. Potential activism could PlayStation/PS 2 59% 30% 26% 8% 7% 6%
PSP 6% 18% 10% 5% 7% 6%
involve another attempt at a transaction with rival PC 11% 17% 14% 3% 11% 8%
Electronic Arts (ERTS), after Take-Two rejected Other 3 23% 12% 6% 2% 7% 6%
Electronic Arts’ $26 per share offer in 2008. % of revenue by platform maker:
• Executive chairman Strauss Zelnick (52) worked Sony 65% 49% 45% 46% 31% 31%
Microsoft 19% 29% 32% 40% 40% 41%
with Carl Icahn at Blockbuster. Zelnick was part Nintendo 2% 2% 7% 11% 17% 18%
of the slate of directors elected to Blockbuster’s PC and other 14% 20% 16% 4% 12% 9%
board following the Icahn-led proxy fight in 2005. % of revenue from top geography: 2
• Generated $13 million of free cash flow in North America 68% 69% 75% 65% 73% 75%
∆ shares out (avg) 4% 2% 1% 4% 2% 3%
F1Q10, excluding divested distribution business. 1
Excludes divested distribution business, unless noted otherwise. FY08
• Targeting $15 million of annualized cost savings, revenue reflects Grand Theft Auto IV, which has sold 15+ million units globally.
2
including $8 million in FY10. Restructuring FY2005-09 includes distribution business. EBIT excludes restructuring and
impairment charges. D&A includes amortization and impairment of software
includes a planned 15% headcount reduction. development costs and licenses. 3 Includes Nintendo DS, among others.
• EV to FY10E sales of 1.0-1.3x, based on guidance.
COMPARABLE PUBLIC COMPANY ANALYSIS
INVESTMENT RISKS & CONCERNS P/ This Next
• Cyclical, hit-driven business. The video game MV EV EV / Tang. FY FY
($mn) ($mn) Rev. Book P/E P/E
software industry has exhibited strong cyclicality
ATVI 13,300 9,960 2.2x 5.0x 14x 13x
due to major hardware transitions. Take-Two is also
ERTS 5,690 3,690 1.0x 4.0x 27x 20x
dependent on “hit” titles, such as Grand Theft Auto,
KNM 2,320 2,230 .8x 1.7x 14x 12x
which accounted for 42% of FY09 revenue.
THQI 430 250 .3x 2.0x 20x 13x
• Global sales of video game software to decline
TTWO 940 930 1.1x 4.8x n/m 8x
from $24 billion in 2009 to $17 billion in 2013
based on IDG’s November 2009 "Global Video
Game Market Update.” Units sold are to decline
MAJOR HOLDERS
from 604 million in 2009 to 463 million in 2013. ZelnickMedia* 4% | Other insiders <1% | Oppenheimer 15%
Threats include proliferation of free, casual games. Icahn 14% | FMR 12% | BlackRock 11% | Harbinger 7%
*
• Guiding for non-GAAP EPS loss of $0.40-0.60 in Chairman Zelnick and CEO Feder are partners at ZelnickMedia, which
owns 1.5 million shares and options over another 1.6 million shares.
FY10 on $725-925 million of continuing revenue
(up 3-32% y-y). Guidance excludes, among others,
RATINGS
stock compensation expense ($0.40/share) and
VALUE Intrinsic value materially higher than market value? 
includes loss from MLB game ($0.38-0.44/share).
DOWNSIDE PROTECTION Low risk of permanent loss? 
• Issued dilutive convert in June 2009. Although MANAGEMENT Capable and properly incentivized? 
hedging should reduce dilution, Take-Two issued FINANCIAL STRENGTH Solid balance sheet? 
$138 million of 4.375% notes due 2014, convertible MOAT Able to sustain high returns on invested capital? 
at $10.675 per share. The company has no other EARNINGS MOMENTUM Fundamentals improving? 
debt and had $106 million cash as of January 31. MACRO Poised to benefit from economic and secular trends? 
THE BOTTOM LINE
Take-Two owns popular video game franchises, most notably Grand Theft Auto. While the business is hit-driven, dependent
on hardware launches and vulnerable to consumer discretionary spending, Take-Two’s core brands are strong enough to
achieve repeat blockbuster sales. Given large ownership by activists Icahn and Falcone (Carl Icahn’s son Brett became a
director in April), the sale of the distribution business could be a precursor to a sale of the company. With EV-to-revenue of
1.0-1.3x based on FY10 guidance, the attractive valuation on a stand-alone basis becomes compelling in an M&A scenario.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 45 of 118
New or Increased Superinvestor Holdings
Aspen Technology (AZPN) – Third Point  Burlington, MA, 781-221-6400
Technology: Software & Programming www.aspentech.com
Trading Data Consensus EPS Estimates Valuation
Price: $11.60 (as of 5/14/10) Month # of P/E FYE 6/30/09 20x
52-week range: $7.00 - $12.01 Latest Ago Ests P/E FYE 6/30/10 n/m
Market value: $1.1 billion This quarter -$0.22 -$0.22 4 P/E FYE 6/30/11 n/m
Enterprise value: $1.1 billion Next quarter -0.19 -0.21 4 P/E FYE 6/29/12 n/a
Shares out: 91.8 million FYE 6/30/10 -1.04 -1.05 3 EV/ LTM revenue 4.7x
Ownership Data FYE 6/30/11 -0.78 -0.82 4 EV/ LTM EBIT n/m
Insider ownership: 1% FYE 6/29/12 n/a n/a n/a P / tangible book 6.2x
Insider buys (last six months): 0 LT growth 10.0% 10.0% 1 Greenblatt Criteria
Insider sales (last six months): 2 EPS Surprise Actual Estimate LTM EBIT yield -4%
Institutional ownership: 62% 5/6/10 -$0.24 -$0.25 LTM pre-tax ROC -82%
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 6/30/03 6/30/04 6/30/05 6/30/06 6/30/07 6/30/08 6/30/09 12/31/09 12/31/08 12/31/09
Revenue 347 332 269 294 341 312 312 225 83 43
Gross profit 218 207 161 196 247 227 236 153 64 26
Operating income (138) (13) (59) 19 55 19 44 (47) 19 (29)
Net income (148) (33) (84) (9) 38 25 53 (34) 23 (31)
Diluted EPS (3.86) (0.80) (1.97) (0.20) 0.50 0.27 0.57 (0.37) 0.25 (0.34)
Shares out (avg) 38 41 42 45 71 90 90 90 90 91
Cash from operations 22 41 (4) 51 56 71 34 31 (3) 10
Capex 13 11 14 11 7 10 5 4 2 1
Free cash flow 9 30 (18) 40 49 61 28 27 (5) 9
Cash & investments 52 108 68 86 132 134 122 109 123 109
Total current assets 192 209 147 260 319 333 302 254 297 254
Intangible assets 61 53 49 40 31 25 21 20 21 20
Total assets 374 352 246 466 529 555 516 449 522 449
Short-term debt 4 59 1 92 102 48 84 33 102 33
Total current liabilities 156 194 144 249 266 217 204 143 214 143
Long-term debt 90 2 0 91 104 99 28 63 36 63
Total liabilities 286 217 171 363 392 382 287 258 314 258
Preferred stock 58 107 121 126 0 0 0 0 0 0
Common equity 31 28 (46) (23) 137 173 229 192 208 192
Ten-Year Stock Price Performance and Trading Volume Dynamics

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© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 46 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA 1
Aspen Technology provides software focused on optimizing YTD
engineering, manufacturing, and supply chain processes. FYE June 30 2005 2006 2007 2008 2009 3/31/10
∆ revenue -19% 9% 16% -9% 0% n/m 1
Revenue ($mn) 269 294 341 312 312 128
INVESTMENT HIGHLIGHTS % of revenue by segment:
• #1 in process manufacturing software. Aspen has License 48% 52% 59% 54% 58% 31%
Maintenance & training 28% 26% 23% 27% 27% 44%
34% share in engineering applications (ahead of
Professional services 24% 22% 18% 19% 16% 24%
Invensys’13%), 11% in manufacturing (behind EBIT margin by segment:
Honeywell’s 12%) and 25% share in supply chain License 55% 63% 67% 59% 65% -23%
software (ahead of SAP’s 22% and Oracle’s 14%). Maintenance & training 79% 81% 80% 83% 83% 80%
Professional services 18% 31% 29% 27% 18% 18%
• AspenONE software helps customers design and Corporate -75% -54% -47% -53% -49% -90%
operate plants as well as manage the supply chain. Total EBIT margin -22% 6% 16% 6% 14% -58%
The benefit is higher return on capital by, for % of revenue by type:
example, reducing cost or lowering working capital. Software 48% 52% 59% 54% 58% 31%
Services 52% 48% 41% 46% 42% 69%
• Blue-chip customer base includes 1,500+ process Gross margin by type: 2
manufacturers. Among clients are the top 30 and top Software 87% 89% 93% 91% 93% 88%
50 oil and chemical companies, 14 of the top 15 Services 41% 48% 49% 52% 52% 50%
pharma and 14 of the top 16 engineering companies. Total gross margin 63% 70% 74% 73% 76% 62%
% of revenue by major geography:
• Barriers to entry due to high switching costs. U.S. 40% 43% 47% 36% 31% n/a
Aspen also has 34 existing and 28 pending patents. Europe 37% 31% 30% 33% 27% n/a
• End-markets represent growth opportunities. Selected items as % of revenue:
Management’s market size estimates are $1 billion R&D 18% 15% 13% 14% 13% 28%
Net income -31% -3% 11% 8% 17% -57%
for energy vertical (43% of FY09 license bookings), D&A 10% 8% 6% 4% 3% 4%
and $800 million for chemicals (30% of bookings). Capex 5% 4% 2% 3% 2% 2%
• Fiscal YTD license bookings are up 10% y-y. FCF ($mn) -17 40 49 61 28 21
March quarter bookings of $94 million were ∆ shares out (avg) 3 4% 5% 59% 26% 0% 1%
1
YTD figures are based on new accounting adopted in July 2009 (y-y and prior
“consistent” with seasonally stronger prior quarter. results not comparable). Previously, revenue was recognized as NPV of future
New sales model (see below) may be succeeding. license fees at time of software delivery. Now, revenue is recognized on a
• $32 million of net cash at March 31, 2010. subscription basis over the term of the contract. The change has resulted in
lower revenue and an operating loss in the YTD period.
2
Gross profit excludes amortization of technology-related intangible assets.
3
INVESTMENT RISKS & CONCERNS FY2007/08 growth reflects conversion of preferred into common stock.

• “Identified material weaknesses in our internal


COMPARABLE PUBLIC COMPANY ANALYSIS
control over financial reporting” as of March 31,
P/ This Next
2010. Efforts to address this are ongoing. The MV EV EV / Tang. FY FY
company has a history of poor compliance. Shares ($mn) ($mn) Rev. Book P/E P/E
were delisted in 2008 due to reporting deficiencies. ORCL 119,350 117,580 4.9x n/m 15x 13x
• Shares trade at estimated EV-to-revenue and ROK 8,460 8,550 2.0x 27.1x 21x 16x
gross profit of 6x and 10x, respectively, based on JDAS 1,150 1,270 2.9x 7.3x 14x 11x
fiscal YTD annualized figures. FCF yield is 2-3%. MANH 670 550 2.1x 5.8x 25x 21x
Strong cyclical upturn in demand may be priced in. AZPN 1,060 1,050 4.7x 6.2x n/m n/m
• Changed sales approach and related accounting
from “upfront” to “term” model in July 2009. RATINGS
Commercial changes include flexible client access VALUE Intrinsic value materially higher than market value? 
to software instead of having to decide on software DOWNSIDE PROTECTION Low risk of permanent loss? 
titles upfront. Rate of client uptake is uncertain. MANAGEMENT Capable and properly incentivized? 
FINANCIAL STRENGTH Solid balance sheet? 
MAJOR HOLDERS MOAT Able to sustain high returns on invested capital? 
CEO Fusco 2% | Other insiders 2% | Advent 31% | Waddell EARNINGS MOMENTUM Fundamentals improving? 
& Reed 15% | Third Point 5% | Cadian 5% | Alydar 4% MACRO Poised to benefit from economic and secular trends? 
THE BOTTOM LINE
Despite competition from heavyweights such as Oracle, AspenTech continues to dominate enterprise software markets for
process manufacturing applications. Eleven of its 14 largest products have #1 market share worldwide. In fact, the company
had to divest some businesses in 2004 after an FTC anticompetitive complaint. AspenTech remains subject to compliance
obligations under a related FTC decree. While an investment case could be built on takeover potential, a staggered board and
a valuation of 10x estimated EV-to-gross profit may be a hindrance. With little cash flow relative to market cap, stand-alone
valuation is far less attractive even assuming a cyclical demand upturn. We view an investment as rather speculative.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 47 of 118
…additional insight into Aspen Technology:

SLIDES FROM COMPANY PRESENTATION, FALL 2009

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 48 of 118
…additional insight into Aspen Technology:

PRESENTATION ON ACCOUNTING IMPACT OF ASPEN’S


“NEW COMMERCIAL MODEL” (RATABLE REVENUE RECOGNITION)

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 49 of 118
Hillenbrand (HI) – Breeden  Batesville, IN, 812-934-7500
Consumer Cyclical: Furniture & Fixtures, Member of S&P SmallCap 600 www.hillenbrandinc.com

Trading Data Consensus EPS Estimates Valuation


Price: $25.30 (as of 5/14/10) Month # of P/E FYE 9/30/09 15x
52-week range: $15.88 - $25.83 Latest Ago Ests P/E FYE 9/30/10 14x
Market value: $1.6 billion This quarter $0.42 $0.45 3 P/E FYE 9/30/11 12x
Enterprise value: $1.5 billion Next quarter 0.39 0.45 3 P/E FYE 9/29/12 n/a
Shares out: 62.3 million FYE 9/30/10 1.76 1.73 3 EV/ LTM revenue 2.3x
Ownership Data FYE 9/30/11 2.03 2.10 2 EV/ LTM EBIT 10x
Insider ownership: 3% FYE 9/29/12 n/a n/a n/a P / tangible book 4.7x
Insider buys (last six months): 3 LT growth n/a n/a n/a Greenblatt Criteria
Insider sales (last six months): 0 EPS Surprise Actual Estimate LTM EBIT yield 10%
Institutional ownership: 66% 5/6/10 $0.49 $0.44 LTM pre-tax ROC 92%
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 9/30/05 9/30/06 9/30/07 9/30/08 9/30/09 3/31/10 3/31/09 3/31/10
Revenue 659 675 667 678 649 643 171 170
Gross profit 267 283 279 281 274 279 74 77
Operating income 161 177 156 149 155 155 45 42
Net income 103 113 100 93 102 107 28 29
Diluted EPS 1.65 1.81 1.59 1.49 1.66 1.73 0.45 0.47
Shares out (avg) 62 63 63 63 62 62 62 62
Cash from operations 89 125 127 102 123 161 28 53
Capex 16 19 16 10 10 12 3 4
Free cash flow 73 106 112 92 113 148 26 49
Cash & investments 8 12 15 65 103 43 103
Total current assets 172 170 182 233 283 212 283
Intangible assets 22 23 20 16 15 18 15
Total assets 329 317 545 561 610 570 610
Short-term debt 0 0 100 60 30 115 30
Total current liabilities 77 76 186 135 140 189 140
Long-term debt 0 0 0 0 0 0 0
Total liabilities 137 136 257 257 262 260 262
Preferred stock 0 0 0 0 0 0 0
Common equity 193 181 288 304 348 310 348
EBIT/capital employed >100% 90% 87% 89% 92% n/m n/m
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Apr 08 Apr 09 Apr 10

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 50 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA — HILLENBRAND 1
Hillenbrand provides funeral products and services through YTD
wholly-owned subsidiary Batesville Services. FYE September 30 2007 2008 2009 3/31/10
∆ revenue -1% 2% -4% -2%
Following the acquisition of K-Tron International in April Revenue ($mn) 667 678 649 331
2010, the company also provides material handling products. Selected items as % of revenue:
These include feeding, size reduction and pneumatic Gross profit 42% 41% 42% 45%
EBIT 23% 22% 24% 25%
conveying equipment used in a range of industrial processes. Net income 15% 14% 16% 18%
Hillenbrand was spun off from Hill-Rom in April 2008. D&A 3% 3% 3% 3%
Capex 2% 1% 2% 2%
% of revenue by type:
INVESTMENT HIGHLIGHTS Batesville burial caskets 90% 90% 89% n/a
• #1 funeral casket provider in North America Other 2 10% 10% 11% n/a
with ~50% share of the $1.3 billion market (part of % of revenue by geography:
$2.6 billion funeral products industry, which also U.S. 93% 93% 93% n/a
International 7% 7% 7% n/a
includes markers, vaults and cremation products). ∆ shares out (avg) n/m n/m -1% 0%
• Owns iconic Batesville brand. Batesville is 100+ 1
Figures exclude any contribution from K-Tron (acquired April 1, 2010).
2
years old and is the brand of choice for families of Includes mainly urns, display fixturing, and other products and services.

funeral directors. The company’s direct customers


are funeral directors at licensed funeral homes. SELECTED OPERATING DATA — K-TRON 1
FYE December 31 2006 2007 2008 2009
• Stable, cash-generative business. During fiscal ∆ revenue 25% 36% 20% -21%
2005-09, Hillenbrand generated on average $665 ∆ backlog, period-end 97% 38% -4% -26%
million of revenue and $100 million of free cash Revenue ($mn) 148 202 243 191
flow annually, with modest year-on-year variation. Selected items as % of revenue:
• Insiders own about 5%. Kenneth Camp (64) and Gross profit 42% 43% 42% 43%
EBIT 14% 16% 16% 16%
Ray Hillenbrand (75) remain CEO and chairman, Net income 9% 11% 11% 11%
respectively, following the purchase of K-Tron. Ex- D&A 3% 3% 2% 3%
K-Tron CEO Cloues (61) became a director. Capex 2% 1% 2% 1%
% of revenue by type:
• Guiding for revenue of $740-770 million in FY10,
Equipment and parts 94% 94% 95% 95%
including six-months of K-Tron. Guidance midpoint Services and freight 6% 6% 5% 5%
implies pro-forma revenue is roughly flat y-y. Net % of revenue by geography:
income is expected at $102-113 million, excl. items. U.S. 55% 52% 47% 57%
International 45% 48% 53% 43%
Backlog, period-end ($mn) 51 72 69 51
INVESTMENT RISKS & CONCERNS 1
Hillenbrand acquired K-Tron effective April 1, 2010. Pro-forma financials were
• K-Tron acquisition. The purchase of a business in not available as of May 13, 2010. Figures are based on K-Tron’s public filings.
an unrelated industry may reflect “empire building.”
The $435 million price implies EV-to-trailing • $276 million of estimated net debt at 3/31/2010,
revenue and EBIT of 2.0x and 12.8x, respectively. after K-Tron deal. Included in cash is $62 million of
• Casket industry may have twice the necessary securities/investments, but not a $149 million note
domestic production capacity. Competition from receivable from Forethought Financial Group.
new entrants such as Wal-Mart and Chinese imports
could put further pressure on industry economics. MAJOR HOLDERS
• Lower demand due to growth of cremations, CEO Camp 1% | Other insiders 4% | Franklin 10% | Breeden
which are chosen for over one-third of U.S. deaths. 8% | BlackRock 6% | Vanguard 4% | River Road 4%
• Trades at estimated pro-forma EV-to-trailing
revenue and EBIT of 2.3x and 10.5x. RATINGS
VALUE Intrinsic value materially higher than market value? 
COMPARABLE PUBLIC COMPANY ANALYSIS DOWNSIDE PROTECTION Low risk of permanent loss? 
P/ This Next MANAGEMENT Capable and properly incentivized? 
MV EV EV / Tang. FY FY FINANCIAL STRENGTH Solid balance sheet? 
($mn) ($mn) Rev. Book P/E P/E MOAT Able to sustain high returns on invested capital? 
MATW 1,020 1,190 1.5x n/m 15x 14x EARNINGS MOMENTUM Fundamentals improving? 
HI 1,580 1,510 2.3x 4.7x 14x 12x MACRO Poised to benefit from economic and secular trends? 
THE BOTTOM LINE
The recent acquisition of industrial equipment maker K-Tron has transformed Hillenbrand from a pure-play funeral products
firm into a conglomerate with unrelated businesses. Absent further M&A, the funeral business remains the value driver with
80%+ of pro-forma EBITDA-less-capex. However, we are concerned about management’s focus on empire-building versus
value creation. While insider ownership mitigates some of this concern, we pass on the shares at an EV-to-EBIT of >10x.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 51 of 118
…additional insight into Hillenbrand:
COMPANY SLIDES ON K-TRON ACQUISITION, JANUARY 2010
Access full 51-page presentation at http://bit.ly/acRHcg

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 52 of 118
…additional insight into Hillenbrand:

INDUSTRY MACHINERY – VALUATION COMPARABLES at time of K-Tron acquisition announcement, January 2010

Source: Company presentation, January 2010.

SELECTED PRO FORMA COMBINED FINANCIALS

Note: Hillenbrand is expected to disclose more detailed and updated pro forma financial information after the publication date of this report.
Source: Company presentation, January 2010.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 53 of 118
Progressive Corp. (PGR) – Weitz  Mayfield Village, OH, 440-461-5000
Financial: Insurance (Property & Casualty), Member of S&P 500 www.progressive.com

Trading Data Consensus EPS Estimates Valuation


Price: $20.30 (as of 5/14/10) Month # of P/E FYE 12/31/09 13x
52-week range: $14.12 - $20.94 Latest Ago Ests P/E FYE 12/31/10 14x
Market value: $13.6 billion This quarter $0.36 $0.36 18 P/E FYE 12/31/11 13x
Enterprise value: $15.6 billion Next quarter 0.35 0.34 17 P/E FYE 12/30/12 12x
Shares out: 670.4 million FYE 12/31/10 1.48 1.47 19 EV/ LTM revenue 1.1x
Ownership Data FYE 12/31/11 1.56 1.56 21 EV/ LTM EBIT 10x
Insider ownership: 8% FYE 12/30/12 1.74 1.70 6 P / tangible book 2.2x
Insider buys (last six months): 0 LT growth 7.2% 7.2% 5 Greenblatt Criteria
Insider sales (last six months): 8 EPS Surprise Actual Estimate LTM EBIT yield 10%
Institutional ownership: 69% 4/14/10 $0.41 $0.37 LTM pre-tax ROC >100%
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 3/31/10 3/31/09 3/31/10
Revenue 11,892 13,782 14,303 14,786 14,687 12,840 14,564 14,761 3,468 3,666
Gross profit 1,992 2,571 2,178 2,547 1,835 (56) 1,726 1,792 418 483
Operating income 1,860 2,451 2,059 2,433 1,693 (222) 1,557 1,619 377 439
Net income 1,255 1,649 1,394 1,648 1,183 (70) 1,058 1,121 233 296
Diluted EPS 1.42 1.91 1.74 2.10 1.65 (0.10) 1.57 1.67 0.35 0.44
Shares out (avg) 867 852 788 774 710 668 667 665 669 661
Cash from operations 2,437 2,663 1,994 2,025 1,791 1,549 1,487 1,615 541 670
Capex 171 192 219 334 136 99 67 62 21 17
Free cash flow 2,266 2,471 1,775 1,690 1,655 1,451 1,420 1,553 520 653
Cash & investments 12 20 6 6 6 3 161 155 135 155
Total current assets 0 0 0 0 0 0 0 0 0 0
Intangible assets 0 0 0 0 0 0 0 0 0 0
Total assets 16,282 17,184 18,899 19,482 18,843 18,251 20,049 21,049 18,215 21,049
Short-term debt 0 0 0 0 0 0 0 0 0 0
Total current liabilities 0 0 0 0 0 0 0 0 0 0
Long-term debt 1,490 1,284 1,285 1,186 2,174 2,176 2,177 2,178 2,176 2,178
Total liabilities 11,251 12,029 12,791 12,636 13,908 14,035 14,301 14,837 13,912 14,837
Preferred stock 0 0 0 0 0 0 0 0 0 0
Common equity 5,031 5,155 6,108 6,847 4,936 4,215 5,749 6,212 4,303 6,212
EBIT/capital employed >100% >100% >100% >100% >100% -22% >100% >100% n/m n/m
Ten-Year Stock Price Performance and Trading Volume Dynamics

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© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 54 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA
Progressive writes personal and commercial auto insurance YTD
in the U.S. and, since 1999, in Australia (personal only). FYE December 31 2005 2006 2007 2008 2009 3/31/10
∆ Book per share 1 21% 19% 3% -11% 29% 36%
∆ EPS 2 -9% 21% -21% -106% n/m 26%
INVESTMENT HIGHLIGHTS BVPS (period-end) $7.74 $9.15 $7.26 $6.23 $8.55 $9.26
• #4 U.S. private passenger auto insurer, with an Net prem. written, $bn 14.0 14.1 13.8 13.6 14.0 3.8
estimated 7.6% market share in 2009 (2008: 7.3%) % of net premiums written by business line: 3
Personal - agency 57% 56% 55% 54% 53% 51%
based on net premiums written. Progressive ranks Personal – direct 30% 31% 32% 34% 36% 39%
behind State Farm, Allstate and Berkshire in a Commercial auto 13% 13% 13% 13% 11% 10%
relatively consolidated market (top 5 have ~50%). Net premiums written growth by business line:
• Personal lines account for ~90% of net premiums Personal - agency 1% -2% -4% -3% 1% 5%
Personal – direct 10% 4% 0% 4% 11% 15%
written, with rest represented by commercial auto. Commercial auto 11% 5% -4% -7% -10% -4%
Within personal lines, the split between auto and ∆ total 5% 1% -3% -1% 3% 7%
recreational vehicles is ~90/10. Personal auto GAAP combined ratios by business line:
policies are mainly written for six months. Personal - agency 89% 88% 94% 95% 92% 89%
Personal – direct 88% 87% 92% 94% 93% 95%
• Claims are high frequency, low severity and Commercial auto 82% 80% 90% 95% 86% 88%
short-tail. This makes the auto business one of the Total combined ratio 88% 87% 93% 95% 92% 91%
most predictable insurance segments around. of which loss ratio 68% 67% 72% 74% 71% 69%
• Positive “cost” of capital as Progressive has Pre-tax income by major segment ($mn):
Personal – agency 858 937 500 361 579 196
averaged a 9% underwriting margin in 2000-09
Personal – direct 476 569 340 275 358 71
(2008: 8%). This compares to the industry average Commercial auto 298 367 186 94 230 44
of about breakeven in 2000-09 and 1% in 2008. Total underwriting 1,639 1,878 1,025 735 1,176 318
• $15.6 billion of investments as of March 31, of Investments 487 626 775 -816 523 157
Interest expense -83 -77 -109 -137 -139 -35
which 24% is invested in equities and below- Total pre-tax income 2,059 2,433 1,693 -222 1,557 439
investment grade fixed income. The rest is in higher Pre-tax income margin 14% 16% 12% -2% 11% 12%
quality fixed maturity and short-term securities. Net income margin 10% 11% 8% -1% 7% 8%
• Grew book value per share at 12-13% CAGR Total assets, $bn 18.9 19.5 18.8 18.3 20.0 21.0
Selected items as % of total assets:
since yearend 2004, based on diluted shares and Investments 76% 75% 75% 71% 73% 74%
with dividends added back. ROE was 21% in ’09. Loss reserves 30% 29% 32% 34% 33% 32%
• Chairman Peter Lewis (76) owns 7%. Lewis was Debt 7% 6% 12% 12% 11% 10%
a founder of Progressive and served as CEO from Shareholders’ equity 32% 35% 26% 23% 29% 30%
ROE 25% 25% 20% -2% 21% 21%
1965 to 2000. His director term expires in 2013. Debt-to-capital ratio 17% 15% 31% 34% 28% 26%
Policies in force, mn 10.0 10.2 10.7 11.0 11.5 11.8
INVESTMENT RISKS & CONCERNS ∆ policies in force 9% 3% 4% 3% 4% 5%
• Sells a commodity product. Most insureds don’t ∆ shares out (avg) -8% -2% -8% -6% 0% -1%
1
Book value per diluted share with dividends added back (book=tangible book
care from whom they buy car insurance. Cost is a as Progressive has no goodwill/intangibles on its balance sheet). 2
Diluted.
3
key factor in the decision, leading to price pressure. Personal lines include private passenger autos and recreational vehicles.
• Low-growth due to the maturity of the U.S. car Commercial writes insurance for autos and trucks owned by small businesses.

insurance industry (‘09 premiums are flat with ’05).


MAJOR HOLDERS
• Internet comparative rating services are adding
Chairman Lewis 7% | Other insiders 1% | Davis 12% |
transparency to pricing. Low-cost operators such as
Franklin 4% | State Street 4% | Vanguard 3% | Maverick 2%
Geico, which relies on direct marketing, are a threat.
• Reserving. As with any insurance business, lack of RATINGS
adequate reserving is a key source of potential risk.
VALUE Intrinsic value materially higher than market value? 
The short-tail nature of car insurance mitigates this.
DOWNSIDE PROTECTION Low risk of permanent loss? 
• Shares trade at 2.2x book value. Rival Allstate MANAGEMENT Capable and properly incentivized? 
trades at 1.0x book value, though the comparison FINANCIAL STRENGTH Solid balance sheet? 
may not be entirely appropriate. Competitor Geico MOAT Able to sustain high returns on invested capital? 
is wholly owned by Buffett’s Berkshire Hathaway. EARNINGS MOMENTUM Fundamentals improving? 
MACRO Poised to benefit from economic and secular trends? 
THE BOTTOM LINE
Auto insurer Progressive has grown book value per share, with dividends, in the low double-digits over the last ten years. It
has done so with an overcapitalized balance sheet and a remarkable 9% underwriting margin versus the industry average of
breakeven. At 2.2x book value, current valuation implies investors likely won’t achieve returns greater than future book value
per share growth including dividends. Given prospects for increased price pressure, we are not compelled by the risk-reward.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 55 of 118
…additional insight into Progressive:

Progressive’s “OBJECTIVES AND POLICIES SCORECARD”

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 56 of 118
TOP 25 U.S. AUTO INSURANCE WRITERS, ranked by 2008 direct premiums written

Progressive’s CLAIMS PAYMENT PATTERN

Progressive is primarily an insurer of autos and RVs owned by individuals, and trucks owned by small businesses. As such,
the company’s claims liabilities are generally short in duration. Incurred losses consist of both payments and changes in
reserve estimates. The chart below show the company’s claims payment pattern, reflecting both dollars and claims counts
paid. Physical damage claims pay out faster than bodily injury claims.

