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          <TD class=3Dtopleft width=3D"22%"><A=20
            href=3D"http://www2.business.ku.edu/apm/amp_frontpage"><IMG =
height=3D85=20
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src=3D"http://www2.business.ku.edu/apm/newsletter/templates/apm_resources=
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            width=3D108 border=3D0></A></TD>
          <TD class=3Dtopright vAlign=3Dtop align=3Dleft width=3D"78%">
            <P><!-- InstanceBeginEditable name=3D"Date" --><SPAN =
class=3Dtitle1>APM=20
            Quarterly<BR>1st Quarter=20
            2005</SPAN><!-- InstanceEndEditable --><BR><SPAN =
class=3Dheadingsub>a=20
            publication of Applied Portfolio Management, KU School of=20
            Business</SPAN></P></TD></TR></TBODY></TABLE></TD>
    <TD><IMG height=3D85 alt=3D""=20
      =
src=3D"http://www2.business.ku.edu/apm/newsletter/templates/spacer.gif"=20
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  <TR>
    <TD class=3Dleftpane vAlign=3Dtop align=3Dleft bgColor=3D#ffffff>
      <TABLE width=3D"100%" border=3D0>
        <TBODY>
        <TR>
          <TD class=3Dleftnewsheading>Inside This Issue:</TD></TR>
        <TR><!-- InstanceBeginEditable name=3D"Story List" -->
          <TD class=3Dleftsubheading>
            <UL>
              <LI><A=20
              =
href=3D"http://www2.business.ku.edu/apm/newsletter/Copy%20of%20q1-05/apmn=
ews_q1-05.htm#tyg">Tortoise=20
              Winning the Race</A>=20
              <LI><A=20
              =
href=3D"http://www2.business.ku.edu/apm/newsletter/Copy%20of%20q1-05/apmn=
ews_q1-05.htm#shoup">Shoup=20
              Provides Insight </A>
              <LI><A=20
              =
href=3D"http://www2.business.ku.edu/apm/newsletter/Copy%20of%20q1-05/apmn=
ews_q1-05.htm#schier">The=20
              Jim Schier Way</A>=20
              <LI><A=20
              =
href=3D"http://www2.business.ku.edu/apm/newsletter/Copy%20of%20q1-05/apmn=
ews_q1-05.htm#performance">Portfolio=20
              Performance</A>=20
              <LI><A=20
              =
href=3D"http://www2.business.ku.edu/apm/newsletter/Copy%20of%20q1-05/apmn=
ews_q1-05.htm#inergy">John=20
              Sherman of Inergy</A>=20
              <LI><A=20
              =
href=3D"http://www2.business.ku.edu/apm/newsletter/Copy%20of%20q1-05/apmn=
ews_q1-05.htm#donors">Donors</A>=20

              <LI><A=20
              =
href=3D"http://www2.business.ku.edu/apm/newsletter/Copy%20of%20q1-05/apmn=
ews_q1-05.htm#class">This=20
              Semester's Students</A> </LI></UL></TD><!-- =
InstanceEndEditable --></TR>
        <TR>
          <TD class=3Dleftnewsheading>Links:</TD></TR>
        <TR>
          <TD class=3Dleftsubheading>
            <UL>
              <LI><A href=3D"http://www2.business.ku.edu/apm" =
target=3D_blank>APM=20
              Website</A>=20
              <LI><A=20
              =
href=3D"http://www2.business.ku.edu/apm/portfolio/portfoliotyped.shtml"=20
              target=3D_blank>APM Portfolio</A>=20
              <LI><A class=3Dleftsubheading =
href=3D"http://www.business.ku.edu/"=20
              target=3D_blank>KU Business</A>=20
              <LI><A href=3D"http://www.ku.edu/" target=3D_blank>KU Home =
</A>
              <LI><A href=3D"http://www.ku.edu/home/cshenoy" =
target=3D_blank>Prof.=20
              Shenoy's Homepage</A> </LI></UL></TD></TR></TBODY></TABLE>
    <TD vAlign=3Dtop align=3Dleft bgColor=3D#ffffff>
      <TABLE width=3D"100%" border=3D0>
        <TBODY>
        <TR>
          <TD vAlign=3Dtop align=3Dleft><!-- InstanceBeginEditable =
name=3D"Beginning" -->
            <P class=3DmainHeading>Portfolio Performance Report<SPAN=20
            class=3Dstyle1><A=20
            =
href=3D"http://www2.business.ku.edu/apm/newsletter/Copy%20of%20q1-05/apmn=
ews_q1-05.htm#performance">...more</A></SPAN></P><!-- =
InstanceEndEditable -->
            <TABLE class=3Dperformancefulltable cellSpacing=3D0 =
width=3D"100%"=20
            bgColor=3D#cccccc border=3D0><!--DWLayoutTable--><!-- =
InstanceBeginEditable name=3D"Performance Table" -->
              <TBODY>
              <TR>
                <TD class=3Dperformancetotal width=3D107>&nbsp;</TD>
