PortfolioAnalysis:FinalReport

BrendanKeevan,CaitlynMcBride,
IanMcLarney,DavidPatel

InvestmentObjective:
Ourportfoliosinvestmentobjectiveistomaximizetheopportunityforhighreturnsina
shortterminvestingperiod(13years).Toachievethisgoal,ourteamwillactivelyand
exclusivelyinvestinstocksofbothdomesticandinternationalcompaniesthathaveIPOdin
thepast6months.
WebelievethatdataprovidedbyRenaissanceCapitalcorroboratesourinvestment
selectionprocess.AccordingtoTheIPOExpert,USlistedIPOsexperiencedanaverage
rateofreturnof41%in2013inwhatwasthebestyearfortheIPOmarketsince2000.*This
comparesfavorablytotheS&P500andRussell3000indices,whichgeneratedreturnsof
30%each.Backedbyimprovingeconomicconditionsanddecreasingvolatility,weexpect
IPOstocontinuetoproducesuperiorreturnsin2014andbeyond.
OurportfoliotargetsHighNetWorthIndividuals(HNWIs)thatcanassumehighrisk.
Thoughweexpectimprovingmarketconditions,weacknowledgethatcertainIPOswillnot
generatepositivereturns.Assuch,ourportfolioisnotaimedattheriskaverseinvestor,but
ratherthosewillingandabletocapitalizeonhighupsidepotentialintheshortterm.

*Source:
http://www.renaissancecapital.com/ipohome/review/2013usreviewpublic.pdf

OverallPerformance:

Ouroverallperformancewaspositive.Ourportfolio,onaggregate,returned4.92%
whichwasgoodenoughfor2ndplaceintheclass.Inordertobetterunderstandthedriversof
thisreturn,wemustfurtheranalysehowourfundswereapportioned.Ofthefundsprovidedto
us,wedidnotinvestroughly$175,000.Theseunusedfundsgenerated$1,941.08ininterest
duringourinvestmentperiod.Ourcashreserveswereobviouslynotthemaindriverofour
nearly5%returnhowever.Instead,themainsourceofourreturnwasdrivenbythe13trades
weexecutedoverthelastfewmonths.ThelargesttradeweplacedwasforAlibaba(
BABA
),
whichprovideduswithareturnof19.52%.ThesinglehighestRoRwasgeneratedbyRadius
Health(
RDUS
)whichgarneredareturnof77.7%.ThelowestRoRwasgeneratedbyViper
EnergyPartners(
VNOM
)whichlost38.03%ofitspurchasingvalue.Ofour13trades
executed7finishedwithpositivereturnsand6finishedwithnegativereturns.Theaverage
percentchangeforthestocksthatgeneratedpositivereturnswas22.96%,providingan
2

averageprofitof$15,753.Theaveragepercentchangeforthestocksthataccruednegative
returnswas17.69%,resultinginanaveragelossof$12,336.Overall,itseemsasthoughthe
returnsgeneratedby
BABA
and
RDUS
wereabletoeffectivelycancelouttheoverwhelmingly
negativereturnsofboth
AGRX
(thestockwiththesecondlowestreturn)and
VNOM
.Therest
oftheportfoliowasabletogenerateanetreturnof~5%asaresultoftheremainingprofitable
stocksmodestlyoutperformingtheirunprofitablecounterparts.Thislargedisparitybetween
ourhighestandlowestreturnstocksisindicativeoftheriskassociatedwithconstructingan
IPOcentricportfolio.
Inordertogetabetterideaofhowourportfolioperformedrelativetothemarket,we
comparedittoanS&P500ETF(
SPY
),aDJIAETF(
DIA
),andaNASDAQETF(
QQQ
).
Picturedbelowarethegraphsforreference:

SPY:

DIA:

QQQ:
3

Fromlookingattheprecedinggraphsitiseasilysurmisedthatourportfoliowasfairly
closelycorrelatedtothemovementsoftheS&P,DowJones,andNASDAQ.Thegraphsalso
illustratethatthereturnsgeneratedbyourportfoliowereverysimilartothereturnsexpected
throughinvestmentintomarketbasedETFs.Torestate,theoverallperformanceofour
portfolio
was
positive.However,whenplacedwithinthecontextoftheoverallmarketplaceit
becomesapparentthatroughlythesamereturnwouldhavebeenattainablethrough
investmentinlessvolatileassets.

DidthePortfolioMeettheInvestmentObjective?