Source: Progressive 10-K.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 57 of 118
Texas Industries (TXI) – Southeastern  Dallas, TX, 972-647-6700
Capital Goods: Construction - Raw Materials, Member of S&P SmallCap 600 www.txi.com

Trading Data Consensus EPS Estimates Valuation


Price: $37.77 (as of 5/14/10) Month # of P/E FYE 5/31/09 n/m
52-week range: $27.36 - $47.33 Latest Ago Ests P/E FYE 5/31/10 n/m
Market value: $1.0 billion This quarter -$0.39 -$0.39 9 P/E FYE 5/31/11 n/m
Enterprise value: $1.5 billion Next quarter -0.15 -0.15 7 P/E FYE 5/30/12 47x
Shares out: 27.8 million FYE 5/31/10 -1.48 -1.48 7 EV/ LTM revenue 2.4x
Ownership Data FYE 5/31/11 -0.43 -0.43 10 EV/ LTM EBIT n/m
Insider ownership: 17% FYE 5/30/12 0.80 0.80 4 P / tangible book 1.4x
Insider buys (last six months): 5 LT growth 8.0% 7.0% 1 Greenblatt Criteria
Insider sales (last six months): 0 EPS Surprise Actual Estimate LTM EBIT yield -4%
Institutional ownership: 87% 3/25/10 -$0.98 -$0.85 LTM pre-tax ROC -5%
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 5/31/03 5/31/04 5/31/05 5/31/06 5/31/07 5/31/08 5/31/09 2/28/10 2/28/09 2/28/10
Revenue 718 767 835 944 996 1,029 839 627 179 118
Gross profit 121 130 142 177 242 195 113 62 30 (13)
Operating income 41 59 62 (9) 157 127 (30) (61) 13 (44)
Net income (24) 36 125 8 105 88 (18) (72) 11 (27)
Diluted EPS 1.28 1.96 1.99 (0.03) 3.94 3.15 (0.64) (2.58) 0.39 (0.98)
Shares out (avg) 21 21 22 23 25 27 28 28 28 28
Cash from operations 48 12 218 90 186 102 107 82 34 7
Capex 32 16 46 110 318 313 289 60 66 4
Free cash flow 16 (4) 171 (21) (132) (211) (181) 22 (31) 3
Cash & investments 6 133 252 135 15 40 20 76 34 76
Total current assets 374 362 481 411 311 373 327 313 321 313
Intangible assets 172 101 58 58 58 60 2 16 60 16
Total assets 1,730 1,717 2,194 1,088 1,275 1,532 1,573 1,514 1,638 1,514
Short-term debt 1 1 1 1 1 8 0 1 0 1
Total current liabilities 165 93 108 119 168 186 108 86 135 86
Long-term debt 677 798 803 411 274 402 542 544 541 544
Total liabilities 1,002 955 1,266 610 538 706 769 741 785 741
Preferred stock 0 0 0 0 0 0 0 0 0 0
Common equity 728 762 928 478 737 825 803 773 853 773
EBIT/capital employed 3% 6% 11% -2% 20% 12% -2% -5% n/m n/m
Ten-Year Stock Price Performance and Trading Volume Dynamics

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© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 58 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA
Texas Industries provides building materials in the U.S. YTD
FYE May 31 2005 2006 2007 2008 2009 2/28/10
∆ revenue 9% 13% 6% 3% -18% -32%
INVESTMENT HIGHLIGHTS Revenue ($mn) 835 944 996 1,029 839 445
• Largest cement producer in Texas with 30% % of revenue by segment:
share based on capacity. It is also the #2 cement Cement 44% 42% 43% 41% 40% 40%
producer in southern California and a major supplier Aggregates 23% 24% 23% 23% 24% 22%
Consumer products 32% 34% 33% 35% 36% 37%
of aggregates (stone, sand and gravel) and ready- Revenue growth by segment:
mix (cement/aggregate mixtures) in North Texas. Cement 13% 8% 8% -2% -22% -32%
• Cement accounts for ~75% of EBIT over time. Aggregates 14% 14% 4% 3% -16% -36%
Consumer products 1% 19% 3% 10% -16% -31%
Annual production capacity is 5.9 million tonnes
EBIT margin by segment:
across two plants in Texas (3.7 million tonnes) and Cement 5 23% 27% 40% 24% 13% 3%
one plant in California (2.2 million tonnes). Aggregates 15% 22% 16% 23% 17% 10%
• Owns limestone and other reserves used as raw Consumer products 2% 3% 3% 3% 3% 2%
Corporate -4% -3% -5% -4% -3% -6%
materials in cement/aggregate production. Reserves Total EBIT margin 1 10% 14% 17% 13% 7% -1%
have lives up to ~100 years of annual production. Selected items as % of revenue:
• Spent $1.0 billion of capex during FY06-09, Gross profit 17% 19% 24% 19% 13% 8%
representing two thirds of enterprise value. Bulk Net income 5% 0% 11% 9% -2% -7%
DD&A 6% 5% 5% 5% 8% 11%
of capex went into cement capacity expansions. Capex 6% 12% 32% 30% 34% 3%
Work on a 1.4 million tonne expansion of the % of revenue by product:
Central Texas cement plant remains on hold. Cement 41% 40% 41% 38% 36% 36%
• Generated trailing free cash flow of $22 million, Stone, sand and gravel 12% 12% 12% 12% 12% 11%
Ready-mix concrete 27% 28% 28% 30% 30% 29%
including $3 million in the February quarter. Other products 12% 12% 11% 12% 13% 15%
Trailing capex has been reduced to 90% of D&A. Delivery fees 9% 8% 8% 8% 9% 9%
Labor force has been cut by 25% since yearend ‘07. Return on tangible equity n/m 0% 19% 12% -2% -4%
• Shamrock won proxy fight in 2009 leading to Tangible equity to assets 3% 22% 49% 54% 51% 51%
∆ shares out (avg) 4% 5% 8% 10% 1% 1%
improved corporate governance. However, one of 1
Fiscal 2009 EBIT excludes goodwill impairment of $58 million.
three Shamrock-supported board directors resigned
in March as the fund distributed holdings to its LPs. COMPARABLE PUBLIC COMPANY ANALYSIS
• May benefit from increased infrastructure spend P/ This Next
as part of U.S. government stimulus initiatives. MV EV EV / Tang. FY FY
• Shares trade at 1.3x tangible book. ($mn) ($mn) Rev. Book P/E P/E
CX 10,620 9,140 .6x .7x n/m 25x
INVESTMENT RISKS & CONCERNS VMC 6,750 9,440 3.7x 23.5x 189x 41x
MLM 4,180 5,210 3.1x 6.1x 39x 23x
• No stabilization in volumes yet. Cement shipments
TXI 1,050 1,520 2.4x 1.4x n/m n/m
are down 27% y-y in the fiscal year-to-date period
and down 24% y-y in the February quarter. Other
products are recording even worse y-y declines. MAJOR HOLDERS
• $469 million of net debt (7.4x trailing EBITDA). CEO Brekhus 1% | Other insiders 2% | NNS Holding 15% |
Debt consists of $535 million of senior notes due Southeastern 13% | MS 10% | FMR 9% | Keeley 6%
2013. Trailing EBITDA to interest charge is 1.3x.
• Competition from imports. Cement, the biggest RATINGS
profit contributor, is vulnerable to imports as VALUE Intrinsic value materially higher than market value? 
transportation costs are low relative to product price DOWNSIDE PROTECTION Low risk of permanent loss? 
($80+ per ton versus aggregates at ~$8 per ton). MANAGEMENT Capable and properly incentivized? 
FINANCIAL STRENGTH Solid balance sheet? 
• Key cement competitors are Cemex and Holcim.
MOAT Able to sustain high returns on invested capital? 
Ready-mix market includes US Concrete, Southern
EARNINGS MOMENTUM Fundamentals improving? 
Star, Campbell Ready Mix and Lattimore Materials.
MACRO Poised to benefit from economic and secular trends? 
Lehigh, Vulcan, and MLM compete in aggregates.
THE BOTTOM LINE
The downturn in U.S. construction markets could not have come at a worse time for cement producer Texas Industries.
Management pursued an aggressive expansion strategy at the top of the cycle, which has left the company struggling under a
heavy debt burden. New investors may be enticed by a potential demand recovery and shares trading near tangible book.
However, current valuation already discounts a strong recovery with an EV-to-EBIT of 9x and P/E of 10x based on peak
results achieved in fiscal 2007. Given high financial leverage, the implied return potential does not justify the risk. Even if
fundamentals start improving (which they are not), it is difficult to see how the company can avoid raising new equity.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 59 of 118
…additional insight into Texas Industries:
SELECTED OPERATING SEGMENT METRICS — HIGHLIGHTS, FY 2004 – YTD 2/28/2010
YTD YTD
FY Ended May 31 2004 2005 2006 2007 2008 2009 2/28/09 2/28/10
Cement:
Shipments (tons) 5,298 5,394 5,136 5,074 5,035 4,035 3,138 2,292
Prices ($/ton) 68.5 75.1 87.1 95.1 93.1 90.3 90.9 84.0
Cost of sales ($/ton) 53.6 58.0 63.7 63.1 70.9 78.0 77.8 79.0
∆ shipments 2% -5% -1% -1% -20% -27%
∆ prices 10% 16% 9% -2% -3% -8%
∆ cost of sales 8% 10% -1% 12% 10% 2%
Stone, sand and gravel:
Shipments (tons) 22,282 23,616 25,246 22,114 21,851 16,470 13,073 8,012
Prices ($/ton) 5.4 5.7 6.1 7.0 7.4 8.0 7.9 7.9
Cost of sales ($/ton) 4.7 4.8 5.2 5.4 6.1 6.7 6.6 7.0
∆ shipments 6% 7% -12% -1% -25% -39%
∆ prices 5% 7% 16% 6% 7% -1%
∆ cost of sales 2% 9% 3% 14% 9% 7%
Ready-mix:
Shipments (cubic yards) 3,562 3,678 3,830 3,665 3,844 2,902 2,330 1,540
Prices ($/cubic yard) 57.9 60.5 69.3 75.9 80.8 85.5 84.6 84.1
Cost of sales ($/cubic yard) 57.8 61.1 67.7 71.9 76.4 81.4 81.2 81.5
∆ shipments 3% 4% -4% 5% -25% -34%
∆ prices 4% 14% 10% 7% 6% -1%
∆ cost of sales 6% 11% 6% 6% 7% 0%
Source: Company data, Manual of Ideas analysis.

SELECTED OPERATING SEGMENT METRICS — DETAILS, FY 2005 – FY 2010

Source: Company.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 60 of 118
…additional insight into Texas Industries:

CASH FLOW STATEMENT DATA, FY 2005 – FY 2010

Source: Company.

EBITDA RECONCILIATION, FY 2005 – FY 2010

Source: Company.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 61 of 118
Union Pacific (UNP) – Children’s  Omaha, NE, 402-544-5000
Transportation: Railroads, Member of S&P 500 www.up.com

Trading Data Consensus EPS Estimates Valuation


Price: $74.18 (as of 5/14/10) Month # of P/E FYE 12/31/09 20x
52-week range: $44.00 - $78.61 Latest Ago Ests P/E FYE 12/31/10 16x
Market value: $37.5 billion This quarter $1.15 $1.05 25 P/E FYE 12/31/11 13x
Enterprise value: $45.5 billion Next quarter 1.27 1.21 23 P/E FYE 12/30/12 11x
Shares out: 506.1 million FYE 12/31/10 4.69 4.42 23 EV/ LTM revenue 3.1x
Ownership Data FYE 12/31/11 5.56 5.23 25 EV/ LTM EBIT 12x
Insider ownership: 0% FYE 12/30/12 6.67 6.20 8 P / tangible book 2.2x
Insider buys (last six months): 0 LT growth 10.7% 10.9% 5 Greenblatt Criteria
Insider sales (last six months): 0 EPS Surprise Actual Estimate LTM EBIT yield 8%
Institutional ownership: 84% 4/22/10 $1.01 $0.95 LTM pre-tax ROC 10%
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 3/31/10 3/31/09 3/31/10
Revenue 11,551 12,215 13,578 15,578 16,283 17,970 14,143 14,693 3,415 3,965
Gross profit 8,575 8,537 9,068 9,458 9,955 10,759 9,586 9,933 2,308 2,660
Operating income 2,133 1,295 1,795 2,884 3,375 4,075 3,392 3,692 671 972
Net income 1,585 604 1,026 1,724 1,855 2,338 1,898 2,052 362 516
Diluted EPS 2.03 1.15 1.92 3.17 3.46 4.54 3.75 4.05 0.72 1.01
Shares out (avg) 509 518 527 539 532 511 503 503 503 505
Cash from operations 2,443 2,257 2,595 2,880 3,277 4,070 3,234 3,172 718 656
Capex 1,752 1,876 2,169 2,242 2,496 2,780 2,384 2,324 521 461
Free cash flow 691 381 426 638 781 1,290 850 848 197 195
Cash & investments 527 977 773 827 878 1,249 1,850 1,753 1,466 1,753
Total current assets 2,089 2,297 2,325 2,411 2,594 2,813 3,680 4,112 3,017 4,112
Intangible assets 0 0 0 0 0 0 0 0 0 0
Total assets 33,494 34,596 35,620 36,515 38,033 39,722 42,410 42,712 40,199 42,712
Short-term debt 167 150 656 780 139 320 212 239 137 239
Total current liabilities 2,456 2,531 3,384 3,539 3,041 2,880 2,682 2,909 2,682 2,909
Long-term debt 7,822 7,981 6,760 6,000 7,543 8,607 9,636 9,480 9,058 9,480
Total liabilities 21,140 21,941 21,913 21,203 22,448 24,275 25,469 25,499 24,545 25,499
Preferred stock 0 0 0 0 0 0 0 0 0 0
Common equity 12,354 12,655 13,707 15,312 15,585 15,447 16,941 17,213 15,654 17,213
EBIT/capital employed 7% 4% 6% 9% 10% 12% 9% 10% n/m n/m
Ten-Year Stock Price Performance and Trading Volume Dynamics

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© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 62 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA
Union Pacific provides freight rail transportation. YTD
FYE December 31 2005 2006 2007 2008 2009 3/31/10
∆ carloads 1% 3% -1% -5% -16% 13%
INVESTMENT HIGHLIGHTS ∆ avg revenue per car 10% 11% 5% 16% -7% 3%
• Operates one of the largest U.S. rail networks, ∆ revenue 11% 15% 5% 10% -21% 16%
with more than 32,000 route miles covering 23 ∆ avg employees 3% 2% -1% -4% -10% -6%
states in the western U.S. 82% of miles are owned, ∆ revenue per employee 8% 12% 6% 15% -13% 24%
with rest operated through trackage rights or leases. Revenue ($bn) 13.6 15.6 16.3 18.0 14.1 4.0
% of revenue by type:
• Diversified revenue base across six freight types: Freight 95% 95% 95% 95% 95% 95%
energy (e.g. coal), agricultural, chemicals, industrial Other 5% 5% 5% 5% 5% 5%
products, automotive and intermodal (moving of % of freight revenue by type:
containers using multiple modes of transportation). Energy 20% 20% 20% 22% 23% 22%
Agricultural 15% 16% 17% 19% 20% 19%
• Competitive advantage in moving low value-per- Intermodal 19% 19% 19% 18% 19% 18%
ton goods like coal, ores, and grains. Studies show Industrial products 22% 21% 20% 19% 16% 16%
that rail is more fuel-efficient than trucking, which Chemicals 14% 14% 15% 15% 16% 16%
Automotive 10% 10% 9% 8% 6% 8%
makes rail especially attractive for longer hauls.
Freight revenue growth by type:
• Rebound coming? Auto, industrial and intermodal Energy 7% 15% 6% 22% -18% 5%
revenue is down 41%, 30% and 15% from 2007-09. Agricultural 18% 22% 9% 22% -16% 10%
• Freight revenue rose 16% y-y in 1Q10, driven by Intermodal 10% 14% 4% 3% -18% 25%
Industrial products 17% 13% -3% 6% -34% 10%
13% volume growth, higher fuel surcharges, and Chemicals 8% 14% 9% 9% -16% 14%
pricing gains. EBIT margin hit a Q1 record of 25%. Automotive 3% 13% 1% -8% -36% 88%
• Raised quarterly dividend by 22% to $0.33 per Selected items as % of revenue:
share in May, implying a 2% annualized yield. The Compensation/benefits 32% 30% 28% 25% 29% 27%
Fuel 19% 19% 19% 22% 12% 15%
company also “plans to resume share repurchases.” EBIT 13% 19% 21% 23% 24% 25%
Net income 8% 10% 11% 13% 13% 13%
INVESTMENT RISKS & CONCERNS D&A 9% 8% 8% 8% 10% 9%
Capex 16% 14% 15% 15% 17% 12%
• Replacement capex was $2.0 billion in 2009 (14%
Selected operational metrics:
of revenue vs. D&A at 10%). Due to high capex, Revenue carloads (mn) 9.5 9.9 9.7 9.3 7.8 2.1
FCF averaged only $800 million from 2005-09. Gross ton-miles (tn) 1 1.04 1.07 1.05 1.02 0.85 0.23
• Needs to spend $1.4 billion of incremental capex Change (y-y) 1% 3% -2% -3% -17% 9%
Revenue ton-miles (bn) 2 549 565 562 563 479 127
by 2015 to satisfy “Positive Train Control” laws. Change (y-y) 0% 3% -1% 0% -15% 7%
The new legislation calls for an upgrade of the rail Freight rev. / 000s RTN 3 $24 $26 $28 $30 $28 $30
infrastructure to improve collision avoidance. Change (y-y) 10% 11% 5% 10% -8% 8%
• 22% of road locomotives and 14% of freight car Avg employees (000s) 49.7 50.7 50.1 48.2 43.5 42.1
Return on tangible equity 8% 11% 12% 15% 12% 13%
inventory remain in storage or off-line as of Tangible equity to assets 38% 40% 41% 40% 39% 40%
March 31 (versus 24% and 26% a year-ago). ∆ shares out (avg) 2% 2% -1% -4% -1% 0%
• Shares trade at trailing earnings and FCF yields 1
2
Weight of loaded or empty freight cars multiplied by miles hauled.
2
Weight of freight multiplied by tariff miles. RTN = revenue ton-miles
of 5% and 2%, respectively. FCF yield is just 2-
3% on average FCF generation during 2005-09.
MAJOR HOLDERS
• $8.0 billion of net debt. About two thirds of debt is
Insiders 1% | Cap Re 8% | BlackRock 6% | FMR 4% |
due after 2014. Net debt to trailing EBITDA is 1.5x.
Marsico 4% | State Street 3% | Vanguard 3% | Jennison 2%
COMPARABLE PUBLIC COMPANY ANALYSIS
P/ This Next
RATINGS
MV EV EV / Tang. FY FY VALUE Intrinsic value materially higher than market value? 
($mn) ($mn) Rev. Book P/E P/E DOWNSIDE PROTECTION Low risk of permanent loss? 
CNI 27,800 33,330 4.6x 2.7x n/a n/a MANAGEMENT Capable and properly incentivized? 
NSC 21,570 27,210 3.3x 2.0x 16x 13x FINANCIAL STRENGTH Solid balance sheet? 
CSX 21,420 28,360 3.1x 2.4x 16x 13x MOAT Able to sustain high returns on invested capital? 
CP 9,670 13,560 3.2x 2.1x n/a n/a EARNINGS MOMENTUM Fundamentals improving? 
UNP 37,540 45,510 3.1x 2.2x 16x 13x MACRO Poised to benefit from economic and secular trends? 
THE BOTTOM LINE
Berkshire’s recent acquisition of rival Burlington Northern reflects confidence into the future of the U.S. freight rail industry
by one of the world’s most successful investors. In fact, Buffett described the purchase as an “all-in wager on the economic
future of the United States.” While the read-across to Union Pacific is positive, shares already reflect a strong dose of
optimism trading at a free cash flow yield of 3% based on prior peak cash generation in 2008. Even after stripping out growth
capex, the yield does not rise beyond 5%, reflecting the high capital intensity required to maintain existing rail infrastructure.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 63 of 118
…additional insight into Union Pacific:

SYSTEM MAP AND FACTS

Source: Union Pacific, 2009 Analyst Factbook.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 64 of 118
…additional insight into Union Pacific:

SLIDES FROM Q1 COMPANY PRESENTATION, APRIL 2010

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 65 of 118
…additional insight into Union Pacific:

COMPARISON OF RAIL AND TRUCK FUEL EFFICIENCY – from Federal Railroad Administration

“For all movements, rail fuel efficiency is higher than truck fuel efficiency in terms of ton-miles per gallon. The ratio
between rail and truck fuel efficiency indicates how much more fuel efficient rail is in comparison to trucks. As illustrated
[below], rail fuel efficiency varies from 156 to 512 ton-miles per gallon, truck fuel efficiency ranges from 68 to 133 ton-miles
per gallon, and rail-truck fuel efficiency ratios range from 1.9 to 5.5.”

Source: Federal Railroad Administration, “Comparative Evaluation of Rail and Truck Fuel Efficiency on Competitive Corridors,” November 19, 2009.

Definition of “movements”:

“A competitive movement is defined herein as one in which mode share is comparable between rail and truck. The term
competitive is here used in an economic sense, which indicates that cost and level of service are close economic equivalents
for shippers in a given market. In other words, this study does not evaluate any of the individual criteria that influence mode
choice (e.g., cost, transit time, reliability, safety), and competitive movements do not imply equivalent levels of service.”

“This study is strictly about fuel efficiency, and it does not compare the economic efficiency of rail and truck movements.
Economic efficiency concerns not only transportation costs, on which fuel efficiency has a strong influence, but also
accessibility, quality of service, speed of delivery, transit time reliability, and safety. This study compares rail and truck
movements on the sole basis of fuel efficiency and consumption.”

“The comparative evaluation of rail and truck fuel efficiency on the 23 competitive movements considers fuel efficiency at
the load level, measured in lading ton-miles per gallon. This metric reflects the number of tons2 of freight (excluding
equipment tare weight) and the distance (in miles) that can be moved with one gallon of fuel. The rail-truck fuel efficiency
ratio, which is the ratio between rail and truck fuel efficiency (both measured in lading ton-miles per gallon), is also used in
the comparative evaluation. Two additional metrics are considered to analyze modal efficiency individually: (1) trailing ton-
miles per gallon (rail fuel efficiency at the train level), and (2) miles per gallon (truck fuel efficiency).”

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 66 of 118
…additional insight into Union Pacific:

EVOLUTION OF RAIL FUEL EFFICIENCY (ton-miles/gallon) – from Federal Railroad Administration

Source: Federal Railroad Administration, “Comparative Evaluation of Rail and Truck Fuel Efficiency on Competitive Corridors,” November 19, 2009.

EVOLUTION OF TRUCK FUEL EFFICIENCY (ton-miles/gallon) – from Federal Railroad Administration

Source: Federal Railroad Administration, “Comparative Evaluation of Rail and Truck Fuel Efficiency on Competitive Corridors,” November 19, 2009.

To access the full report by the Federal Railroad Administration,


entitled “Comparative Evaluation of Rail and Truck Fuel Efficiency
on Competitive Corridors,” dated November 19, 2009, visit
http://bit.ly/cBBfn6

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 67 of 118
Weight Watchers (WTW) – Bares , Weitz  New York, NY, 212-589-2700
Services: Personal Services www.weightwatchersinternational.com…

Trading Data Consensus EPS Estimates Valuation


Price: $27.68 (as of 5/14/10) Month # of P/E FYE 1/2/10 12x
52-week range: $22.91 - $30.41 Latest Ago Ests P/E FYE 12/31/10 11x
Market value: $2.1 billion This quarter $0.72 $0.70 6 P/E FYE 12/31/11 11x
Enterprise value: $3.5 billion Next quarter 0.63 0.62 5 P/E FYE 12/30/12 10x
Shares out: 77.1 million FYE 12/31/10 2.45 2.41 6 EV/ LTM revenue 2.5x
Ownership Data FYE 12/31/11 2.58 2.51 6 EV/ LTM EBIT 10x
Insider ownership: 56% FYE 12/30/12 2.66 2.60 3 P / tangible book n/m
Insider buys (last six months): 0 LT growth 15.0% 15.0% 1 Greenblatt Criteria
Insider sales (last six months): 0 EPS Surprise Actual Estimate LTM EBIT yield 10%
Institutional ownership: 47% 5/6/10 $0.58 $0.56 LTM pre-tax ROC n/m
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 1/3/04 1/1/05 12/31/05 12/30/06 12/29/07 1/3/09 1/2/10 4/3/10 4/4/09 4/3/10
Revenue 944 1,025 1,151 1,233 1,467 1,536 1,399 1,396 391 388
Gross profit 504 538 631 676 814 835 728 728 212 212
Operating income 269 302 303 379 433 425 357 354 94 91
Net income 144 183 174 210 201 204 177 175 47 45
Diluted EPS 1.31 1.82 1.67 2.11 2.48 2.60 2.30 2.26 0.61 0.58
Shares out (avg) 107 105 103 99 81 78 77 77 77 77
Cash from operations 233 258 297 266 319 241 266 220 109 64
Capex 5 7 18 31 32 32 23 20 7 4
Free cash flow 228 251 279 235 287 210 242 200 103 61
Cash & investments 23 35 32 38 40 47 46 52 60 52
Total current assets 115 126 128 169 186 225 200 208 214 208
Intangible assets 523 588 616 764 805 828 842 843 829 843
Total assets 771 816 836 1,001 1,046 1,107 1,088 1,093 1,087 1,093
Short-term debt 16 3 5 19 46 163 215 334 231 334
Total current liabilities 134 153 166 233 358 495 536 617 527 617
Long-term debt 454 466 741 830 1,603 1,485 1,238 1,121 1,393 1,121
Total liabilities 590 620 916 1,069 1,973 1,994 1,824 1,796 1,938 1,796
Preferred stock 0 0 0 0 0 0 0 0 0 0
Common equity 181 196 (81) (68) (926) (888) (737) (703) (851) (703)
EBIT/capital employed n/m n/m n/m n/m n/m n/m n/m n/m n/m n/m
Ten-Year Stock Price Performance and Trading Volume Dynamics

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© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 68 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA
Weight Watchers provides weight management services via a YTD
network of company-owned and franchised operations. FYE December 31 2005 2006 2007 2008 2009 3/31/10
∆ revenue 12% 7% 19% 5% -9% -1%
∆ meeting attendance 1 2% 0% 3% -4% -10% -12%
INVESTMENT HIGHLIGHTS ∆ meeting paid weeks 2 n/a n/a 23% 8% -4% -4%
• Member meetings are core to the business model. ∆ online subscribers n/a -14% 27% 16% 12% 12%
1.3 million members attend nearly 50,000 weekly Revenue ($bn) 1.2 1.2 1.5 1.5 1.4 0.4
% of revenue by type:
meetings globally, run by ~15,000 leaders. 2009 Meetings 59% 59% 60% 59% 58% 56%
attendance was ~65 million, of which 83% was at Products 25% 24% 23% 22% 21% 21%
company-owned versus franchised operations. Internet 10% 10% 10% 12% 14% 14%
• One-hour meetings function mainly as a group Licensing and other 7% 7% 7% 7% 7% 9%
Revenue growth by major type:
support system and offer proprietary, points-based, Meetings 8% 6% 22% 3% -10% -3%
weight management programs to participants. Products 4% 3% 15% 1% -14% 0%
• Meeting fees are main revenue generator, Internet 69% 18% 17% 23% 5% 14%
typically accounting for 55-60% of revenue. Other Selected EBIT margin data: 3
Internet 35% 37% 33% 34% 24% 25%
revenue sources are from sale of products, such as Total EBIT margin 30% 31% 30% 28% 25% 24%
snacks and cookbooks, and from licensing. Products % of revenue by major geography:
are sold at meetings and over the Internet. North America 61% 65% 66% 66% 65% n/a
• 50%+ of attendance is based on “Monthly Pass” U.K. 15% 13% 14% 12% 13% n/a
Continental Europe 19% 17% 16% 18% 18% n/a
which charges member credit cards monthly in Revenue growth by major geography:
advance. It was introduced as an alternative to the North America 15% 14% 21% 4% -10% n/a
original “pay-as-you-go” payment method in 2006 U.K. 4% -5% 23% -10% -1% n/a
and is offered at ~30% discount to the pay-as-you- Continental Europe 11% -2% 10% 18% -11% n/a
Attendance growth by geography (company-owned operations):
go weekly fee (recently $13 in New York City). North America 4% 6% 8% -4% -12% -16%
• WeightWatchers.com targets self-help market U.K. -3% -8% 3% -3% -2% -15%
offering online weight management plans to about Continental Europe 4% -4% -8% -4% -12% 4%
one million active subscribers, up ~100% since ’06. Selected items as % of revenue:
Gross profit 55% 55% 55% 54% 52% 55%
• Shares trade on 9% trailing FCF yield. Marketing expense 14% 13% 14% 15% 14% 19%
Net income 18% 17% 14% 13% 13% 11%
INVESTMENT RISKS & CONCERNS D&A 1% 1% 1% 2% 2% 2%
Capex 2% 3% 2% 2% 2% 1%
• Guiding for 2010 EPS of $2.25-2.50 (down 7-16% ∆ shares out (avg) 4 -2% -4% -18% -3% -2% 0%
y-y), excluding special items. $0.04 per share of 1
Based on meeting attendance at company-owned operations only.
2
“special” charges booked in 2009, however, may Tracked since 2007, it reports paid weeks by meeting members in company
operations in the period (approximates attendance growth for pay-as-you-go).
become recurring as it is due to the ongoing 3
The segments are WeightWatchers.com and WeightWatchers International.
operational impact from an adverse U.K. tax ruling. 4
The company repurchased 19 million shares at $54 per share in 2007.
• North America attendance fell 16% y-y in 1Q10,
at company-owned operations. U.K. attendance is COMPARABLE PUBLIC COMPANY ANALYSIS
down 15% y-y. This is the third consecutive year of P/ This Next
declines in the company’s two main markets. MV EV EV / Tang. FY FY
($mn) ($mn) Rev. Book P/E P/E
• Changing customer preferences; prone to fads NTRI 710 620 1.2x 5.5x 20x 17x
such as Atkins. Customer loyalty is an issue. DIET 30 50 2.8x n/m n/m n/a
• Controlled by Artal, which owns 56% as a result WTW 2,130 3,530 2.5x n/m 11x 11x
of buying the company from Heinz in 1999. Artal is
affiliated with investment fund Invus, whose CEO RATINGS
Debbane (55) is Weight Watchers’ chairman.
VALUE Intrinsic value materially higher than market value? 
• $1.4 billion of net debt (3.5x trailing EBITDA). DOWNSIDE PROTECTION Low risk of permanent loss? 
Debt maturities were extended in April. MANAGEMENT Capable and properly incentivized? 
FINANCIAL STRENGTH Solid balance sheet? 
MAJOR HOLDERS MOAT Able to sustain high returns on invested capital? 
Insiders <1% | Artal 56% | Cap World 9% | MS 5% | T. EARNINGS MOMENTUM Fundamentals improving? 
Rowe 4% | Delaware Mgmt 3% | Wells 2% | Vanguard 2% MACRO Poised to benefit from economic and secular trends? 
THE BOTTOM LINE
The stock’s high-single digit earnings yield based on 2010 guidance fails to compensate for deteriorating business metrics
and financial leverage (3.5x net debt to trailing EBITDA). Enterprise value implies a value of roughly $3,000 per Weight
Watchers’ member, excluding franchisees. This is a rich valuation relative to member economics, especially for a no-growth
company in a competitive, faddish industry. With no tangible assets to protect the downside, risk-reward is not favorable.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 69 of 118
WPCS International (WPCS) – Riley , Miller  Exton, PA, 610-903-0400
Services: Communications Services www.wpcs.com

