CEO Lesson #2 Capital IQ Plug-in Tutorial

October 31, 2011

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Outline

TOPIC Overview of Plug-in Company Historical Financial Data & Estimates Industry Specific Data Reserve Life Index Market Data - Indices Prices & Short Interest Trading Multiples Forward P/E Multiples Company Info Institutional Ownership

Section 1 2 3 4 5 6

Overview of Capital IQ
What is Capital IQ? Capital IQ is a real-time financial database that can be accessed through any internet connection It has become the industry standard for financial professionals, and an essential tool for portfolio management Key benefits include real-time market data and the ability to create dynamic excel based financial models

Who has access to Capital IQ? Each sector team on QUIC has access to an account Two accounts will be used by the executive for portfolio monitoring, educational purposes & market analysis One account will be installed in the NSC and will be available for all students to use, free of charge

What can be done with the Capital IQ plug-in? Primary functionality is as a tool for fundamental analysis trading levels, financial ratios, trading multiples Analyst forecasts for earnings & commodity prices Short interest data analysis

Company Historical Financial Data & Estimates

Categories
Income Statement Revenue, COGS, SG&A, R&D Expense, Operating Income, Net Income, Basic EPS, Dividends, etc. Balance Sheet Current Assets, Current Portion of LT Debt, Pension & OPEB, Shares Outstanding, Net Working Capital, Contingent Liabilities, etc. Cash Flow Statement D&A, Change in B/S Accounts, Capital Expenditures, Issuance/Repurchase of Common Stock, Debt Repaid, etc. Financial Ratios ROA, ROE, EBITDA Margin, Asset Turnover, Debt-toEBITDA, Capex-to-Revenues, etc. Growth Ratios EBITDA Growth, Net Income Growth, Tangible Book Growth, etc. Estimates EPS, Revenue, EPS Growth Rates, Target Price, # of Analysts, etc.

Formula Builder

Company Historical Financial Data & Estimates

Learning Points
Pull constituents of an index Entering Identifier Ticker or Cell Period Type Date in Cell Audit Data Sanity Check and filtering data

DJIA FY EPS Percentage Change (2000 2013E)

25% 20% 15% 10% 5% 0% -5% -10% -15% 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 CY2011 CY2012 CY2013

Industry Specific Data

Categories
Found in the Financials tab Data may be slightly less available, be sure to audit the information that you find Will be more useful for some sector teams than others Energy & Utilities Acquisition Costs, Exploration Costs, Production, Closing Reserves, Avg Price / Mcf, # of Wells, etc. Metals & Mining Grades, Measured & Indicated Resources, Cash Costs, Averaged Realized Price, Remaining Mine Life Consumers Stores opened, Same Store Sales Growth, Total Retail Sq Ft., Franchises TMT Gross Additions, ARPU, Churn, Capital Investment FIG (Banks, Insurance & Financial Services Template) Allowance for Credit Losses, Tier 1 Capital Ratio, Nonperforming Loans, Premiums Written Cash Yield FFO, AFFO, NAV, Sale of Properties, Occupancy Rate

Formula Builder

Industry Specific Data

Learning Points
Most likely to work well for larger companies better information availability Explore your sector and experiment with what options are available Very easy to try with a number of companies once template is built simply by changing ticker Supplement the data that pulls with primary research using SEDAR filings and analyst reports Understand the applicable metrics, critically think about what information you can draw from the trends that you see

Reserve Life Index in Years of Energy Supermajors (1999 2010)

16 14 12 10 8 6 4 2 0 1999 2000 2001 2002 2003 NYSE:CVX 2004 2005 2006 NYSE:RDS.A 2007 2008 NYSE:TOT 2009 2010 NYSE:XOM NYSE:BP

Market Data Indices Prices & Short Interest

Categories
All PMs should work to integrate Capital IQ with their Outperformance spreadsheets huge time saver Market data is less robust than Bloomberg Equity Market Data Day Close Price, VWAP, 52 Week High & Low, Beta, Short Interest, Dividend Yield, Float Percentage Rates & Indices Equity Indices Day Closing Price Commodities & Futures Not currently enabled

Formula Builder

Market Data Indices Prices & Short Interest

Learning Points
Search function for Cap IQ identifiers Extending the formulas to customize for dates Transpose function in Excel Frequency of data adjust accordingly Role of an analyst is not only to crunch the numbers, but also understand the drivers of the business and think critically about the trends and anomalies observed

Energy & Utility Indices Performance

10% 0% -10% -20%

Alcoa Share Price (LHS) & Short Interest (RHS)

$50 $40 $30 $20 10% 8% 6% 4% 2% 0% Jan-06 Jan-07 Jan-08 Jan-09 Jan-10 Jan-11 Short Interest (% of Shares Outstanding)
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-30% -40% Feb-2011 $10 Apr-2011 Jun-2011 Aug-2011 S&P/TSX Capped Utilities $0 Jan-05

S&P/TSX Capped Energy Weighted Index

Alcoa Share Price

Trading Multiples
Categories
Should be used as a supplement, not a replacement to the existing coverage universes maintained by each sector Well suited for historical multiple analysis Trailing trading multiples works well, forward multiples capability may not be provided Trailing Trading Multiples EV / Revenue, EV / EBITDA, EV / EBIT, EV / UFCF P / Sales, P / EPS, P / BV, P / TBV, P / LFCF

Formula Builder

Bank of Nova Scotia P / E LTM

18.0x 16.0x 14.0x 12.0x 10.0x 8.0x 6.0x 2005 2006 2007 2008 2009 2010 2011 13.6x 11.4x

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Company Information
Categories
Some categories will be quite useful, others rarely used Set up a QUIC template to populate information for companies in universe General Very little useful News Top stories, URL, date Professionals Names, Background, etc. Public Ownership Holder name, % of Shares Outstanding, Institutional % of Shares Outstanding, Investment Style, Insider Buying/Selling Private Ownership Current and Past Direct Investors, Relationship, Stake, Transaction Dates, etc. Latest Analyst Coverage Analyst Name, Number of Analysts Covering Company, Email Address (to determine broker)

Formula Builder

Energy Supermajors Top 5 Institutional Holders

25% 20% 15% 10% 5% 0% NYSE:BP NYSE:XOM NYSE:TOT NYSE:CVX NYSE:RDS.A
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