The Valtechs System, http://us.valuationfactor.com, is an online institutional investor-targeting and intelligence application expressly designed for investor relations professionals. It was developed by Valuation Technologies LLC and Transaction Technologies.

The Valtechs System enables you to:

• Gain insight into the investment style, portfolio holdings and security selection methodology of institutions and mutual funds that you can capitalize on
• Target potential long-term investors
• Identify "at-risk" shareholders
• Discover the shareholders of peer companies
• Plan your Investor Relations activities and review the results

In other words, find out who owns your company's stock, as well as who is (or wants to) buying and selling it. Find out which investment strategies drive funds to buy and to sell and whether your company is compatible with a fund's investment strategy.

With the Valtechs System, you can do much of your day-to-day work online, such as printing and downloading reports for your records and sharing information with others. When you are planning a series of Investor Relations meetings, the Valtechs System will suggest which current investors or potential investors to invite to each meeting.

We are interested in your feedback and are here to provide assistance. Please let us know if you are unable to find the feature of the Valtechs System that you need to accomplish your task, perhaps one of the advanced capabilities can help you get your job done. If not, we will put your need on our list of enhancements.

The Valtechs System offers easy navigation from one area of the product to another. There are four basic areas:

• Profile
• Search
• Ownership Data
• Company Data

A description and the functionality associated follows.

Profile

The Profile area discloses the user's name and the name of the company for which you are performing targeting and analysis on.

You can verify your name and target company, which will be listed in upper left corner of the navigation frame. If you want to change the target company, click Edit My Profile. A Profile Management window displays. This screen shows your user information and allows you to make modifications to that information.

If you have access to multiple companies, you may change the target company by simply changing the company name (or if you have access to all companies, changing the CUSIP number) in the appropriate box.

Select the Click Here Lookup a Company hyperlink to access the Company Data: CUSIP Lookup window. Enter the ticker symbol or company name for the new company in the given field and click GO. Companies that correspond to that ticker symbol or name will be returned. Click on the requested company name in the list returned. Then click GO on the Profile Management page. The requested company should now appear under your name in the profile box in the navigation bar.

Return to the initial screen at any time by clicking Home on the upper bar.

To exit the Valtechs System, simply click on Sign Out. This will end your Valtechs System session.

Search

The Search area provides two options:

• Quick and Saved Searches screen, which includes quick predefined searches and custom searches the user may have previously saved
• Advanced Search screen, which permits searches on institutions based on a wide range of search criteria.

Quick and Saved Searches

Select the Quick and Saved Searches link in the left column within the Search area, to perform more detailed analysis.

• The Quick Search area has two sections:

  • Find Institutions:
    Create the list of institutions based upon one of these criteria: Meetings, Holders, Targets, Peer Owners, Potential Sellers, New Buyers and Total Sellers.

    Using the Geographic Location selection box, you can narrow your results by selecting up to three geographic locations for the institutions.

• The Saved Searches area: Locate an institution using your previously saved custom search criteria.

Let's imagine you want a list of potential buyers of your company's stock who are located in the U.S.

Select the Targets radio button, verify All US is selected in Step 2 and click GO. (The Geographic Selection defaults to All US.) The Search Results screen will list up to 150 funds that currently do not own stock in your company, but have investment styles that make them likely purchasers. You may increase the number of results retrieved by simply clicking on Edit Search Criteria on the Results page and select the desired number at the bottom of the edit search page. Summary contact information is displayed by default.

To learn more about the fund, a list of more contacts, and to see how the investment characteristics of your company fit with the investment style of the institution, use the bar across the top of the screen, or select the Reports in the lower right. The screens and Reports are discussed in further detail below.

Another example might be that you are planning a Chicago meeting, and want to include current shareholders, plus potential buyers. Click the Quick and Saved Searches link to return to the main search page.

In the Find Institutions area, select Meetings. In the Geographic Location area, select Chicago IL Metro and click GO. A list of shareholders and target funds in the Chicago area will be returned.

Building and Saving Custom Searches

The Valtechs System gives you the option of building and saving your own custom searches.