                <TD class=3Dperformancetotal width=3D108>
                  <DIV align=3Dcenter><STRONG>Total Return YTD - May 31=20
                  </STRONG></DIV></TD>
                <TD class=3Dperformancetotal width=3D106>
                  <DIV align=3Dcenter><STRONG>1st Q =
Return</STRONG></DIV></TD>
                <TD class=3Dperformancetotal width=3D111>
                  <DIV align=3Dcenter><STRONG>Latest 4=20
              Quarters</STRONG></DIV></TD></TR>
              <TR>
                <TD class=3Dperformancetotal><STRONG>SP500</STRONG></TD>
                <TD class=3Dperformancetotal>
                  <DIV align=3Dcenter>-1.1%</DIV></TD>
                <TD class=3Dperformancetotal>
                  <DIV align=3Dcenter>-2.5%</DIV></TD>
                <TD class=3Dperformancetotal>
                  <DIV align=3Dcenter>7%</DIV></TD></TR>
              <TR>
                <TD class=3Dperformancetotal><STRONG>SP600</STRONG></TD>
                <TD class=3Dperformancetotal>
                  <DIV align=3Dcenter>-1.7%</DIV></TD>
                <TD class=3Dperformancetotal>
                  <DIV align=3Dcenter>-2.3%</DIV></TD>
                <TD class=3Dperformancetotal>
                  <DIV align=3Dcenter>14%</DIV></TD></TR>
              <TR>
                <TD =
class=3Dperformancetotal><STRONG>NASDAQ</STRONG></TD>
                <TD class=3Dperformancetotal>
                  <DIV align=3Dcenter>-4.6%</DIV></TD>
                <TD class=3Dperformancetotal>
                  <DIV align=3Dcenter>-7.8%</DIV></TD>
                <TD class=3Dperformancetotal>
                  <DIV align=3Dcenter>4%</DIV></TD></TR>
              <TR>
                <TD class=3Dperformancetotal><STRONG>APM</STRONG></TD>
                <TD class=3Dperformancetotal>
                  <DIV align=3Dcenter>-0.8%</DIV></TD>
                <TD class=3Dperformancetotal>
                  <DIV align=3Dcenter>0.8%</DIV></TD>
                <TD class=3Dperformancetotal>
                  <DIV align=3Dcenter>13%</DIV></TD></TR>
              <TR>
                <TD =
class=3Dperformancetotal><STRONG>APM-adjusted</STRONG></TD>
                <TD class=3Dperformancetotal>
                  <DIV align=3Dcenter>-1.5%</DIV></TD>
                <TD class=3Dperformancetotal>
                  <DIV align=3Dcenter>0.1%</DIV></TD>
                <TD class=3Dperformancetotal>
                  <DIV align=3Dcenter>12%</DIV></TD></TR><!-- =
InstanceEndEditable -->
              <TR>
                <TD height=3D3><IMG height=3D1 alt=3D""=20
                  =
src=3D"http://www2.business.ku.edu/apm/newsletter/templates/spacer.gif"=20
                  width=3D107></TD>
                <TD><IMG height=3D1 alt=3D""=20
                  =
src=3D"http://www2.business.ku.edu/apm/newsletter/templates/spacer.gif"=20
                  width=3D108></TD>
                <TD><IMG height=3D1 alt=3D""=20
                  =
src=3D"http://www2.business.ku.edu/apm/newsletter/templates/spacer.gif"=20
                  width=3D106></TD>
                <TD><IMG height=3D1 alt=3D""=20
                  =
src=3D"http://www2.business.ku.edu/apm/newsletter/templates/spacer.gif"=20
                  width=3D111></TD></TR></TBODY></TABLE><!-- =
InstanceBeginEditable name=3D"Main" -->
            <P class=3DmainHeadingBlue align=3Dleft>APM Invitational - =
Plan for it=20
            <SPAN class=3DmainParagraph><IMG height=3D202=20
            =
src=3D"http://www2.business.ku.edu/apm/images/alvamar-200w.jpg"=20
            width=3D150 align=3Dright></SPAN>today! </P>
            <P class=3DmainParagraph align=3Dleft>On Friday, September =
16 APM will=20
            host its 1st annual Golf Tournament. Get your foursome =
together, or=20
            just come to meet old and new friends. They'll be many =
exciting=20
            prizes. Stay for the football game on September 17. </P>
            <P class=3DmainHeading align=3Dleft>&nbsp;</P>
            <P class=3DmainHeading align=3Dleft>Thanks to a Great Group =
of Q1=20
            Speakers</P>
            <P class=3DmainParagraph align=3Dleft>This quarter we had an =
outstanding=20