Ourportfoliometitsobjectivetotheextentthatitgeneratedsuperiorreturnscompared
tothemarket(31.66%comparedto20.46%onanannualizedbasis).Whilethebulkofour
returncorrespondstoabetaof.9,weattributeoursuperiorreturntothestrengthofouractive
management,asdemonstratedbyalphaof13%.
Despitestrongperformance,diversificationlimitedourportfoliosupsidepotential.As
expectedourportfoliorepresentedhighrisk,onlyafractionofwhichwesoughttodiversify.As
activemanagersandasrealists,weunderstoodthatsomepickswouldunderperform.
Therefore,weinvestedinbothdomesticandinternationalIPOsacrossfourindustries.While
thispracticeofdiversificationlimitedlosses,italsohadthesameeffectonupsidepotential.In
otherwords,thelargeupsideassociatedwithourbestperformerswassomewhatoffsetby
theinclusionofsecuritiesthatdemonstrateddecreasedoreveninversesensitivitytomarket
movements.Assuch,ourportfoliosSharpeRatiowas1.62,whichisrelativelysmall
comparedtotheSharpeRatiosforindividualsecuritieswithinourportfolio,whichwereas
highas11.79.
Asanticipated,ourportfolioexperiencedhighervolatilitythanthemarketwitha.20
standarddeviationcomparedto.13forthemarketonanannualizedbasis.Wedetermined
that58%ofportfolioriskcouldbediversified.Thisnumberseemshigh,butalignswithour
investmentobjectivebecausetheweincuradditionalcompanyspecificriskbyselecting
4

individualIPOsratherthanamorediversifiedapproach.Ourabilitytodiversifyisalso
hinderedbythesmallsizeoftheportfolio.Again,thisisdonesothatwecouldresearcheach
holdingtothebestofourability.
Insuchashortamountoftime,wehavebeenabletomakerealprogresstowardsour
objectives.Eachstockpickhasbeeninlinewithourobjectivesandaswerefinetheresearch
process,ourabilitytosecureadditionalupsidewillincrease.Ourportfolioisagreat
opportunityforsomeonewillingtotakeontheriskassociatedwithIPOsinthesearchforhigh
returns.

TipsforFutureManagement:

WhatWeveLearned:
Throughthisportfoliosimulation,wehavelearnedthatthestockofrecentlyIPOd
firmscanbeverylucrativeforinvestors.Thispointwasmadeveryevidentbyourhighly
profitablepurchasesof
RBUS
and
BABA
.Ontheflipside,wehavealsolearnedthat
investinginthisassetclasscanbeveryriskyasevidencedbythelargelossesincurredby
AGRX
and
VNOM
.Forthemostparthowever,itseemedasthoughmanyofourIPOs
performedroughlyatthemarketaverage.Manyexceededmarketperformancebyafew
percentagepoints,whileothersgarneredslightlysubparreturns.Overall,ourpositivereturns
slightlyoutweighedtheirnegativecounterpartsandourportfoliowasabletoachievean
overallreturnofnearly5%.Moreover,welearnedthatinvestinginsmallcapfirmsthathave
recentlyIPOdisdifficultattimes.Thisisduetotradingvolumesbeing,inmanyinstances,
verylowforsmallerfirmsinthesecondarymarket.Infact,duringthecourseofthesemester
becausemanyofourmarketordertradeswerenotimmediatelyexecutedbyStockTrak
becausethetradingvolumewassimplynotlargeenough.Theothermajorlessonwelearned
wasthatourfundsreturnswerehighlycorrelatedwithmarketperformanceasdiscussed
above.

TipsGoingForward:
Movingforwardwerecommendtwomajorchangestoourinvestmentobjective.The
firstchangewouldbetoconsiderinvestmentsintheprimarymarket.Thiswillallowourfund
toobtainahigherRoRforathesamelevelofinvestment,anditwillalsoreducethe
complicationofnotbeingabletopurchasestockinsmallcapfirms.Thatsaid,weunderstand
thatthisavenuemaynotbeimmediatelyfeasible.Typicallyparticipantsintheprimarymarket
areestablishedfirmswithareputationofbeingcapableofhelpingtofacilitatetheIPO
process.Despitethisbarriertoentry,wefirmlybelievethatthedrasticincreaseinreturns
possiblewouldmorethanjustifyanattempttobreakintothismarketplace.Additionally,we
recommendnarrowingourfundsfocusfromallIPOstotechnologyfirmsand
medical/pharmaceuticalfirms.Thereasonbehindoursecondrecommendationistoreduce
ourcorrelationwiththemarketwhilesimultaneouslyfocusingonsectorswehave
competenciesandpastsuccessatpickingwinningstocks.Sinceinvestingintheprimary
marketandnarrowingourfundsfocuswouldinvolvehigherlevelsofriskandvolatility,we
stronglyrecommendkeepingourclientbaselimitedtohighnetworthindividuals(HNWIs).
5

ThekeyforourfundmovingforwardwouldtoensurethegenerationofhigherRoRsas
outlinedabove.Ourcurrentperformance,althoughpositive,isnotindicativeofthehighlevel
ofreturnthatHNWIsarelookingforwhentheypledgelargesumsofcapital.Wefirmly
believeifthesegoalsaremetinthefuturethesuccessofthisportfoliocouldbeinsuredfor
yearstocome.

