EFTA00842456.pdf

From: "Jeffrey E." ejeevacationreigmail.com> To: Stephen Hanson Subject: Fwd: Proposed Portfolio Date: Mon, 26 Oct 2015 22:07:48 +0000 Attachments: Gaming.zip; Defense.zip; Consumer.zip; Healthcare.zip Forwarded From: Barrett, Paul S Date: Mon, Oct 26, 2015 at 6:03 PM Subject: Proposed Portfolio To: Brad Wechsler Cc: Barrett Team , "Jeffrey Epstein (jeevacation(2gmail.cont)" <[email protected]>, "Nelson, Justin D" Brad, Below would be our proposed investments breakdown for 520mm: Their Proposed Investment 5 Consumer Discretionary 2,500.000 S Interactive Gaming 2,500.000 S Healthcare 2,500,000 S Defense 2,500,000 S Prefeneds 6.000.000 S HY: Frontier 8'I,% 04/15/20 1,000.000 S Structured Notes: TBD 3,000,000 S Total 20,000.000 I. Consumer Discretionary: Rising disposable income, lower oil prices, labor market strengthening and tame inflation should continue to boost confidence and spending. Ticker Name Rating Target WALT DISNEY DIS CO/THE OW 130.00 NICE NIICE INC -CL B OW 135.00 COSTCO COST WHOLESALE CORP OW 162.00 HD IIOME DEPOT INC OW 127.00 RAD RITE AID CORP OW 10.00 Source: Bloomberg, JPM 10/26/2015 2. eGaming / Interactive Gaming: There are more than 700 different eGames events annually (ESPN plans to broadcast an eGame event for the first time in 2016), with a fan base that exceeds 260 million people. 2015 marks the first year global games market sales are projected to overtake filmed entertainment bringing in 591.5 billion EFTA00842456 and is forecast to rise to $113 billion by 2018. Despite an addressable market many times larger than ten years ago, valuations for the leading gaming vendors are trading at significantly lower multiples titan at the top of the last cycle. Ticker Name Rating Target ADR UBI FP UBISOFT ENTERTAINMENT OW 20.00 UBSFY SQUARE ENIX HOLDINGS 9684 JT CO LTD OW 4000 7974 JP NINTENDO CO LTD N 19,000.00 NTDOY NVDA NVIDIA CORP N 24.00 700 HK TENCENT HOLDINGS LTD OW 187.00 TCEllY Source: Bloomberg, JPM 10/26/2015 3. Healthcare: The percentage of the American population that is over 65 years old has increased from 13% in 2010 to an estimated 18% in 2025. Company pipelines have also become more robust with a 54% increase since 2007 in the number of chugs gaining FDA approval. We think the sell-off which was due to the practices of a few select companies was too broad and overdone. We would use this as an opportunity to add to our core names. Ticker Name Rating Target BRISTOL-MYERS SQUIBB BMY CO OW 78.00 PFE PFIZER INC OW 40.00 MRK MERCK & CO. INC. OW 66.00 Source: Bloomberg, JPM 10/26/2015 4. Defense: Geopolitical events in Russia, the Middle East and the South China Sea are forcing governments to quickly ramp up defense spending. Defense stocks are well positioned in a low-growth environment with high earnings visibility, improving defense budget outlooks, and good shareholder return. Ticker Name Rating Target GENERAL DYNAMICS GD CORP OW 169.00 NORTHROP GRUMMAN NOC CORP N 198.00 BA BOEING CO/THE OW 177.00 RTN RAYTHEON COMPANY OW 130.00 LOCKHEED MARTIN LMT CORP N 225.00 Source: Bloomberg. JPM 10/26/2015 5. Preferreds: (We would like to put one turn of leverage on these in the margin account) Preferreds performed quite well amidst recent market turbulence, with rapid price and liquidity recovery. While Preferreds, as hybrid securities, might have been expected to experience more volatility during this period, we believe that the fundamental strength of bank balance sheets as well as the securities' fixed income duration (as rates rallied) cushioned the sector. The broader firm tone in the markets coupled with the fact that bank earnings season is largely completed and the market saw no preferred issuance is creating a strong technical backdrop for the assets. Indicative Pricing YLD to Interest QDI Ask Ratings Next Call Back-end Industry CUSIWISIN Security NXT Rate DRD Price (Moody's/S&P) Date Coupon Reset Sector Call Duration Eligible Non-Call 5yr EFTA00842457  GS 5 3/8 38 I48BAB4 Perp 99.500 Bal / BB 5/10/2020 5.50 3mL+392.2bps 3.96 Yes/Yes Financial MS 5.55 6I7474AA9 Perp 100.750 Bal / BB 7/15/2020 5.37 3mL+381bps 4.13 Yes/Yes Financial Non-Can 10yr JPM 6 3/4 46625111Q4 Perp 106.875 Baa3 / BBB- 2/1/2024 5.70 3mL+378bps 6.35 Yes/Yes Financial BAC 6.1 060505EN0 Perp 99.750 Ba2 / BB+ 3/17/2025 6.13 3mL+389.8bps 7.10 Yes/Yes Financial C 5.95 172967JM4 Perp 96.875 Ba2 / BB+ 5/15/2025 6.39 3mL+390.5bps 7.02 Yes/Yes Financial Source: Bloomberg 10/2015 6. Frontier Communications: FTR R '4% 04/15/20 Indicative Offer: 104.50 YTM: 7.30% Frontier is the largest rural telecom company in the U.S., focused on providing services to small and medium-sized cities. With a market cap of S5billion, FTR is the 5th largest US wireline company. Over the last 5 years, FTR has increased revenue 5x, and has achieved geographic diversification & product mix through tactical acquisitions of broadband assets from both AT&T and Verizon. The bonds offer attractive relative value, picking up —200bps vs. BB comps and —50bps over single-B comps. Frontier issued S6.6bn of bonds on September 11th to back its purchase of landline assets from Verizon Communications, a deal largely anticipated by the market. Post issuance, the supply overhang has now been virtually removed front the Frontier complex. 7. Structured Notes: In these volatile markets, we continue to like structured notes that provide protection on the downside coupled with unlimited upside or double-digit coupons. We will show these as we think pricing looks interesting. Paul Barrett I Managing Director I Global Investment Opportunities Group I M. Meagan Securities US I M. Morgan Private Bank I M. Mercian Chase Bank 320 Park Avenue, 14t11 Floor NtW York, NY 10022 I Y: F: NOT AN OFFICIAL CONFIRMATION: For informational purposes only. This repon does not represent an official account of the holdings, balances, or transactions made in your account and is being provided at your request. Please refer to your monthly account statement for tlw official record of all of your account activities. For question. please call your 1.P. Morgan representative. 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