Trading Data Consensus EPS Estimates Valuation


Price: $3.11 (as of 5/14/10) Month # of P/E FYE 4/30/09 14x
52-week range: $2.22 - $4.38 Latest Ago Ests P/E FYE 4/30/10 16x
Market value: $22 million This quarter $0.07 $0.07 1 P/E FYE 4/30/11 8x
Enterprise value: $24 million Next quarter 0.06 0.06 1 P/E FYE 4/29/12 n/a
Shares out: 7.0 million FYE 4/30/10 0.19 0.19 1 EV/ LTM revenue 0.2x
Ownership Data FYE 4/30/11 0.38 0.38 1 EV/ LTM EBIT 13x
Insider ownership: 7% FYE 4/29/12 n/a n/a n/a P / tangible book 0.9x
Insider buys (last six months): 0 LT growth n/a n/a n/a Greenblatt Criteria
Insider sales (last six months): 19 EPS Surprise Actual Estimate LTM EBIT yield 8%
Institutional ownership: 47% 3/17/10 $0.01 $0.06 LTM pre-tax ROC 7%
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 4/30/03 4/30/04 4/30/05 4/30/06 4/30/07 4/30/08 4/30/09 1/31/10 1/31/09 1/31/10
Revenue 5 22 40 52 70 101 107 101 25 27
Gross profit 2 5 8 14 22 28 29 28 7 6
Operating income (0) 0 (0) 4 8 7 3 2 0 0
Net income (1) (0) 1 (2) 5 4 2 1 0 0
Diluted EPS (0.64) (0.08) 0.49 (0.40) 0.72 0.52 0.23 0.16 0.03 0.01
Shares out (avg) 1 2 3 4 6 7 7 7 7 7
Cash from operations (1) 1 (3) 1 6 (1) 5 (0) (3) (3)
Capex 0 0 0 0 1 1 1 1 0 0
Free cash flow (1) 1 (3) 0 6 (2) 4 (2) (3) (3)
Cash & investments 0 2 1 12 22 8 6 4 10 4
Total current assets 3 10 13 27 44 44 42 43 43 43
Intangible assets 6 9 15 15 22 32 35 37 34 37
Total assets 10 21 30 44 72 84 83 87 84 87
Short-term debt 0 0 0 0 2 2 6 6 0 6
Total current liabilities 2 8 8 7 13 18 21 22 14 22
Long-term debt 0 0 0 3 5 5 0 0 8 0
Total liabilities 2 10 18 12 20 25 24 26 25 26
Preferred stock 0 0 0 0 0 0 0 0 0 0
Common equity 8 11 13 33 52 59 59 61 59 61
EBIT/capital employed -20% 0% -3% 54% 60% 30% 11% 7% n/m n/m
Ten-Year Stock Price Performance and Trading Volume Dynamics

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© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 70 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA 1
WPCS provides design-build engineering services for public YTD
FYE April 30 2007 2008 2009 1/31/10
and private sectors. It operates in three segments:
∆ revenue 34% 45% 6% -7%
Electrical power: Provides electrical contracting to help ∆ backlog 119% 71% -36% 19%
commercial and industrial facilities upgrade power systems. ∆ employees, period-end 77% 50% 3% n/a
WPCS integrates telecommunications, security, fire Revenue ($mn) 70 101 107 77
protection, and HVAC in an environmentally safe manner. % of revenue by segment: 2
Electrical power n/a 42% 53% 59%
Wireless communications: Develops Wi-Fi, WiMAX, Wireless communications n/a 45% 32% 30%
cellular and other communications networks. Specialty construction n/a 13% 15% 12%
Pre-tax margin by segment: 2
Specialty construction: Includes design and construction of Electrical power n/a 12% 7% 7%
buildings, transportation and energy industry infrastructure. Wireless communications n/a 7% 1% 0%
Specialty construction n/a -6% -4% 5%
Corporate n/a -1% -1% -4%
INVESTMENT HIGHLIGHTS Total pre-tax margin 11% 7% 2% 1%
• Roll-up of infrastructure contractors. WPCS has Selected items as % of revenue:
acquired 17 companies since 2001 and wants to Gross profit 32% 28% 27% 28%
“continue to search for acquisitions.” EBIT 11% 7% 3% 2%
Net income 7% 4% 2% 1%
• Average project length is about two months. Staff D&A 2% 2% 2% 3%
size ranges from two to ~30 engineers. WPCS Capex 1% 1% 1% 1%
typically provides labor, materials and equipment. Backlog ($mn) 35 60 38 49
• Non-U.S. revenue annual run-rate is $14 million, FCF ($mn) 5 -2 4 -1
Return on tangible equity 20% 15% 6% 5%
after acquisition of Australia-based contractor Pride Tangible equity to assets 60% 55% 51% 49%
in November 2009. WPCS also operates in China. ∆ shares out (avg) 42% 23% 1% -3%

1
Backlog up 19% y-y to $49 million at January 31. Y/Y comparisons not meaningful due to acquisitions since 2005. Fiscal YTD
pro forma revenue is $82 million (down 7% y-y) (includes Lincoln Wind, BRT,
WPCS reported $22 million of project wins since. the Portland operations and Pride for both periods). Fiscal YTD pro forma net
The $787 billion American Recovery and income is $1.0 million (down 36% y-y), representing a 1.2% net margin.
2
2007 and prior segmental data are not available in the current reporting
Reinvestment Act of 2009 is a positive. Project bids format as WPCS changed its segmental reporting structure in fiscal 2009.
under proposal totaled $186 million at 1/31.
• Riley filed 13D in February after WPCS revealed • Fixed-price contracts represent “substantial” part
new, five-year employment agreements with its of revenue, exposing WPCS to cost-overrun risk.
CEO and CFO. Riley stated that the contract terms
represent “corporate waste and mismanagement.” COMPARABLE PUBLIC COMPANY ANALYSIS
• “LCC had expressed an interest in a merger,” as P/ This Next
stated by WPCS on 2/26. Wireless communications MV EV EV / Tang. FY FY
contractor LCC is 40%-owned by Riley. ($mn) ($mn) Rev. Book P/E P/E
• $17 million of net-net current assets, representing PWR 4,730 4,200 1.3x 3.1x 24x 19x
nearly 80% of market cap. In April, WPCS renewed TTEK 1,470 1,370 1.0x 4.4x 21x 18x
a $15 million credit facility with Bank of America. WPCS 20 20 .2x .8x 16x 8x
• Trades at .9x tangible book, which includes $4
million of estimated profit on unfinished contracts. MAJOR HOLDERS
CEO Hidalgo 6% | Other insiders 6% | Riley 7% | Kennedy
INVESTMENT RISKS & CONCERNS 4% | Wealthtrust 4% | Emerald 4% | Lloyd Miller 2%
• Lowered FY10 guidance in March due to a “delay
in converting bids to backlog.” Revenue is expected RATINGS
at $102-106 million (prior: $112 million) and net VALUE Intrinsic value materially higher than market value? 
income at $1.2-1.4 million (prior: $2.2-2.4 million). DOWNSIDE PROTECTION Low risk of permanent loss? 
• Low barriers to entry. Access to capital and MANAGEMENT Capable and properly incentivized? 
technical expertise are the only hurdles. FINANCIAL STRENGTH Solid balance sheet? 
• Adopted a stockholder rights plan in February. MOAT Able to sustain high returns on invested capital? 
The measure is a blow to Riley’s activist efforts. EARNINGS MOMENTUM Fundamentals improving? 
MACRO Poised to benefit from economic and secular trends? 
THE BOTTOM LINE
Shares of infrastructure contractor WPCS are down about 20% since it lowered guidance in March. A prior run-up may have
been due to optimism after Riley filed a 13D in February, which criticized management. While potential M&A with Riley-
owned competitor LCC International could create value, WPCS dealt a blow to activist efforts by adopting a poison pill. The
recent sell-off provides an opportunity to pick up shares at a modest premium to “net-net” current assets. With operations
roughly cash-flow breakeven, risk-reward is enticing on prospects of a demand recovery and return to normalized margins.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 71 of 118
Unchanged or Offsetting Superinvestor Holdings
Oracle (ORCL) – Children’s  Redwood City, CA, 650-506-7000
Technology: Software & Programming, Member of S&P 500 www.oracle.com
Trading Data Consensus EPS Estimates Valuation
Price: $23.78 (as of 5/14/10) Month # of P/E FYE 5/31/09 22x
52-week range: $18.28 - $26.63 Latest Ago Ests P/E FYE 5/31/10 15x
Market value: $119.4 billion This quarter $0.55 $0.55 33 P/E FYE 5/31/11 13x
Enterprise value: $117.6 billion Next quarter 0.37 0.37 29 P/E FYE 5/30/12 11x
Shares out: 5,019.1 million FYE 5/31/10 1.62 1.62 36 EV/ LTM revenue 4.9x
Ownership Data FYE 5/31/11 1.90 1.90 36 EV/ LTM EBIT 14x
Insider ownership: 23% FYE 5/30/12 2.11 2.09 18 P / tangible book n/m
Insider buys (last six months): 2 LT growth 14.2% 14.2% 11 Greenblatt Criteria
Insider sales (last six months): 28 EPS Surprise Actual Estimate LTM EBIT yield 7%
Institutional ownership: 61% 3/25/10 $0.38 $0.38 LTM pre-tax ROC n/m
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 5/31/03 5/31/04 5/31/05 5/31/06 5/31/07 5/31/08 5/31/09 2/28/10 2/28/09 2/28/10
Revenue 9,475 10,156 11,799 14,380 17,996 22,430 23,252 24,177 5,453 6,404
Gross profit 7,133 7,839 9,148 11,145 13,805 17,449 18,458 19,475 4,342 4,985
Operating income 3,440 3,864 4,022 4,736 5,974 7,844 8,321 8,645 1,940 1,843
Net income 2,307 2,681 2,886 3,381 4,274 5,521 5,593 5,662 1,329 1,189
Diluted EPS 0.43 0.50 0.55 0.64 0.81 1.06 1.09 1.12 0.26 0.23
Shares out (avg) 5,302 5,215 5,136 5,196 5,170 5,133 5,070 5,056 5,005 5,015
Cash from operations 3,050 3,195 3,552 4,541 5,520 7,402 8,255 8,178 2,257 1,781
Capex 291 189 188 236 319 243 529 199 92 61
Free cash flow 2,759 3,006 3,364 4,305 5,201 7,159 7,726 7,979 2,165 1,720
Cash & investments 6,519 8,587 4,771 7,605 7,020 11,043 12,624 17,489 11,294 17,489
Total current assets 9,227 11,336 8,448 11,974 12,883 18,103 18,581 23,979 15,611 23,979
Intangible assets 0 80 10,376 14,337 19,443 26,386 26,111 30,283 26,346 30,283
Total assets 10,967 12,763 20,687 29,029 34,572 47,268 47,416 59,386 44,949 59,386
Short-term debt 153 9 2,693 159 1,358 1,001 1,001 4,220 1,002 4,220
Total current liabilities 4,158 4,272 8,063 6,930 9,387 10,029 9,149 14,251 7,972 14,251
Long-term debt 175 163 159 5,735 6,235 10,235 9,237 11,498 10,236 11,498
Total liabilities 4,647 4,768 9,850 14,017 17,653 24,243 22,326 30,910 21,872 30,910
Common equity 6,320 7,995 10,837 15,012 16,919 23,025 25,090 28,476 23,077 28,476
Ten-Year Stock Price Performance and Trading Volume Dynamics

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© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 72 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA 1
Oracle provides enterprise software. YTD
FYE May 31 2005 2006 2007 2008 2009 2/28/10
The company also entered the hardware business by buying ∆ revenue 16% 22% 25% 25% 4% 6%
Sun Microsystems for $7.4 billion in January 2010. ∆ revenue, constant forex 12% 23% 22% 19% 10% 4%
∆ employees, period-end 20% 13% 33% 13% 2% 23%
INVESTMENT HIGHLIGHTS Revenue ($bn) 11.8 14.4 18.0 22.4 23.3 17.3
% of revenue by segment:
• World’s largest enterprise software provider. Software 80% 80% 79% 80% 81% 81%
Added to core strength in relational databases by Services 20% 20% 21% 20% 19% 16%
buying 50+ companies for $40+ billion since 2005. Hardware 2 0% 0% 0% 0% 0% 3%
Purchases of PeopleSoft and Siebel, for example, Revenue growth by segment:
Software 17% 23% 23% 26% 6% 7%
extended offerings into applications software such Services 14% 19% 33% 21% -5% -15%
as customer relationship management. % of software revenue by sub-segment:
• Core product is Oracle Database, which enables New licenses 43% 43% 41% 42% 38% 31%
the secure storage, retrieval and manipulation of License updates/support 57% 57% 59% 58% 62% 69%
Software revenue growth by sub-segment:
business application and analytics data. Customer New licenses 16% 20% 20% 28% -5% 0%
benefits include business process automation. License updates/support 18% 25% 26% 24% 14% 11%
• High switching costs. Oracle’s software is deeply % of new software license revenue by product:
entrenched within customers’ core business Database/middleware 81% 73% 71% 68% 72% 71%
Applications 19% 27% 29% 32% 28% 29%
processes. Clients may spend years implementing
% of revenue by geography:
the software, adjusting processes and training staff. Americas 49% 53% 53% 51% 51% 52%
• CEO Larry Ellison (64) founded Oracle in 1977 Europe/Mideast/Africa 36% 33% 34% 35% 34% 33%
and is the largest shareholder with a 23% stake. Asia Pacific 15% 14% 14% 14% 15% 15%
Selected items as % of revenue:
• “Every quarter we grab huge chunks of market Gross profit 3 78% 78% 77% 78% 79% 80%
share from SAP,” based on Ellison’s comment in R&D 13% 13% 12% 12% 12% 13%
March. Oracle’s revenue from applications new EBIT 34% 33% 33% 35% 36% 33%
licenses was up 21% in the quarter ended February. Net income 24% 24% 24% 25% 24% 22%
D&A 4% 6% 6% 7% 8% 9%
• $1.8 billion of net cash, incl. securities at 2/28/10. Capex 2% 2% 2% 1% 2% 1%
• Trades on estimated EBIT-to-EV yield of 11%, Employees, ending (k) 49.9 56.1 74.7 84.2 85.6 106.5
based on trailing non-GAAP EBIT plus $1.5 billion ∆ shares out (avg) -2% 1% -1% -1% -1% -2%
1
Figures include contribution from various acquisitions during the period
contribution from Sun (based on FY11 guidance). including Sun Microsystems, BEA Systems, Hyperion Solutions, Siebel
Systems, and PeopleSoft, among others. Fiscal YTD through February 2010
INVESTMENT RISKS & CONCERNS figures include results from Sun Microsystems from January 26, 2010 onward.
2
The segment was created following the acquisition of Sun Micro in FY10.
• Pro-forma revenue is down 5% y-y YTD (trailing 3
Estimated (Oracle does not report “gross profit” in public filings).
nine months ended February 2010). Pro-forma
reflects Sun and other acquisitions in both periods. COMPARABLE PUBLIC COMPANY ANALYSIS
• Entered low-margin hardware business through P/ This Next
purchase of Sun, which makes servers and storage MV EV EV / Tang. FY FY
($mn) ($mn) Rev. Book P/E P/E
products. Oracle’s strategy of offering integrated
MSFT 253,540 219,870 3.7x 7.9x 14x 13x
hardware and software products may not work.
IBM 168,230 180,570 1.9x n/m 12x 11x
• Open-source software and software-as-a-service SAP 53,540 50,860 3.8x 13.6x 16x 15x
offerings may lead to less customer demand for ORCL 119,350 117,580 4.9x n/m 15x 13x
buying software licenses and/or lower profitability.
• Rivals include IBM, Microsoft and a potentially
RATINGS
resurgent SAP after its planned Sybase acquisition.
VALUE Intrinsic value materially higher than market value? 
• Key-man risk related to Larry Ellison. DOWNSIDE PROTECTION Low risk of permanent loss? 
MANAGEMENT Capable and properly incentivized? 
MAJOR HOLDERS FINANCIAL STRENGTH Solid balance sheet? 
CEO Ellison 23% | Other insiders <1% | Cap Re 5% | Cap MOAT Able to sustain high returns on invested capital? 
World 4% | State Street 3% | Vanguard 3% | BlackRock 2% EARNINGS MOMENTUM Fundamentals improving? 
MACRO Poised to benefit from economic and secular trends? 
THE BOTTOM LINE
By pursuing aggressive M&A, CEO Ellison has extended Oracle’s core database expertise into applications software and,
more recently, hardware through the purchase of Sun Microsystems. In Ellison’s words, the aim is to offer “integrated
systems from silicon…through the software, all prepackaged together.” While competition, technology change and Oracle’s
size may hinder growth, the fundamental demand driver – need for better ways to manage information and automate business
processes – is intact. At an estimated EBIT-to-EV yield of 11% (assumes Sun turnaround), valuation is not demanding.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 73 of 118
…additional insight into Oracle:

SLIDES ON ACQUISITION OF SUN MICRO, JANUARY 2010

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 74 of 118
…additional insight into Oracle:

EXCERPTS OF INTERVIEW WITH LARRY ELLISON ON SUN MICRO ACQUISITION, MAY 2009

Why does Oracle, a company that prides itself on high margins, want to get into the low-margin hardware business?
Are you going to exit the hardware business? No, we are definitely not going to exit the hardware business. While most
hardware businesses are low-margin, companies like Apple and Cisco enjoy very high-margins because they do a good job of
designing their hardware and software to work together. If a company designs both hardware and software, it can build much
better systems than if they only design the software. That’s why Apple’s iPhone is so much better than Microsoft phones.

OK, Apple and Cisco have proven that they can do it, but what experience does Oracle have designing hardware and
software to work together? Oracle started designing hardware and software to work together a few years ago when we
began our Exadata database machine development project. Some of our competitors, Teradata and Netezza for example, were
delivering preconfigured hardware/software systems, while we were just delivering software. The combination of hardware
and software has significant performance advantages for data warehousing applications. We had to respond with our own
hardware/software combination, the Exadata database machine. Oracle’s Exadata database machine runs data warehousing
applications much faster—at least ten-times faster than Oracle software running on conventional hardware. All the hardware
and software pieces, database to disk, are included. You just plug it in and go—no systems integration required.

Alright, Oracle’s done integrated hardware and software design with the Exadata database machine. But Exadata
uses standard Intel chips. Are you going to discontinue the SPARC chip? No. Once we own Sun we’re going to increase
the investment in SPARC. We think designing our own chips is very, very important. Even Apple is designing its own chips
these days. Right now, SPARC chips do some things better than Intel chips and vice-versa. For example, SPARC is much
more energy efficient than Intel while delivering the same performance on a per socket basis. This is not just a green issue,
it’s an economic issue. Today, database centers are paying as much for electricity to run their computers as they pay to buy
their computers. SPARC machines are much less expensive to run than Intel machines.

So is that your plan, to use SPARC to compete by lowering a data center’s electricity bills? No, our primary reason for
designing our own chips is to build computers with the very best performance, reliability and security available in the market.
Some system features work much better if they are implemented in silicon rather than software. Once we own Sun, we’ll be
able to plan and synchronize new features from silicon to software, just like IBM and the other big system suppliers. We
want to work with Fujitsu to design advanced features into the SPARC microprocessor aimed at improving Oracle database
performance. In my opinion, this will enable SPARC Solaris open-system mainframes and servers to challenge IBM’s
dominance in the data center. Sun was very successful for a very long time selling computer systems based on the SPARC
chip and the Solaris operating system. Now, with the added power of integrated Oracle software, we think they can be again.

Your management team has no experience with delivering hardware. There is a lot of risk in going into an unfamiliar
business. Obviously, we want to hold on to Sun’s experienced team of first-rate hardware engineers. For years, Sun has led
the industry in building and delivering innovative systems. For example, Sun was the first company to deliver systems built
on a multicore processor—what Sun called the Niagara chip—and the industry followed. Oracle has a good track record of
retaining the engineering talent from acquired companies; Sun will be no different. In addition, over the last couple of years
Oracle gained a lot of experience developing and delivering our first integrated hardware and software system, the Exadata
database machine. We have lots of hardware experience inside of Oracle. Hundreds of Oracle’s engineers came from systems
companies like IBM and HP. Even I started my Silicon Valley career working for a hardware company that worked with
Fujitsu to design and build the first IBM compatible mainframe.

OK, so you have engineers who are experienced at designing hardware as well as software, but Oracle outsourced the
manufacturing of the Exadata machine to HP. You have no experience in manufacturing. Just because we’re buying
Sun does not mean Oracle is becoming a manufacturer. Sun outsources almost all of its manufacturing to companies like
Flextronics and Fujitsu. With one tiny exception, Sun does no manufacturing; neither will we.

Source: Oracle Corp.


The full interview is available at http://www.oracle.com/sun/lje-oracle-sun-faq.pdf
Videos of speeches by Larry Ellison are available at http://www.youtube.com/user/OracleVideo

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 75 of 118
Paychex (PAYX) – Markel  Rochester, NY, 585-385-6666
Services: Business Services, Member of S&P 500 www.paychex.com

Trading Data Consensus EPS Estimates Valuation


Price: $29.46 (as of 5/14/10) Month # of P/E FYE 5/31/09 20x
52-week range: $23.84 - $32.88 Latest Ago Ests P/E FYE 5/31/10 22x
Market value: $10.6 billion This quarter $0.31 $0.31 22 P/E FYE 5/31/11 21x
Enterprise value: $10.3 billion Next quarter 0.35 0.35 16 P/E FYE 5/30/12 19x
Shares out: 361.4 million FYE 5/31/10 1.34 1.34 20 EV/ LTM revenue 5.1x
Ownership Data FYE 5/31/11 1.43 1.43 24 EV/ LTM EBIT 14x
Insider ownership: 11% FYE 5/30/12 1.56 1.56 14 P / tangible book 11.7x
Insider buys (last six months): 0 LT growth 11.5% 11.7% 10 Greenblatt Criteria
Insider sales (last six months): 0 EPS Surprise Actual Estimate LTM EBIT yield 7%
Institutional ownership: 72% 3/24/10 $0.34 $0.33 LTM pre-tax ROC >100%
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 5/31/03 5/31/04 5/31/05 5/31/06 5/31/07 5/31/08 5/31/09 2/28/10 2/28/09 2/28/10
Revenue 1,099 1,294 1,445 1,675 1,887 2,066 2,083 2,001 529 508
Gross profit 840 831 946 1,114 1,272 1,406 1,402 1,343 354 343
Operating income 401 433 534 650 702 828 805 726 197 168
Net income 294 303 369 465 515 576 534 475 131 112
Diluted EPS 0.78 0.80 0.97 1.22 1.35 1.56 1.48 1.31 0.36 0.31
Shares out (avg) 376 377 378 379 381 368 361 361 361 361
Cash from operations 374 389 467 569 631 725 689 628 235 224
Capex 60 51 71 81 79 82 65 53 14 18
Free cash flow 313 338 396 488 552 642 624 576 221 205
Cash & investments 381 524 303 577 591 393 493 395 490 395
Total current assets 3,033 3,280 3,522 4,444 4,861 4,466 4,240 4,717 4,873 4,717
Intangible assets 492 490 478 467 475 508 510 490 519 490
Total assets 3,691 3,950 4,617 5,549 6,247 5,310 5,127 5,788 5,776 5,788
Short-term debt 0 0 0 0 0 0 0 0 0 0
Total current liabilities 2,588 2,722 3,180 3,838 4,238 4,037 3,702 4,312 4,366 4,312
Long-term debt 0 0 0 0 0 0 0 0 0 0
Total liabilities 2,613 2,750 3,232 3,895 4,294 4,113 3,786 4,391 4,444 4,391
Preferred stock 0 0 0 0 0 0 0 0 0 0
Common equity 1,077 1,200 1,386 1,655 1,952 1,197 1,342 1,397 1,331 1,397
EBIT/capital employed >100% >100% >100% >100% >100% >100% >100% >100% n/m n/m
Ten-Year Stock Price Performance and Trading Volume Dynamics

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© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 76 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA
Paychex provides payroll outsourcing services to employers. YTD
FYE May 31 2005 2006 2007 2008 2009 2/28/10
∆ revenue 12% 16% 13% 10% 1% -5%
INVESTMENT HIGHLIGHTS ∆ payroll clients 4% 4% 3% 2% -3% -2%
• #2 outsourced payroll processor in the U.S., ∆ avg client funds 1 10% 12% 6% 4% -3% -7%
behind ADP (based on revenue). Paychex had ∆ employees, ending 6% 9% 7% 4% 2% -2%
552,000 U.S. clients as of May 2009 versus an Revenue ($bn) 1.4 1.7 1.9 2.1 2.1 1.5
estimated 455,000 at ADP (which dominates the % of revenue by type:
Payroll 2 78% 75% 72% 71% 71% 71%
large employer market) and <50,000 at other rivals. Human resource 3 17% 19% 21% 23% 25% 27%
• Average client size is 17 employees, reflecting the Interest on client funds 4% 6% 7% 6% 4% 3%
company’s focus on small- and medium-sized firms. Revenue growth by major type:
40% of client base has 1-4 employees, another 42% Payroll 9% 10% 9% 8% 1% -6%
Human resource 26% 29% 22% 19% 11% 2%
has 5-19, and only 2% has 100+ employees. Selected items as % of revenue:
• Market potential is 11.5 million businesses in EBIT 37% 39% 37% 40% 39% 37%
areas served by Paychex.* 79% and 16% of target Net income 26% 28% 27% 28% 26% 24%
D&A 4% 4% 4% 4% 4% 4%
businesses have 1-4 and 5-19 employees. Only 10-
Capex 5% 5% 4% 4% 3% 3%
15% of target market outsources payroll currently. Avg client funds ($bn) 2.8 3.1 3.3 3.4 3.3 3.1
• “Beyond payroll” services represent opportunity. Avg interest rate earned4 2.2% 3.2% 4.0% 3.7% 2.2% 1.7%
In addition to remitting payroll and payroll taxes, Employees, ending (k) 10.0 10.9 11.7 12.2 12.5 12.3
Paychex offers other human resource services such Human resource services segment metric:
∆ client employees n/a 31% 26% 18% 3% 9%
as benefits administration. Client employees served ∆ shares out (avg) 0% 0% 0% -3% -2% 0%
by such services are up 9% y-y to 472,000 at 2/28. 1
Represents assets used to satisfy related client obligations based on Paychex
• Recurring revenue business model with high processing of payroll and payroll tax on behalf of clients’ employees. Client
funds consist of short-term funds and available-for-sale securities.
client switching costs. Client retention has 2
Represents payroll processing and payroll tax administration including
historically averaged around 80%. New clients can remittance of clients’ payroll obligations and fund transfer to tax agencies.
3
Includes “beyond payroll” services such as employee benefits administration.
take up to one year to set up Paychex processes. Paychex also acts as a professional employer organization, assuming, among
• Client funds represent “float” on which Paychex others, the risks of workers’ comp insurance. 4 Excludes net realized gains.
earns interest before remittance to client employees
or tax authorities. Funds are invested into U.S. • Regulatory factors can decrease float income if
agency discount notes and other low-risk securities. tax authorities allow less time to remit payroll tax.
• Chairman Thomas Golisano (67) founded
Paychex in 1971 and owns 11% of shares. COMPARABLE PUBLIC COMPANY ANALYSIS
Golisano served as CEO until 2004, when current P/ This Next
CEO Judge (55), an ex-IBM executive, took over. MV EV EV / Tang. FY FY
($mn) ($mn) Rev. Book P/E P/E
• Strong balance sheet with $689 million of cash and ADP 21,020 19,060 2.2x 7.1x 17x 17x
investments as of February 28 (excl. client funds). PAYX 10,650 10,250 5.1x 11.7x 22x 21x
• Shares trade at 5-6% trailing free cash flow yield
including a 4% dividend yield.
MAJOR HOLDERS
Chairman Golisano 11% | Other insiders <1% | Cap World
INVESTMENT RISKS & CONCERNS
10% | CapRe 6% | Vanguard 3% | State Street 3%
• Payroll revenue down 6% in February quarter,
reflecting weak economy. Paychex earns a fixed fee RATINGS
per payroll processed; as a result, revenue declines VALUE Intrinsic value materially higher than market value? 
when clients lay off people or go out of business. DOWNSIDE PROTECTION Low risk of permanent loss? 
• Small business focus is a negative in a weak MANAGEMENT Capable and properly incentivized? 
economy as smaller firms are most vulnerable. FINANCIAL STRENGTH Solid balance sheet? 
Paychex may spend considerable investments MOAT Able to sustain high returns on invested capital? 
upfront only to see its client go out of business. EARNINGS MOMENTUM Fundamentals improving? 
*
Based on Paychex estimates from third quarter fiscal 2010 presentation. MACRO Poised to benefit from economic and secular trends? 
THE BOTTOM LINE
With U.S. unemployment and interest rates at historical highs and lows, respectively, payroll processor Paychex is suffering a
double-whammy. Not only is revenue declining as clients lay off staff or go out of business, but it is also losing high-margin
float income due to low yields. High recurring revenue, strong cash generation and a solid balance sheet protect the downside
if economic weakness lingers on. In addition, continued growth in “beyond payroll” services is mitigating some of the
revenue pressure. On balance, we like the risk-reward. Investors can afford to wait for employment to improve and interest
rates to rise while collecting a 4% dividend yield. Another positive is 11% ownership by founder and chairman Golisano.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 77 of 118
…additional insight into Paychex:

SLIDES ON BUSINESS AND COMPETITIVE POSITION, APRIL 2010

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 78 of 118
…additional insight into Paychex:

SLIDES ON FINANCIAL PERFORMANCE, APRIL 2010

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 79 of 118
SandRidge Energy (SD) – Fairfax  Oklahoma City, OK, 405-429-5500
Energy: Oil & Gas Operations www.sandridgeenergy.com

Trading Data Consensus EPS Estimates Valuation


Price: $6.88 (as of 5/14/10) Month # of P/E FYE 12/31/09 n/m
52-week range: $6.12 - $15.00 Latest Ago Ests P/E FYE 12/31/10 11x
Market value: $1.4 billion This quarter $0.14 $0.15 13 P/E FYE 12/31/11 14x
Enterprise value: $4.1 billion Next quarter 0.17 0.18 13 P/E FYE 12/30/12 12x
Shares out: 210.7 million FYE 12/31/10 0.64 0.72 14 EV/ LTM revenue 6.3x
Ownership Data FYE 12/31/11 0.49 0.52 14 EV/ LTM EBIT n/m
Insider ownership: 20% FYE 12/30/12 0.59 0.74 4 P / tangible book n/m
Insider buys (last six months): 10 LT growth 10.0% 10.0% 1 Greenblatt Criteria
Insider sales (last six months): 4 EPS Surprise Actual Estimate LTM EBIT yield -10%
Institutional ownership: 72% 5/6/10 $0.01 $0.18 LTM pre-tax ROC -17%
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 3/31/10 3/31/09 3/31/10
Revenue 155 176 288 388 678 1,182 591 643 159 211
Gross profit 37 41 75 135 413 779 308 348 83 123
Operating income 22 21 34 37 187 (1,338) (1,605) (402) (1,116) 89
Net income 13 25 18 12 10 (1,458) (1,784) (611) (1,155) 19
Diluted EPS 0.26 0.22 0.32 0.16 0.09 (9.37) (10.20) (3.38) (7.07) 0.09
Shares out (avg) 56 56 57 74 109 156 175 184 163 209
Cash from operations 28 39 64 67 358 579 312 384 75 148
Capex 42 58 135 307 1,281 2,058 715 556 350 191
Free cash flow (14) (19) (71) (239) (923) (1,479) (404) (172) (275) (43)
Cash & investments 0 13 46 39 63 1 8 3 0 3
Total current assets 31 52 119 175 227 356 256 290 408 290
Intangible assets 0 0 0 0 0 0 0 0 0 0
Total assets 118 181 459 2,388 3,631 3,655 2,780 2,972 2,671 2,972
Short-term debt 20 3 13 26 15 17 12 10 16 10
Total current liabilities 67 63 111 159 232 403 226 324 290 324
Long-term debt 5 56 30 1,041 1,052 2,359 2,567 2,610 2,392 2,610
Total liabilities 90 132 170 1,299 1,413 2,862 2,986 3,154 2,785 3,154
Preferred stock 0 0 0 440 451 0 0 0 0 0
Common equity 28 49 289 650 1,767 794 (206) (183) (114) (183)
EBIT/capital employed 50% 34% 17% 3% 7% -42% -57% -17% n/m n/m
Ten-Year Stock Price Performance and Trading Volume Dynamics

