CIF Stock Recommendation Report (Fall 2012)

Date: 10/18/2012 Analyst Name: Christopher Weber

CIF Stock Recommendation Report (Fall 2012)

Company Name and Ticker: BlackRock Inc

Section (A) Summary

Recommendation Buy: Yes No

Sector: Financials Current Price: $189

Industry: Investment Management

52 WK Hi: $209.37

Target Price: $200

Market Cap (in Billions): $32.42 52 WK Low: $146.53

Stop-Loss Price: $146.53

# of Shrs. O/S (in Millions): 173.03

EBO Valuation: $112.45

Morningstar (MS) Fair Value Est.: $210

EPS (TTM): 12.51

MS FV Uncertainty: Medium

EPS (FY1): $13.18

MS Consider Buying: $147

EPS (FY2): $14.76

MS Consider Selling: $283.5

MS Star Rating: 4 stars

Next Fiscal Yr. End "Year": 2012 "Month": December Forward P/E: 12.6

Last Fiscal Qtr. End: Less Than 8 WK: Y N Mean LT Growth: 12.5%

If Less Than 8 WK, next Earnings Ann. Date: October 17, 2012 PEG: 5.82

Analyst Consensus Recommendation: Outperform Beta: 1.49

% Inst. Ownership: 50

Ratio Analysis

Inst. Ownership- Net Buy: Y N

Company: BlackRock Inc

P/E (TTM)

14.98

P/S (TTM)

3.63

P/B (MRQ)

1.31

P/CF (TTM)

12.56

Dividend Yield

3.2

Total Debt/Equity (MRQ) 31.31

Net Profit Margin (TTM) 25.62

ROA (TTM)

1.25

ROE (TTM)

9.24

Short Interest Ratio: 2.8

Industry

Investment Management 57.78

31.58

.96

60.04

2.6

68.01

11.86

.89

1.98

Short as % of Float: 1.6

Sector Financial

32.8 5.3 1.27 12.44 2 149.83 16.89 .91 5.58

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Investment Thesis

After reviewing all the information and taking into account the opinions of seasoned financial analysts I believe investing in BlackRock would be a great idea for the Cougar Investment Fund. Over the past year analysts have taken a bullish attitude towards the stock. With a mean buying of 2.15 which has increased from three months ago I believe the stock is currently undervalued. It is my belief based on the amount of shorting going on in the market and the continued growth and recovery of the stock market that BlackRock is well on its way to increased value in its share prices. With the current price sitting at 189.17 and a 52 week high of 209.37 I believe the CIF would benefit from purchasing this stock. The only concern I have going forward is election that is coming up in a month. New fiscal policies could potential have an adverse effect on the entire financial sector. However, BlackRock has consistently outperformed the S&P 500 and its competitors for many years including the last five years of economic recession. BlackRock's strength comes from its firm hold in the investment management industry as the largest company in the industry. Although I do not think CIF will hit a homerun with BlackRock, there is definetly potential to make a decent return on our investment.

Summary

Provide brief summary of your analysis in each section that follows

Company Profile: BlackRock Inc. is the world's largest asset and investment management firm. Its assets under management total around $3.5 trillion

Fundamental Valuation: BlackRock's P/E and P/B are good indicators on the company's overall financial strength and value. These ratios show much investors are willing to spend for 1 dollar of profit and the value from assets.

Relative Valuation: Comparing BlackRock to its competitors shows that BlackRock has tremendous value in the eyes of its investors with potential for huge growth within its sector. Revenue and Earnings Estimates: For the past three years BlackRock's revenues have increased, and unless the economy unravels they should continue to rise.

Analyst Recommendations: Analysts recommend buying BLK stock. Reuters gives the stock a rating around 2, the general attitude is bullish regarding the stock.

Institutional Ownership: Nearly half the company is institutionally owned. This number is high but reasonable for a large investment firm such as BlackRock.

Short Interest: Over the last 4 months the stock has been volatile, with a tremendous amount of change in daily trades from June to August.

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Stock Price Chart: Over the past three months BlackRock has been outperformed by both the S&P500 and its competitor JPMorgan, however this is a good indication it may be time to buy because historically it has done much better than both.

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Section (B) Company Profile

Company Summary BlackRock is an asset management company focused on reaching investors around the world. They specialize in investment services for both taxable and non-taxable businesses and high net worth individuals. BlackRock's assets under management include invests in mutual funds, index funds and ETFs, as well as insurance and risk management products. The company hires financial representatives who act as advisors for clientele all over the world. BlackRock's investment vehicles are both active and passive in nature. The AUM breakdown is as follows: 23% equities, 52% fixed income assets, 18% multi-asset investment, and lastly 7% is invested in alternatives. Business Model, Competition, Environment and Strategy BlackRock Inc specializes in the management of assets and investments for clients worldwide. The company operates in over 27 different countries and is a globally recognized company for its financial strength. BlackRock's total assets it manages amount to around $3.56 trillion. BlackRock's competition includes JPMorgan Chase, Citigroup, and Goldman Sachs to name a few. Each of these firms specializes in the financial services industry. The company is the world's largest asset management firm and BlackRock stays competitive by offering both passive and active strategies. Revenue and Earnings History

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Total Revenues (in millions): 2010- 7,922 2011- 8,534 2012-4,256 Total EPS (in millions): 2010- 10.55 2011-12.37 2012- 6.22 BlackRock has seen good growth over the past three years and is currently on pace to exceed 2011's total revenue. The earnings per share has seen growth from 2010 to 2011 but it may not exceed 2011 EPS in 2012. It would be wise to wait and see if EPS continues growing at the pace it is at or if it has explosive growth as the fiscal year draws to a close.

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