HoldingsBreakdown:
InOverallPerformancewewentintosomedetailregardingtheverybestandworst
performersinourportfolio.Inordertoattainamoreholisticunderstandingofwhatdroveour
overallperformancehowever,furtheranalysisofexactlywhattradesmostcontributedtoour
portfoliosaggregatereturnisneeded.Providedbelowisanoutlineofthetradesmadeduring
ourmanagingtenure(listedinorderofRoR):

TradesMade:

RadiusHealth(
RDUS
)
InitialValue:
$68,110
Return:
77.70%
Motivation:
RadiusHealthisabiopharmaceuticalcompanythatisdevelopingnew

therapiesforosteoporosisandotherseriousendocrinemediateddiseases.Inaddition,
twodrugsintheirpipelinearebeingdevelopedtoaidinthetreatmentofbreastcancer.
TheyareheadquarteredinWaltham,MAandcurrentlyhaveadruginPhaseIIItrials,
6

twoinPhaseIItrials,oneinPhaseItrials,andonedruginpreclinicaltesting.Thisfull
pipelineoffersmultipleopportunitiesforsuccessfuldrugs.

SinceitsIPOinearlyJune,
RDUS
hasgrown95.13%andcurrentlysellsatabout
$15.15.Thisstockshowsalotofpromiseand,asshownonMorningstar,twoanalysts
agreeandrecommenditasabuy.RadiusHealthisgreatforourportfoliobecauseit
hasseveraldrugsindevelopmentthatlookpromisingandwouldoffergreatreturnif
grantedFDAapproval.

AlibabaGroupHoldingLtd.(
BABA
)
InitialValue:
$102,751
Return:
19.52%
Motivation:
ParticipationintheAlibabaIPOofferedanopportunityforourportfoliotoextend
itsreachintoChinaslargestecommercemarket.Thesitehashundredsofmillionsofusers
andispoisedforcontinuedgrowthasitoperatesinChinatheworldslargestconsumer.
WithitsIPOsettinganalltimehighat$25billion,
BABA
promisestocontinueexpansionfor
yearstocome.Thestockhasreturnednearly20%sinceitsinitialpurchaseprice,andmany
analystspredictthatitwillcontinueonitsupwardtrend.

ZayoGroupHoldingInc.(
ZAYO
)
InitialValue:
$59,025
Return:
16.43%
Motivation:
Zayoisacompanythatspecializesinbandwidthinfrastructure.Itwasfoundedin
2007inanticipationofgrowingdemandforthistypesofcable,internet,andphone
infrastructure.SOfar,thecompanyhasgrownprimarilythroughacquisitionasitattemptsto
secureafirmmarketshareintheindustry.IthasabuyratingfromananalystonMorningstar
andYahooFinanceexpectsittoreachalevelof$29withinayear.Itiscurrentlytrading
around$26.75.AsZayocontinuestosecureordersandrackupcustomers,itsupside
potentialcontinuestogrow.

2UInc.(
TWOU
)
InitialValue:
$60,002
Return:
14.50%
Motivation:
2U,Inc.isaleadingproviderofcloudbasedsoftwareasaservicesolutions

thatenablenonprofitcollegesanduniversitiestodeliverhighqualityeducationto
students.2Usinnovativeonlinelearningplatformandbundledservicesprovidethe
comprehensiveoperatinginfrastructurecollegesanduniversitiesincreasinglyuseto
attract,enroll,educate,supportandgraduatestudents.Byleveragingitssolutions,2U
believesclientscanexpandtheiraddressablemarketswhileprovidingeducational
engagement,experiencesandoutcomestoonlinestudentsthatmatchorexceedthose
oftheironcampusofferings.

SinceconductingitsIPOinMarch2014,2Usstockpricehasexperienced20%
growth.AccordingtoYahoo!Finance,analystsexpectitsstockpricetogrowbyan
additional26%,from$15.60to$19.70.2Uiswellpositionedtotakeadvantageofand
itsfinancialperformancehasaccuratelyreflectedincreasingdemandforonline
educationaloptions.2Umeetsourportfoliosselectioncriterianotonlybecauseofits
trackrecord,butalsobecauseofitsimmediatefutureprospects.

AxaltaCoatingSystemsLtd.(
AXTA
)
InitialValue:
$37,818
Return:
13.28%
Motivation:
AlthoughAxaltaonlywentpublicinNovember,ithasbeenaroundforover150
years.ItisanindustrialpaintingcompanythatbeganasadivisionofDuPontandwasspun
offintoaprivateentityin2012.SuchstrongindustrypositionisrareinanIPO,whichmakes
thisveryappealing.Itcurrentlytradesaround$24.50andanalystreportshaveyettobe
issued,butweexpectthemtobeabuyrecommendation.Sofar,thereturnhasbeen
measurableandwithanalystreportingtobeginafterthesilenceperiod,evenmoreupside
potentialexistswiththisstock.