$80

$70

$60

$50

$40

$30

$20

$10

$0
Apr 08 Apr 09 Apr 10

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 80 of 118
BUSINESS OVERVIEW SELECTED PRO-FORMA OPERATING DATA 1
SandRidge Energy is a U.S. oil and natural gas producer with SandRidge 2 Arena 3 Combined
main areas of operation in West Texas and New Mexico. Proved reserves (as of 12/31/09): 4
Oil (000s barrels) 105,349 59,715 165,064
SandRidge announced the acquisition of Arena Resources Natural Gas (MMcf) 680,075 57,215 737,290
(ARD) in April. Arena owns oil assets in Oklahoma, Texas, Total (MMcfe) 1,312,169 415,505 1,727,674
New Mexico and Kansas. SandRidge is paying 4.7771 SD Oil as a % of proved reserves 48% 86% 57%
Proved developed as % of proved 63% 37% 57%
shares plus $2.50 in cash for each Arena share. This implies PV10 proved reserves ($mn), based on…: 5
a $1.6 billion enterprise value at deal announcement. … 2009 avg prices (SEC method) $1,561 $1,121 $2,682
…12/31/09 spot prices 3,590 1,820 5,410
The company also acquired oil and gas properties from
…Average 10-year NYMEX strip 5,240 2,234 7,474
Forest Oil (FST) for about $800 million in December 2009. Selected production data (FYE December 31, 2009):
Oil (000s barrels) 4,448 2,004 6,452
INVESTMENT HIGHLIGHTS Natural Gas (MMcf) 93,526 2,173 95,699
Total (MMcfe) 120,214 14,197 134,411
• Onshore U.S. oil and natural gas producer with Proved reserve life (reserves/production) in years:
1.3 Tcfe of proved reserves at yearend 2009.* 63% Oil 24 30 26
of reserves, which are mainly located in the Permian Natural Gas 7 26 8
Basin and West Texas Overthrust, are developed. Total 11 29 13
1
MMcf(e)=millions of cubic feet (equivalents).
Reserve life is eleven years based on 2009 2
SandRidge figures are pro-forma for Forest assets bought in December 2009.
3
production. Oil represents 48% of proved reserves. 4
Arena PV10 values assume tax benefits from SandRidge deferred tax assets.
• Arena acquisition increases exposure to oil. 86% Based on SEC method using 2009 average prices. Oil includes natural gas
liquids. Total reserves assume a ratio of 6 mcf of natural gas per barrel of oil.
of Arena’s 416 Bcfe of proved reserves are oil. As 5
PV10 is based on after-tax net present value of future net cash flows
Arena’s main properties are located in the Permian discounted at 10% p.a. Price assumptions: SEC ($3.87/Mcf; $57.65/Bbl); Spot
($5.79/Mcf; $79.34/Bbl); and NYMEX ($6.94/Mcf; $92.24/Bbl).
Basin, integration with SandRidge should be easier.
• “Oil wells are significantly value advantaged in SELECTED PRO-FORMA FINANCIAL DATA
today’s pricing environment,” as “capex is the $ millions SandRidge Arena Adjustments Combined
same” and oil/gas price differential is 13:1 or more. Selected balance sheet data (as of 12/31/09):
• Tom Ward (50) to remain Chairman and CEO. Cash and equivalents $8 $64 -$15 $56
Total assets 2,780 657 1,370 4,808
Ward, who co-founded Chesapeake (CHK) in 1989 Debt 2,579 0 98 2,677
and was its COO until 2006, owns 12% of shares. Shareholders' equity -206 523 1,379 1,696
• Benefits from low-cost operations and hedging. Goodwill/intangibles 0 0 499 499
SandRidge is guiding for cash costs of under $3.00 Tangible equity -206 523 880 1,197
as a % of total assets -7% 80% n/m 25%
per Mcfe in 2010, including lifting, production tax Selected income statement data (FYE December 31, 2009):
and cash G&A. About 80% of 2010 production is Revenue $683 $126 $0 $809
hedged at $9.15 per Mcfe. Over $3.0 billion of EBIT 1 112 66 -33 145
hedges are planned through 2013, post Arena-deal. Net income -1,826 42 -10 -1,794
DD&A 281 39 33 353
• Pro-forma EV-to-PV10 proved reserves is 0.8x, 1
SandRidge EBIT excludes $1.7 billion impairment charge.
based on average 10-year NYMEX strip prices of
$6.94 per Mcf and $92.24 per barrel. MAJOR HOLDERS *
CEO Ward 12% | Other insiders 2% | Fairfax 11% | FMR
INVESTMENT RISKS & CONCERNS 11% | Mount Kellett 6% | N. Mitchell 5% | Ares 5%
• Paying $55 per boe of developed Arena reserves, * Based on SandRidge shareholdings excluding Arena transaction.
versus own EV of roughly $35 per boe. While
figures are roughly equal at $20 per boe of proved RATINGS
reserves, SandRidge may be giving up more in VALUE Intrinsic value materially higher than market value? 
value than it receives. As only 37% of Arena’s DOWNSIDE PROTECTION Low risk of permanent loss? 
reserves are developed, capex could be high. MANAGEMENT Capable and properly incentivized? 
• $2.6 billion of post-deal net debt. While balance FINANCIAL STRENGTH Solid balance sheet? 
sheet improves with the Arena deal, leverage MOAT Able to sustain high returns on invested capital? 
remains high. Based on 1Q10 adj. EBITDA, we EARNINGS MOMENTUM Fundamentals improving? 
estimate net debt to annualized, pro-forma EBITDA MACRO Poised to benefit from economic and secular trends? 
at ~3.5x. Nearest significant debt maturity is 2014. *
Trillion cubic feet equivalents; based on SEC method using ‘09 avg prices.

THE BOTTOM LINE


Oil and gas producer SandRidge achieves two main goals by acquiring Arena Resources in a predominantly stock-based deal:
1) it increases exposure to oil versus natural gas; and 2) strengthens its balance sheet with tangible equity reaching 25% of
post-deal assets. It is noteworthy that CEO Ward, who is an incentivized 12% shareholder, is bullish on oil versus gas. Our
main concern is that SandRidge is giving up more value than it gets in return: it pays $55/boe of Arena’s developed reserves
versus its own valuation of ~$35/boe. Among oil and gas stocks, we would prefer Breitburn (BBEP) or Contango (MCF).

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 81 of 118
…additional insight into SandRidge Energy:

SLIDES FROM COMPANY PRESENTATION ON ARENA ACQUISITION, APRIL 2010

SandRidge Combined Asset Analysis

SandRidge Permian Progression

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 82 of 118
…additional insight into SandRidge Energy:

IMPLIED TRADING VALUATIONS OF SELECTED OIL & GAS COMPANIES

Arena
SandRidge Breitburn Harvest
SandRidge Resources ATP Oil Compton Contango Delta Gastar
Company Pre-Deal Energy Natural
Energy * Deal Value & Gas Petroleum Oil & Gas Petroleum Exploration
*** Partners Resources
**

Ticker SD ARD SD ATPG BBEP CMZ MCF DPTR GST HNR

Recent stock
$6.88 $7.85 $15.59 $15.16 CAD 0.84 $54.63 $1.32 $4.29 $8.55
price
Diluted shares
453.2 262.3 56.8 56.7 263.8 16.2 275.7 49.5 39.1
out (mn)

Market cap (mn) $3,118 $2,059 $885 $860 CAD 222 $883 $364 $212 $334

Net debt/(cash)
2,621 2,571 1,148 518 539 (100) 338 -88 (44)
(mn)
Enterprise
value $5,739 $1,414 $4,630 $2,033 $1,378 CAD 761 $783 $702 $124 $290
(mn)
proved
developed
163 26 137 17 101 81 58 30 6 18
reserves
(MMboe)
proved reserves
288 69 219 135 111 98 - 26 8 46
(MMboe)

EV / proved
$35 $55 $34 $117 $14 CAD 9 $14 $23 $21 $16
developed Boe

EV / proved Boe 20 20 21 15 12 8 - 27 15 6

U.S. U.S. U.S. GOM/ continental U.S. continental


Main location of Alberta shallow
Permian Permian Permian North U.S. Rocky U.S. Venezuela
proved reserves (Canada) GOM
Basin Basin Basin Sea (MI, CA, WY) Mountains (WV, PA, TX)
Proved reserves
split
57/43 86/14 48/52 58/42 35/65 14/86 20/80 18/82 0/100 82/18
(oil/natural gas)
in %
* Pro-forma for Arena Resources acquisition.
** Based on SandRidge acquisition proposal at SD stock price as of 5/14/2010. Arena net cash of $64 million is assumed used up for deal expenses.
** Based on SandRidge closing stock price on April 1, 2010.

Notes:
1) MMboe=millions of barrels of oil equivalent; Mcf=thousands cubic feet equivalent; 2P=proved+probable; 3P=proved+probable+possible; GOM=Gulf of Mexico.
2) All reserve data is as of 12/31/09, except MCF (9/30/09). Arena reserves assume tax benefit from SandRidge deferred tax assets.
3) ATPG shares outstanding include convertible preferred shares; CMZ shares outstanding include potential dilution from 138 million warrants, each exercisable at
C$1.55/share through October 2011; HNR shares outstanding assume conversion of $32 million of convertible notes ($5.71/share).
4) All net debt/(cash) figures are as of 3/31/10, except SD and ARD (12/31/09). DPTR net debt excludes restricted deposits and non-recourse DHS debt.

SandRidge Energy — Debt Profile as of March 31, 2010


Debt type Amount Maturity
Senior credit facility $45 2014 *
Other debt incl. current debt 31 n/m
Floating senior notes 350 2014
8.625% senior notes 650 2015
9.875% senior notes 351 2016
8.0% senior notes 750 2018
8.75% senior notes 443 2020
Total debt $2,621
*
During April 2010, the company’s senior credit facility borrowing base of $850 million was affirmed by its bank group and the facility’s maturity date was extended
to April 15, 2014 from November 21, 2011.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 83 of 118
USG Corp. (USG) – Berkshire , Fairfax  Chicago, IL, 312-436-4000
Capital Goods: Construction - Raw Materials www.usg.com

Trading Data Consensus EPS Estimates Valuation


Price: $20.95 (as of 5/14/10) Month # of P/E FYE 12/31/09 n/m
52-week range: $8.71 - $25.59 Latest Ago Ests P/E FYE 12/31/10 n/m
Market value: $2.1 billion This quarter -$0.68 -$0.70 13 P/E FYE 12/31/11 n/m
Enterprise value: $3.5 billion Next quarter -0.46 -0.58 13 P/E FYE 12/30/12 40x
Shares out: 99.5 million FYE 12/31/10 -2.68 -2.82 9 EV/ LTM revenue 1.1x
Ownership Data FYE 12/31/11 -1.03 -1.59 13 EV/ LTM EBIT n/m
Insider ownership: 15% FYE 12/30/12 0.53 0.12 3 P / tangible book 2.8x
Insider buys (last six months): 1 LT growth n/a n/a n/a Greenblatt Criteria
Insider sales (last six months): 5 EPS Surprise Actual Estimate LTM EBIT yield -6%
Institutional ownership: 67% 4/20/10 -$0.98 -$0.93 LTM pre-tax ROC -8%
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 12/31/03 12/31/04 12/31/05 12/31/06 12/31/07 12/31/08 12/31/09 3/31/10 3/31/09 3/31/10
Revenue 3,666 4,509 5,139 5,810 5,202 4,608 3,235 3,087 864 716
Gross profit 545 837 1,102 1,384 599 192 145 111 48 14
Operating income 210 508 (2,354) 999 165 (512) (185) (225) (42) (82)
Net income 121 312 (1,436) 297 76 (463) (787) (855) (42) (110)
Diluted EPS 3.18 5.61 (25.29) 4.46 0.78 (4.67) (7.93) (8.61) (0.42) (1.11)
Shares out (avg) 43 56 56 66 97 99 99 99 99 99
Cash from operations 237 428 506 (3,703) 1,307 (165) 139 67 (30) (102)
Capex 111 138 198 393 460 238 44 34 16 6
Free cash flow 126 290 308 (4,096) 847 (403) 95 33 (46) (108)
Cash & investments 764 894 1,170 565 297 471 690 513 223 513
Total current assets 1,498 1,790 2,179 2,707 1,284 1,494 1,431 1,312 1,267 1,312
Intangible assets 40 44 66 162 372 137 86 83 135 83
Total assets 3,799 4,278 6,142 5,365 4,654 4,719 4,097 4,019 4,446 4,019
Short-term debt 1 1 0 1,065 0 194 7 7 4 7
Total current liabilities 414 570 600 1,764 567 756 492 518 522 518
Long-term debt 1 0 0 1,439 1,238 1,642 1,955 1,954 1,641 1,954
Total liabilities 3,110 3,254 6,444 3,831 2,428 3,169 3,167 3,199 2,955 3,199
Preferred stock 0 0 0 0 0 0 0 0 0 0
Common equity 689 1,024 (302) 1,534 2,226 1,550 930 820 1,491 820
EBIT/capital employed 10% 24% -104% 33% 5% -17% -6% -8% n/m n/m
Ten-Year Stock Price Performance and Trading Volume Dynamics

$140

$120

$100

$80

$60

$40

$20

$0
Apr 01 Apr 02 Apr 03 Apr 04 Apr 05 Apr 06 Apr 07 Apr 08 Apr 09 Apr 10

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 84 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA
USG manufactures and distributes building materials. The YTD
company owns gypsum rock reserves with ~30 years of life FYE December 31 2005 2006 2007 2008 2009 3/31/10
∆ revenue 14% 13% -10% -11% -30% -17%
based on average annual production during 2005-09. ∆ employees (avg) 2% 4% 0% -7% -21% n/a
USG emerged from a five-year Chapter 11 process in 2006. Revenue ($bn) 5.1 5.8 5.2 4.6 3.2 0.7
% of revenue by segment:
North American gypsum 63% 62% 55% 51% 55% 59%
INVESTMENT HIGHLIGHTS Product distribution 40% 43% 44% 43% 40% 35%
• U.S. Gypsum is #1 gypsum wallboard producer Worldwide ceilings 14% 13% 16% 18% 20% 23%
in U.S., accounting for 27% of gypsum wallboard Eliminations -16% -18% -14% -13% -15% -17%
shipped in 2009. CGC is the largest manufacturer of Revenue growth by segment:
North American gypsum 17% 12% -22% -17% -25% -11%
gypsum wallboard in eastern Canada. USG Mexico Product distribution 18% 21% -8% -13% -35% -30%
has 50%+ share of gypsum wallboard in Mexico. Worldwide ceilings 3% 7% 8% 4% -22% -4%
• L&W Supply is the leading U.S. specialty building EBIT margin by segment:
products distributor, accounting for 11% of all North American gypsum -77% 23% 3% -10% -1% -8%
Product distribution 7% 8% 4% -12% -13% -16%
gypsum wallboard distribution in 2009, including Worldwide ceilings 9% 10% 9% 8% 9% 11%
36% of U.S. Gypsum’s production. Corporate and other -2% -2% -2% -2% -2% -4%
• Ceilings segment is the largest manufacturer of Total EBIT margin -46% 17% 3% -11% -6% -11%
ceiling grid and the second-largest manufacturer and % of revenue by geography (may not add to 100% due to transfers):
U.S. 90% 90% 88% 86% 84% n/a
marketer of acoustical ceiling tile worldwide. International - Canada 8% 8% 8% 9% 10% n/a
• Repair and remodel markets accounted for 47% International - Other 6% 7% 9% 10% 10% n/a
of 2009 revenue. New nonresidential construction Selected items as % of revenue:
Gross profit 22% 24% 12% 4% 4% 2%
was 31%, while new residential construction 20%. Net income -28% 5% 1% -10% -24% -15%
• Berkshire and Fairfax bought $400 million of D&A 2% 2% 3% 4% 6% 6%
10% converts in 2008 ($11.40 conversion). In 2006, Capex 4% 7% 9% 5% 1% 1%
Berkshire also backstopped a $1.7 billion rights Selected U.S. Gypsum metrics:
Revenue ($bn) 2.9 3.2 2.4 1.9 1.4 0.3
offering, buying seven million shares at $40/share. as % of N.A. Gypsum 89% 89% 85% 82% 81% 78%
• Asbestos liabilities transferred to outside trust. Sheetrock ASP ($/k sqft) 144 181 135 111 117 107
Future claims must be brought against the trust. ∆ sheetrock ASP n/a 25% -25% -18% 5% -12%
• “Began to see signs of modest improvement in ∆ manufacturing costs n/a "up" 9% 11% -2% 0%
Capacity utilization 96% 92% 78% 65% 47% 45%
wallboard demand” in first quarter of 2010.
Shipments (bn sq. ft.) 11 11 9 7 5 1
• $1.3 billion of federal NOLs as of March 31, ∆ shipments n/a -4% -17% -20% -34% -12%
which do not expire until 2026-2030. ∆ industry shipments n/a -3% -15% -18% -27% -7%
• Trades at EV-to-peak revenue and EBIT of 0.6x Selected products distribution metrics:
L&W Supply locations 192 220 247 198 164 161
and 3.5x, respectively, based on 2006 financials. ∆ L&W Supply locations n/a 15% 12% -20% -17% -19%
Tangible equity/assets n/m 27% 43% 31% 21% 19%
INVESTMENT RISKS & CONCERNS ∆ shares out (avg) n/m 18% 46% 2% 0% 0%
• Expects “continued pressure on gypsum
wallboard selling prices and gross margins” due MAJOR HOLDERS *
to “significant excess wallboard production capacity CEO Foote <1% | Other insiders 1% | Berkshire 17% | Knauf
industry-wide” (U.S. capacity was 34.4 billion sq. family 15% | Fairfax 7% | T. Rowe 5% | Sasco 4% | DFA 4%
*
ft. at 1/1/10 with 1Q10 utilization at 52%). USG has Not adjusted for potential conversion of $400 million of convertible debt.
idled 3.6 billion sq. ft. of capacity since mid-2006.
• Trailing EBITDA excl. items is -$5 million versus RATINGS
annualized cash interest of $172 million based on VALUE Intrinsic value materially higher than market value? 
1Q10 interest. Trailing gross profit is $111 million. DOWNSIDE PROTECTION Low risk of permanent loss? 
• $1.4 billion of net debt and ~$500 million of MANAGEMENT Capable and properly incentivized? 
unfunded post-retirement liabilities. USG had $585 FINANCIAL STRENGTH Solid balance sheet? 
million of cash and securities and another $149 MOAT Able to sustain high returns on invested capital? 
million of credit facility availability (expires 2012) EARNINGS MOMENTUM Fundamentals improving? 
at March 31. Earliest term debt maturity is in 2014. MACRO Poised to benefit from economic and secular trends? 

THE BOTTOM LINE


USG holds market-leading positions in gypsum wallboard across North America, putting the company in a position to benefit
from an eventual rebound in the housing and construction markets. In the near term, however, USG remains vulnerable to
continued weakness in the company’s key end-markets. Should housing market conditions deteriorate further, USG may be
unable to satisfy its financial obligations, potentially leading to permanent capital loss for equity holders. While risk-reward
on the equity is not attractive, investors may consider investing in debt securities, as Berkshire and Fairfax have done.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 85 of 118
…additional insight into USG:

USG – REALIZED PRICES AND SHIPMENTS OF WALLBOARD, 1999-2010 YTD

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 86 of 118
…additional insight into USG:

EXCERPTS FROM 2010 LETTER TO SHAREHOLDERS

The challenges: The outcome:

Housing starts hit record lows in 2009. U.S. housing starts Operating losses decreased. Despite a $1.4 billion decline
of 550,000 represented the lowest level since the federal in sales, we succeeded in reducing our operating loss.
government began reporting that statistic in 1959. Losses are unacceptable, but in the context of a 30 percent
decline in sales, this was a move in the right direction.
The repair and remodel market was down for the fourth
straight year. Before the current downturn, this market Liquidity increased. We were successful in adding to our
segment had never seen a consecutive two-year decline. liquidity through financing and other activities, ending
This is an indication of just how financially stretched 2009 with almost $700 million in cash. Total liquidity,
homeowners and other property owners have been. including cash and available borrowing capacity, was more
than $800 million at the close of the year.
The new commercial construction segment also declined
sharply. This segment likewise experienced a drop of more We are extending our international reach. We expanded
than 40 percent, the third year of decline, which was operations through joint ventures and other alliances with a
largely attributable to tightening within the credit markets. ceiling tile manufacturing plant in China and a
manufacturing and distribution alliance in Colombia. These
U.S. industry wallboard shipments fell 27 percent. add to our other successful alliances, including those in
Shipments totaled about 18 billion square feet, roughly half Canada, Saudi Arabia and Germany.
of the peak level achieved only a few years ago, reflecting
the steep declines in the housing market. We protected our intellectual property. We reached a $105
million settlement in a years-long patent-infringement and
Our response: trade-secrets lawsuit against a competitor. Our pursuit of
redress demonstrates the value of our intellectual property
We continued to anticipate, adapt and act. We proactively and how serious we are about safeguarding it.
responded by reducing manufacturing capacity, cutting
costs, and improving liquidity. Since the beginning of the The future:
recession in mid-2006, we have closed or idled 3 billion
square feet of wallboard manufacturing capacity, closed We are facing another challenging year in 2010. Some
approximately 100 of our L&W Supply distribution centers segments of the market, including residential construction,
and reduced employment by approximately 3,900. We seem to have stabilized. Market forecasts for 2010 U.S.
continued those efforts in 2009, including the closure of 37 housing starts range from 600,000 to 900,000 units, which
L&W centers. are very low by historical standards. We are projecting
starts to be near the low end of that range, which would
We reduced costs substantially. Since mid-2006, we have still be an improvement for the first time in four years.
decreased overhead and other costs by more than $400
million. The residential repair and remodel market, which is driven
by sales of existing homes, appears to have stabilized as
We pared capital expenditures. Having made substantial well, with some analysts forecasting that spending will
investments in infrastructure and manufacturing capacity in begin to increase in 2010. We are estimating that overall
recent years, we were able to reduce capital expenditures to repair and remodel spending will increase approximately 3
less than $50 million in 2009, compared to $238 million in percent in 2010.
2008.
Commercial construction starts are expected to remain
We greatly reduced our investment in working capital and weak, but not as weak as in 2009. Our international
improved cash flow. We reduced our investment in business has seen signs of recovery in areas such as China,
working capital by approximately $200 million, with about South America and Canada.
one-third of that figure representing a permanent structural
savings. Cash flow from operating activities exceeded cash
used for capital spending and other investing activities by Access USG’s complete 2010 letter to shareholders at
about $30 million last year. Aggressive cost reductions and
http://bit.ly/bjcc7W
resizing the business to the market contributed to this
positive cash flow.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 87 of 118
Visa (V) – Children’s , Lone Pine  San Francisco, CA, 415-932-2100
Financial: Consumer Financial Services, Member of S&P 500 www.visa.com

Trading Data Consensus EPS Estimates Valuation


Price: $77.26 (as of 5/14/10) Month # of P/E FYE 9/30/09 28x
52-week range: $58.00 - $97.19 Latest Ago Ests P/E FYE 9/30/10 20x
Market value: $64.9 billion This quarter $0.93 $0.90 32 P/E FYE 9/30/11 16x
Enterprise value: $60.3 billion Next quarter 0.98 0.98 30 P/E FYE 9/29/12 14x
Shares out: 839.8 million FYE 9/30/10 3.88 3.81 29 EV/ LTM revenue 8.1x
Ownership Data FYE 9/30/11 4.71 4.58 35 EV/ LTM EBIT 15x
Insider ownership: 41% FYE 9/29/12 5.59 5.39 12 P / tangible book 22.4x
Insider buys (last six months): 0 LT growth 20.1% 19.9% 16 Greenblatt Criteria
Insider sales (last six months): 2 EPS Surprise Actual Estimate LTM EBIT yield 7%
Institutional ownership: 50% 4/28/10 $0.96 $0.91 LTM pre-tax ROC >100%
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 9/30/04 9/30/05 9/30/06 9/30/07 9/30/08 9/30/09 3/31/10 3/31/09 3/31/10
Revenue 2,429 2,665 2,948 3,590 6,263 6,911 7,444 1,647 1,959
Gross profit 1,711 2,046 2,277 2,869 5,064 5,768 6,223 1,375 1,649
Operating income 431 453 730 (1,449) 1,232 3,538 4,030 881 1,122
Net income 210 360 455 (1,076) 804 2,353 2,719 536 713
Diluted EPS 0.27 0.33 0.56 (1.34) 0.91 2.79 3.23 0.63 0.85
Shares out (avg) 806 806 806 806 881 844 843 845 839
Cash from operations 433 481 450 505 531 558 720 233 609
Capex 122 119 102 160 415 306 249 68 42
Free cash flow 311 361 348 345 116 252 471 165 567
Cash & investments 817 931 1,022 6,287 4,801 4,645 3,535 4,645
Total current assets 1,478 1,594 2,507 11,174 9,241 9,115 8,225 9,115
Intangible assets 0 0 0 21,096 21,091 21,091 21,096 21,091
Total assets 2,745 2,964 4,390 34,981 32,281 32,068 31,964 32,068
Short-term debt 32 32 41 1,559 12 12 52 12
Total current liabilities 1,325 1,393 3,282 7,165 4,442 3,537 4,243 3,537
Long-term debt 74 41 0 55 44 38 50 38
Total liabilities 2,620 2,381 4,891 12,704 9,092 8,085 9,844 8,085
Preferred stock 0 0 0 0 0 0 0 0
Common equity 126 583 (501) 22,277 23,189 23,983 22,120 23,983
EBIT/capital employed n/m n/m n/m n/m >100% >100% n/m n/m
Ten-Year Stock Price Performance and Trading Volume Dynamics

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© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 88 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA
Visa operates a global electronic payment network and YTD
engages in the following activities: FYE September 30 2006 2007 2008 2009 3/31/10
∆ revenue 11% 22% 74% 10% 16%
− owns and licenses to customers payment brands, Revenue ($bn) 2.9 3.6 6.3 6.9 3.9
including Visa, Visa Electron, PLUS and Interlink; % of revenue by type:
− promotes its brands through marketing initiatives Service fees 55% 54% 49% 46% 44%
Data processing fees 42% 39% 33% 35% 38%
and by encouraging usage and merchant acceptance;
International transaction fees 14% 13% 27% 28% 28%
− offers platforms that customers use to develop Other revenue 9% 8% 9% 9% 9%
credit, debit and prepaid programs for cardholders; Volume and support incentives -20% -14% -19% -18% -19%
− provides authorization, clearing and settlement to % of revenue from U.S. 90% 92% 59% 58% 59%
Selected items as % of revenue:
customers through VisaNet, a processing platform; Personnel 23% 20% 19% 17% 15%
− provides value-added services: risk management, Network & communications 7% 7% 5% 6% 5%
debit processing, loyalty, and dispute management; Advertising & marketing 16% 16% 16% 13% 12%
− enforces rules to ensure efficient functioning of the Professional & consulting 10% 9% 7% 5% 3%
Administrative & other 8% 6% 5% 5% 4%
payments network and the promotion of its brands. Litigation provision 1% 74% 23% 0% -1%
Visa went public in 2008. Class A shares trade on the NYSE; EBIT (excl. litigation provision) 26% 34% 43% 51% 59%
B and C shares are held by financial institutions. D&A 5% 4% 4% 3% 3%
Capex 3% 4% 7% 4% 2%
∆ shares out (avg) n/a 0% 80% -17% -4%
INVESTMENT HIGHLIGHTS
• World’s largest electronic payments network, • Open-loop model relies on third-party merchant
ahead of MasterCard and American Express, based acquirers and card issuers. While Mastercard has
on branded credit and debit cards in circulation, a similar model, American Express operates a
transaction volume and dollar volume. closed-loop network that gives it more revenue
• VisaNet platform provides financial institutions streams and control over functioning of the network.
and merchants with transaction processing and
value-added services. Financial institutions are COMPARABLE PUBLIC COMPANY ANALYSIS
Visa’s main clients; the former are responsible for Market Price to This Next
Price FY End
Value Tangible FY FY
merchant acquiring and card issuance to consumers. ($)
($mn) Book P/E P/E
Date
• Payment volume grew 13% y-y in Jan-Mar 2010, AXP 40.60 48,820 3.6x 14x 12x Dec-31
accelerating from 8% rate of prior quarter. Visa MA 212.50 27,790 8.9x 16x 13x Dec-31
derives revenue from fees based on payment DFS 14.20 7,740 1.4x 41x 10x Nov-30
volume, processed transactions and related services. V 77.30 64,880 22.4x 20x 16x Dec-31
• $4.8 billion of net cash, including securities. $664
million of share buybacks was executed fiscal YTD. MAJOR HOLDERS
• Targeting FCF “in excess of $2 billion” in FY11 Shares outstanding: 495 million class A shares (V; voting),
on diluted EPS growth of 20%+. 246 million class B (limited voting), and 99 million class C
• Shares trade on 8% trailing EBIT-to-EV yield. (limited voting). Each class B and C share is convertible into
.5824 and one class A share, respectively. The number of
INVESTMENT RISKS & CONCERNS class A shares on an “as-converted” basis is 737 million.
• Regulatory scrutiny of interchange fees may Economic stake: Insiders <1% | FMR 5% | Children's 2%
negatively affect Visa’s business, as the fees are an
important driver of system volume. Interchange RATINGS
represents a value transfer between the financial
VALUE Intrinsic value materially higher than market value? 
institutions in an open-loop network such as Visa’s.
DOWNSIDE PROTECTION Low risk of permanent loss? 
While Visa does “not receive any portion” of such MANAGEMENT Capable and properly incentivized? 
fees (its bank clients do), it sets the fee rates. FINANCIAL STRENGTH Solid balance sheet? 
• CyberSource purchase for $2 billion may indicate MOAT Able to sustain high returns on invested capital? 
Visa is playing catch-up with online payment rivals. EARNINGS MOMENTUM Fundamentals improving? 
However, due to Visa’s strong brand and expertise, MACRO Poised to benefit from economic and secular trends? 
it should be a long-term beneficiary of e-commerce.
THE BOTTOM LINE
Similar to MasterCard, Visa is a non capital-intensive business as credit is extended by network member banks who are
Visa’s customers. Main risk to the business model appears to be regulatory scrutiny on whether open-loop payment networks
such as Visa’s are failing merchant-customers by charging them undue fees. While shares have been pressured because of
this, risk-reward implied by the recent share price is not yet compelling. Longer term, the closed-loop model of American
Express may be more attractive, as it gives AmEx greater control over its relationship with merchants and consumers.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 89 of 118
…additional insight into V:
SELECTED OPERATING PERFORMANCE DATA FOR THE YEARS ENDED MARCH 31, 2009-2010