            group of speakers.<BR><BR><STRONG>Michael Lamb</STRONG> - =
CEO,=20
            Wealth Monitors<IMG height=3D128=20
            src=3D"http://www2.business.ku.edu/apm/images/news01.jpg" =
width=3D192=20
            align=3Dright><BR><STRONG>Craig West</STRONG>, Sr. Analyst, =
SB=20
            Group<BR><STRONG>Todd Preheim</STRONG>, President, Campanile =

            Capital<BR><STRONG>John Sherman</STRONG>, CEO and =
<STRONG>Mike=20
            Campbel</STRONG>l, Treasurer, Inergy<BR><STRONG>Marc=20
            Hensel</STRONG>, VP M&amp;A, Plains =
Exploration<BR><STRONG>Brad=20
            Shoup</STRONG>, President, BCS Capital<BR><STRONG>John=20
            Dicus</STRONG>, CEO, Capital Federal<BR><STRONG>David=20
            Schulte</STRONG>, CEO, Tortoise Energy </P>
            <P class=3DmainParagraph align=3Dleft>Thanks also to =
<STRONG>Jon Blumb=20
            </STRONG>for more great photos that are featured in this =
newsletter.=20
            <STRONG>Kent McCarthy </STRONG>called and visited several =
times.=20
</P>
            <P class=3DmainParagraph align=3Dleft><SPAN =
class=3DmainHeading><A=20
            name=3Dtyg></A>Tortoise Winning the Race </SPAN><BR><SPAN=20
            class=3Dauthor>By Group 6</SPAN></P>
            <P class=3DmainParagraph><SPAN class=3DmainParagraph>On =
March 30th=20
            <STRONG>David Schulte</STRONG>, CEO of Tortoise Energy=20
            Infrastructure Corporation (TYG), presented to the APM class =
the<IMG=20
            height=3D173=20
            =
src=3D"http://www2.business.ku.edu/apm/images/newstortoise.jpg"=20
            width=3D173 align=3Dright> unique philosophy behind his =
up-and-coming=20
            company. Tortoise Energy is a closed end mutual fund that =
has=20
            achieved higher than average returns by investing in Master =
Limited=20
            Partnerships in the energy infrastructure sector (such as =
pipeline=20
            and processing operations). The investments have included =
both=20
            publicly traded and privately placed equity, as well as debt =

            securities . Tortoise=92s strategy is based on providing its =

            shareholders with three essentials: Yield, Growth and =
Quality. Mr.=20
            Schulte explained how TGY=92s selected MLP investments are =
primarily=20
            focused in sectors that produce steady streams of cash flows =
with=20
            very little exposure to fluctuating commodity prices. Mr. =
Schulte=20
            did not hesitate to highlight his enthusiasm for the =
successful=20
            reciprocal relationship TGY had with Inergy =96 an APM =
portfolio=20
            favorite that many of us are excited about too. Students=92 =
curiosity=20
            led to long discussions regarding the company=92s =
revolutionary way of=20
            dealing with taxes. As the presentation progressed, the =
company=20
            became a very appealing prospect to add to our portfolio. =
Tortoise=20
            provides its investors with diversification while =
maintaining low=20
            correlations to stocks and bonds. By allowing its investors =
direct=20
            access to private placements (usually unregistered MLP =
units), TGY=20
            is able to maintain a competitive advantage. TGY=92s C =
Corporation=20
            structure allows institutions to own Tortoise and =
participate on a=20
            broader scale. It was for these reasons, as well as its =
attractive=20
            yield, that sold the class on the idea of purchasing shares =
of TGY=20
            the following week.</SPAN></P>
            <P class=3DmainParagraph>After he was finished, Mr. Schulte =
stayed to=20
            hear a practice presentation by<IMG height=3D171=20
            src=3D"http://www2.business.ku.edu/apm/images/jamie.jpg" =
width=3D256=20
            align=3Dright> APM's Group 5 with <STRONG>Elizabeth =
White</STRONG>,=20
            <STRONG>Marcelo Moreira</STRONG>, <STRONG>Jamie =
Melzer</STRONG>,=20
            <STRONG>Peggy Cameron</STRONG>, and <STRONG>Carolyn =
Mohr</STRONG>=20
            preparing for a competition at the Stern Global Summit at =
New York=20
            University . His insightful comments were particularly =