DominionMidstreamPartnersLP(
DM
)
InitialValue:
$50,267.20
Return:
9.95%
Motivation:

DM
isagrowthorientedlimitedpartnershipformedonMarch11,2014.The
partnershipwasformedbetweenDominionandDelawarebasedCovePoint.Bothcompanies
expecttherelationshiptoyieldsubstantialgrowthopportunitiesandassetsinthefuture.Cove
Pointiscurrentlygeneratingsignificantrevenueandearningsfromannualcontractswith
affiliatessuchasBP,RoyalDutchShell,andStatoil.Continuedgrowthinthenaturalgas
space,coupledwiththeaddedbenefitofhavingbothcompanieswellestablishedwithintheir
respectiveindustriesencouragedustobuythisIPO.
DM
upsidepotentialhasbeenrealized
overthepastfewmonths,withthestockreturningnearly10%withnosignsofslowinginthe
nearfuture.

iDreamSkyTechnologyLtd.(
DSKY
)
InitialValue:
$95,207
Return:
9.32%
Motivation:
iDreamSkyisthelargestindependentmobilegamepublishingplatformin

Chinabasedonthenumberofactiveusersin2013,accordingtoareportfromAnalysys
International.iDreamSkyhasredefinedtheroleofagamepublisher,andby
collaboratingwithawiderangeofdistributionandpaymentoperatorsinChinasmobile
gameecosystem,ithasestablishedanextensivethirdpartydistributionandpayment
network.Perhapsmostimportantly,iDreamSkyhasquicklybuiltstrongbusiness

relationshipswithmanyofthetopgamedevelopersintheworld,suchasHalfbrick,
Imangi,Devsisters,andMiniclip.
SinceconductingitsIPOinAugust2014,iDreamSkysstockpricehasrisenby
36%tomorethan$20.AccordingtoYahoo!Finance,analystsexpectthestockpriceto
riseby40%tomorethan$28inthenext12months.Givenitsstrongperformanceand
evenstrongerforecastedperformance,iDreamSkyisastrongcandidatefor
membershipinourportfolio.

Autohome(
ATHM
)
InitialValue:
$49,944.5
Return:
0.48%
Motivation:
AutohomeistheleadingonlinedestinationforautomobileconsumersinChina.
Throughitstwowebsites(autohome.com.cn&che168.com),Autohomeprovides
comprehensive,independentandinteractivecontenttoautomobilebuyersandowners.

AccordingtoiResearch,AutohomerankedfirstamongChinasautomotivewebsitesand
automotivechannelsofinternetportalsintermsofaveragedailyuniquevisitors,averagedaily
timespentperuser,andaveragedailypageviewsinQ22014.
Throughitsabilitytoreacha
largeandengagedconsumerbase,Autohomehasbecomethepreferredplatformfor
automakersanddealerstoconducttheiradvertisingcampaigns.Automakerstypicallyutilize
itsadvertisingservicesforqbrandpromotion,newmodelreleases,andsalespromotions.
Autohomesdealersubscriptionservicesallowdealerstomarkettheirinventoryandservices
throughitstwowebsites,extendingthereachoftheirphysicalshowroomstopotentially
millionsofinternetusersinChina.

AutohomeIPOdonDecember11,2013.Sincethen,thecompanysstockpricehasrisenby
165%from$17.00to$45.05.AccordingtoMorningstar,Autohomehasveryhighprice/book
andprice/earningsratios(10.4&46.7)comparedtoindustryaverages(4.5&34.0).Despite
itshighvaluation,however,Autohomehasgeneratedasuperioroperatingprofitmargin,net
profitmargin,returnonassets,andreturnonequity.TwoWallStreetanalystshavelenttheir
opinionsofAutohome,andeachrecommendsabuy.

Asagroup,wehavechosentoinvestinAutohomebecauseofstrongandconsistent
performance,aswellasitspositioninthemarket.Astheleadingonlinedestinationfor
Chineseautomobileconsumers,webelieveitiswellpositionedtotakeadvantageofa
growingChineseeconomyandbolsteredmiddleclass.