CALCULATION OF FREE CASH FLOW, THREE AND SIX MONTHS ENDED MARCH 31, 2010 ($ in millions)

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 90 of 118
…additional insight into V:

SLIDES ON CYBERSOURCE (CYBS) ACQUISITION, APRIL 2010

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 91 of 118
Walgreen (WAG) – Bares , Lone Pine , Markel , Third Point  Deerfield, IL, 847-914-2500
Services: Retail (Drugs), Member of S&P 500 www.walgreens.com

Trading Data Consensus EPS Estimates Valuation


Price: $35.38 (as of 5/14/10) Month # of P/E FYE 8/31/09 18x
52-week range: $27.89 - $40.69 Latest Ago Ests P/E FYE 8/31/10 16x
Market value: $34.6 billion This quarter $0.59 $0.59 17 P/E FYE 8/31/11 13x
Enterprise value: $33.9 billion Next quarter 0.49 0.50 16 P/E FYE 8/30/12 11x
Shares out: 978.4 million FYE 8/31/10 2.26 2.27 20 EV/ LTM revenue 0.5x
Ownership Data FYE 8/31/11 2.67 2.67 18 EV/ LTM EBIT 10x
Insider ownership: 0% FYE 8/30/12 3.08 3.08 8 P / tangible book 2.6x
Insider buys (last six months): 0 LT growth 14.3% 14.3% 6 Greenblatt Criteria
Insider sales (last six months): 3 EPS Surprise Actual Estimate LTM EBIT yield 10%
Institutional ownership: 68% 3/23/10 $0.68 $0.71 LTM pre-tax ROC 25%
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 8/31/03 8/31/04 8/31/05 8/31/06 8/31/07 8/31/08 8/31/09 2/28/10 2/28/09 2/28/10
Revenue 32,505 37,508 42,202 47,409 53,762 59,034 63,335 65,264 16,475 16,987
Gross profit 8,799 10,198 11,788 13,169 15,244 16,643 17,613 18,240 4,657 4,897
Operating income 1,861 2,142 2,424 2,702 3,151 3,441 3,247 3,431 1,030 1,086
Net income 1,165 1,350 1,560 1,751 2,041 2,157 2,006 2,116 640 669
Diluted EPS 1.13 1.31 1.52 1.72 2.03 2.17 2.02 2.13 0.65 0.68
Shares out (avg) 1,025 1,025 1,020 1,010 999 991 990 988 988 983
Cash from operations 1,503 1,644 1,371 2,440 2,357 3,039 4,111 4,134 1,428 595
Capex 795 940 1,238 1,338 1,785 2,225 1,927 1,359 454 220
Free cash flow 708 705 134 1,102 571 814 2,184 2,775 974 375
Cash & investments 1,268 1,696 1,072 1,335 255 443 2,587 3,101 1,559 3,101
Total current assets 6,609 7,764 8,317 9,705 9,511 10,433 12,049 13,159 12,182 13,159
Intangible assets 0 0 0 168 1,060 1,438 1,461 1,480 1,451 1,480
Total assets 11,657 13,342 14,609 17,131 19,314 22,410 25,142 26,334 24,825 26,334
Short-term debt 0 0 0 0 879 83 15 8 12 8
Total current liabilities 3,671 4,078 4,481 5,755 6,744 6,644 6,769 7,297 7,261 7,297
Long-term debt 9 12 12 0 22 1,337 2,336 2,347 2,332 2,347
Total liabilities 4,539 5,202 5,719 7,015 8,209 9,541 10,766 11,386 11,146 11,386
Preferred stock 0 0 0 0 0 0 0 0 0 0
Common equity 7,118 8,140 8,890 10,116 11,104 12,869 14,376 14,948 13,679 14,948
EBIT/capital employed 28% 31% 30% 29% 30% 28% 24% 25% n/m n/m
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© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 92 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA
Walgreen operates ~7,680 drugstores in the U.S. Stores sell YTD
FYE August 31 2005 2006 2007 2008 2009 2/28/10
prescription/non-prescription drugs and general merchandise.
∆ revenue 13% 12% 13% 10% 7% 6%
∆ stores 8% 10% 10% 16% 8% 7%
INVESTMENT HIGHLIGHTS ∆ s-s drugstore sales 1 8% 8% 8% 4% 2% 2%
• Largest U.S. drugstore chain, slightly ahead of ∆ prescription sales 13% 13% 15% 10% 8% 7%
CVS’s retail pharmacies. However, Walgreen has a ∆ s-s prescript. sales 10% 9% 10% 4% 4% 3%
smaller pharmacy benefit management business ∆ front-end sales 2 11% 11% 12% 10% 6% 6%
∆ s-s front-end sales 6% 5% 6% 4% -1% 0%
(95% of prescription revenue is third-party). Revenue ($bn) 42.2 47.4 53.8 59.0 63.3 33.4
• 18% share of U.S. retail prescriptions, based on Selected items as % of revenue:
651 million prescriptions filled in fiscal 2009, up Gross profit 28% 28% 28% 28% 28% 28%
6% y-y. Market share is up from 13% in 2004. SG&A 22% 22% 22% 22% 23% 23%
EBIT 6% 6% 6% 6% 5% 6%
• Strategy: “provide the most convenient access to Net income 4% 4% 4% 4% 3% 3%
healthcare services and consumer goods.” 70%+ of D&A 1% 1% 1% 1% 2% 2%
the U.S. population lives within five miles of a Capex 3% 3% 3% 4% 3% 2%
Walgreens and 5.6 million shop at its stores daily. % of revenue by product:
Prescription drugs 64% 64% 65% 65% 65% 65%
Walgreens.com receives 12+ million monthly visits. Non-prescription drugs 11% 11% 10% 10% 10% 10%
• Owns ~21% of drugstores, while the rest is leased. General merchandise 25% 25% 25% 25% 25% 25%
PP&E at cost was $14.3 billion, and $10.8 billion # of stores 3 4,985 5,461 5,997 6,934 7,496 7,680
net of depreciation, as of fiscal yearend 2009. % of stores by major type:
Drugstores 100% 99% 98% 93% 93% 93%
• Expects $120-130 million of synergies from Prescriptions (in mn) 489 530 583 617 651 346
acquisition of Duane Reade by end of FY12. ∆ prescriptions 11% 8% 10% 6% 6% 8%
Walgreens acquired the 258-store, New York-based Net op cash flow ($bn) 1.4 2.4 2.4 3.0 4.1 1.8
chain for $1.1 billion of enterprise value in April. It FCF ($bn) 0.1 1.1 0.6 0.8 2.2 1.2
paid an EV-to-2009 revenue multiple of 0.58x. Return on tang. equity 18% 19% 21% 21% 17% 19%
Tang. equity to assets 61% 59% 56% 53% 53% 52%
• Aims for $1 billion of pre-tax cost saves by FY11, ∆ shares out (avg) 0% -1% -1% -1% 0% 0%
versus FY08 base. 50% of savings is to come from 1
Based on drugstores open for 12+ consecutive months without closure for
corporate overhead and store labor cost reduction. seven or more consecutive days and without a major remodel/natural disaster.
2
Includes revenue from non-prescription drugs and general merchandise such
One-time costs to achieve savings are $400 million. as household items, personal care, convenience foods, and photofinishing.

3
Repurchased $384 million of shares and paid Excludes 358 clinics operated by Take Care Health Systems as of 2/28/2010.

$272 million dividends in first half of fiscal 2010.


• $746 million of net cash as of February 28. COMPARABLE PUBLIC COMPANY ANALYSIS
P/ This Next
• Shares trade at trailing FCF yield of 8%. EV-to- MV EV EV / Tang. FY FY
trailing revenue and EBIT is 0.52x and 10.0x. ($mn) ($mn) Rev. Book P/E P/E
CVS 48,690 59,010 .6x n/m 13x 12x
INVESTMENT RISKS & CONCERNS RAD 1,120 7,540 .3x n/m n/m n/m
• Can capital be re-invested at high rates over the WAG 34,620 33,870 .5x 2.6x 16x 13x
long term? Given Walgreens’ size, as well as the
mature and competitive nature of the U.S. retail MAJOR HOLDERS
drugstore industry, we are skeptical. Insiders <1% | BlackRock 4% | Vanguard 4% | State Street
• Reductions in prescription drug reimbursement 4% | FMR 3% | Cap Re 2% | MFS 2% | Dodge & Cox 1%
levels may lower profitability. As a participant in
the prescription drug value chain, Walgreens is RATINGS
exposed to payors’ efforts to contain drug costs. VALUE Intrinsic value materially higher than market value? 
• Competition includes other drugstore chains, DOWNSIDE PROTECTION Low risk of permanent loss? 
independent drugstores, mail order prescription MANAGEMENT Capable and properly incentivized? 
providers as well as general retailers and grocers. FINANCIAL STRENGTH Solid balance sheet? 
• Operating leverage. Walgreens had minimum lease MOAT Able to sustain high returns on invested capital? 
payments totaling $35 billion at fiscal yearend 2009. EARNINGS MOMENTUM Fundamentals improving? 
Annual rent expense is $2.0 billion (3% of revenue). MACRO Poised to benefit from economic and secular trends? 
THE BOTTOM LINE
Walgreens has historically posted after-tax returns on invested capital of ~10% and returns on tangible equity of 15-20%.
While these returns are attractive, we are skeptical the business will be able to reinvest capital at high rates over the long
term. With shares trading at a 2.7x multiple of tangible book, the market is more optimistic. Given a weak retail environment,
selective acquisitions of smaller competitors such as Duane Reade may make sense. However, this raises execution risks and
is hardly a way to sustainably create value. More aggressive return of capital would get us more interested in the shares.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 93 of 118
…additional insight into Walgreens:

SELECTED RETURN ON CAPITAL DATA, FY 2003 – FY 2009

Source: Company.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 94 of 118
…additional insight into Walgreens:

SLIDES FROM COMPANY PRESENTATION, APRIL 2010

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 95 of 118
Reduced or Eliminated Superinvestor Holdings
Hyatt Hotels (H) – Pershing Square  Chicago, IL, 312-750-1234
Services: Hotels & Motels www.hyatt.com
Trading Data Consensus EPS Estimates Valuation
Price: $40.47 (as of 5/14/10) Month # of P/E FYE 12/31/09 n/m
52-week range: $25.75 - $43.88 Latest Ago Ests P/E FYE 12/31/10 337x
Market value: $7.0 billion This quarter $0.07 $0.01 10 P/E FYE 12/31/11 99x
Enterprise value: $6.6 billion Next quarter -0.01 -0.04 9 P/E FYE 12/30/12 48x
Shares out: 173.9 million FYE 12/31/10 0.12 -0.06 7 EV/ LTM revenue 1.9x
Ownership Data FYE 12/31/11 0.41 0.19 10 EV/ LTM EBIT 199x
Insider ownership: 75% FYE 12/30/12 0.85 0.60 4 P / tangible book 1.5x
Insider buys (last six months): 3 LT growth 8.5% 8.5% 2 Greenblatt Criteria
Insider sales (last six months): 3 EPS Surprise Actual Estimate LTM EBIT yield 1%
Institutional ownership: 29% 5/6/10 $0.00 -$0.06 LTM pre-tax ROC 2%
Operating Performance and Financial Position
($ millions, except Fiscal Years Ended LTME FQE FQE
per share data) 12/31/06 12/31/07 12/31/08 12/31/09 3/31/10 12/31/08 3/31/10
Revenue 3,471 3,738 3,837 3,332 3,384 1,828 841
Gross profit 794 891 903 579 600 390 160
Operating income 352 324 278 (60) 33 28 21
Net income 315 270 168 (43) (38) (5) 5
Diluted EPS 1.15 0.98 0.44 (0.28) (0.25) (0.24) 0.04
Shares out (avg) 275 269 256 151 157 256 174
Cash from operations 358 386 291 276 337 148 61
Capex 326 377 258 216 253 142 37
Free cash flow 32 9 33 60 84 6 24
Cash & investments 409 428 1,327 1,308 1,308
Total current assets 1,065 1,057 1,989 2,162 2,162
Intangible assets 607 436 472 375 375
Total assets 6,248 6,119 7,155 7,154 7,154
Short-term debt 26 38 12 0 0
Total current liabilities 697 653 495 480 480
Long-term debt 1,288 1,209 840 838 838
Total liabilities 2,814 2,555 2,139 2,128 2,128
Common equity 3,434 3,564 5,016 5,026 5,026
EBIT/capital employed 9% 8% -2% 2% n/m
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© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 96 of 118
BUSINESS OVERVIEW SELECTED OPERATING DATA
Hyatt owns, leases, manages, or franchises ~124,000 rooms YTD
in 434 hotels globally. Jay Pritzker founded Hyatt in 1957. FYE December 31 2006 2007 2008 2009 3/31/10
∆ revenue 10% 8% 3% -13% 7%
The controlling Pritzker family sold 44 million Class A Revenue ($bn) 3.5 3.7 3.8 3.3 0.8
shares at $25 per share in an IPO in November 2009. % of revenue by segment:
Owned/leased hotels 54% 55% 56% 53% 54%
Mgmt/franchising – N. America 38% 37% 36% 40% 39%
INVESTMENT HIGHLIGHTS Mgmt/franchising – Int’l 5% 6% 5% 5% 5%
• Owner/manager business model. Hyatt owns Corporate 4% 3% 3% 2% 2%
and/or manages ~85% of total Hyatt-branded EBITDA margin by segment:
properties as measured by number of rooms. Owned/leased hotels 23% 25% 24% 17% 18%
Mgmt/franchising – N. America 13% 12% 12% 9% 9%
• Competes mainly in upper upscale segment.* Mgmt/franchising – Int’l 58% 53% 50% 41% 32%
Hyatt Regency and Hyatt brands account for 58% of Corporate -2% -2% -3% -2% -2%
total rooms, with Grand Hyatt representing another Total EBITDA margin 18% 19% 18% 12% 13%
% of revenue by geography:
18%. Other major segments include upscale (Hyatt U.S. 82% 81% 80% 80% n/a
Place: 15% of rooms) and luxury (Park Hyatt: 4%). International 18% 19% 20% 20% n/a
• Owns 96 properties or 22% of total, and ~20% of % of total rooms/units by type:
rooms. Net PP&E is $3.6 billion— fair value may Owned/leased 1 25% 25% 24% 23% 23%
Managed 2 66% 65% 64% 61% 61%
be materially higher. Land was carried at historical Franchised 7% 8% 10% 14% 14%
cost of $562 million as of yearend 2009. Other 3 2% 2% 2% 2% 2%
• Opportunities in franchising/global expansion. Selected items as % of revenue:
Franchising represents only ~15% of revenue, while EBIT 4 12% 13% 11% 4% 5%
Net income 9% 7% 4% -1% 1%
non-U.S. revenue is about 20%. The widely D&A 6% 6% 6% 8% 8%
recognized Hyatt brand is a platform for growth. Capex 9% 10% 7% 6% 4%
• 9+ million Hyatt Gold Passport members. New Owned/leased hotels’ operating metrics:
enrollment in Hyatt’s guest loyalty program ADR $155 $173 $178 $154 $158
Occupancy 67% 68% 70% 66% 66%
increased 12% year-on-year in 2009. Members RevPAR 5 $103 $117 $124 $101 $104
represented 23% of total room nights during 2009. Δ RevPAR n/a 13% 6% -18% 10%
• Pritzker family is active owner with 60% stake. 1
∆ shares out (avg) 19% -2% -5% 18% 36%
Hyatt owns ~90% of owned/leased rooms; all are managed by Hyatt.
Thomas Pritzker (59) has been chairman since 2004. 2
Includes properties owned or leased by unconsolidated hospitality ventures.
• RevPAR grew 10% y-y in 1Q10 at comparable 3
Includes vacation ownership properties and residences, all of which are
owned/leased hotels (up 8% excl. currency), driven managed by Hyatt (some are owned by Hyatt).
4
Excludes gains on sales of real estate, asset impairments and discontinued
by occupancy gains, partly offset by lower price. operations and changes in accounting principles, net of tax. Includes Hyatt's
• Solid balance sheet with $470 million of net cash. share of operating income generated by unconsolidated hospitality ventures.
5
RevPAR is the product of ADR (excludes non-room revenue) and occupancy.
• Shares trade at 1.5x (reported) tangible book.
MAJOR HOLDERS
INVESTMENT RISKS & CONCERNS Shares outstanding: 44 million class A shares (H; one vote
• High capital intensity. Hyatt’s owner/manager per share) and 130 million class B shares (ten votes). The
business model ties up significant capital and Pritzker family has 78% voting power.
exposes it more to the cyclicality of the lodging
Economic stake: Pritzker family 60% | Other insiders <1% |
industry relative to more franchise-focused models.
GS 7% | Madrone 6% | FMR 3% | Abu Dhabi 3% | Baron 2%
• Exposure to premium lodging markets may be a
negative if an economic recovery is not sustained.
RATINGS
COMPARABLE PUBLIC COMPANY ANALYSIS VALUE Intrinsic value materially higher than market value? 
P/ This Next DOWNSIDE PROTECTION Low risk of permanent loss? 
MV EV EV / Tang. FY FY MANAGEMENT Capable and properly incentivized? 
($mn) ($mn) Rev. Book P/E P/E FINANCIAL STRENGTH Solid balance sheet? 
MAR 12,510 15,660 1.4x n/m 34x 26x MOAT Able to sustain high returns on invested capital? 
HOT 9,120 12,480 2.6x n/m 53x 36x EARNINGS MOMENTUM Fundamentals improving? 
IHG 4,770 5,810 3.8x n/m 20x 17x MACRO Poised to benefit from economic and secular trends? 
H 7,040 6,570 1.9x 1.5x 337x 99x *
Based on branded hotel categorization per www.strglobal.com

THE BOTTOM LINE


Hyatt distinguishes itself from other hotel chains through high asset backing, net cash, and an interested and active owner in
the Pritzker family. Moreover, its high exposure to premium segments may position it well to take advantage of an economic
recovery. Based on the power of the Hyatt brand, the company is creating additional shareholder value by focusing on
franchising (franchised rooms are 14% of total rooms in 2009 versus 7% in 2006). Despite a run-up of about 60% since the
IPO, shares appear modestly undervalued based on a return to normalized margins and good long-term growth prospects.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 97 of 118
…additional insight into Hyatt:

OVERVIEW OF HOSPITALITY BRANDS


% of total Rooms/units as of 12/31/09 2008 ADR
rooms/units North North Selected
Brand Segment as of 12/31/09 America International America International competitors
Full Serv ice/ Four Seasons, Ritz-Carlton, Peninsula,
4% 1,122 3,779 $320 $410
Lux ury St. Regis, Mandarin Oriental

Full Serv ice/


W, Mondrian,
Upper <1% 1 238 267 N/A $450
The Standard
Upscale

Full Serv ice/


Mandarin Oriental, Shangri-La,
Upper 18% 8,233 13,328 $230 $270
InterContinental, Fairmont
Upscale

Marriott,
Full Serv ice/
Sheraton,
Upper 58% 53,033 17,528 $165 $180
Hilton, Renaissance,
Upscale
Westin

Select
Serv ice/ 15% 18,433 0 $105 N/A Courty ard by Marriott, Hilton Garden Inn
Upscale

Select
Serv ice/ Residence Inn
3% 4,070 0 $125 N/A
Ex tended by Marriott, Homew ood Suites
Stay

Vacation Hilton Vacation Club, Marriott Vacation


1% 962 0 N/A N/A
Ow nership Club, Starw ood Vacation Ow nership

Branded and unbranded lux ury


Residential 1% 0 1,324 N/A N/A
residential accommodations
Total Hyatt 100% 86,091 36,226
1 As of December 31, 2009, there w ere tw o Andaz properties.

Source: Hyatt 2009 10-K.

U.S. Lodging Industry RevPAR Growth (1988-2008)

Source: Smith Travel Research (per Hyatt IPO prospectus).

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 98 of 118
…additional insight into Hyatt:

Global Lodging Industry — Percentage Change in ADR, Occupancy and RevPAR


(YTD September 2009 vs. YTD September 2008)

Source: Smith Travel Research (per Hyatt IPO prospectus).

SUMMARY VALUATION ANALYSIS

Low High
Ownership of hotel real estate:
Net book value, stated at cost of $5.5 billion net of depreciation, yearend 2009* $3,605 $3,605
Fair value multiple 1.0x 1.5x
Estimated fair value of owned hotel real estate $3,605 $5,408
North American management and franchising of hotels:
2009 adjusted EBITDA $117
Estimated normalized adjusted EBITDA $160
Fair value multiple 6.0x 7.0x
Estimated fair value of North American hotel management and franchising $702 $1,120
International management and franchising of hotels:
2009 adjusted EBITDA $66
Estimated normalized adjusted EBITDA $100
Fair value multiple 8.0x 10.0x
Estimated fair value of international hotel management and franchising $528 $1,000
Value "drag" of corporate overhead expenses:
Estimated normalized adjusted EBITDA of corporate overhead ($80) ($65)
Fair value multiple 7.0x 7.0x
Estimated fair value "drag" of corporate overhead ($560) ($455)
Other assets:
Cash $1,308 $1,308
Debt (838) (838)
Net cash $470 $470
Notes receivable, net 378 378
Additional allowance for notes receivable (100) 0
Long-term investments 222 222
Allowance for long-term investments (75) 0
Hyatt Gold Passport Program 0 0
All other non-cash assets $425 $600
Estimated fair value of other assets $895 $1,070
$5.2 billion $8.1 billion
Total estimated equity value of Hyatt Hotels
$30 per share $47 per share

* Includes land at historical cost of $562 million.


Source: Company data, Manual of Ideas analysis.

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 99 of 118
Snapshot of 98 Superinvestor Holdings
In Alphabetical Order
Recent YTD Market Enter.
Price Price Value Value
Company / Ticker Industry Notable Shareholders ($) ∆ ($mn) ($mn) Website
Abbott Labs / ABT Major Drugs Cap Re, Markel 48.50 -10% 74,863 90,368 www.abbott.com
ADC Telecom / ADCT Comms Equipment Advisory, Baupost 7.75 25% 752 845 www.adc.com
AIG / AIG Property & Casualty Appaloosa, Fairholme 39.72 32% 26,501 235,780 www.aigcorporate.com
Airgas / ARG Chemical Manufacturing Bamco, Third Point 62.09 30% 5,137 6,599 www.airgas.com
Alleghany / Y Conglomerates Centaur, Eagle, Royce 290.60 5% 2,703 2,647 www.alleghany.com
American Public Ed. / APEI Schools Bares, Maverick 44.94 31% 825 750 americanpubliceducation.com
Aon Corp. / AON Insurance (miscellaneous) Breeden, Southeastern 41.61 9% 11,211 12,574 www.aon.com
Aspen Technology / AZPN Software & Programming Third Point 11.60 18% 1,065 1,052 www.aspentec.com
Bally Technologies / BYI Casinos & Gaming Breeden, Eagle, Par 45.39 10% 2,504 2,610 www.ballytech.com
Bank of America / BAC Money Center Banks Appaloosa, Fairholme 16.34 8% 163,938 nm www.bankofamerica.com
Baxter International / BAX Medical Equipment Cap World, Lone Pine 43.53 -26% 25,964 28,044 www.baxter.com
BioFuel Energy / BIOF Chemical Manufacturing Greenlight, Third Point 2.24 -17% 73 318 www.bfenergy.com
Brookfield Asset / BAM Real Estate Operations Bares, Markel 24.94 12% 14,313 39,616 www.brookfield.com
CapitalSource / CSE Regional Banks Baupost, Pabrai, S.A.C. 4.81 21% 1,552 nm www.capitalsource.com
Cardinal Health / CAH Biotechnology & Drugs Davis, Greenlight 33.82 5% 12,245 11,715 www.cardinal.com
CareFusion / CFN Medical Equipment Dodge & Cox, Greenlight 25.84 3% 5,744 5,654 www.carefusion.com
Chesapeake Energy / CHK Oil & Gas Operations Icahn, Southeastern 22.62 -13% 14,724 26,878 www.chk.com
CIT Group / CIT Regional Banks Fairholme, Greenlight 38.35 39% 7,672 nm www.cit.com
Citigroup / C Money Center Banks Appaloosa, Fairholme 3.98 20% 115,340 nm www.citigroup.com
Coca-Cola / KO Beverages (non-alcoholic) BRK, Children's 53.34 -6% 123,002 125,843 thecoca-colacompany.com
Cognizant Tech / CTSH Software & Programming Lone Pine, Winslow 49.89 10% 14,938 13,504 www.cognizant.com
Comcast / CMCSA Broadcasting & Cable BRK, Brave Warrior 17.60 4% 49,661 77,056 www.comcast.com
Corrections Corp. / CXW Business Services Pershing 20.39 -17% 2,319 3,421 correctionscorp.com
Cresud / CRESY Crops Fairfax, Pabrai 12.93 -10% 649 989 www.cresud.com.ar
Dell / DELL Computer Hardware Fairfax, Southeastern 15.15 6% 29,660 22,732 www.dell.com
Diamond Hill Invest. / DHIL Investment Services Arrow, Centaur, Royce 69.74 9% 193 181 www.diamond-hill.com
DineEquity / DIN Restaurants MSD, Southeastern 35.26 45% 632 2,859 www.dineequity.com
DIRECTV / DTV Broadcasting & Cable Baupost, Southeastern 37.34 12% 34,104 39,414 www.directv.com
Dun & Bradstreet / DNB Retail Financial Services Ariel, Breeden, Davis 74.98 -11% 3,778 4,512 www.dnb.com
eBay / EBAY Retail (online) Centaur, Dodge & Cox 22.25 -5% 29,080 24,552 www.ebay.com
EMC / EMC Computer Storage Centaur, Greenlight 18.57 6% 38,173 34,403 www.emc.com
Energizer Holdings / ENR Electronic Instruments Ariel, Atlantic, Weitz 55.89 -9% 3,914 5,932 www.energizer.com
Enzon Pharma / ENZN Biotechnology & Drugs Baupost, Icahn, Iridian 10.93 4% 663 381 www.enzon.com
Fairfax Financial / FRFHF Property & Casualty Centaur, Markel, Pabrai 372.05 -5% 7,942 nm www.fairfax.ca
GameStop / GME Retail (technology) Adage, Centaur 21.85 0% 3,339 2,881 www.gamestop.com
Genzyme / GENZ Biotechnology & Drugs Clearbridge, Icahn, Sands 50.43 3% 13,458 12,775 www.genzyme.com
Hillenbrand / HI Furniture & Fixtures Breeden, Franklin 25.30 34% 1,575 1,503 www.hillenbrandinc.com
Hyatt Hotels / H Hotels & Motels Baron, Bridger, GS 40.47 36% 7,037 6,567 www.hyatt.com
Intelligent Systems / INS Software & Programming Weitz 1.25 33% 11 8 www.intelsys.com
Interactive Intell. / ININ Software & Programming Bares, Essex, Perimeter 19.25 4% 333 262 www.inin.com
International Assets / IAAC Investment Services Bares, Leucadia 16.76 15% 294 262 www.intlassets.com
International Coal / ICO Coal Chou, Fairfax, Pabrai 4.46 16% 909 1,080 www.intlcoal.com
Investors Title / ITIC Property & Casualty Bridgeway, Markel 33.76 9% 77 73 www.invtitle.com
Johnson & Johnson / JNJ Major Drugs BRK, Fairfax, Markel 63.97 -1% 176,434 170,527 www.jnj.com
Kraft Foods / KFT Food Processing BRK, Fairfax, Pershing 30.03 10% 52,357 79,499 kraftfoodscompany.com
Level 3 Comms / LVLT Comms Services Fairfax, Southeastern 1.25 -18% 2,071 7,695 www.level3.com
Liberty Interactive / LINTA Broadcasting & Cable Southeastern, Third Point 13.10 21% 7,825 13,330 www.libertymedia.com
Lions Gate / LGF Motion Pictures Cap Re, Icahn, MHR 6.70 15% 790 1,122 www.lionsgate.com
Lockheed Martin / LMT Aerospace and Defense Brave Warrior, Children's 80.79 7% 29,973 31,738 www.lockheedmartin.com
MasterCard / MA Retail Financial Services Children's, Viking 212.45 -17% 27,791 24,711 www.mastercard.com

