Topic: You are being asked to put together a portfolio recommendation for UCWs $50,000,000 endowment. The University fund is currently holding 25% of its assets in US Treasuries, 25% in the SPDR Dow Jones Industrial Average ETF Trust, and 50% in the AMEX Gold BUGS Index (ie., Basket of Unhedged gold Stocks).

You are looking to provide UCW an investment recommendation for its University endowment. The University will withhold any distributions for a 5 year period. What stock, options position, alternative investment or combination of investments would you recommend and why? One of the key deliverables of the project is to identify the various sectors/ asset classes for the investments, include the percentage allocation for each. What is the rationale for your selection and weighting.

If you pick a company or companies of your choosing, explain why. Was it due to your current valuation estimate and/ or growth prospects? Part of your evaluation may include an estimate of the intrinsic value of the investment opportunity.

This may also include an investment in a new business. If so, evaluate the prospectus/ business plan and provide details on the monetization of the business within the time frame required.

For all the potential investments, try to identify the risks (including business and financial risk). You may want to consider the underlying business operations of the investment and evaluate areas that the entity may be able to expand and thus, grow into its valuation? Depending on the investment, you may need to put together a pro forma set of cash flows to help determine dividends/ free cash flows for your discount models.

Are there considerations needed to maintain the current risk profile of the overall portfolio? What are your assumptions?

The use of market performance metrics may be highlighted (eg., EPS, P/E, Dividend Payout, ROE, etc.) along with a trend analysis underscoring changes in the underlying business or industry.