CONEMidstreamPartnersLP(
CNNX
)
InitialValue:
$50,000.20
Return:
2.24%
Motivation:
CNNX
isafeebased,growthorientedmasterlimitedpartnershiprecentlyformed
byCONSOLEnergyandNobleEnergy.Eachof
CNNX
ssponsorsisalargeindependentoil
9

andnaturalgasexplorationandproductioncompanywithasubstantialresourcebaseanda
historyofgrowingproductioninitsareasofoperation.Itisintheuniquepositionofhavinga
largepayout(~4.2%)whilehavehighgrowthpotential(financedexternally).These
combinationoffactorsleadustothedecisiontopurchasethestock.Amildsummerhaslead
to
CNNX
notmeetingseveraloftheirtargets,andasubsequentunderperformance.

TubeMogulInc.(
TUBE
)
InitialValue:
$49,445
Return:
6.39%
Motivation:
TubeMogulproducesenterprisesoftwareforthepurposesofdigitalbranding.
Morespecifically,TubeMogulsimplifiesthedeliveryofvideoadsbyenablingpurchaseof
videoinventoryinrealtime,acrossalldevices,usingasingleplatform.TubeMogulprovides
customerswithfulltransparency,meaningcustomersknowexactlywheretheiradsare
running,howoftentheiradsareviewed,andwhoitisthatswatching.Advertiserspayby
click,i.e.accordingtothefrequencyviewerschoosetowatchthead.TubeMogulhasoffices
onfourcontinentsthatserveaglobalclientbase.

TubeMogulIPOdonJuly18,2014.Sincethen,thecompanysstockpricehasrisenby
138.71%from$7.00to$16.71.Relativetotheindustry,TubeMogulhasaveryhigh
price/bookratio.AccordingtoMorningstar,itisconsideredaspeculativegrowthstock.Two
WallStreetanalystshavelenttheiropinions,oneofwhomrecommendsabuyandtheother
ofwhomrecommendsahold.

Asagroup,wehavechosentoinvestinTubeMogulforitsstrongupsidepotential.Though
thefirmhasreportednegativeEPStodate,ithasinvestedheavilyingrowthopportunitiesthat
weseeasbothviableandindicativeofindustryleadership.Forexample,TubeMogulhas
launchedaseriesofcertificationprogramsincombinationwithexistingeducationalevents
thatactivelyengageitstargetmarket.CEOBrettWilsonalsoannouncedthecompanys
intentiontoexpandintotheTVadvertisingspace.Finally,hasdemonstrateditsabilitytomake
rapidimprovementstoitssoftwarethroughindustrypartnershipsandlucrativehires.

SuperiorDrillingProducts(
SDPI
)
InitialValue:
$72,450
Return:
26.23%
Motivation:

SDPI
isanindustryleadingmanufacturerofbothremanufacturedandnew
diamonddrillbitsanddrillstringcomponentsfortheoil,naturalgas,andminingdrilling
industries.
SDPI
recentlyacquiredHardRockSolutionsfor$25million,andalsosecureda
patentfortheirDrillNReamtoolforuseinboringintothegroundinthesearchforoiland
otherresources.TheacquisitionofHardRockaswellasthepatenttheysecuredfortheir
uniquedrillingtoolwerethemainmotivatingfactorsbehindourdecisiontopurchasethe
stock.Despiteitssuccessfulacquisitionandpatentdevelopment
SDPI
hasunderperformed
forthelastseveralmonths,providingourportfoliowithalargenegativereturn.

10

AgileTherapeuticsInc.(
AGRX
)
InitialValue:
$69,915
Return:
32.77%
Motivation:
AgileTherapeuticsisawomenshealthspecialtypharmaceuticalcompany.

TheyarecurrentlyinPhaseIIIdrugtrialswithanewprescriptioncontraceptivepatch,
Twirla.Thiscompanyhastwogrowthopportunitieswithboththeproprietary
contraceptivedrugandtheirinnovativepatchtechnology,whichisalsopatented.They
areheadquarteredinPrinceton,NJwhichisaprimelocationforagrowing
pharmaceuticalcompany.

SinceitsIPOinlateMay,
AGRX
hasgrown66.67%andiscurrentlypricedat
$9.54pershare.Evenbetter,accordingtoMorningstar,isthatthestockcurrentlyholds
buyrecommendationsfromtwoanalysts.Thisstockfitsourportfoliowellandhas
plentyofgrowthpotential,especiallyiftheycontinuegatheringpatentsandthePhaseIII
trialendssuccessfully.

ViperEnergyPartners(
VNOM
)
InitialValue:$72,500
Return:
38.03%
Motivation:

VNOM
isaDelawarelimitedpartnershipformedbyDiamondbacktoown,acquire
andexploitoilandnaturalgasopportunitiesinNorthAmerica.Theprimarybusinessobjective
ofthecompany(intheirownwords)istoProvideanattractivereturntounitholdersby
focusingonbusinessresults,maximizingdistributionsthroughorganicgrowthandpursuing
accretivegrowthopportunitiesthroughacquisitionsofmineralinterestfromDiamondbackand
fromthirdparties.Thecompanysfocusongrowth,coupledwiththefactthatDiamondback
wouldown93%ofthestockpostIPO(whichshowsastrongfaithinthepartnershipsupside
potential)werethedriverfactorsbehindourpurchasingofthestock.Sinceourinitialbuy,the
companyhasconsistentlyunderperformed,andhasprovidedourportfoliowithitsworst
individualreturn.SeveralanalystshavedowngradedthestocktoaSelloverthesametime
period.