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 100 of 118
Recent YTD Market Enter.
Price Price Value Value
Company / Ticker Industry Notable Shareholders ($) ∆ ($mn) ($mn) Website
Merck / MRK Major Drugs Appaloosa, Cap Re 32.88 -10% 102,528 112,061 www.merck.com
Microsoft / MSFT Software & Programming Appaloosa, Greenlight 28.93 -5% 253,538 219,867 www.microsoft.com
Molson Coors / TAP Beverages (alcoholic) Cap Re, Children's 42.70 -5% 7,926 9,006 www.molsoncoors.com
Motorola / MOT Comms Equipment Dodge & Cox, Icahn 6.79 -13% 15,781 11,317 www.motorola.com
Omnicare / OCR Retail (drugs) Argyll, Glenview, Weitz 26.21 8% 3,150 4,883 www.omnicare.com
Oracle / ORCL Software & Programming Cap Re, Children's 23.78 -3% 119,354 117,583 www.oracle.com
OSI Pharma / OSIP Biotechnology & Drugs Orbimed, Third Point 59.80 93% 3,660 3,441 www.osip.com
Overstock.com / OSTK Retail (online) Chou, Fairfax 22.71 67% 523 478 www.overstock.com
Paychex / PAYX Business Services Cap Re, Markel, T Rowe 29.46 -4% 10,648 10,252 www.paychex.com
PetSmart / PETM Retail (specialty) Centaur, Longview, LSV 33.27 25% 4,010 4,273 www.petsmart.com
Pfizer / PFE Major Drugs Appaloosa, Greenlight 16.20 -11% 130,701 152,260 www.pfizer.com
Philip Morris / PM Tobacco Children's, Markel 46.56 -3% 86,223 101,383 philipmorrisinternational.com
Progressive Corp. / PGR Property & Casualty Davis, Maverick, Weitz 20.30 13% 13,610 15,632 www.progressive.com
QUALCOMM / QCOM Comms Equipment Jennison, Lone Pine 37.30 -19% 61,186 50,030 www.qualcomm.com
Redwood Trust / RWT Real Estate Operations Cap Re, Perkins, Weitz 15.01 4% 1,169 4,984 www.redwoodtrust.com
Republic Airways / RJET Airline Greenlight, GS, Kleinheinz 6.08 -18% 208 2,824 republicairways.com
RSC Holdings / RRR Rental & Leasing Fairholme, GS, Jennison 8.49 21% 878 2,997 www.rscrental.com
Ryanair / RYAAY Airline Brave Warrior, Fairfax 24.72 -8% 7,316 7,711 www.ryanair.com
SandRidge Energy / SD Oil & Gas Operations Ares, Fairfax, Hoplite 6.88 -27% 1,450 4,068 sandridgeenergy.com
Sealed Air Corp. / SEE Misc. Fabricated Products Davis, Southeastern 21.14 -3% 3,371 4,326 www.sealedair.com
Solar Capital / SLRC Investment Services Baupost 21.00 na 694 759 www.solarcapltd.com
Take-Two / TTWO Software & Programming Harbinger, Icahn, Legg 11.07 10% 936 929 www.take2games.com
Target / TGT Retail (dep't & discount) Cap Re, Pershing 55.17 14% 43,767 58,381 www.target.com
Telephone & Data / TDS Comms Services Southeastern, Weitz 33.24 -2% 3,509 4,211 www.teldta.com
Tesoro / TSO Oil & Gas Operations Appaloosa, Tradewinds 12.94 -5% 1,828 3,380 www.tsocorp.com
Teva Pharma / TEVA Biotechnology & Drugs Cap Re, Markel 56.80 1% 52,881 55,625 www.tevapharm.com
Texas Industries / TXI Construction Materials Shamrock, Southeastern 37.77 8% 1,049 1,518 www.txi.com
Theravance / THRX Biotechnology & Drugs Baupost, Chesapeake 14.49 11% 1,060 1,008 www.theravance.com
Time Warner / TWX Broadcasting & Cable Cap Re, Children's 30.56 5% 34,830 46,310 www.timewarner.com
TravelCenters / TA Retail (specialty) Bares, Leucadia 3.08 -30% 53 -2 www.tatravelcenters.com
Tree.com / TREE Retail Financial Services Second Curve, Weitz 7.02 -23% 78 70 www.tree.com
tw telecom / TWTC Comms Services Cap Re, Southeastern 18.11 6% 2,747 3,598 www.twtelecom.com
Union Pacific / UNP Railroads Cap Re, Children's 74.18 16% 37,544 45,510 www.up.com
USG / USG Construction Materials Berkshire, Fairfax 20.95 49% 2,084 3,532 www.usg.com
Valero Energy / VLO Oil & Gas Operations Appaloosa, Brandes, GS 20.13 20% 11,383 17,849 www.valero.com
Viacom / VIA.B Broadcasting & Cable Gamco, Children's 33.67 13% 20,450 26,877 www.viacom.com
ViaSat / VSAT Comms Equipment Alydar, Baupost 33.80 6% 1,228 1,572 www.viasat.com
Visa / V Retail Financial Services Children's, Lone Pine 77.26 -12% 64,880 60,285 www.visa.com
Vodafone / VOD Comms Services Centaur, Greenlight 19.74 -15% 10,391 62,809 www.vodafone.com
Walgreen / WAG Retail (drugs) Bares, Markel, Third Point 35.38 -4% 34,617 33,871 www.walgreens.com
Wal-Mart / WMT Retail (dep't & discount) Berkshire, Fairfax, Markel 52.12 -2% 195,920 229,333 walmartstores.com
Weight Watchers / WTW Personal Services Bares, Cap World, Weitz 27.68 -5% 2,134 3,536 weightwatchers.com
WellPoint / WLP Health Insurance Children's, Third Point 53.09 -9% 22,679 28,146 www.wellpoint.com
Wells Fargo / WFC Regional Banks Berkshire, Fairfax, Pabrai 32.04 19% 166,933 nm www.wellsfargo.com
Western Union / WU Misc. Financial Services Bares, Blue Ridge, GS 16.64 -12% 11,185 12,703 www.westernunion.com
Winthrop Realty / FUR Real Estate Operations Bares, Fairholme 12.29 13% 260 423 www.winthropreit.com
Xerox / XRX Office Equipment Greenlight, Third Point 10.02 18% 13,818 23,770 www.xerox.com
Yum! Brands / YUM Restaurants Pershing, Southeastern 40.57 16% 18,964 21,795 www.yum.com

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 101 of 118
By Market Value
Recent ∆ to Market Enter. P/E (Est.)
Price 52-Week Value Value This Next
Company / Ticker ($) Low High ($mn) ($mn) FY FY Industry Notable Shareholders
Microsoft / MSFT 28.93 -33% 9% 253,538 219,867 14x 13x Software & Programming Appaloosa, Greenlight
Wal-Mart / WMT 52.12 -9% 8% 195,920 229,333 13x 12x Retail (dep't & discount) Berkshire, Fairfax, Markel
Johnson & Johnson / JNJ 63.97 -16% 3% 176,434 170,527 13x 12x Major Drugs BRK, Fairfax, Markel
Wells Fargo / WFC 32.04 -33% 7% 166,933 nm 17x 11x Regional Banks Berkshire, Fairfax, Pabrai
Bank of America / BAC 16.34 -35% 22% 163,938 nm 16x 9x Money Center Banks Appaloosa, Fairholme
Pfizer / PFE 16.20 -14% 26% 130,701 152,260 7x 7x Major Drugs Appaloosa, Greenlight
Coca-Cola / KO 53.34 -16% 11% 123,002 125,843 15x 14x Beverages (non-alcoholic) BRK, Children's
Oracle / ORCL 23.78 -23% 12% 119,354 117,583 15x 13x Software & Programming Cap Re, Children's
Citigroup / C 3.98 -36% 36% 115,340 nm 12x 9x Money Center Banks Appaloosa, Fairholme
Merck / MRK 32.88 -26% 26% 102,528 112,061 10x 8x Major Drugs Appaloosa, Cap Re
Philip Morris / PM 46.56 -38% 16% 86,223 101,383 12x 11x Tobacco Children's, Markel
Abbott Labs / ABT 48.50 -12% 17% 74,863 90,368 12x 10x Major Drugs Cap Re, Markel
Visa / V 77.26 -25% 26% 64,880 60,285 20x 16x Retail Financial Services Children's, Lone Pine
QUALCOMM / QCOM 37.30 -6% 34% 61,186 50,030 16x 15x Comms Equipment Jennison, Lone Pine
Teva Pharma / TEVA 56.80 -23% 14% 52,881 55,625 13x 11x Biotechnology & Drugs Cap Re, Markel
Kraft Foods / KFT 30.03 -19% 4% 52,357 79,499 15x 13x Food Processing BRK, Fairfax, Pershing
Comcast / CMCSA 17.60 -26% 17% 49,661 77,056 14x 13x Broadcasting & Cable BRK, Brave Warrior
Target / TGT 55.17 -34% 6% 43,767 58,381 14x 13x Retail (dep't & discount) Cap Re, Pershing
EMC / EMC 18.57 -38% 8% 38,173 34,403 16x 14x Computer Storage Centaur, Greenlight
Union Pacific / UNP 74.18 -41% 6% 37,544 45,510 16x 13x Railroads Cap Re, Children's
Time Warner / TWX 30.56 -31% 11% 34,830 46,310 14x 12x Broadcasting & Cable Cap Re, Children's
Walgreen / WAG 35.38 -21% 15% 34,617 33,871 16x 13x Retail (drugs) Bares, Markel, Third Point
DIRECTV / DTV 37.34 -43% 3% 34,104 39,414 16x 13x Broadcasting & Cable Baupost, Southeastern
Lockheed Martin / LMT 80.79 -17% 8% 29,973 31,738 11x 10x Aerospace and Defense Brave Warrior, Children's
Dell / DELL 15.15 -30% 16% 29,660 22,732 12x 10x Computer Hardware Fairfax, Southeastern
eBay / EBAY 22.25 -29% 28% 29,080 24,552 13x 12x Retail (online) Centaur, Dodge & Cox
MasterCard / MA 212.45 -27% 27% 27,791 24,711 16x 13x Retail Financial Services Children's, Viking
AIG / AIG 39.72 -79% 41% 26,501 nm 12x 9x Property & Casualty Appaloosa, Fairholme
Baxter International / BAX 43.53 -1% 42% 25,964 28,044 11x 10x Medical Equipment Cap World, Lone Pine
WellPoint / WLP 53.09 -17% 32% 22,679 28,146 9x 8x Health Insurance Children's, Third Point
Viacom / VIA.B 33.67 -42% 10% 20,450 26,877 12x 11x Broadcasting & Cable Gamco, Children's
Yum! Brands / YUM 40.57 -21% 8% 18,964 21,795 16x 15x Restaurants Pershing, Southeastern
Motorola / MOT 6.79 -16% 39% 15,781 11,317 17x 13x Comms Equipment Dodge & Cox, Icahn
Cognizant Tech / CTSH 49.89 -52% 9% 14,938 13,504 24x 21x Software & Programming Lone Pine, Winslow
Chesapeake Energy / CHK 22.62 -25% 33% 14,724 26,878 8x 7x Oil & Gas Operations Icahn, Southeastern
Brookfield Asset / BAM 24.94 -38% 6% 14,313 39,616 na na Real Estate Operations Bares, Markel
Xerox / XRX 10.02 -41% 17% 13,818 23,770 11x 9x Office Equipment Greenlight, Third Point
Progressive Corp. / PGR 20.30 -30% 3% 13,610 15,632 14x 13x Property & Casualty Davis, Maverick, Weitz
Genzyme / GENZ 50.43 -7% 26% 13,458 12,775 20x 13x Biotechnology & Drugs Clearbridge, Icahn, Sands
Cardinal Health / CAH 33.82 -38% 8% 12,245 11,715 15x 14x Biotechnology & Drugs Davis, Greenlight
Valero Energy / VLO 20.13 -24% 17% 11,383 17,849 23x 9x Oil & Gas Operations Appaloosa, Brandes, GS
Aon Corp. / AON 41.61 -16% 7% 11,211 12,574 13x 12x Insurance (miscellaneous) Breeden, Southeastern
Western Union / WU 16.64 -9% 24% 11,185 12,703 13x 11x Misc. Financial Services Bares, Blue Ridge, GS
Paychex / PAYX 29.46 -19% 12% 10,648 10,252 22x 21x Business Services Cap Re, Markel, T Rowe
Vodafone / VOD 19.74 -10% 22% 10,391 62,809 8x 8x Comms Services Centaur, Greenlight
Fairfax Financial / FRFHF 372.05 -13% 7% 7,942 nm na na Property & Casualty Centaur, Markel, Pabrai
Molson Coors / TAP 42.70 -10% 20% 7,926 9,006 13x 11x Beverages (alcoholic) Cap Re, Children's
Liberty Interactive / LINTA 13.10 -65% 28% 7,825 13,330 20x 16x Broadcasting & Cable Southeastern, Third Point
CIT Group / CIT 38.35 -35% 12% 7,672 nm 34x 14x Regional Banks Fairholme, Greenlight
Ryanair / RYAAY 24.72 -4% 29% 7,316 7,711 18x 14x Airline Brave Warrior, Fairfax

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 102 of 118
Recent ∆ to Market Enter. P/E (Est.)
Price 52-Week Value Value This Next
Company / Ticker ($) Low High ($mn) ($mn) FY FY Industry Notable Shareholders
Hyatt Hotels / H 40.47 -36% 8% 7,037 6,567 >99x 99x Hotels & Motels Baron, Bridger, GS
CareFusion / CFN 25.84 -33% 16% 5,744 5,654 18x 16x Medical Equipment Dodge & Cox, Greenlight
Airgas / ARG 62.09 -41% 6% 5,137 6,599 21x 18x Chemical Manufacturing Bamco, Third Point
PetSmart / PETM 33.27 -41% 5% 4,010 4,273 18x 16x Retail (specialty) Centaur, Longview, LSV
Energizer Holdings / ENR 55.89 -10% 24% 3,914 5,932 11x 10x Electronic Instruments Ariel, Atlantic, Weitz
Dun & Bradstreet / DNB 74.98 -8% 13% 3,778 4,512 13x 12x Retail Financial Services Ariel, Breeden, Davis
OSI Pharma / OSIP 59.80 -55% 1% 3,660 3,441 41x 29x Biotechnology & Drugs Orbimed, Third Point
Telephone & Data / TDS 33.24 -34% 8% 3,509 4,211 19x 20x Comms Services Southeastern, Weitz
Sealed Air Corp. / SEE 21.14 -19% 11% 3,371 4,326 13x 12x Misc. Fabricated Products Davis, Southeastern
GameStop / GME 21.85 -22% 31% 3,339 2,881 8x 8x Retail (technology) Adage, Centaur
Omnicare / OCR 26.21 -22% 17% 3,150 4,883 10x 9x Retail (drugs) Argyll, Glenview, Weitz
tw telecom / TWTC 18.11 -53% 4% 2,747 3,598 50x 31x Comms Services Cap Re, Southeastern
Alleghany / Y 290.60 -15% 5% 2,703 2,647 17x 17x Conglomerates Centaur, Eagle, Royce
Bally Technologies / BYI 45.39 -46% 5% 2,504 2,610 21x 17x Casinos & Gaming Breeden, Eagle, Par
Corrections Corp. / CXW 20.39 -28% 29% 2,319 3,421 17x 16x Business Services Pershing
Weight Watchers / WTW 27.68 -17% 10% 2,134 3,536 11x 11x Personal Services Bares, Cap World, Weitz
USG / USG 20.95 -58% 22% 2,084 3,532 nm nm Construction Materials Berkshire, Fairfax
Level 3 Comms / LVLT 1.25 -17% 42% 2,071 7,695 nm nm Comms Services Fairfax, Southeastern
Tesoro / TSO 12.94 -18% 40% 1,828 3,380 nm 11x Oil & Gas Operations Appaloosa, Tradewinds
Hillenbrand / HI 25.30 -37% 2% 1,575 1,503 14x 12x Furniture & Fixtures Breeden, Franklin
CapitalSource / CSE 4.81 -38% 31% 1,552 nm nm 13x Regional Banks Baupost, Pabrai, S.A.C.
SandRidge Energy / SD 6.88 -11% 118% 1,450 4,068 11x 14x Oil & Gas Operations Ares, Fairfax, Hoplite
ViaSat / VSAT 33.80 -40% 9% 1,228 1,572 22x 18x Comms Equipment Alydar, Baupost
Redwood Trust / RWT 15.01 -14% 30% 1,169 4,984 10x 8x Real Estate Operations Cap Re, Perkins, Weitz
Aspen Technology / AZPN 11.60 -40% 4% 1,065 1,052 nm nm Software & Programming Third Point
Theravance / THRX 14.49 -34% 28% 1,060 1,008 nm nm Biotechnology & Drugs Baupost, Chesapeake
Texas Industries / TXI 37.77 -28% 25% 1,049 1,518 nm nm Construction Materials Shamrock, Southeastern
Take-Two / TTWO 11.07 -37% 14% 936 929 nm 8x Software & Programming Harbinger, Icahn, Legg
International Coal / ICO 4.46 -50% 28% 909 1,080 19x 8x Coal Chou, Fairfax, Pabrai
RSC Holdings / RRR 8.49 -38% 14% 878 2,997 nm 45x Rental & Leasing Fairholme, GS, Jennison
American Public Ed. / APEI 44.94 -33% 5% 825 750 26x 19x Schools Bares, Maverick
Lions Gate / LGF 6.70 -32% 9% 790 1,122 na na Motion Pictures Cap Re, Icahn, MHR
ADC Telecom / ADCT 7.75 -33% 26% 752 845 16x 11x Comms Equipment Advisory, Baupost
Solar Capital / SLRC 21.00 -18% 15% 694 759 9x 8x Investment Services Baupost
Enzon Pharma / ENZN 10.93 -42% 5% 663 381 >99x nm Biotechnology & Drugs Baupost, Icahn, Iridian
Cresud / CRESY 12.93 -38% 24% 649 989 22x 28x Crops Fairfax, Pabrai
DineEquity / DIN 35.26 -43% 37% 632 2,859 12x 11x Restaurants MSD, Southeastern
Overstock.com / OSTK 22.71 -56% 17% 523 478 30x 22x Retail (online) Chou, Fairfax
Interactive Intell. / ININ 19.25 -45% 25% 333 262 17x 17x Software & Programming Bares, Essex, Perimeter
International Assets / IAAC 16.76 -30% 19% 294 262 93x 22x Investment Services Bares, Leucadia
Winthrop Realty / FUR 12.29 -31% 16% 260 423 16x 15x Real Estate Operations Bares, Fairholme
Republic Airways / RJET 6.08 -33% 75% 208 2,824 17x 4x Airline Greenlight, GS, Kleinheinz
Diamond Hill Invest. / DHIL 69.74 -46% 18% 193 181 17x 16x Investment Services Arrow, Centaur, Royce
Tree.com / TREE 7.02 -11% 86% 78 70 nm nm Retail Financial Services Second Curve, Weitz
Investors Title / ITIC 33.76 -29% 12% 77 73 29x 23x Property & Casualty Bridgeway, Markel
BioFuel Energy / BIOF 2.24 -76% 96% 73 318 na na Chemical Manufacturing Greenlight, Third Point
TravelCenters / TA 3.08 -42% 184% 53 -2 nm na Retail (specialty) Bares, Leucadia
Intelligent Systems / INS 1.25 -56% 91% 11 8 na na Software & Programming Weitz

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 103 of 118
By Sector
Recent Market Enter. P/E (Est.)
Price Value Value This Next
Sector Industry Company / Ticker ($) ($mn) ($mn) FY FY Notable Shareholders
Basic Materials Chemical Manufacturing Airgas / ARG 62.09 5,137 6,599 21x 18x Bamco, Third Point
Basic Materials Chemical Manufacturing BioFuel Energy / BIOF 2.24 73 318 na na Greenlight, Third Point
Basic Materials Misc. Fabricated Products Sealed Air Corp. / SEE 21.14 3,371 4,326 13x 12x Davis, Southeastern
Capital Goods Aerospace and Defense Lockheed Martin / LMT 80.79 29,973 31,738 11x 10x Brave Warrior, Children's
Capital Goods Construction Materials Texas Industries / TXI 37.77 1,049 1,518 nm nm Shamrock, Southeastern
Capital Goods Construction Materials USG / USG 20.95 2,084 3,532 nm nm Berkshire, Fairfax
Conglomerates Conglomerates Alleghany / Y 290.60 2,703 2,647 17x 17x Centaur, Eagle, Royce
Consumer Beverages (alcoholic) Molson Coors / TAP 42.70 7,926 9,006 13x 11x Cap Re, Children's
Consumer Beverages (non-alcoholic) Coca-Cola / KO 53.34 123,002 125,843 15x 14x BRK, Children's
Consumer Crops Cresud / CRESY 12.93 649 989 22x 28x Fairfax, Pabrai
Consumer Food Processing Kraft Foods / KFT 30.03 52,357 79,499 15x 13x BRK, Fairfax, Pershing
Consumer Furniture & Fixtures Hillenbrand / HI 25.30 1,575 1,503 14x 12x Breeden, Franklin
Consumer Tobacco Philip Morris / PM 46.56 86,223 101,383 12x 11x Children's, Markel
Energy Coal International Coal / ICO 4.46 909 1,080 19x 8x Chou, Fairfax, Pabrai
Energy Oil & Gas Operations Chesapeake Energy / CHK 22.62 14,724 26,878 8x 7x Icahn, Southeastern
Energy Oil & Gas Operations SandRidge Energy / SD 6.88 1,450 4,068 11x 14x Ares, Fairfax, Hoplite
Energy Oil & Gas Operations Tesoro / TSO 12.94 1,828 3,380 nm 11x Appaloosa, Tradewinds
Energy Oil & Gas Operations Valero Energy / VLO 20.13 11,383 17,849 23x 9x Appaloosa, Brandes, GS
Financial Health Insurance WellPoint / WLP 53.09 22,679 28,146 9x 8x Children's, Third Point
Financial Insurance (miscellaneous) Aon Corp. / AON 41.61 11,211 12,574 13x 12x Breeden, Southeastern
Financial Investment Services Diamond Hill Invest. / DHIL 69.74 193 181 17x 16x Arrow, Centaur, Royce
Financial Investment Services International Assets / IAAC 16.76 294 262 93x 22x Bares, Leucadia
Financial Investment Services Solar Capital / SLRC 21.00 694 759 9x 8x Baupost
Financial Misc. Financial Services Western Union / WU 16.64 11,185 12,703 13x 11x Bares, Blue Ridge, GS
Financial Money Center Banks Bank of America / BAC 16.34 163,938 nm 16x 9x Appaloosa, Fairholme
Financial Money Center Banks Citigroup / C 3.98 115,340 nm 12x 9x Appaloosa, Fairholme
Financial Property & Casualty AIG / AIG 39.72 26,501 nm 12x 9x Appaloosa, Fairholme
Financial Property & Casualty Fairfax Financial / FRFHF 372.05 7,942 nm na na Centaur, Markel, Pabrai
Financial Property & Casualty Investors Title / ITIC 33.76 77 73 29x 23x Bridgeway, Markel
Financial Property & Casualty Progressive Corp. / PGR 20.30 13,610 15,632 14x 13x Davis, Maverick, Weitz
Financial Regional Banks CapitalSource / CSE 4.81 1,552 nm nm 13x Baupost, Pabrai, S.A.C.
Financial Regional Banks CIT Group / CIT 38.35 7,672 nm 34x 14x Fairholme, Greenlight
Financial Regional Banks Wells Fargo / WFC 32.04 166,933 nm 17x 11x Berkshire, Fairfax, Pabrai
Financial Retail Financial Services Dun & Bradstreet / DNB 74.98 3,778 4,512 13x 12x Ariel, Breeden, Davis
Financial Retail Financial Services MasterCard / MA 212.45 27,791 24,711 16x 13x Children's, Viking
Financial Retail Financial Services Tree.com / TREE 7.02 78 70 nm nm Second Curve, Weitz
Financial Retail Financial Services Visa / V 77.26 64,880 60,285 20x 16x Children's, Lone Pine
Health Care Biotechnology & Drugs Cardinal Health / CAH 33.82 12,245 11,715 15x 14x Davis, Greenlight
Health Care Biotechnology & Drugs Enzon Pharma / ENZN 10.93 663 381 >99x nm Baupost, Icahn, Iridian
Health Care Biotechnology & Drugs Genzyme / GENZ 50.43 13,458 12,775 20x 13x Clearbridge, Icahn, Sands
Health Care Biotechnology & Drugs OSI Pharma / OSIP 59.80 3,660 3,441 41x 29x Orbimed, Third Point
Health Care Biotechnology & Drugs Teva Pharma / TEVA 56.80 52,881 55,625 13x 11x Cap Re, Markel
Health Care Biotechnology & Drugs Theravance / THRX 14.49 1,060 1,008 nm nm Baupost, Chesapeake
Health Care Major Drugs Abbott Labs / ABT 48.50 74,863 90,368 12x 10x Cap Re, Markel
Health Care Major Drugs Johnson & Johnson / JNJ 63.97 176,434 170,527 13x 12x BRK, Fairfax, Markel
Health Care Major Drugs Merck / MRK 32.88 102,528 112,061 10x 8x Appaloosa, Cap Re
Health Care Major Drugs Pfizer / PFE 16.20 130,701 152,260 7x 7x Appaloosa, Greenlight
Health Care Medical Equipment Baxter International / BAX 43.53 25,964 28,044 11x 10x Cap World, Lone Pine
Health Care Medical Equipment CareFusion / CFN 25.84 5,744 5,654 18x 16x Dodge & Cox, Greenlight

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 104 of 118
Recent Market Enter. P/E (Est.)
Price Value Value This Next
Sector Industry Company / Ticker ($) ($mn) ($mn) FY FY Notable Shareholders
Services Broadcasting & Cable Comcast / CMCSA 17.60 49,661 77,056 14x 13x BRK, Brave Warrior
Services Broadcasting & Cable DIRECTV / DTV 37.34 34,104 39,414 16x 13x Baupost, Southeastern
Services Broadcasting & Cable Liberty Interactive / LINTA 13.10 7,825 13,330 20x 16x Southeastern, Third Point
Services Broadcasting & Cable Time Warner / TWX 30.56 34,830 46,310 14x 12x Cap Re, Children's
Services Broadcasting & Cable Viacom / VIA.B 33.67 20,450 26,877 12x 11x Gamco, Children's
Services Business Services Corrections Corp. / CXW 20.39 2,319 3,421 17x 16x Pershing
Services Business Services Paychex / PAYX 29.46 10,648 10,252 22x 21x Cap Re, Markel, T Rowe
Services Casinos & Gaming Bally Technologies / BYI 45.39 2,504 2,610 21x 17x Breeden, Eagle, Par
Services Comms Services Level 3 Comms / LVLT 1.25 2,071 7,695 nm nm Fairfax, Southeastern
Services Comms Services Telephone & Data / TDS 33.24 3,509 4,211 19x 20x Southeastern, Weitz
Services Comms Services tw telecom / TWTC 18.11 2,747 3,598 50x 31x Cap Re, Southeastern
Services Comms Services Vodafone / VOD 19.74 10,391 62,809 8x 8x Centaur, Greenlight
Services Hotels & Motels Hyatt Hotels / H 40.47 7,037 6,567 >99x 99x Baron, Bridger, GS
Services Motion Pictures Lions Gate / LGF 6.70 790 1,122 na na Cap Re, Icahn, MHR
Services Personal Services Weight Watchers / WTW 27.68 2,134 3,536 11x 11x Bares, Cap World, Weitz
Services Real Estate Operations Brookfield Asset / BAM 24.94 14,313 39,616 na na Bares, Markel
Services Real Estate Operations Redwood Trust / RWT 15.01 1,169 4,984 10x 8x Cap Re, Perkins, Weitz
Services Real Estate Operations Winthrop Realty / FUR 12.29 260 423 16x 15x Bares, Fairholme
Services Rental & Leasing RSC Holdings / RRR 8.49 878 2,997 nm 45x Fairholme, GS, Jennison
Services Restaurants DineEquity / DIN 35.26 632 2,859 12x 11x MSD, Southeastern
Services Restaurants Yum! Brands / YUM 40.57 18,964 21,795 16x 15x Pershing, Southeastern
Services Retail (dep't & discount) Target / TGT 55.17 43,767 58,381 14x 13x Cap Re, Pershing
Services Retail (dep't & discount) Wal-Mart / WMT 52.12 195,920 229,333 13x 12x Berkshire, Fairfax, Markel
Services Retail (drugs) Omnicare / OCR 26.21 3,150 4,883 10x 9x Argyll, Glenview, Weitz
Services Retail (drugs) Walgreen / WAG 35.38 34,617 33,871 16x 13x Bares, Markel, Third Point
Services Retail (online) eBay / EBAY 22.25 29,080 24,552 13x 12x Centaur, Dodge & Cox
Services Retail (online) Overstock.com / OSTK 22.71 523 478 30x 22x Chou, Fairfax
Services Retail (specialty) PetSmart / PETM 33.27 4,010 4,273 18x 16x Centaur, Longview, LSV
Services Retail (specialty) TravelCenters / TA 3.08 53 -2 nm na Bares, Leucadia
Services Retail (technology) GameStop / GME 21.85 3,339 2,881 8x 8x Adage, Centaur
Services Schools American Public Ed. / APEI 44.94 825 750 26x 19x Bares, Maverick
Technology Comms Equipment ADC Telecom / ADCT 7.75 752 845 16x 11x Advisory, Baupost
Technology Comms Equipment Motorola / MOT 6.79 15,781 11,317 17x 13x Dodge & Cox, Icahn
Technology Comms Equipment QUALCOMM / QCOM 37.30 61,186 50,030 16x 15x Jennison, Lone Pine
Technology Comms Equipment ViaSat / VSAT 33.80 1,228 1,572 22x 18x Alydar, Baupost
Technology Computer Hardware Dell / DELL 15.15 29,660 22,732 12x 10x Fairfax, Southeastern
Technology Computer Storage EMC / EMC 18.57 38,173 34,403 16x 14x Centaur, Greenlight
Technology Electronic Instruments Energizer Holdings / ENR 55.89 3,914 5,932 11x 10x Ariel, Atlantic, Weitz
Technology Office Equipment Xerox / XRX 10.02 13,818 23,770 11x 9x Greenlight, Third Point
Technology Software & Programming Aspen Technology / AZPN 11.60 1,065 1,052 nm nm Third Point
Technology Software & Programming Cognizant Tech / CTSH 49.89 14,938 13,504 24x 21x Lone Pine, Winslow
Technology Software & Programming Intelligent Systems / INS 1.25 11 8 na na Weitz
Technology Software & Programming Interactive Intell. / ININ 19.25 333 262 17x 17x Bares, Essex, Perimeter
Technology Software & Programming Microsoft / MSFT 28.93 253,538 219,867 14x 13x Appaloosa, Greenlight
Technology Software & Programming Oracle / ORCL 23.78 119,354 117,583 15x 13x Cap Re, Children's
Technology Software & Programming Take-Two / TTWO 11.07 936 929 nm 8x Harbinger, Icahn, Legg
Transportation Airline Republic Airways / RJET 6.08 208 2,824 17x 4x Greenlight, GS, Kleinheinz
Transportation Airline Ryanair / RYAAY 24.72 7,316 7,711 18x 14x Brave Warrior, Fairfax
Transportation Railroads Union Pacific / UNP 74.18 37,544 45,510 16x 13x Cap Re, Children's

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 105 of 118
Stock Price Performance (sorted by price decline since December 31, 2007)