For example, from the Quick Search window:

1. Select Targets and click GO. A list of institutions matching the criteria will be displayed on the results screen.
2. Click on Save Search Criteria. The Advanced Search screen is displayed. At the bottom of the window, name your search and click SAVE AS to save this search for later use.
   

   Note: The name of the search is automatically generated by the application; however, you can rename the file. The name of the search criteria saved will display on the Quick Search window until you delete it. A search created from the Advanced Search screen may also be saved in the same manner.

3. Click the Quick and Saved Searches link from the menu in the left-hand navigation frame and you will see your newly saved search at the bottom of the Quick Search window. Anytime you want to execute this search, click on its name.
   

By saving the search, the criteria are saved, not the results. The results can change as the underlying data changes. To save the specific results of a search, select the Download Search Results option on the results list screen.

Change the initial results by selecting Edit Search Criteria on the Results window. The Advanced Search screen will display. For example, in the Search by Institution Size category, set the Equity Assets in $Millions to a minimum of 1000. In the Save As field, update the description to match your new search, e.g. Targets over $1Bill Holdings. Click GO and a newly refined results list will display.

Advanced Search

The Advanced Search screen is used to perform a detailed search or to modify an existing search. Any of the search parameters may be used for either purpose.

The Advanced Search window allows you to choose whether to search Buy-Side or Sell-Side firms, or both.

Let's assume you received a call from an unfamiliar fund. You can research this fund using the Advanced Search feature. Click on Advanced Search. Enter the name of the fund in the Search by Firm/Fund Name field and click GO. The investment characteristics of the fund, how it matches with My Company, and who are the fund management personnel, are returned.

In addition to searching on Fund Name, Contact Name and/or job function and title, you can search for institutions based on the institution's size, average basic financial data on companies in the portfolios such as Price/Earnings, Price/Book, Dividend Yield, and 5-Year Earnings Growth; and/or by portfolio information such shares of the company held, share changes, and overall match score.

Ownership Data

The Ownership Data area provides four options that you can use to see which funds hold stock in your company and/or which funds are buying or selling stock in your company:

• Owners of My Stock: returns a list of all funds reporting ownership, the number of shares currently owned and the change in holding from their previous report.
• Buyers of My Stock
• Sellers of My Stock
• Peer Owners: Lists institutions that hold positions in your company and its peers

Owners of My Stock

Select Owners of My Stock to get a list of all funds reporting ownership, the number of shares currently owned, and the change in holding from their previous report. The holdings returned are as reported by the Funds, which primarily report using a 13(f) and Mutual Fund reports. Holdings are as of the most recent reported period. Holdings for the Fund Families and the individual Funds are included on the list.

By default, institutions are sorted alphabetically by name. The results can be sorted according to Holdings, Change or Institution. To change the way that the results are sorted, click on the desired column heading.

For example, to sort the results by the largest holdings first, click Holdings on the top of the column, which will sort the column on number of shares held from the most to least. Click on Change to list the largest Buyers first. Display Options allow you to screen the list of Funds in other ways.

• All Owners lists funds that currently own your stock, or owned your stock as of the previous report, but may have sold all as of the most recent report.
• Current Owners report holdings as of most recent report.
• Buyers have increased holdings from previous report to most recent
• Sellers have decreased holdings from the previous report to the most recent report
• New Buyers have a current holding, but no holding in previous report
• Total Sellers had a holding as of previous report, but no holding currently.

Let's assume you want to know who owns, or is buying a peer's stock. Simply input the ticker of a peer in the box in the right hand column, and you can obtain this same valuable information on your peers. To obtain a peer list, click on Peer Lists under Company Data.

Peer Owners

Select the Peer Owners link on the left-hand navigation frame. A screen with three selection variables is displayed: Peer List, Limit Results and Geographic Location.

Select one of the five peer groups in the Peer List (see below for how to customize up to three peer groups in your profile), a Limit (which will limit your results based on the number selected or select No Limit), and a Geographic Location. Once you have designated the three variables, click GO. A screen of the institutional ownership of the peers in the group you have selected for the particular geographic area will display. If you choose to limit the number of results, the list will generate institutions with the greatest aggregate positions in the peer list selected.