SalesMade
:

Dave&Busters(
PLAY
)
InitialValue:
$100,282.00or$22.04
SellPrice:
$105,378.00or$23.16
Return:
$5,096.00
MotivationforPurchase:

Dave&Buster'sistheleadingownerandoperatorofhighvolume
venuesthatcombineentertainmentanddininginNorthAmericaforbothadultsandfamilies.
Foundedin1982,thecoreoftheconceptistooffergueststheopportunitytoEatDrinkPlay
Watchallinonelocation.Theyofferafullmenuof"FunAmericanNewGourmet"entres
andappetizers,afullselectionofnonalcoholicandalcoholicbeverages,andanextensive
11

assortmentofentertainmentattractionscenteredaroundplayinggamesandwatchinglive
sportsandothertelevisedevents.

SinceitsIPOinearlyoctoberPLAYhadrisenfromitsofferpriceof$16.00to
$22.00.TheNASDAQhadthefirms12monthpricetargetat$23.00(consensus).
Additionally,thefirmsfocusontheU.S.marketmadeitanidealcandidatetoexceed
analystexpectationsbasedontheimprovingeconomicoutlookintheU.S.The
reassurancefromNASDAQspricetargetandtheimprovingU.S.economicoutlook,led
ourgrouptobelievethisstockhadthepotentialtoappreciateinashortperiodoftime.

MotivationforSale:
SinceNASDAQhadapricetargetof$23.00,ourgroupplacedalimitsell
orderatthepriceof$23.00atthetimeofpurchase.Thislimitsellorderoccurred
approximately18daysafterafterourpurchaseon11/10.Asof12/2,thestockclosedthe
tradingdayat$23.13.

CBSOutdoorAmericasInc.(
OUT
formerly
CBSO
)
InitialValue:
$74,970.14or$30.34
SellPrice:
$75,958.54or$30.74
Return:
$988.40

MotivationforSale:
WhenourgrouppurchasedCBSOstock,ithadapositiveoutlookanda
12monthpricetargetof$34.00fromGoldmanSachsanda12monthpricetargetof$37.00
fromNASDAQ.DuringtheearlypartofNovember,thestockspriceoutlookturnednegative
becausenationaladvertisingexperiencedmarketsoftness,thefirmdecidedtotransitiontoa
REIT,anditwouldincurincrementallyhighercostsasastandalonecompanystartinginQ3.
Therefore,duringtheearlypartofNovemberourgroupdecidedtoliquidateourholdingsin
CBSO(OUT)forasmallprofit.Asof12/2,thestockclosedthetradingdayat$27.16.
Zacks.comWillCBSOutdoorAmericas(CBSO)SurpriseQ3Earnings?,YahooFinance

LejuHoldingsLimited(LEJU)
InitialValue:
$74,486.30or$13.58
SellPrice:
$78,984.00or$14.40
Return:
$4,497.70

12

MotivationforSale:
LEJUisleadingonlinetooffline(O2O)realestateservicesproviderin
China,andwhenourgrouppurchasedLEJUstock5investmentanalystsprovided12month
pricetargetsatamediantargetof$19.90.However,moreandmorenegativenewshasbeen
pouringoutofChinarecentlyregardingitsslowinggrowthanddecliningdemandforreal
estate.Basedonsomeofthisnews,ourgroupdecideditwastimetosellourpositionin
LEJU.
Asof12/2,thestockclosedthetradingdayat$11.99.

Thediplomat.comChinas
RealEstateSectorDragsonGrowth,YahooFinance

Appendix:

PortfolioOverview:Assignment1

1.)Briefstatementofyourportfolioobjective:
Theobjectiveofourportfolioistotargetstockswithhighupsidegrowthpotential,
inordertoprovidethebestopportunityforhighreturnsoverashortterminvestment
window(13years).Ourtargetaudienceforthistypeofinvestingstrategywouldbe
highnetworthindividualslookingtomaximizethepotentialoftheircapital.Thereason
forthisisthat,althoughIPOsusuallybenefitfromahighRoR(averageof+20%in
2012RenaissanceCapital),thereisstillsignificantriskassociatedwiththistypeof
investment.Assuch,thoselookingforasmallerriskburdenwouldbebestserved
investingelsewhere.