helpful=20
            because their chosen stock was none other than=85Inergy! We =
just can=92t=20
            seem to get enough! </P>
            <P class=3DmainParagraph>This just in....Jamie Melzer will =
work at=20
            Tortoise as an intern during the summer! </P>
            <P><SPAN class=3DmainHeading><A name=3Dshoup></A>Shoup =
Provides Insight=20
            on Oil Industry &amp; Investing</SPAN><BR><SPAN =
class=3Dauthor>By=20
            Group 1</SPAN></P>
            <P class=3DmainParagraph><STRONG>Brad Shoup</STRONG>, a KU =
Engineering=20
            grad, enlightened the class this quarter with a brief =
history of oil=20
            companies in the 1980=92s and provided an outlook for oil =
production=20
            and equity markets. </P>
            <P class=3DmainParagraph>After graduating from KU, Mr. Shoup =
spent two=20
            years working for Exxon before earning his MBA from MIT. =
After=20
            graduation, he went to work for Texas oilman and corporate =
raider T.=20
            Boone Pickens who is infamous for leveraging his firm, Mesa =
Oil,=20
            with high-yield debt to make tender offers on other oil =
companies.=20
            His strategy led to the sale of Gulf Oil to Chevron, and =
forced=20
            other firms such as Phillips, Unocal, &amp; Diamond Shamrock =
to=20
            self-tender to avoid being acquired. Mr. Shoup explained =
that during=20
            the 1980=92s oil companies were pouring millions into =
unprofitable=20
            exploration. Once the firms self-tendered or were acquired =
using=20
            high-yield debt, managements of those firms burdened by =
their new=20
            debt service were forced to choose the most profitable =
projects so=20
            as not to default on the debt. The strategy usually enhanced =

            shareholder value because all the cash burned in =
unprofitable=20
            exploration typically outweighed the more prudent =
exploration=20
            spending plan plus the increased debt service. .</P>
            <P class=3DmainParagraph>Mr. Shoup continued that =
understanding the=20
            current supply and demand characteristics of energy markets =
is=20
            crucial in the valuation of energy firms. He stated that =
natural gas=20
            production peaked in 2000, and since that time prices of =
natural gas=20
            have risen from $2 per Mcf to around $7 per Mcf today. Even =
if a=20
            pipeline from Alaska comes to fruition, realization of =
increased=20
            production of 10% or more could be 10 years off. . Looking =
at oil=20
            production, Mr. Shoup estimate daily production of oil is 84 =
million=20
            barrels (MBOPD). Non-OPEC countries produce 56 MBOPD, =
leaving about=20
            28 MBOPD for OPEC countries. The United States consumption =
of around=20
            20-21 MBOPD outstrips its 7 MBOPD production. Further, =
non-OPEC=20
            production, excluding Russia, has been flat for the past =
four years,=20
            and the primary growth in global production has come from =
Russia.=20
            =93Estimates vary for the ability for OPEC countries to =
increase=20
            production,=94 added Mr. Shoup, =93but it is clear that =
non-OPEC=20
            production is at or near its peak.=94 </P>
            <P class=3DmainParagraph>If total production is peaking, =
what can be=20
            done to help reduce demand? The early 1980=92s was the last =
time=20
            demand fell over the long-term (around three years). Oil =
demand in=20
            developed countries was reduced by what Mr. Shoup described =
as=20
            =93fuel-switching=94. Substitution of natural gas for =
oil-based fuels=20
            used in power generation and heating led to reduced demand =
for oil.=20
            These shifts provided relief to soaring prices. =
Unfortunately, today=20
            there aren=92t any big =93switches=94 to flip to reduce the =
demand.=20
            Conservation appears to be the only alternative, and that =
takes=20
            years to make a large impact. So what should we expect? Mr. =