Let's assume you want to research which institutions hold positions in your peers. You have access to five peer groups, three of which can be customized by you. There are two options that allow you to analyze the institutional owners of your company's peers. The first is under the Ownership Data category, where you can view the complete holdings for any one given peer. The second is in the Peer Owners Search, where you can view ownership for a group of companies in a peer list and selected by geographic location.

The Valtechs System creates two files with the results of your peer group research: the contact information file and the ownership data file. Download the contact information into a delimited file by simply clicking Download Contacts. You may at this point save the contact information in a contact management software application. Click Download Peer Ownership Data to download the ownership data file, which provides you with the names of the institutions with the aggregate investment in the peer group, the position each institution holds in each peer and the Match score for each company on the list. This file allows you to review the compatibility of each company on the list, including your own company, with each institution on your results list.

Company Data

See how the Valtechs System views your company using the four options under Company Data:

• My Company Data
• Peer Lists
• Peer Data

My Company Data

My Company Data includes basic stock information, ratios for your company, annualized return values and valuation models for your company. Click My Company Data. The window labeled Company Data: My Company displays.

A graph on the right side of the screen will show how your company scores on a series of valuation models. These are models used by investors in selecting stocks. Investors can focus on those models that best meet their needs, e.g., Cash Plow Back valuation model. Detailed definitions of these models are located to the left of the graph area. Valuation models are normalized; therefore, if your company shows a value of 0.0, that is the average across all companies for this model. With a value of +1.0, your company is at 1 standard deviation above the average.

The Valtechs System uses them to characterize funds and in determining your company's match to these funds. The graphic provides a quick view of how the buy-side views your company based on the 17 widely used stock screens.

Peer Lists

Peer Lists provide a list of your company's peers, which investors can use for comparisons. To better understand peer companies click on Peer Data. To select a different peer group, simply click on the down arrow after the peer name and select the desired list.

Peer Lists displays the screen Company Data: Peer List.

There are two alternative system generated lists of peers. One is atraditional list based on generally accepted industries and market cap weighted. The other is proprietary and derived by Valtechs, which is risk-weighted. The two lists reflect different ways of determining which companies are like yours, however each list gives you a useful perspective. Additionally, you may customize up to three peer lists of ten companies each. Select Custom 1, Custom 2 or Custom3 from the Peer List View drop down menu. This additional feature allows you to view the Peer Data screen for all five peer groups, as well as review the Peer ownership for any one of the five groups.

Customize a Peer Group

1. In the Company Data: Valtech Peer List screen, click the Edit/Add Custom Peer Group link. The window to edit the list view name and contents displays.
   
   
   
2. In the Peer List View drop down menu, select the peer list to be revised.
3. After naming your list, click the Add to List link and a pop-up window, Company Data: CUSIP Lookup, displays requesting you to input a company name or ticker symbol. Add a company by clicking on the selected name. Repeat this procedure until the peer list is fully populated.

Peer Data

Peer Data displays fundamentals, annualized returns and valuation scores for your company and its peers. At the top of the screen, you may select one of five peer lists to view this valuable information. Three groups are your custom peer lists and two are system generated.

You may access your peer's Reuters Research Report as well as Industry Research by subscribing to the premium services.

Institution's Information Screens

You can find out more details about an individual fund by clicking on an institution on the Results List. There are also four formatted reports to select from at the bottom of each page. Click on View a Report to select the desired report format.

The Valtechs System toolbar across the top lets you view additional information about the fund, such as Summary, Size - Value/Growth, Holdings, [how well the institution(s)] Fit with My Company, Industries and Contacts.

• Summary screen
  
  
  

  This screen provides:

  • -principal contact information
  • -a descriptive overview of the institution's investment object
  • -the size of the portfolio
  • -the number of shares of the company held.
  • -Turnover of the portfolio for the institution

  At the bottom of the Summary page, you may select Add a Note. This will allow you to add your own personal note for the institution displayed.

• Size-Value/Growth
  
  
  This screen provides a graphic representation of the fund's Size and Value/Growth characteristics. The graph depicts the characteristics of the institution's portfolio and how the company fits within that portfolio.

• Holdings
  
  
  The Holdings screen provides a list of the total portfolio holdings, displaying:

  • -the name of the holding
  • -the shares held
  • -the change in each holding.