2.)Descriptionofyoursecurityselectionprocedure:
ThestockswewillbelookingtoinvestinarethosethathaveIPOdatanypoint
duringthelasttwelvemonthsandhave,upuntilthispoint,providedaRoRofatleast
15%.Ourgoalisensureourclientsareturnofbetween10%15%.Therationalehere
beingthatalthoughtheselectedstockshaveexperiencedrapidgrowthupuntilthis
point,astheymaturetheirgrowthmayslowasthemarketwillrealizeanyunderlying
valueintheformofdrivingthemtowardsasteadierpricepoint.Inordertodoso,wewill
beselectingonlythemostpromisingIPOsoverthelastseveralmonthswiththegoalof
maximizingcapitalgeneration.Welookforwardtoworkingwithourclientstoachieve
thisgoal.

3.)Justificationofeachofyourinitialtrades:

DSKY
:iDreamSkyisthelargestindependentmobilegamepublishingplatforminChina
basedonthenumberofactiveusersin2013,accordingtoareportfromAnalysys
13

International.iDreamSkyhasredefinedtheroleofagamepublisher,andby
collaboratingwithawiderangeofdistributionandpaymentoperatorsinChinasmobile
gameecosystem,ithasestablishedanextensivethirdpartydistributionandpayment
network.Perhapsmostimportantly,iDreamSkyhasquicklybuiltstrongbusiness
relationshipswithmanyofthetopgamedevelopersintheworld,suchasHalfbrick,
Imangi,Devsisters,andMiniclip.
SinceconductingitsIPOinAugust2014,iDreamSkysstockpricehasrisenby
36%tomorethan$20.Itsstockpriceisexpectedtoriseby40%tomorethan$28in
thenext12months.Givenitsstrongperformanceandevenstrongerforecasted
performance,iDreamSkyisastrongcandidateformembershipinourportfolio.

TWOU
:2U,Inc.isaleadingproviderofcloudbasedsoftwareasaservicesolutions
thatenableleadingnonprofitcollegesanduniversitiestodelivertheirhighquality
educationtoqualifiedstudentsanywhere.Ourinnovativeonlinelearningplatformand
bundledtechnologyenabledservicesprovidethecomprehensiveoperating
infrastructurecollegesanduniversitiesneedtoattract,enroll,educate,supportand
graduatetheirstudents.Byleveragingoursolutions,webelieveourclientsareableto
expandtheiraddressablemarketswhileprovidingeducationalengagement,
experiencesandoutcomestotheironlinestudentsthatmatchorexceedthoseoftheir
oncampusofferings.
SinceconductingitsIPOinMarch2014,2Usstockpricehasexperienced20%
growth.Inthenextyear,itsstockpriceisprojectedtogrowbyanadditional26%,from
$15.60to$19.70.2Uiswellpositionedtotakeadvantageofanditsfinancial
performancehasaccuratelyreflectedincreasingdemandforonlineeducational
options.2Umeetsourportfoliosselectioncriterianotonlybecauseofitstrackrecord,
butalsobecauseofitsimmediatefutureprospects.

VNOM
:ViperEnergyPartnersisaDelawarelimitedPartnershipfrombyDiamondback
(
FANG)
,inordertoown,acquireandexploitoilandnaturalgaspropertiesinNorth
America.TheirprimarymissionobjectiveistoProvideanattractivereturnto
unitholdersbyfocusingonbusinessresults,maximizingdistributionsandpursuing
accretivegrowthopportunitiesthroughacquisitionsformDiamondbackandfromthird
parties..Theirinitialfocus(likeDiamondback)willbethePermianBasinwhichisoneof
theoldestandmostprolificbasinsinNorthAmerica.
SinceitsIPOinJune
VNOM
hasexhibitedagrowthrateof15.62%.Currentlythe
stockishoveringaround$30persharewithNASDAQestimatingthepossibilityfor
12monthgrowthtobesomewherearound$35,whileconcedingthepricecouldmove
ashighas$41.Assuch,
VNOM
isavaluableadditiontoourportfoliointhatitnotonly
14

meetsourinitialcriteria,butalsoshowspromiseofcontinuingthegrowthitsalready
demonstrated.

SDPI:
SuperiorDrillingProductsisaninnovativeindustryleadingmanufacturerof
bothremanufacturedandnewdiamonddrillbitsanddrillstringcomponentsfortheoil,
naturalgas,andminingdrillingindustries.TheyareheadquarteredinVernal,Utah
wheretheyoperateatechnologicallyadvancedPolycrystallineDiamondCompactdrill
bitremanufacturingfacility,aswellasastateoftheartcomputerizedmachiningfacility
wherewedesignandmanufacturenewdrillbitanddrillstringtools.Additionallythey
haveapatentpendingboreconditioningtoolcalledtheDrillNReam
SinceitsIPOinlateJune
SDPI
hasshownagrowthrateofanastonishing
78.50%.Thestockiscurrentlyjustbelow$7.15pershareandhasgarneredtwoStrong
BuyopinionsaccordingtoTheMotleyFool.
SDPI
meetsourportfoliocriteriabyhaving
alreadyexhibitedanimpressiveinitialreturnsinceitsIPO,andshowspromiseto
continuegrowing(evenintheeyesofsomemarketexperts)whichismorethan
reassuring.