Shoup=20
            believes, =93supply (of oil) will remain tight and expect it =
to get=20
            tighter with the potential of a worldwide production =
turndown in the=20
            next five years.=94</P>
            <P class=3DmainParagraph>The impact of higher prices over =
the=20
            long-term will clearly be a negative catalyst for equity =
markets.=20
            When asked about his outlook for equity markets, Mr. Shoup =
said,=20
            =93the market looks tough for the next few years.=94 His =
justification=20
            for this belief is that the U.S. has had many years of =
falling=20
            energy prices coupled with decreasing interest rates. This =
has lead=20
            to stronger GDP growth and higher multiples for equities. If =
higher=20
            energy prices are likely here to stay, this coupled with =
stable or=20
            rising interest rates could lead to tougher markets over the =

            long-term.</P>
            <P class=3DmainParagraph>Despite a bleak outlook on equity =
markets,=20
            Mr. Shoup has recently started a long-short fund. His =
investment=20
            philosophy is to be =93analytically intensive=94 and not =
focus on=20
            portfolio management (i.e., own 100 different names). He =
currently=20
            owns around thirty names and anticipates owning a maximum of =

            forty-five. Short sales are driven primarily by anticipated =
negative=20
            events rather than overvaluation, but Mr. Shoup will still =
enter=20
            shorts based on valuation. When making long decisions Mr. =
Shoup=20
            believes you should =93do a lot of work on a firm until you =
know them=20
            intimately. You can really make hay by knowing your =
positions really=20
            well and having the confidence to buy more when they move =
against=20
            you.=94 This is good advice if we will be facing the tough =
markets he=20
            anticipates.</P>
            <P class=3Dsmalltext><SPAN class=3DmainHeading><A =
name=3DSchier></A>The=20
            Jim Schier Way</SPAN><BR><SPAN class=3Dauthor>By Group =
7</SPAN></P>
            <P class=3DmainParagraph>When most people think of a =
plain-spoken=20
            Midwestern portfolio manager with a value approach who has=20
            outperformed his index for an extended period of time, most =
people=20
            think of one person: <STRONG>Warren Buffett</STRONG>. =
Actually they=20
            should add another manager to that list: <STRONG>Jim=20
            Schier</STRONG>. Schier has managed Security Benefit=92s =
Mid-Cap Value=20
            Fund since 1997 and the Security Mid-Cap Growth Fund since =
1998.</P>
            <P class=3DmainParagraph>Since 1997 Jim Schier=92s Security =
Mid Cap=20
            Value Fund has beaten its index, the Russell 2000, every =
year. Over=20
            the past five years, this fund has produced average annual =
returns=20
            of 18.24%, beating the S&amp;P 500=92s annual return by 20%. =
This=20
            impressive streak of outperformance is the second longest in =
the=20
            nation, behind only Bill Miller=92s Legg Mason Value Trust. =
This=20
            impressive record is not found in New York, Boston, or San=20
            Francisco. It is found at Security Benefit=92s headquarters =
in Topeka,=20
            KS!</P>
            <P><SPAN class=3DmainParagraph>=93We think about what we =
would do with=20
            our money=85what would I want to own?=94 I think we have an =
opportunity=20
            if we are patient,=94 said Schier.</SPAN></P>
            <P class=3DmainParagraph>Jim Schier=92s Mid-Cap Value Fund =
looks for=20
            good companies trading at depressed prices, clean balance =
sheets,=20
            and untapped profit levers that could unlock value for =
shareholders.=20
            Schier uses a bottom up approach to picking stocks, =
evaluating the=20
            fundamentals of each company over a three to five year time =
horizon.=20
            In addition, Schier has developed a proprietary curve =
methodology=20
            based on a comparison of valuation and pre-tax return on =