  On the right side of the screen, you can choose from additional display options that will change the display to illustrate the stocks the institution has bought or sold.

  You may download the holdings by clicking on Click here to export this information to a file.

• Fit with My Company
  
  

  
  

  The Fit With My Company category provides graphic representation showing how well My Company matches the investment styles of the fund.

  Valuation Models are listed in order of their importance to the Fund. Importance is determined by looking at the values of the models for each company owned by the fund. If a fund owns stocks with a highly focused value for a variable, we consider that variable to be important. A variable that is scattered as though the fund had chosen randomly is considered to be unimportant. The width of the colored bar for each model depicts how focused the fund is on that model, helping us rate importance to that fund.

  The fit between your company and a fund is based upon how close your company's values are toa the average values for that fund. Fit to a model is weighted more heavily for the models of importance to that fund. The fund's investment trends are also looked at. The top bar colored in green for each model shows recent buys. The middle bar colored blue represents stocks the institution is holding. While the bottom bar colored in red shows recent sells, and shows a trend to increase or decrease the value of a model. If your company supports that trend, the likelihood of buying your company's stock is higher; if your company is contrary to the trend, likelihood is lower.

  The shaded portion for each bar represents two thirds of the activity and the circle is the average for the activity. The gold bar is a representation of your company's value.

  For a description of the models, see Valuation Models below.

• Industry Concentrations
  
  

  The Concentrations screen depicts the industry distribution of holdings in the fund. On the right side of the screen, you have additional display options, which allow you to view buys, holds or sells for the institution based on either a dollar percentage of the fund's portfolio or the number of companies held within a particular sector.

• Contacts
  
  
  The Contacts screen list individuals that you may want to contact at the fund. You have the ability to select a contact as your personal default contact. Once designated as the default or primary contact, his/her name will appear as the contact for that institution on all screens within your profile listing that institution.

  Additionally, you have the ability to add custom contacts. These are the people of the institutions you are comfortable working with. Once you have added a custom contact, you my elect to designate this contact as your default for the particular institution in your profile.

  Clicking on any contact name will take you to the Contact Details screen that displays all the contact information and related institutions. To add your own personal note for the contact, simply click on Add a Note. A text box appears for you to enter your personal note on the individual.

Reports

Display, print and/or download any of the information from the Institution Information Screens. In the View Report drop down menu in the lower right corner of the window, select one of four reports: the Summary Report, Executive Summary Report, Full Report and Contact Report.

• Summary Report provides a descriptive overview of the institution's investment object and contact information
• Executive Summary Report shows how well your company fits with the investment style of the Fund. In the upper right you will see a list of the top four valuation models and an indication of how closely your company matches these styles. On the left side of the window are Portfolio Characteristics, which give you a comparison between summary statistics of your company and the average of these statistics for the fund. Industry Concentrations (based on % of portfolio equity assets) is also reported.
• Full Report includes Industry Concentrations, your company's fit to the fund on its four most important models, portfolio characteristics, size-value/growth chart, and a display of Style Changes over Time.
• Contact Report shows the viewer all of the valuations models for the fund and how well your company fits within each.

Valuation Models

The following calculations capture strategies used by the vast majority of investment managers:

Industry/Economic Sector

Valuation Technologies has assigned each company a primary industry, e.g. Health, or Electronics. Some managers focus on select industries, while others invest across the board. The Valtechs System checks to see if the investor holds stocks in your company's industry.

Predicted Beta

This measures the amount of market risk obtained by investing in this company. The Valtechs Beta is a prediction of future market risk based upon company fundamentals, not simply a description of past market risk. A Beta of 1.0 is average, indicating that a 5% market move would be expected to result in 5% return to this company. A Beta of 2.0 is very high, predicting a 10% return from a 5% market movement.

Cash Plowback

This valuation model looks at the amount of earnings that the company has reinvested over the past year. Companies that tend to score well here are relatively cheap compared to earnings and have a low payout ratio.