CBSO:
CBSOutdoorAmericasInc.isoneofthelargestlessorsofadvertising
spaceonoutofhomeadvertisingstructuresandsitesacrosstheU.S.,Canadaand
LatinAmerica.Theirportfolioprimarilyconsistsofbillboarddisplays,whichare
predominantlylocatedindenselypopulatedmajormetropolitanareasandalong
hightrafficexpresswaysandmajorcommutingroutes.Inaddition,theyhavea
numberofexclusivemultiyearcontractsthatallowthemtooperateadvertising
displaysinmunicipal
transit
systemswheretheircustomersareabletoreach
millionsofcommutersonadailybasis.
SinceitsIPOinMarchCBSOhasgrownabout8.82%andcurrentlytradesat
$30.47pershare.Thisfirmispromisingduetoitsstrengthintheindustryandit
currentlyholdsaBuyrecommendationfromGoldmanSachswitha12monthprice
targetof$34.00anda12monthpricetargetof$37.00fromNASDAQ.CBSOhas
demonstratedstronggrowthsinceitsIPObutthestockstillseemstohaveroomtogrow
soitwillmakeagreatadditiontoourportfolio.

LEJU:
LEJUisleadingonlinetooffline(O2O)realestateservicesproviderinChina.
TheirO2Orealestateservicesintegrateonlineinformationandmarketingwithoffline
promotionandtransactionsupport.Theyofferrealestateecommerce,online
advertising,andonlinelistingservicesthroughtheironlineplatform,whichcomprises
localwebsitescoveringmorethan250citiesandvariousmobileapplications.Theyalso
integratetheironlineplatformwithcomplementaryofflineservicestofacilitateresidential
propertytransactions.
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SinceitsIPOinmidAprilLEJUhasrisen45.80%to$14.58pershare.The
NASDAQcurrentlyhasthefirms12monthpricetargetat$18.00(consensus)and
$22.00onthehighend.Additionally,the5investmentanalystsproviding12monthprice
targetsforthefinancialtimesprovidedamediantargetof$19.90.Withreassurance
frominvestmentanalysts,thissecurityprovidesanexcellentopportunitytofulfillour
portfolioobjective.

AGRX:
AgileTherapeuticsisawomenshealthspecialtypharmaceuticalcompany.
TheyarecurrentlyinPhaseIIIdrugtrialswithanewprescriptioncontraceptivepatch,
Twirla.Thiscompanyhastwogrowthopportunitieswithboththeproprietary
contraceptivedrugandtheirinnovativepatchtechnology,whichisalsopatented.They
areheadquarteredinPrinceton,NJwhichisaprimelocationforagrowing
pharmaceuticalcompany.

SinceitsIPOinlateMay,
AGRX
hasgrown66.67%andiscurrentlypricedat
$9.54pershare.Evenbetter,accordingtoMorningstar,isthatthestockcurrentlyholds
buyrecommendationsfromtwoanalysts.Thisstockfitsourportfoliowellandhas
plentyofgrowthpotential,especiallyiftheycontinuegatheringpatentsandthePhaseIII
trialendssuccessfully.

RDUS:
RadiusHealthisabiopharmaceuticalcompanythatisdevelopingnewtherapies
forosteoporosisandotherseriousendocrinemediateddiseases.Inaddition,twodrugs
intheirpipelinearebeingdevelopedtoaidinthetreatmentofbreastcancer.Theyare
headquarteredinWaltham,MAandcurrentlyhaveadruginPhaseIIItrials,twoin
PhaseIItrials,oneinPhaseItrials,andonedruginpreclinicaltesting.Thisfullpipeline
offersmultipleopportunitiesforsuccessfuldrugs.

SinceitsIPOinearlyJune,
RDUS
hasgrown95.13%andcurrentlysellsatabout
$15.15.Thisstockshowsalotofpromiseand,asshownonMorningstar,twoanalysts
agreeandrecommenditasabuy.RadiusHealthisgreatforourportfoliobecauseit
hasseveraldrugsindevelopmentthatlookpromisingandwouldoffergreatreturnif
grantedFDAapproval.

4.)Specificlistingofholdings

DSKY
:4,500shares
TWOU
:3,800shares
VNOM:
2,500Shares
SDPI
:10,500Shares
AGRX:
7,900Shares
RDUS:
4,900Shares
16

LEJU:
5,485Shares
CBSO:
2,471Shares

17