capital,=20
            which helps him evaluate companies relative to their peers. =
The=20
            curve helps narrow his universe and identify companies for =
in depth=20
            research, and also determine how to weight the =
portfolio.</P>
            <P><SPAN class=3DmainParagraph>=93A lot of time the cheapest =
isn=92t the=20
            best,=94 said Schier. =93We work up the curve until we find =
good=20
            fundamentals. It is not a black box, it is a starting point =
for=20
            looking at how things change.=94</SPAN></P>
            <P class=3DmainParagraph>Each of the analysts for Schier=92s =
funds=20
            covers a broad range of companies. Based on their individual =
stock=20
            research, this allows them to get a good feel for how =
different=20
            industries are doing and identify trends.</P>
            <P class=3DmainParagraph><STRONG>Craig West</STRONG>, who =
was a top=20
            ranked healthcare analyst during his time at AG Edwards, =
joined=20
            Schier=92s team in 2001 to add special expertise in =
healthcare and=20
            biotech, key areas for a small to mid cap fund. Craig =
recently came=20
            to speak to the KU APM class, giving students a glimpse into =
the=20
            type of fundamental research his team puts into every =
investment=20
            recommendation.</P>
            <P class=3DmainParagraph><STRONG>Troy Showalter</STRONG>, =
CFA, joined=20
            the team in August of 2000. As a sell side analyst Showalter =

            developed specialized knowledge of technology and telecom. =
He brings=20
            to SB=92s buy side an understanding of these sectors that is =
essential=20
            in evaluating investment opportunities requiring specific =
industry=20
            knowledge.</P>
            <P class=3DmainParagraph>This combination of a well defined =
value=20
            approach and a sharp team of analysts with deep industry =
knowledge=20
            has produced outstanding results for the plain-spoken =
Midwestern=20
            portfolio manager from Topeka, Kansas.</P>
            <P><SPAN class=3DmainHeading><A =
name=3Dperformance></A>Portfolio=20
            Performance - Q1 2005</SPAN><BR><SPAN class=3Dauthor>By =
Group=20
            2<STRONG> </STRONG></SPAN></P>
            <P><SPAN class=3DmainParagraph>The APM portfolio concluded =
Q1 2005 at=20
            $732,951, down $17,177 from the previous quarter. This =
equates to a=20
            negative return of 0.1% compared to the return of -2.3% on =
the=20
            S&amp;P 600 small cap index over the same period. The APM =
portfolio=20
            outperformed the S&amp;P 500 (-2.59%) and the NASDAQ =
(-8.10%)=20
            indices during Q1 2005. </SPAN></P>
            <P class=3DmainParagraph>During Q1 2005 the APM Portfolio =
executed 28=20
            total transactions compared to 23 during the previous =
quarter. Of=20
            these transactions, 13 were on the sell side. Sales of note =
included=20
            13,000 shares each of Internacional de Ceramica B (CERAMIC =
B) and=20
            Internacional de Ceramica D (CERAMIC D), thus reducing the=20
            portfolio=92s position in each security by 17% to 8.31% of =
the total=20
            portfolio. The Beverly Hills Bancorp Inc. (BHBC) position =
was pared=20
            by 2,000 shares or 22% to 10.21% of the total portfolio. The =

            portfolio closed out its positions entirely in four =
securities:=20
            American Service Group Inc (ASGR, 150 shares), PC-Tel Inc =
(PCTI,=20
            2,000 shares), American Italian Pasta Co (PLB, 225 shares), =
and=20
            Western Wireless Corp (WWCA, 400 shares). </P>
            <P class=3DmainParagraph>On the buy side our position in =
Oplink=20
            Communications (OPLK) was increased significantly to 6.02% =
of the=20
            portfolio by adding 27,500 shares in five separate purchases =

            beginning with 10,000 shares at $1.60 and the remaining =
shares=20
            between $1.45 and $1.47. Also APM made small additions to =
China=20