Dividend Discount Model

For this valuation model, the score is based on annual implied return from a three-stage dividend discount model. Valuation Technologiesuses analysts' forecast earnings and forecast growth rate to project a stream of earnings for each company. The asset's and industry's payout ratios are combined, yielding a forecast dividend for each company every year. The score is based on the implied return that equates the current price with the present value of the projected dividends. High scores indicate good growth at current price.

Earnings Momentum Model

The Earnings Momentum valuation model is based on momentum of historical and projected earnings. Valtechs looks at historical and forecasted (based upon analysts' reports) earnings data to estimate a growth rate and acceleration of earnings.

Earnings Estimate Changes Model

The Earnings Estimate Changes valuation model reports changes in consensus earnings estimates over a 2-month horizon. A combination of the earnings estimates for fiscal year 1 and fiscal year 2 is used to put each company on the same basis. The change over a 2-month horizon is measured to minimize the impact of very small positive or negative earnings forecasts.

Estimate Revision Model

This model looks at the changes in earnings estimates, as well as the price appreciation over the recent past to identify assets likely to outperform over the upcoming months. When two stocks with the same earnings estimate changes are analyzed, this model gives a higher score to the one whose price has appreciated less.

Historical Alpha Model

This momentum model is sixty-month realized alpha, a relative strength measure, over the most recent 5 years. It is the portion of each company's five-year return that is not related to the movement of the overall market. This is also the alpha estimated in the regression of 60 monthly returns that is used to find the stock's historical beta.

Neglect Model

The Neglect valuation model is the combination of two factors relating to the attention the company receives from institutional managers: market capitalization and analyst coverage. High Neglect indicates low institutional coverage and small size, relative to other firms in the company's economic sector (industry group).

Historical Earnings to Price

Historical Earnings to Price is the most recent earnings divided by most recent closing price. This is the reciprocal of the conventional Price Earnings Ratio. We use earnings divided by price for consistency with Dividends to Price (Yield) and Cash Flow to Price. Compare with Forecast Earnings to Price, which uses forward looking earnings estimates rather than reported earnings. This is a value measure.

Predicted (Forecast) Earnings to Price Model

The Predicted (Forecast) Earnings to Price model is an earnings-to-price ratio using 12-month median projected earnings. Valtechs weights the company's projected 1- and 2-year median earnings forecasts, divided by most recent price. It is a forward-looking measure of value. Compare this model with Historical earnings to Price.

Relative Strength Model

In this momentum model, rankings are based on price momentum over a 1-year horizon, adjusted for market movements. Relative strength capitalizes on the positive relationship between a stock's return over the last year and its return in the future. Compare this model with Historical Alpha, a 5-year measure of strength. Because this is contrary to the stronger short-term reversal effect, Valtechs adjusts for very recent performance that goes into the reversal model below.

Residual Reversal Model

The Residual Reversal model gives a score representing predicted short-term performance based on the well-documented reversal effect. This model uses returns neutralized for the market, for our 55 industry groups and for some style factors. Assets with relatively low residual returns in the recent past have higher scores and are likely to outperform the market in the near future. This is also a momentum model.

Sector Momentum Model

The Sector Momentum model is based on the recent performance of the stock's sector. Historically there has been momentum here, as sectors that have performed above average recently tend to continue to beat the market. If an asset has exposure to multiple sectors, then the score will be a weighted mixture of the momentum of the various sectors.

Cash Flow to Price Model

This valuation model represents typical cash-flow-to-price ratio over the past five years. It is calculated as the average cash flow per share divided by the average year-end closing price. It is a measure of relative value.

Yield

Another primary screening factor is yield. This value measure is calculated using the current annualized dividend and most recent stock price.

Size

Size is used as an initial screen for most institutions, as well as a factor in most models and styles. It includes market capitalization as well as total assets of the underlying firm.

Trading Activity

Like size, trading activity is often an initial screen, as well as a factor in models and styles. Trading activity represents several measures of the stock's liquidity, including turnover, institutional coverage, and level of stock price.

Growth/Value

Growth/Value reveals whether the market views a company as a value company or as a growth company. Value companies, those with a high Growth/Value scores, have a high ratio of book value to market price, allowing the investor to purchase net assets cheaply. Growth companies have low Growth/Value scores and are priced to reflect the expectation of above average future growth.