Recent Market Enter. Price Performance P/E (Est.) Price/


Price Value Value Since Since Since This Next Tang.
Company / Ticker ($) ($mn) ($mn) 12/31/09 12/31/07 12/30/05 FY FY Book Notable Shareholders
AIG / AIG 39.72 26,501 nm 32% -97% -97% 12x 9x 58.5x Appaloosa, Fairholme
Citigroup / C 3.98 115,340 nm 20% -86% -92% 12x 9x 1.0x Appaloosa, Fairholme
SandRidge Energy / SD 6.88 1,450 4,068 -27% -81% na 11x 14x nm Ares, Fairfax, Hoplite
TravelCenters / TA 3.08 53 -2 -30% -75% na nm na 0.2x Bares, Leucadia
Tesoro / TSO 12.94 1,828 3,380 -5% -73% -58% nm 11x 0.7x Appaloosa, Tradewinds
CapitalSource / CSE 4.81 1,552 nm 21% -73% -79% nm 13x 0.9x Baupost, Pabrai, S.A.C.
Valero Energy / VLO 20.13 11,383 17,849 20% -71% -61% 23x 9x 0.8x Appaloosa, Brandes, GS
Republic Airways / RJET 6.08 208 2,824 -18% -69% -60% 17x 4x 0.6x Greenlight, GS, Kleinheinz
BioFuel Energy / BIOF 2.24 73 318 -17% -68% na na na 1.0x Greenlight, Third Point
GameStop / GME 21.85 3,339 2,881 0% -65% 37% 8x 8x 6.5x Adage, Centaur
Intelligent Systems / INS 1.25 11 8 33% -63% -42% na na 2.3x Weitz
Bank of America / BAC 16.34 163,938 nm 8% -60% -65% 16x 9x 1.7x Appaloosa, Fairholme
Level 3 Comms / LVLT 1.25 2,071 7,695 -18% -59% -56% nm nm nm Fairfax, Southeastern
Motorola / MOT 6.79 15,781 11,317 -13% -58% -70% 17x 13x 2.4x Dodge & Cox, Icahn
Redwood Trust / RWT 15.01 1,169 4,984 4% -56% -64% 10x 8x 1.2x Cap Re, Perkins, Weitz
Winthrop Realty / FUR 12.29 260 423 13% -54% -57% 16x 15x 1.3x Bares, Fairholme
ADC Telecom / ADCT 7.75 752 845 25% -50% -65% 16x 11x 2.9x Advisory, Baupost
Energizer Holdings / ENR 55.89 3,914 5,932 -9% -50% 12% 11x 10x nm Ariel, Atlantic, Weitz
Vodafone / VOD 19.74 10,391 62,809 -15% -47% -20% 8x 8x 0.7x Centaur, Greenlight
Telephone & Data / TDS 33.24 3,509 4,211 -2% -47% -8% 19x 20x 2.2x Southeastern, Weitz
Texas Industries / TXI 37.77 1,049 1,518 8% -46% -24% nm nm 1.4x Shamrock, Southeastern
Merck / MRK 32.88 102,528 112,061 -10% -43% 3% 10x 8x >99x Appaloosa, Cap Re
Chesapeake Energy / CHK 22.62 14,724 26,878 -13% -42% -29% 8x 7x 1.3x Icahn, Southeastern
USG / USG 20.95 2,084 3,532 49% -41% -68% nm nm 2.8x Berkshire, Fairfax
Take-Two / TTWO 11.07 936 929 10% -40% -37% nm 8x 4.8x Harbinger, Icahn, Legg
WellPoint / WLP 53.09 22,679 28,146 -9% -39% -33% 9x 8x 7.4x Children's, Third Point
Weight Watchers / WTW 27.68 2,134 3,536 -5% -39% -44% 11x 11x nm Bares, Cap World, Weitz
Dell / DELL 15.15 29,660 22,732 6% -38% -49% 12x 10x nm Fairfax, Southeastern
Xerox / XRX 10.02 13,818 23,770 18% -38% -32% 11x 9x nm Greenlight, Third Point
International Assets / IAAC 16.76 294 262 15% -38% 84% 93x 22x 1.3x Bares, Leucadia
Ryanair / RYAAY 24.72 7,316 7,711 -8% -37% -12% 18x 14x 2.1x Brave Warrior, Fairfax
eBay / EBAY 22.25 29,080 24,552 -5% -33% -49% 13x 12x 4.0x Centaur, Dodge & Cox
RSC Holdings / RRR 8.49 878 2,997 21% -32% na nm 45x nm Fairholme, GS, Jennison
Genzyme / GENZ 50.43 13,458 12,775 3% -32% -29% 20x 13x 3.3x Clearbridge, Icahn, Sands
Cresud / CRESY 12.93 649 989 -10% -32% 25% 22x 28x nm Fairfax, Pabrai
Western Union / WU 16.64 11,185 12,703 -12% -31% na 13x 11x nm Bares, Blue Ridge, GS
Liberty Interactive / LINTA 13.10 7,825 13,330 21% -31% na 20x 16x nm Southeastern, Third Point
Corrections Corp. / CXW 20.39 2,319 3,421 -17% -31% 36% 17x 16x 1.6x Pershing
Lions Gate / LGF 6.70 790 1,122 15% -29% -13% na na nm Cap Re, Icahn, MHR
Pfizer / PFE 16.20 130,701 152,260 -11% -29% -31% 7x 7x nm Appaloosa, Greenlight
Aspen Technology / AZPN 11.60 1,065 1,052 18% -28% 48% nm nm 6.2x Third Point
Brookfield Asset / BAM 24.94 14,313 39,616 12% -28% 15% na na 0.9x Bares, Markel
Interactive Intell. / ININ 19.25 333 262 4% -27% 277% 17x 17x 4.6x Bares, Essex, Perimeter
Theravance / THRX 14.49 1,060 1,008 11% -26% -36% nm nm nm Baupost, Chesapeake
Baxter International / BAX 43.53 25,964 28,044 -26% -25% 16% 11x 10x 6.7x Cap World, Lone Pine
Alleghany / Y 290.60 2,703 2,647 5% -25% 11% 17x 17x 1.0x Centaur, Eagle, Royce
Viacom / VIA.B 33.67 20,450 26,877 13% -23% -18% 12x 11x nm Gamco, Children's
Lockheed Martin / LMT 80.79 29,973 31,738 7% -23% 27% 11x 10x nm Brave Warrior, Children's
Microsoft / MSFT 28.93 253,538 219,867 -5% -19% 11% 14x 13x 7.9x Appaloosa, Greenlight

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 106 of 118
Recent Market Enter. Price Performance P/E (Est.) Price/
Price Value Value Since Since Since This Next Tang.
Company / Ticker ($) ($mn) ($mn) 12/31/09 12/31/07 12/30/05 FY FY Book Notable Shareholders
Paychex / PAYX 29.46 10,648 10,252 -4% -19% -23% 22x 21x 11.7x Cap Re, Markel, T Rowe
Cardinal Health / CAH 33.82 12,245 11,715 5% -18% -31% 15x 14x 4.0x Davis, Greenlight
Molson Coors / TAP 42.70 7,926 9,006 -5% -17% 27% 13x 11x 7.1x Cap Re, Children's
International Coal / ICO 4.46 909 1,080 16% -17% -53% 19x 8x 1.2x Chou, Fairfax, Pabrai
Dun & Bradstreet / DNB 74.98 3,778 4,512 -11% -15% 12% 13x 12x nm Ariel, Breeden, Davis
Abbott Labs / ABT 48.50 74,863 90,368 -10% -14% 23% 12x 10x nm Cap Re, Markel
Coca-Cola / KO 53.34 123,002 125,843 -6% -13% 32% 15x 14x 9.8x BRK, Children's
Aon Corp. / AON 41.61 11,211 12,574 9% -13% 16% 13x 12x nm Breeden, Southeastern
Investors Title / ITIC 33.76 77 73 9% -12% -20% 29x 23x 0.8x Bridgeway, Markel
tw telecom / TWTC 18.11 2,747 3,598 6% -11% 84% 50x 31x 9.4x Cap Re, Southeastern
Time Warner / TWX 30.56 34,830 46,310 5% -10% -15% 14x 12x nm Cap Re, Children's
Bally Technologies / BYI 45.39 2,504 2,610 10% -9% 249% 21x 17x 7.7x Breeden, Eagle, Par
Sealed Air Corp. / SEE 21.14 3,371 4,326 -3% -9% -25% 13x 12x 14.4x Davis, Southeastern
Kraft Foods / KFT 30.03 52,357 79,499 10% -8% 7% 15x 13x nm BRK, Fairfax, Pershing
Walgreen / WAG 35.38 34,617 33,871 -4% -7% -20% 16x 13x 2.6x Bares, Markel, Third Point
QUALCOMM / QCOM 37.30 61,186 50,030 -19% -5% -13% 16x 15x 3.8x Jennison, Lone Pine
Diamond Hill Invest. / DHIL 69.74 193 181 9% -5% 123% 17x 16x 8.4x Arrow, Centaur, Royce
Johnson & Johnson / JNJ 63.97 176,434 170,527 -1% -4% 6% 13x 12x 8.3x BRK, Fairfax, Markel
Comcast / CMCSA 17.60 49,661 77,056 4% -4% 2% 14x 13x nm BRK, Brave Warrior
DineEquity / DIN 35.26 632 2,859 45% -4% -25% 12x 11x nm MSD, Southeastern
ViaSat / VSAT 33.80 1,228 1,572 6% -2% 26% 22x 18x 2.7x Alydar, Baupost
MasterCard / MA 212.45 27,791 24,711 -17% -1% na 16x 13x 8.9x Children's, Viking
EMC / EMC 18.57 38,173 34,403 6% 0% 36% 16x 14x 7.1x Centaur, Greenlight
Oracle / ORCL 23.78 119,354 117,583 -3% 5% 95% 15x 13x nm Cap Re, Children's
Progressive Corp. / PGR 20.30 13,610 15,632 13% 6% -30% 14x 13x 2.2x Davis, Maverick, Weitz
Yum! Brands / YUM 40.57 18,964 21,795 16% 6% 73% 16x 15x nm Pershing, Southeastern
Wells Fargo / WFC 32.04 166,933 nm 19% 6% 2% 17x 11x 3.1x Berkshire, Fairfax, Pabrai
American Public Ed. / APEI 44.94 825 750 31% 8% na 26x 19x 10.1x Bares, Maverick
Wal-Mart / WMT 52.12 195,920 229,333 -2% 10% 11% 13x 12x 3.6x Berkshire, Fairfax, Markel
Target / TGT 55.17 43,767 58,381 14% 10% 0% 14x 13x 2.9x Cap Re, Pershing
Enzon Pharma / ENZN 10.93 663 381 4% 15% 48% >99x nm 1.8x Baupost, Icahn, Iridian
Omnicare / OCR 26.21 3,150 4,883 8% 15% -54% 10x 9x nm Argyll, Glenview, Weitz
Union Pacific / UNP 74.18 37,544 45,510 16% 18% 84% 16x 13x 2.2x Cap Re, Children's
Airgas / ARG 62.09 5,137 6,599 30% 19% 89% 21x 18x 10.8x Bamco, Third Point
Teva Pharma / TEVA 56.80 52,881 55,625 1% 22% 32% 13x 11x 16.4x Cap Re, Markel
OSI Pharma / OSIP 59.80 3,660 3,441 93% 23% 113% 41x 29x 5.1x Orbimed, Third Point
PetSmart / PETM 33.27 4,010 4,273 25% 41% 30% 18x 16x 3.5x Centaur, Longview, LSV
Overstock.com / OSTK 22.71 523 478 67% 46% -19% 30x 22x 40.2x Chou, Fairfax
Cognizant Tech / CTSH 49.89 14,938 13,504 10% 47% 98% 24x 21x 5.7x Lone Pine, Winslow
DIRECTV / DTV 37.34 34,104 39,414 12% 62% 164% 16x 13x nm Baupost, Southeastern
Tree.com / TREE 7.02 78 70 -23% na na nm nm 1.5x Second Curve, Weitz
Visa / V 77.26 64,880 60,285 -12% na na 20x 16x 22.4x Children's, Lone Pine
Fairfax Financial / FRFHF 372.05 7,942 nm -5% na na na na 1.1x Centaur, Markel, Pabrai
Philip Morris / PM 46.56 86,223 101,383 -3% na na 12x 11x nm Children's, Markel
CareFusion / CFN 25.84 5,744 5,654 3% na na 18x 16x 6.0x Dodge & Cox, Greenlight
Hillenbrand / HI 25.30 1,575 1,503 34% na na 14x 12x 4.7x Breeden, Franklin
Hyatt Hotels / H 40.47 7,037 6,567 36% na na >99x 99x 1.5x Baron, Bridger, GS
CIT Group / CIT 38.35 7,672 nm 39% na na 34x 14x 0.9x Fairholme, Greenlight
Solar Capital / SLRC 21.00 694 759 na na na 9x 8x 0.9x Baupost

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 107 of 118
Free Cash Flow (sorted by LTM free cash flow yield)
LTM Recent Market Enter. Price Performance P/E (Est.) Price/
FCF Price Value Value Since Since Since This Next Tang.
Company / Ticker Yield ($) ($mn) ($mn) 12/31/09 12/31/07 12/30/05 FY FY Book Notable Shareholders
AIG / AIG 63% 39.72 26,501 nm 32% -97% -97% 12x 9x 58.5x Appaloosa, Fairholme
Bank of America / BAC 59% 16.34 163,938 nm 8% -60% -65% 16x 9x 1.7x Appaloosa, Fairholme
Republic Airways / RJET 49% 6.08 208 2,824 -18% -69% -60% 17x 4x 0.6x Greenlight, GS, Kleinheinz
International Assets / IAAC 34% 16.76 294 262 15% -38% 84% 93x 22x 1.3x Bares, Leucadia
RSC Holdings / RRR 21% 8.49 878 2,997 21% -32% na nm 45x nm Fairholme, GS, Jennison
Redwood Trust / RWT 20% 15.01 1,169 4,984 4% -56% -64% 10x 8x 1.2x Cap Re, Perkins, Weitz
CapitalSource / CSE 19% 4.81 1,552 nm 21% -73% -79% nm 13x 0.9x Baupost, Pabrai, S.A.C.
DineEquity / DIN 18% 35.26 632 2,859 45% -4% -25% 12x 11x nm MSD, Southeastern
Solar Capital / SLRC 18% 21.00 694 759 na na na 9x 8x 0.9x Baupost
Xerox / XRX 17% 10.02 13,818 23,770 18% -38% -32% 11x 9x nm Greenlight, Third Point
Cardinal Health / CAH 17% 33.82 12,245 11,715 5% -18% -31% 15x 14x 4.0x Davis, Greenlight
Sealed Air Corp. / SEE 15% 21.14 3,371 4,326 -3% -9% -25% 13x 12x 14.4x Davis, Southeastern
GameStop / GME 14% 21.85 3,339 2,881 0% -65% 37% 8x 8x 6.5x Adage, Centaur
Omnicare / OCR 14% 26.21 3,150 4,883 8% 15% -54% 10x 9x nm Argyll, Glenview, Weitz
Energizer Holdings / ENR 13% 55.89 3,914 5,932 -9% -50% 12% 11x 10x nm Ariel, Atlantic, Weitz
CareFusion / CFN 13% 25.84 5,744 5,654 3% na na 18x 16x 6.0x Dodge & Cox, Greenlight
Wells Fargo / WFC 13% 32.04 166,933 nm 19% 6% 2% 17x 11x 3.1x Berkshire, Fairfax, Pabrai
Telephone & Data / TDS 12% 33.24 3,509 4,211 -2% -47% -8% 19x 20x 2.2x Southeastern, Weitz
Tree.com / TREE 12% 7.02 78 70 -23% na na nm nm 1.5x Second Curve, Weitz
Dell / DELL 12% 15.15 29,660 22,732 6% -38% -49% 12x 10x nm Fairfax, Southeastern
Motorola / MOT 12% 6.79 15,781 11,317 -13% -58% -70% 17x 13x 2.4x Dodge & Cox, Icahn
Progressive Corp. / PGR 11% 20.30 13,610 15,632 13% 6% -30% 14x 13x 2.2x Davis, Maverick, Weitz
PetSmart / PETM 11% 33.27 4,010 4,273 25% 41% 30% 18x 16x 3.5x Centaur, Longview, LSV
Liberty Interactive / LINTA 11% 13.10 7,825 13,330 21% -31% na 20x 16x nm Southeastern, Third Point
Comcast / CMCSA 11% 17.60 49,661 77,056 4% -4% 2% 14x 13x nm BRK, Brave Warrior
Investors Title / ITIC 11% 33.76 77 73 9% -12% -20% 29x 23x 0.8x Bridgeway, Markel
Molson Coors / TAP 10% 42.70 7,926 9,006 -5% -17% 27% 13x 11x 7.1x Cap Re, Children's
Time Warner / TWX 10% 30.56 34,830 46,310 5% -10% -15% 14x 12x nm Cap Re, Children's
Target / TGT 9% 55.17 43,767 58,381 14% 10% 0% 14x 13x 2.9x Cap Re, Pershing
Hillenbrand / HI 9% 25.30 1,575 1,503 34% na na 14x 12x 4.7x Breeden, Franklin
Weight Watchers / WTW 9% 27.68 2,134 3,536 -5% -39% -44% 11x 11x nm Bares, Cap World, Weitz
Abbott Labs / ABT 9% 48.50 74,863 90,368 -10% -14% 23% 12x 10x nm Cap Re, Markel
Lockheed Martin / LMT 9% 80.79 29,973 31,738 7% -23% 27% 11x 10x nm Brave Warrior, Children's
Philip Morris / PM 9% 46.56 86,223 101,383 -3% na na 12x 11x nm Children's, Markel
Cresud / CRESY 9% 12.93 649 989 -10% -32% 25% 22x 28x nm Fairfax, Pabrai
Diamond Hill Invest. / DHIL 9% 69.74 193 181 9% -5% 123% 17x 16x 8.4x Arrow, Centaur, Royce
DIRECTV / DTV 9% 37.34 34,104 39,414 12% 62% 164% 16x 13x nm Baupost, Southeastern
Johnson & Johnson / JNJ 9% 63.97 176,434 170,527 -1% -4% 6% 13x 12x 8.3x BRK, Fairfax, Markel
ADC Telecom / ADCT 9% 7.75 752 845 25% -50% -65% 16x 11x 2.9x Advisory, Baupost
Dun & Bradstreet / DNB 8% 74.98 3,778 4,512 -11% -15% 12% 13x 12x nm Ariel, Breeden, Davis
Walgreen / WAG 8% 35.38 34,617 33,871 -4% -7% -20% 16x 13x 2.6x Bares, Markel, Third Point
EMC / EMC 8% 18.57 38,173 34,403 6% 0% 36% 16x 14x 7.1x Centaur, Greenlight
Microsoft / MSFT 8% 28.93 253,538 219,867 -5% -19% 11% 14x 13x 7.9x Appaloosa, Greenlight
Western Union / WU 7% 16.64 11,185 12,703 -12% -31% na 13x 11x nm Bares, Blue Ridge, GS
Baxter International / BAX 7% 43.53 25,964 28,044 -26% -25% 16% 11x 10x 6.7x Cap World, Lone Pine
Wal-Mart / WMT 7% 52.12 195,920 229,333 -2% 10% 11% 13x 12x 3.6x Berkshire, Fairfax, Markel
eBay / EBAY 7% 22.25 29,080 24,552 -5% -33% -49% 13x 12x 4.0x Centaur, Dodge & Cox
Airgas / ARG 7% 62.09 5,137 6,599 30% 19% 89% 21x 18x 10.8x Bamco, Third Point
Oracle / ORCL 7% 23.78 119,354 117,583 -3% 5% 95% 15x 13x nm Cap Re, Children's
Overstock.com / OSTK 7% 22.71 523 478 67% 46% -19% 30x 22x 40.2x Chou, Fairfax

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 108 of 118
LTM Recent Market Enter. Price Performance P/E (Est.) Price/
FCF Price Value Value Since Since Since This Next Tang.
Company / Ticker Yield ($) ($mn) ($mn) 12/31/09 12/31/07 12/30/05 FY FY Book Notable Shareholders
Corrections Corp. / CXW 7% 20.39 2,319 3,421 -17% -31% 36% 17x 16x 1.6x Pershing
Enzon Pharma / ENZN 7% 10.93 663 381 4% 15% 48% >99x nm 1.8x Baupost, Icahn, Iridian
QUALCOMM / QCOM 6% 37.30 61,186 50,030 -19% -5% -13% 16x 15x 3.8x Jennison, Lone Pine
Viacom / VIA.B 6% 33.67 20,450 26,877 13% -23% -18% 12x 11x nm Gamco, Children's
Kraft Foods / KFT 6% 30.03 52,357 79,499 10% -8% 7% 15x 13x nm BRK, Fairfax, Pershing
Coca-Cola / KO 5% 53.34 123,002 125,843 -6% -13% 32% 15x 14x 9.8x BRK, Children's
Paychex / PAYX 5% 29.46 10,648 10,252 -4% -19% -23% 22x 21x 11.7x Cap Re, Markel, T Rowe
Teva Pharma / TEVA 5% 56.80 52,881 55,625 1% 22% 32% 13x 11x 16.4x Cap Re, Markel
tw telecom / TWTC 5% 18.11 2,747 3,598 6% -11% 84% 50x 31x 9.4x Cap Re, Southeastern
WellPoint / WLP 5% 53.09 22,679 28,146 -9% -39% -33% 9x 8x 7.4x Children's, Third Point
Vodafone / VOD 5% 19.74 10,391 62,809 -15% -47% -20% 8x 8x 0.7x Centaur, Greenlight
International Coal / ICO 4% 4.46 909 1,080 16% -17% -53% 19x 8x 1.2x Chou, Fairfax, Pabrai
Winthrop Realty / FUR 4% 12.29 260 423 13% -54% -57% 16x 15x 1.3x Bares, Fairholme
Yum! Brands / YUM 4% 40.57 18,964 21,795 16% 6% 73% 16x 15x nm Pershing, Southeastern
Cognizant Tech / CTSH 3% 49.89 14,938 13,504 10% 47% 98% 24x 21x 5.7x Lone Pine, Winslow
MasterCard / MA 3% 212.45 27,791 24,711 -17% -1% na 16x 13x 8.9x Children's, Viking
Interactive Intell. / ININ 3% 19.25 333 262 4% -27% 277% 17x 17x 4.6x Bares, Essex, Perimeter
American Public Ed. / APEI 3% 44.94 825 750 31% 8% na 26x 19x 10.1x Bares, Maverick
Genzyme / GENZ 3% 50.43 13,458 12,775 3% -32% -29% 20x 13x 3.3x Clearbridge, Icahn, Sands
Aspen Technology / AZPN 3% 11.60 1,065 1,052 18% -28% 48% nm nm 6.2x Third Point
Merck / MRK 2% 32.88 102,528 112,061 -10% -43% 3% 10x 8x >99x Appaloosa, Cap Re
Union Pacific / UNP 2% 74.18 37,544 45,510 16% 18% 84% 16x 13x 2.2x Cap Re, Children's
OSI Pharma / OSIP 2% 59.80 3,660 3,441 93% 23% 113% 41x 29x 5.1x Orbimed, Third Point
Level 3 Comms / LVLT 2% 1.25 2,071 7,695 -18% -59% -56% nm nm nm Fairfax, Southeastern
Texas Industries / TXI 2% 37.77 1,049 1,518 8% -46% -24% nm nm 1.4x Shamrock, Southeastern
USG / USG 2% 20.95 2,084 3,532 49% -41% -68% nm nm 2.8x Berkshire, Fairfax
Aon Corp. / AON 1% 41.61 11,211 12,574 9% -13% 16% 13x 12x nm Breeden, Southeastern
Hyatt Hotels / H 1% 40.47 7,037 6,567 36% na na >99x 99x 1.5x Baron, Bridger, GS
Visa / V 1% 77.26 64,880 60,285 -12% na na 20x 16x 22.4x Children's, Lone Pine
Valero Energy / VLO 1% 20.13 11,383 17,849 20% -71% -61% 23x 9x 0.8x Appaloosa, Brandes, GS
Pfizer / PFE 0% 16.20 130,701 152,260 -11% -29% -31% 7x 7x nm Appaloosa, Greenlight
Brookfield Asset / BAM 0% 24.94 14,313 39,616 12% -28% 15% na na 0.9x Bares, Markel
Alleghany / Y 0% 290.60 2,703 2,647 5% -25% 11% 17x 17x 1.0x Centaur, Eagle, Royce
Bally Technologies / BYI 0% 45.39 2,504 2,610 10% -9% 249% 21x 17x 7.7x Breeden, Eagle, Par
Chesapeake Energy / CHK -2% 22.62 14,724 26,878 -13% -42% -29% 8x 7x 1.3x Icahn, Southeastern
Ryanair / RYAAY -2% 24.72 7,316 7,711 -8% -37% -12% 18x 14x 2.1x Brave Warrior, Fairfax
ViaSat / VSAT -3% 33.80 1,228 1,572 6% -2% 26% 22x 18x 2.7x Alydar, Baupost
Theravance / THRX -5% 14.49 1,060 1,008 11% -26% -36% nm nm nm Baupost, Chesapeake
Tesoro / TSO -6% 12.94 1,828 3,380 -5% -73% -58% nm 11x 0.7x Appaloosa, Tradewinds
CIT Group / CIT -8% 38.35 7,672 nm 39% na na 34x 14x 0.9x Fairholme, Greenlight
Fairfax Financial / FRFHF -10% 372.05 7,942 nm -5% na na na na 1.1x Centaur, Markel, Pabrai
Intelligent Systems / INS -10% 1.25 11 8 33% -63% -42% na na 2.3x Weitz
Citigroup / C -11% 3.98 115,340 nm 20% -86% -92% 12x 9x 1.0x Appaloosa, Fairholme
SandRidge Energy / SD -12% 6.88 1,450 4,068 -27% -81% na 11x 14x nm Ares, Fairfax, Hoplite
TravelCenters / TA -14% 3.08 53 -2 -30% -75% na nm na 0.2x Bares, Leucadia
Take-Two / TTWO -17% 11.07 936 929 10% -40% -37% nm 8x 4.8x Harbinger, Icahn, Legg
Lions Gate / LGF -18% 6.70 790 1,122 15% -29% -13% na na nm Cap Re, Icahn, MHR
BioFuel Energy / BIOF -33% 2.24 73 318 -17% -68% na na na 1.0x Greenlight, Third Point

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 109 of 118
P/E Multiples (sorted initially by P/E based on estimated EPS for next fiscal year)

Recent Market Enter. P/E P/E (Est.) FY LTM LTM Price/ LTM
Price Value Value Last This Next In End EBIT / EBIT / Tang. FCF Insider
Company / Ticker ($) ($mn) ($mn) FY FY FY 2 Yrs Date EV Capital Book Yield Own.
Republic Airways / RJET 6.08 208 2,824 5x 17x 4x na 12/31/10 7% 0-25% 0.6x 49% 0%
Pfizer / PFE 16.20 130,701 152,260 13x 7x 7x 7x 12/31/10 7% 0-25% nm 0% 0%
Chesapeake Energy / CHK 22.62 14,724 26,878 nm 8x 7x 6x 12/31/10 5% 0-25% 1.3x -2% 0%
GameStop / GME 21.85 3,339 2,881 10x 8x 8x 8x 1/31/11 22% >99% 6.5x 14% 6%
Vodafone / VOD 19.74 10,391 62,809 2x 8x 8x 8x 3/31/10 7% 25-50% 0.7x 5% 0%
Take-Two / TTWO 11.07 936 929 nm nm 8x 11x 10/31/10 nm nm 4.8x -17% 3%
WellPoint / WLP 53.09 22,679 28,146 5x 9x 8x 7x 12/31/10 29% >99% 7.4x 5% 0%
International Coal / ICO 4.46 909 1,080 32x 19x 8x 3x 12/31/10 6% 0-25% 1.2x 4% 2%
Redwood Trust / RWT 15.01 1,169 4,984 27x 10x 8x na 12/31/10 0% >99% 1.2x 20% 1%
Solar Capital / SLRC 21.00 694 759 20x 9x 8x 7x 12/31/10 10% >99% 0.9x 18% 0%
Merck / MRK 32.88 102,528 112,061 6x 10x 8x 8x 12/31/10 11% 50-99% >99x 2% 0%
Bank of America / BAC 16.34 163,938 nm nm 16x 9x 6x 12/31/10 1% 0-25% 1.7x 59% 0%
Omnicare / OCR 26.21 3,150 4,883 13x 10x 9x 8x 12/31/10 10% 25-50% nm 14% 3%
Citigroup / C 3.98 115,340 nm nm 12x 9x 7x 12/31/10 nm 0-25% 1.0x -11% 0%
AIG / AIG 39.72 26,501 nm nm 12x 9x 5x 12/31/10 nm nm 58.5x 63% 85%
Valero Energy / VLO 20.13 11,383 17,849 nm 23x 9x 7x 12/31/10 nm nm 0.8x 1% 0%
Xerox / XRX 10.02 13,818 23,770 18x 11x 9x 8x 12/31/10 3% 0-25% nm 17% 4%
Energizer Holdings / ENR 55.89 3,914 5,932 12x 11x 10x 9x 9/30/10 11% 25-50% nm 13% 7%
Baxter International / BAX 43.53 25,964 28,044 12x 11x 10x 9x 12/31/10 8% 25-50% 6.7x 7% 0%
Lockheed Martin / LMT 80.79 29,973 31,738 10x 11x 10x 9x 12/31/10 14% >99% nm 9% 1%
Abbott Labs / ABT 48.50 74,863 90,368 13x 12x 10x 10x 12/31/10 7% 25-50% nm 9% 0%
Dell / DELL 15.15 29,660 22,732 21x 12x 10x 10x 1/31/11 10% >99% nm 12% 12%
DineEquity / DIN 35.26 632 2,859 64x 12x 11x na 12/31/10 7% 0-25% nm 18% 5%
Tesoro / TSO 12.94 1,828 3,380 nm nm 11x 6x 12/31/10 nm nm 0.7x -6% 1%
Weight Watchers / WTW 27.68 2,134 3,536 12x 11x 11x 10x 12/31/10 10% >99% nm 9% 56%
Viacom / VIA.B 33.67 20,450 26,877 13x 12x 11x 10x 9/30/10 11% >99% nm 6% 7%
Teva Pharma / TEVA 56.80 52,881 55,625 25x 13x 11x 10x 12/31/10 5% 25-50% 16.4x 5% 4%
ADC Telecom / ADCT 7.75 752 845 nm 16x 11x 10x 9/30/10 nm nm 2.9x 9% 1%
Philip Morris / PM 46.56 86,223 101,383 14x 12x 11x 10x 12/31/10 10% >99% nm 9% 0%
Wells Fargo / WFC 32.04 166,933 nm 18x 17x 11x 9x 12/31/10 8% 25-50% 3.1x 13% 0%
Western Union / WU 16.64 11,185 12,703 14x 13x 11x 10x 12/31/10 10% >99% nm 7% 0%
Molson Coors / TAP 42.70 7,926 9,006 11x 13x 11x 11x 12/31/10 3% 0-25% 7.1x 10% 26%
Aon Corp. / AON 41.61 11,211 12,574 19x 13x 12x 11x 12/31/10 7% 50-99% nm 1% 7%
Sealed Air Corp. / SEE 21.14 3,371 4,326 16x 13x 12x 10x 12/31/10 11% 25-50% 14.4x 15% 2%
Wal-Mart / WMT 52.12 195,920 229,333 14x 13x 12x 11x 1/31/11 10% 25-50% 3.6x 7% 46%
eBay / EBAY 22.25 29,080 24,552 12x 13x 12x 11x 12/31/10 6% 50-99% 4.0x 7% 12%
Dun & Bradstreet / DNB 74.98 3,778 4,512 12x 13x 12x 10x 12/31/10 10% >99% nm 8% 0%
Johnson & Johnson / JNJ 63.97 176,434 170,527 15x 13x 12x 11x 12/31/10 10% 50-99% 8.3x 9% 0%
Time Warner / TWX 30.56 34,830 46,310 18x 14x 12x 11x 12/31/10 11% >99% nm 10% 0%
Hillenbrand / HI 25.30 1,575 1,503 15x 14x 12x na 9/30/10 10% 50-99% 4.7x 9% 3%
Oracle / ORCL 23.78 119,354 117,583 22x 15x 13x 11x 5/31/10 7% >99% nm 7% 23%
Comcast / CMCSA 17.60 49,661 77,056 14x 14x 13x 11x 12/31/10 10% 25-50% nm 11% 1%
Motorola / MOT 6.79 15,781 11,317 nm 17x 13x 9x 12/31/10 3% 0-25% 2.4x 12% 0%
Microsoft / MSFT 28.93 253,538 219,867 18x 14x 13x 11x 6/30/10 10% 50-99% 7.9x 8% 12%
Target / TGT 55.17 43,767 58,381 17x 14x 13x 11x 1/31/11 8% 0-25% 2.9x 9% 0%
DIRECTV / DTV 37.34 34,104 39,414 39x 16x 13x 10x 12/31/10 7% 50-99% nm 9% 0%
Kraft Foods / KFT 30.03 52,357 79,499 15x 15x 13x 12x 12/31/10 7% 25-50% nm 6% 0%
MasterCard / MA 212.45 27,791 24,711 19x 16x 13x 11x 12/31/10 10% >99% 8.9x 3% 26%
Progressive Corp. / PGR 20.30 13,610 15,632 13x 14x 13x 12x 12/31/10 10% >99% 2.2x 11% 8%