            Green Holdings (904 on the Hong Kong exchange) by purchasing =
35,000=20
            shares at $0.235 (to 4.77% of the portfolio) and 800 shares =
of=20
            Sohu.com Inc (SOHU) at $16.68 (to 4.13% of the portfolio). =
In=20
            addition, we doubled our LSB Industries (LXU) position by =
purchasing=20
            3,000 shares at $6.12 (to 5.60 % of the portfolio), and =
increased=20
            our Chinadotcom Corp. (CHINA) holding by purchasing 6,000 =
shares at=20
            $3.35 and another 1,000 shares at $3.02 (to 5.60 % of the=20
            portfolio). Finally, APM increased two smaller positions by=20
            purchasing 200 shares of Inergy (NRGY) at $32.72 (to 4.42%) =
and 100=20
            shares of Valero Energy (VLO) at $69.63 (to 2.52%). </P>
            <P class=3DmainParagraph>During Q1 2005 the APM Portfolio =
took long=20
            positions in three securities new to the portfolio. Early in =
the=20
            period we purchased 30,000 shares of Launch Tech (LHTCF) at =
$0.27=20
            per share and 4,000 shares of Oneida (ONEI) at $2.54. =
Shortly before=20
            the end of the quarter the portfolio purchased 500 shares of =
Plains=20
            Exploration &amp; Production Company (PXP) at $36.19 per =
share.=20
            Oneida was recommended by <STRONG>Michael Lamb</STRONG> who =
spoke to=20
            the class in February. PXP was recommended by <STRONG>Marc=20
            Hensel</STRONG>, an APM alum who spoke to the class in =
March. </P>
            <P class=3DmainParagraph>As is shown in the chart below, =
significant=20
            winners during Q1 2005 include Valero (VLO) leading all =
returns at=20
            61.60%, Plains Exploration &amp; Production Company (PXP), =
Encore=20
            Acquisition Inc. (EAC) and Inergy (NRGY). The worst =
performing=20
            holding was Spatialight Inc. (HDTV) down 43.58% followed by=20
            Chinadotcom Inc. (CHINA), Novastar Financial (NFI), and =
Garmin=20
            (GRMN). </P>
            <P><SPAN class=3DmainHeading><A name=3Dinergy></A>John =
Sherman, Inergy,=20
            L.P. CEO visits APM class</SPAN><BR><SPAN class=3Dauthor>By =
Group 5=20
            </SPAN></P>
            <P><SPAN class=3DmainParagraph>On February 23, 2005 , the =
APM class=20
            was pleased to welcome back John <IMG height=3D130=20
            =
src=3D"http://www2.business.ku.edu/apm/images/johnsherman.jpg"=20
            width=3D102 align=3Dright>Sherman, the founder and CEO of =
Inergy, L.P.,=20
            and with him Mike Campbell, Vice president and treasurer. =
Sherman=20
            brings 20 yrs of experience in the propane industry to this =
company=20
            that he started in 1996. Inergy later went public in 2001. =
Since=20
            then, Inergy has grown to become the 5 th largest publicly =
traded=20
            propane distributor in the US . Inergy serves over 600,000 =
retail=20
            customers through 280 customer service centers in 27 states =
in the=20
            eastern US, along with a small presence in California and =
Canada .=20
            </SPAN></P>
            <P class=3DmainParagraph>John Sherman=92s presentation =
emphasized=20
            Inergy=92s strong past performance as well as a continued =
strategy of=20
            future growth. Through acquisitions of other propane =
companies, the=20
            company has shown a clear focus on growing market share as =
well as=20
            distributions to its unitholders. Most notably was the =
acquisition=20
            of the propane portion of StarGas, L.P. in Dec. of 2004. =
StarGas was=20
            the 6 th largest propane distributor in the industry. The=20
            acquisition doubled Inergy=92s size and increased its market =
share,=20
            moving it to the number 5 position. </P>
            <P class=3DmainParagraph>Sherman also discussed the =
fundamentals and=20
            benefits of Inergy=92s corporate structure, the Master =
Limited=20
            Partnership (MLP). MLP=92s recently have been a popular =
topic in the=20
            investment world due to new regulations allowing mutual =
funds to=20