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 110 of 118
Recent Market Enter. P/E P/E (Est.) FY LTM LTM Price/ LTM
Price Value Value Last This Next In End EBIT / EBIT / Tang. FCF Insider
Company / Ticker ($) ($mn) ($mn) FY FY FY 2 Yrs Date EV Capital Book Yield Own.
Walgreen / WAG 35.38 34,617 33,871 18x 16x 13x 11x 8/31/10 10% 0-25% 2.6x 8% 0%
Union Pacific / UNP 74.18 37,544 45,510 20x 16x 13x 11x 12/31/10 8% 0-25% 2.2x 2% 0%
CapitalSource / CSE 4.81 1,552 nm nm nm 13x 9x 12/31/10 nm nm 0.9x 19% 2%
Genzyme / GENZ 50.43 13,458 12,775 33x 20x 13x 11x 12/31/10 0% 0-25% 3.3x 3% 0%
EMC / EMC 18.57 38,173 34,403 35x 16x 14x 12x 12/31/10 5% >99% 7.1x 8% 0%
Ryanair / RYAAY 24.72 7,316 7,711 nm 18x 14x 9x 3/31/10 5% 0-25% 2.1x -2% 10%
Cardinal Health / CAH 33.82 12,245 11,715 11x 15x 14x 12x 6/30/10 12% 25-50% 4.0x 17% 0%
CIT Group / CIT 38.35 7,672 nm nm 34x 14x 11x 12/31/10 1% 0-25% 0.9x -8% 0%
SandRidge Energy / SD 6.88 1,450 4,068 nm 11x 14x 12x 12/31/10 nm nm nm -12% 20%
Coca-Cola / KO 53.34 123,002 125,843 18x 15x 14x 13x 12/31/10 7% 50-99% 9.8x 5% 5%
Yum! Brands / YUM 40.57 18,964 21,795 18x 16x 15x 13x 12/31/10 7% 25-50% nm 4% 0%
QUALCOMM / QCOM 37.30 61,186 50,030 39x 16x 15x 13x 9/30/10 6% 25-50% 3.8x 6% 2%
Winthrop Realty / FUR 12.29 260 423 nm 16x 15x 15x 12/31/10 2% 0-25% 1.3x 4% 16%
CareFusion / CFN 25.84 5,744 5,654 19x 18x 16x 14x 6/30/10 7% 25-50% 6.0x 13% 17%
Liberty Interactive / LINTA 13.10 7,825 13,330 30x 20x 16x 12x 12/31/10 8% 50-99% nm 11% 6%
Corrections Corp. / CXW 20.39 2,319 3,421 15x 17x 16x 13x 12/31/10 9% 0-25% 1.6x 7% 3%
Diamond Hill Invest. / DHIL 69.74 193 181 16x 17x 16x 13x 12/31/10 7% >99% 8.4x 9% 12%
PetSmart / PETM 33.27 4,010 4,273 21x 18x 16x 14x 1/31/11 9% 0-25% 3.5x 11% 0%
Visa / V 77.26 64,880 60,285 28x 20x 16x 14x 9/30/10 7% >99% 22.4x 1% 41%
Alleghany / Y 290.60 2,703 2,647 10x 17x 17x na 12/31/10 16% >99% 1.0x 0% 33%
Interactive Intell. / ININ 19.25 333 262 41x 17x 17x na 12/31/10 6% >99% 4.6x 3% 33%
Bally Technologies / BYI 45.39 2,504 2,610 20x 21x 17x 15x 6/30/10 7% 25-50% 7.7x 0% 1%
Airgas / ARG 62.09 5,137 6,599 27x 21x 18x 15x 3/31/11 6% 0-25% 10.8x 7% 10%
ViaSat / VSAT 33.80 1,228 1,572 28x 22x 18x 19x 3/31/10 3% 0-25% 2.7x -3% 10%
American Public Ed. / APEI 44.94 825 750 35x 26x 19x 15x 12/31/10 5% >99% 10.1x 3% 3%
Telephone & Data / TDS 33.24 3,509 4,211 19x 19x 20x 19x 12/31/10 9% 0-25% 2.2x 12% 12%
Paychex / PAYX 29.46 10,648 10,252 20x 22x 21x 19x 5/31/10 7% >99% 11.7x 5% 11%
Cognizant Tech / CTSH 49.89 14,938 13,504 28x 24x 21x 18x 12/31/10 5% 50-99% 5.7x 3% 0%
International Assets / IAAC 16.76 294 262 16x 93x 22x 15x 9/30/10 2% >99% 1.3x 34% 19%
Overstock.com / OSTK 22.71 523 478 69x 30x 22x 22x 12/31/10 4% >99% 40.2x 7% 35%
Investors Title / ITIC 33.76 77 73 16x 29x 23x na 12/31/10 6% >99% 0.8x 11% 39%
Cresud / CRESY 12.93 649 989 23x 22x 28x 22x 6/30/10 13% 0-25% nm 9% 40%
OSI Pharma / OSIP 59.80 3,660 3,441 46x 41x 29x 26x 12/31/10 4% 25-50% 5.1x 2% 1%
tw telecom / TWTC 18.11 2,747 3,598 >99x 50x 31x 24x 12/31/10 3% 0-25% 9.4x 5% 5%
RSC Holdings / RRR 8.49 878 2,997 nm nm 45x 12x 12/31/10 2% 0-25% nm 21% 11%
Hyatt Hotels / H 40.47 7,037 6,567 nm >99x 99x 48x 12/31/10 1% 0-25% 1.5x 1% 75%
Tree.com / TREE 7.02 78 70 nm nm nm 5x 12/31/10 nm nm 1.5x 12% 40%
USG / USG 20.95 2,084 3,532 nm nm nm 40x 12/31/10 nm nm 2.8x 2% 15%
Texas Industries / TXI 37.77 1,049 1,518 nm nm nm 47x 5/31/10 nm nm 1.4x 2% 17%
Aspen Technology / AZPN 11.60 1,065 1,052 20x nm nm na 6/30/10 nm nm 6.2x 3% 1%
BioFuel Energy / BIOF 2.24 73 318 nm na na na 12/31/10 nm nm 1.0x -33% 29%
Brookfield Asset / BAM 24.94 14,313 39,616 46x na na na 12/31/10 10% 0-25% 0.9x 0% 13%
Enzon Pharma / ENZN 10.93 663 381 >99x >99x nm nm 12/31/10 5% 0-25% 1.8x 7% 2%
Fairfax Financial / FRFHF 372.05 7,942 nm 8x na na na 12/31/10 13% >99% 1.1x -10% 9%
Intelligent Systems / INS 1.25 11 8 nm na na na 12/31/10 nm nm 2.3x -10% 36%
Level 3 Comms / LVLT 1.25 2,071 7,695 nm nm nm nm 12/31/10 nm nm nm 2% 4%
Lions Gate / LGF 6.70 790 1,122 nm na na na 12/31/10 3% >99% nm -18% 3%
Theravance / THRX 14.49 1,060 1,008 nm nm nm nm 12/31/10 nm nm nm -5% 17%
TravelCenters / TA 3.08 53 -2 nm nm na na 12/31/10 >99% nm 0.2x -14% 16%

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 111 of 118
Percentile Rank within Industry (sorted by LTM EBIT margin rank)
Percentile Rank within Industry Price/
Rev. Growth EPS Growth LTM EBIT Tang.
Company / Ticker Industry 5-Yr LTM LTM Est. Margin Book Notable Shareholders
Solar Capital / SLRC Investment Services na 18 93 na 95 .9x Baupost
Visa / V Retail Financial Services 80 75 92 85 93 22.4x Children's, Lone Pine
Redwood Trust / RWT Real Estate Operations 6 8 89 12 90 1.2x Cap Re, Perkins, Weitz
Wells Fargo / WFC Regional Banks 78 88 91 32 90 3.1x Berkshire, Fairfax, Pabrai
MasterCard / MA Retail Financial Services 67 69 na 78 90 8.9x Children's, Viking
Merck / MRK Major Drugs 36 89 77 15 89 >99x Appaloosa, Cap Re
Microsoft / MSFT Software & Programming 56 54 55 27 88 7.9x Appaloosa, Greenlight
Oracle / ORCL Software & Programming 73 64 44 60 87 nm Cap Re, Children's
Alleghany / Y Conglomerates 39 88 72 na 87 1.0x Centaur, Eagle, Royce
Paychex / PAYX Business Services 57 50 39 45 87 11.7x Cap Re, Markel, T Rowe
Johnson & Johnson / JNJ Major Drugs 43 59 52 20 84 8.3x BRK, Fairfax, Markel
Coca-Cola / KO Beverages (non-alcoholic) 49 57 60 26 84 9.8x BRK, Children's
QUALCOMM / QCOM Comms Equipment 71 54 81 85 84 3.8x Jennison, Lone Pine
Diamond Hill Invest. / DHIL Investment Services 96 45 96 na 84 8.4x Arrow, Centaur, Royce
American Public Ed. / APEI Schools 91 88 68 96 84 10.1x Bares, Maverick
Cresud / CRESY Crops 97 98 100 na 84 nm Fairfax, Pabrai
Weight Watchers / WTW Personal Services 46 47 40 63 83 nm Bares, Cap World, Weitz
Dun & Bradstreet / DNB Retail Financial Services 36 54 36 55 83 nm Ariel, Breeden, Davis
Union Pacific / UNP Railroads 34 33 41 41 83 2.2x Cap Re, Children's
Western Union / WU Misc. Financial Services 49 55 41 46 82 nm Bares, Blue Ridge, GS
Hillenbrand / HI Furniture & Fixtures na 54 53 na 82 4.7x Breeden, Franklin
Viacom / VIA.B Broadcasting & Cable 59 47 68 39 81 nm Gamco, Children's
Abbott Labs / ABT Major Drugs 55 72 43 33 80 nm Cap Re, Markel
Cognizant Tech / CTSH Software & Programming 90 81 61 75 79 5.7x Lone Pine, Winslow
Baxter International / BAX Medical Equipment 43 65 37 39 78 6.7x Cap World, Lone Pine
Teva Pharma / TEVA Biotechnology & Drugs 80 83 91 53 78 16.4x Cap Re, Markel
Liberty Interactive / LINTA Broadcasting & Cable 51 71 91 12 78 nm Southeastern, Third Point
Corrections Corp. / CXW Business Services 52 67 44 50 78 1.6x Pershing
Citigroup / C Money Center Banks 37 24 87 3 77 1.0x Appaloosa, Fairholme
eBay / EBAY Retail (online) 78 70 67 49 77 4.0x Centaur, Dodge & Cox
Philip Morris / PM Tobacco 55 65 52 30 76 nm Children's, Markel
OSI Pharma / OSIP Biotechnology & Drugs 98 79 21 33 76 5.1x Orbimed, Third Point
Chesapeake Energy / CHK Oil & Gas Operations 79 17 89 20 74 1.3x Icahn, Southeastern
Yum! Brands / YUM Restaurants 37 57 57 51 74 nm Pershing, Southeastern
WellPoint / WLP Health Insurance 82 71 91 18 72 7.4x Children's, Third Point
Kraft Foods / KFT Food Processing 40 66 66 23 72 nm BRK, Fairfax, Pershing
DIRECTV / DTV Broadcasting & Cable 66 76 54 80 71 nm Baupost, Southeastern
CIT Group / CIT Regional Banks 17 19 89 51 71 .9x Fairholme, Greenlight
Energizer Holdings / ENR Electronic Instruments 49 63 36 33 70 nm Ariel, Atlantic, Weitz
Interactive Intell. / ININ Software & Programming 75 77 88 86 70 4.6x Bares, Essex, Perimeter
Sealed Air Corp. / SEE Misc. Fabricated Products 31 45 65 20 69 14.4x Davis, Southeastern
Progressive Corp. / PGR Property & Casualty 27 79 na 22 69 2.2x Davis, Maverick, Weitz
EMC / EMC Computer Storage 60 63 52 71 69 7.1x Centaur, Greenlight
CareFusion / CFN Medical Equipment na 49 23 40 69 6.0x Dodge & Cox, Greenlight
Republic Airways / RJET Airline 77 87 19 na 68 .6x Greenlight, GS, Kleinheinz
Lockheed Martin / LMT Aerospace and Defense 41 69 43 29 67 nm Brave Warrior, Children's
Molson Coors / TAP Beverages (alcoholic) 11 24 83 26 67 7.1x Cap Re, Children's
Airgas / ARG Chemical Manufacturing 58 38 35 45 67 10.8x Bamco, Third Point
Enzon Pharma / ENZN Biotechnology & Drugs 30 82 na na 67 1.8x Baupost, Icahn, Iridian
tw telecom / TWTC Comms Services 65 67 na 96 65 9.4x Cap Re, Southeastern

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 112 of 118
Percentile Rank within Industry Price/
Rev. Growth EPS Growth LTM EBIT Tang.
Company / Ticker Industry 5-Yr LTM LTM Est. Margin Book Notable Shareholders
Omnicare / OCR Retail (drugs) 52 57 72 51 64 nm Argyll, Glenview, Weitz
Ryanair / RYAAY Airline 79 47 98 99 63 2.1x Brave Warrior, Fairfax
Telephone & Data / TDS Comms Services 45 55 85 1 63 2.2x Southeastern, Weitz
GameStop / GME Retail (technology) 89 65 42 39 62 6.5x Adage, Centaur
PetSmart / PETM Retail (specialty) 56 69 52 58 62 3.5x Centaur, Longview, LSV
Wal-Mart / WMT Retail (dep't & discount) 49 62 54 41 60 3.6x Berkshire, Fairfax, Markel
Target / TGT Retail (dep't & discount) 47 61 56 55 60 2.9x Cap Re, Pershing
Investors Title / ITIC Property & Casualty 19 52 na 10 60 .8x Bridgeway, Markel
International Coal / ICO Coal 93 53 95 na 59 1.2x Chou, Fairfax, Pabrai
Walgreen / WAG Retail (drugs) 59 71 51 61 58 2.6x Bares, Markel, Third Point
Bally Technologies / BYI Casinos & Gaming 64 37 43 79 58 7.7x Breeden, Eagle, Par
RSC Holdings / RRR Rental & Leasing 22 16 11 46 58 nm Fairholme, GS, Jennison
Bank of America / BAC Money Center Banks 63 37 16 11 57 1.7x Appaloosa, Fairholme
Pfizer / PFE Major Drugs 25 81 36 7 56 nm Appaloosa, Greenlight
Dell / DELL Computer Hardware 28 34 30 41 56 nm Fairfax, Southeastern
Xerox / XRX Office Equipment 22 54 37 1 54 nm Greenlight, Third Point
Lions Gate / LGF Motion Pictures 85 70 78 na 52 nm Cap Re, Icahn, MHR
Overstock.com / OSTK Retail (online) 62 80 96 90 51 40.2x Chou, Fairfax
Motorola / MOT Comms Equipment 13 23 88 23 50 2.4x Dodge & Cox, Icahn
Genzyme / GENZ Biotechnology & Drugs 69 50 22 79 50 3.3x Clearbridge, Icahn, Sands
Comcast / CMCSA Broadcasting & Cable 65 66 59 46 49 nm BRK, Brave Warrior
International Assets / IAAC Investment Services 100 91 33 na 47 1.3x Bares, Leucadia
ADC Telecom / ADCT Comms Equipment 45 25 82 46 46 2.9x Advisory, Baupost
BioFuel Energy / BIOF Chemical Manufacturing na 96 78 na 46 1.0x Greenlight, Third Point
Level 3 Comms / LVLT Comms Services 70 36 21 5 46 nm Fairfax, Southeastern
Tesoro / TSO Oil & Gas Operations 47 18 10 na 45 .7x Appaloosa, Tradewinds
Fairfax Financial / FRFHF Property & Casualty 32 32 25 na 45 1.1x Centaur, Markel, Pabrai
TravelCenters / TA Retail (specialty) 62 21 na na 45 .2x Bares, Leucadia
Time Warner / TWX Broadcasting & Cable 10 67 91 53 44 nm Cap Re, Children's
USG / USG Construction Materials 12 18 21 na 39 2.8x Berkshire, Fairfax
Aon Corp. / AON Insurance (miscellaneous) 18 64 23 30 38 nm Breeden, Southeastern
Intelligent Systems / INS Software & Programming 8 22 35 na 37 2.3x Weitz
Take-Two / TTWO Software & Programming 17 10 9 40 36 4.8x Harbinger, Icahn, Legg
ViaSat / VSAT Comms Equipment 73 68 41 53 33 2.7x Alydar, Baupost
Texas Industries / TXI Construction Materials 29 15 8 24 32 1.4x Shamrock, Southeastern
Hyatt Hotels / H Hotels & Motels na 37 16 26 30 1.5x Baron, Bridger, GS
Aspen Technology / AZPN Software & Programming 21 13 13 33 30 6.2x Third Point
Cardinal Health / CAH Biotechnology & Drugs 55 68 29 32 29 4.0x Davis, Greenlight
Brookfield Asset / BAM Real Estate Operations 81 73 89 na 26 .9x Bares, Markel
Valero Energy / VLO Oil & Gas Operations 39 21 na 8 22 .8x Appaloosa, Brandes, GS
DineEquity / DIN Restaurants 85 41 91 41 21 nm MSD, Southeastern
Vodafone / VOD Comms Services 38 15 96 9 20 .7x Centaur, Greenlight
AIG / AIG Property & Casualty 23 100 83 17 18 58.5x Appaloosa, Fairholme
SandRidge Energy / SD Oil & Gas Operations 83 10 78 33 18 nm Ares, Fairfax, Hoplite
Tree.com / TREE Retail Financial Services na 49 83 na 18 1.5x Second Curve, Weitz
CapitalSource / CSE Regional Banks 79 18 12 56 16 .9x Baupost, Pabrai, S.A.C.
Winthrop Realty / FUR Real Estate Operations 93 68 66 na 12 1.3x Bares, Fairholme
Theravance / THRX Biotechnology & Drugs 79 21 43 na 3 nm Baupost, Chesapeake

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 113 of 118
Insider Buying and Ownership (sorted by number of buys minus sells in past six months)
Last Six Months Market Enter. P/E P/E (Est.) Price/
Insider Insider Insider Value Value Last This Next In Tang. Div.
Company / Ticker Buys Sales Own. ($mn) ($mn) FY FY FY 2 Yrs Book Yield Notable Shareholders
Lions Gate / LGF 8 - 3% 790 1,122 nm na na na nm - Cap Re, Icahn, MHR
Solar Capital / SLRC 6 - 0% 694 759 20x 9x 8x 7x .9x 11.4% Baupost
SandRidge Energy / SD 10 4 20% 1,450 4,068 nm 11x 14x 12x nm - Ares, Fairfax, Hoplite
BioFuel Energy / BIOF 5 - 29% 73 318 nm na na na 1.0x - Greenlight, Third Point
Texas Industries / TXI 5 - 17% 1,049 1,518 nm nm nm 47x 1.4x .8% Shamrock, Southeastern
Take-Two / TTWO 13 9 3% 936 929 nm nm 8x 11x 4.8x - Harbinger, Icahn, Legg
Hillenbrand / HI 3 - 3% 1,575 1,503 15x 14x 12x na 4.7x 3.0% Breeden, Franklin
International Assets / IAAC 7 4 19% 294 262 16x 93x 22x 15x 1.3x - Bares, Leucadia
Redwood Trust / RWT 2 - 1% 1,169 4,984 27x 10x 8x na 1.2x 6.7% Cap Re, Perkins, Weitz
CIT Group / CIT 2 - 0% 7,672 nm nm 34x 14x 11x .9x - Fairholme, Greenlight
Bank of America / BAC 2 - 0% 163,938 nm nm 16x 9x 6x 1.7x .2% Appaloosa, Fairholme
CapitalSource / CSE 2 - 2% 1,552 nm nm nm 13x 9x .9x .8% Baupost, Pabrai, S.A.C.
Theravance / THRX 2 1 17% 1,060 1,008 nm nm nm nm nm - Baupost, Chesapeake
Paychex / PAYX - - 11% 10,648 10,252 20x 22x 21x 19x 11.7x 4.2% Cap Re, Markel, T Rowe
Cresud / CRESY - - 40% 649 989 23x 22x 28x 22x nm 2.5% Fairfax, Pabrai
Weight Watchers / WTW - - 56% 2,134 3,536 12x 11x 11x 10x nm 2.5% Bares, Cap World, Weitz
Union Pacific / UNP - - 0% 37,544 45,510 20x 16x 13x 11x 2.2x 1.8% Cap Re, Children's
Teva Pharma / TEVA - - 4% 52,881 55,625 25x 13x 11x 10x 16.4x 1.3% Cap Re, Markel
Airgas / ARG - - 10% 5,137 6,599 27x 21x 18x 15x 10.8x 1.4% Bamco, Third Point
Omnicare / OCR - - 3% 3,150 4,883 13x 10x 9x 8x nm .3% Argyll, Glenview, Weitz
Ryanair / RYAAY - - 10% 7,316 7,711 nm 18x 14x 9x 2.1x - Brave Warrior, Fairfax
Investors Title / ITIC - - 39% 77 73 16x 29x 23x na .8x .8% Bridgeway, Markel
International Coal / ICO - - 2% 909 1,080 32x 19x 8x 3x 1.2x - Chou, Fairfax, Pabrai
Pfizer / PFE - - 0% 130,701 152,260 13x 7x 7x 7x nm 4.4% Appaloosa, Greenlight
Overstock.com / OSTK - - 35% 523 478 69x 30x 22x 22x 40.2x - Chou, Fairfax
Motorola / MOT - - 0% 15,781 11,317 nm 17x 13x 9x 2.4x - Dodge & Cox, Icahn
ADC Telecom / ADCT - - 1% 752 845 nm 16x 11x 10x 2.9x - Advisory, Baupost
Fairfax Financial / FRFHF - - 9% 7,942 nm 8x na na na 1.1x 2.7% Centaur, Markel, Pabrai
Intelligent Systems / INS - - 36% 11 8 nm na na na 2.3x - Weitz
Cardinal Health / CAH - - 0% 12,245 11,715 11x 15x 14x 12x 4.0x 2.3% Davis, Greenlight
Brookfield Asset / BAM - - 13% 14,313 39,616 46x na na na .9x 2.1% Bares, Markel
Vodafone / VOD - - 0% 10,391 62,809 2x 8x 8x 8x .7x 4.4% Centaur, Greenlight
AIG / AIG - - 85% 26,501 nm nm 12x 9x 5x 58.5x - Appaloosa, Fairholme
Winthrop Realty / FUR - - 16% 260 423 nm 16x 15x 15x 1.3x 5.3% Bares, Fairholme
Tree.com / TREE 1 1 40% 78 70 nm nm nm 5x 1.5x - Second Curve, Weitz
Hyatt Hotels / H 3 3 75% 7,037 6,567 nm >99x 99x 48x 1.5x - Baron, Bridger, GS
OSI Pharma / OSIP 5 5 1% 3,660 3,441 46x 41x 29x 26x 5.1x - Orbimed, Third Point
Liberty Interactive / LINTA - 1 6% 7,825 13,330 30x 20x 16x 12x nm - Southeastern, Third Point
Kraft Foods / KFT - 1 0% 52,357 79,499 15x 15x 13x 12x nm 3.9% BRK, Fairfax, Pershing
Lockheed Martin / LMT - 1 1% 29,973 31,738 10x 11x 10x 9x nm 3.1% Brave Warrior, Children's
Comcast / CMCSA - 1 1% 49,661 77,056 14x 14x 13x 11x nm 2.2% BRK, Brave Warrior
TravelCenters / TA - 1 16% 53 -2 nm nm na na .2x - Bares, Leucadia
Visa / V - 2 41% 64,880 60,285 28x 20x 16x 14x 22.4x .6% Children's, Lone Pine
Alleghany / Y - 2 33% 2,703 2,647 10x 17x 17x na 1.0x - Centaur, Eagle, Royce
Diamond Hill Invest. / DHIL - 2 12% 193 181 16x 17x 16x 13x 8.4x - Arrow, Centaur, Royce
Viacom / VIA.B - 2 7% 20,450 26,877 13x 12x 11x 10x nm - Gamco, Children's
Citigroup / C - 2 0% 115,340 nm nm 12x 9x 7x 1.0x - Appaloosa, Fairholme
Chesapeake Energy / CHK - 2 0% 14,724 26,878 nm 8x 7x 6x 1.3x 1.3% Icahn, Southeastern
Republic Airways / RJET - 2 0% 208 2,824 5x 17x 4x na .6x - Greenlight, GS, Kleinheinz
Molson Coors / TAP - 2 26% 7,926 9,006 11x 13x 11x 11x 7.1x 2.6% Cap Re, Children's

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 114 of 118
Last Six Months Market Enter. P/E P/E (Est.) Price/
Insider Insider Insider Value Value Last This Next In Tang. Div.
Company / Ticker Buys Sales Own. ($mn) ($mn) FY FY FY 2 Yrs Book Yield Notable Shareholders
Enzon Pharma / ENZN - 2 2% 663 381 >99x >99x nm nm 1.8x - Baupost, Icahn, Iridian
Aspen Technology / AZPN - 2 1% 1,065 1,052 20x nm nm na 6.2x - Third Point
Johnson & Johnson / JNJ 2 4 0% 176,434 170,527 15x 13x 12x 11x 8.3x 3.4% BRK, Fairfax, Markel
Coca-Cola / KO 2 4 5% 123,002 125,843 18x 15x 14x 13x 9.8x 3.3% BRK, Children's
Sealed Air Corp. / SEE 2 4 2% 3,371 4,326 16x 13x 12x 10x 14.4x 2.3% Davis, Southeastern
Interactive Intell. / ININ 4 6 33% 333 262 41x 17x 17x na 4.6x - Bares, Essex, Perimeter
Western Union / WU - 3 0% 11,185 12,703 14x 13x 11x 10x nm 1.4% Bares, Blue Ridge, GS
Energizer Holdings / ENR - 3 7% 3,914 5,932 12x 11x 10x 9x nm - Ariel, Atlantic, Weitz
Walgreen / WAG - 3 0% 34,617 33,871 18x 16x 13x 11x 2.6x 1.6% Bares, Markel, Third Point
Philip Morris / PM 1 4 0% 86,223 101,383 14x 12x 11x 10x nm 5.0% Children's, Markel
Baxter International / BAX - 4 0% 25,964 28,044 12x 11x 10x 9x 6.7x 2.7% Cap World, Lone Pine
Genzyme / GENZ - 4 0% 13,458 12,775 33x 20x 13x 11x 3.3x - Clearbridge, Icahn, Sands
USG / USG 1 5 15% 2,084 3,532 nm nm nm 40x 2.8x - Berkshire, Fairfax
Telephone & Data / TDS - 5 12% 3,509 4,211 19x 19x 20x 19x 2.2x 1.4% Southeastern, Weitz
Merck / MRK - 6 0% 102,528 112,061 6x 10x 8x 8x >99x 4.6% Appaloosa, Cap Re
Dell / DELL 3 9 12% 29,660 22,732 21x 12x 10x 10x nm - Fairfax, Southeastern
Wal-Mart / WMT 4 10 46% 195,920 229,333 14x 13x 12x 11x 3.6x 2.3% Berkshire, Fairfax, Markel
Progressive Corp. / PGR - 8 8% 13,610 15,632 13x 14x 13x 12x 2.2x .8% Davis, Maverick, Weitz
eBay / EBAY 1 9 12% 29,080 24,552 12x 13x 12x 11x 4.0x - Centaur, Dodge & Cox
Dun & Bradstreet / DNB - 9 0% 3,778 4,512 12x 13x 12x 10x nm 1.9% Ariel, Breeden, Davis
Wells Fargo / WFC - 10 0% 166,933 nm 18x 17x 11x 9x 3.1x .6% Berkshire, Fairfax, Pabrai
Valero Energy / VLO - 10 0% 11,383 17,849 nm 23x 9x 7x .8x 1.0% Appaloosa, Brandes, GS
Tesoro / TSO - 11 1% 1,828 3,380 nm nm 11x 6x .7x - Appaloosa, Tradewinds
GameStop / GME - 12 6% 3,339 2,881 10x 8x 8x 8x 6.5x - Adage, Centaur
DineEquity / DIN - 12 5% 632 2,859 64x 12x 11x na nm - MSD, Southeastern
Aon Corp. / AON 1 13 7% 11,211 12,574 19x 13x 12x 11x nm 1.4% Breeden, Southeastern
Target / TGT 1 14 0% 43,767 58,381 17x 14x 13x 11x 2.9x 1.2% Cap Re, Pershing
CareFusion / CFN - 14 17% 5,744 5,654 19x 18x 16x 14x 6.0x - Dodge & Cox, Greenlight
tw telecom / TWTC - 14 5% 2,747 3,598 >99x 50x 31x 24x 9.4x - Cap Re, Southeastern
ViaSat / VSAT - 14 10% 1,228 1,572 28x 22x 18x 19x 2.7x - Alydar, Baupost
Bally Technologies / BYI - 15 1% 2,504 2,610 20x 21x 17x 15x 7.7x - Breeden, Eagle, Par
Xerox / XRX - 15 4% 13,818 23,770 18x 11x 9x 8x nm 1.7% Greenlight, Third Point
American Public Ed. / APEI - 17 3% 825 750 35x 26x 19x 15x 10.1x - Bares, Maverick
Level 3 Comms / LVLT - 17 4% 2,071 7,695 nm nm nm nm nm - Fairfax, Southeastern
RSC Holdings / RRR - 18 11% 878 2,997 nm nm 45x 12x nm - Fairholme, GS, Jennison
Corrections Corp. / CXW 2 20 3% 2,319 3,421 15x 17x 16x 13x 1.6x - Pershing
PetSmart / PETM - 21 0% 4,010 4,273 21x 18x 16x 14x 3.5x 1.2% Centaur, Longview, LSV
Yum! Brands / YUM - 22 0% 18,964 21,795 18x 16x 15x 13x nm 2.1% Pershing, Southeastern
Time Warner / TWX 2 24 0% 34,830 46,310 18x 14x 12x 11x nm 2.8% Cap Re, Children's
MasterCard / MA - 24 26% 27,791 24,711 19x 16x 13x 11x 8.9x .3% Children's, Viking
EMC / EMC - 24 0% 38,173 34,403 35x 16x 14x 12x 7.1x - Centaur, Greenlight
WellPoint / WLP - 25 0% 22,679 28,146 5x 9x 8x 7x 7.4x - Children's, Third Point
Oracle / ORCL 2 28 23% 119,354 117,583 22x 15x 13x 11x nm .8% Cap Re, Children's
DIRECTV / DTV 1 32 0% 34,104 39,414 39x 16x 13x 10x nm - Baupost, Southeastern
Microsoft / MSFT - 33 12% 253,538 219,867 18x 14x 13x 11x 7.9x 1.8% Appaloosa, Greenlight
QUALCOMM / QCOM 1 36 2% 61,186 50,030 39x 16x 15x 13x 3.8x 2.0% Jennison, Lone Pine
Cognizant Tech / CTSH - 37 0% 14,938 13,504 28x 24x 21x 18x 5.7x - Lone Pine, Winslow
Abbott Labs / ABT - 51 0% 74,863 90,368 13x 12x 10x 10x nm 3.6% Cap Re, Markel

© 2009-2010 by BeyondProxy LLC. All rights reserved. www.manualofideas.com May 24, 2010 – Page 115 of 118
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