            invest in them. MLP=92s have also been receiving attention =
for their=20
            high distribution yields. Inergy=92s current yield is at 6% =
and has=20
            been consistently growing since its 2001 IPO.</P>
            <P class=3DmainParagraph>NRGY is currently the 6 th largest =
position=20
            in the APM portfolio at 4.52%. We have held the stock for =
about two=20
            years during which time it has split 2/1 and appreciated 92% =

            overall. We look forward to its continued positive =
performance in=20
            the market.</P>
            <P class=3Dstyle1><SPAN class=3DmainHeading>Marc Hensel from =
Germany to=20
            KU to Houston and back </SPAN><BR><SPAN class=3Dauthor>By =
Group=20
            5</SPAN></P>
            <P class=3DmainParagraph>Marc Hensel, University of Kansas =
alumnus and=20
            Vice President of Acquisitions &amp; Divestments for Plains=20
            Exploration &amp; Production Company (PXP), made a =
presentation=20
            about his company to the APM class on March 9, 2005. Hensel =
related=20
            that he initially was employed locally at Koch Industries as =
the=20
            Director of Mergers &amp; Acquisitions and then moved to =
Enron.=20
            There he served as Director of Business Development for =
Enron=20
            Broadband Services before Enron=92s collapse in 2001.</P>
            <P class=3DmainParagraph>His presentation, which also had =
been given=20
            at a Raymond James conference earlier in the week, =
particularly=20
            outlined PXP=92s acquisitions of Nuevo and 3TEC. Hensel =
related that=20
            PXP is currently the tenth largest independent producer of =
oil in=20
            the US. He also delineated PXP=92s extensive production in =
the Los=20
            Angeles area=97with specific attention paid to the status of =
various=20
            off-coast projects, and specifically, the Tranquillon Ridge. =

            Although PXP is located primarily in the L.A. Basin, the =
second=20
            largest oil field in the world, it now also is expanding its =

            drilling to the Gulf of Mexico. While Hensel conceded the =
costs of=20
            entering the Gulf of Mexico as a small independent company =
are high,=20
            he was nonetheless optimistic about the rewards.</P>
            <P class=3DmainParagraph>Hensel=92s presentation provided =
the class with=20
            an inside look at the oil industry, and especially the =
regulatory=20
            issues involved in expanding operations in California. He =
also=20
            offered beneficial insight into the world of corporate =
mergers and=20
            acquisitions. He left us with the following words of wisdom: =
=93The=20
            ability to execute quickly is key in M&amp;A.=94</P>
            <P class=3DmainParagraph><SPAN class=3DmainHeading><A=20
            name=3Ddonors></A>Thanks to all our Recent =
Donors!</SPAN></P>
            <TABLE cellSpacing=3D2 width=3D400 border=3D0>
              <TBODY>
              <TR class=3Dperformancefulltable>
                <TD><SPAN class=3Dstyle7>Bart Baldwin</SPAN></TD>
                <TD><SPAN class=3Dstyle7>Shane Parr</SPAN></TD></TR>
              <TR class=3Dperformancefulltable>
                <TD><SPAN class=3Dstyle7>Jon Blumb</SPAN></TD>
                <TD><SPAN class=3Dstyle7>Margaret and Teal =
Dakan</SPAN></TD></TR>
              <TR class=3Dperformancefulltable>
                <TD><SPAN class=3Dstyle7>Jim MacMurray</SPAN></TD>
                <TD><SPAN class=3Dstyle7>Andrew =
Steinbach</SPAN></TD></TR>
              <TR class=3Dperformancefulltable>
                <TD><SPAN class=3Dstyle7>Paul and Michelle =
Melland</SPAN></TD>
                <TD><SPAN class=3Dstyle7>Bill Self</SPAN></TD></TR>
              <TR class=3Dperformancefulltable>
                <TD><SPAN class=3Dstyle7>Charles and Marie =
McCarthy</SPAN></TD>
                <TD><SPAN class=3Dstyle7>Josh Selzer</SPAN></TD></TR>
              <TR class=3Dperformancefulltable>
                <TD><SPAN class=3Dstyle7>Jacquelyn Summers</SPAN></TD>
                <TD><SPAN class=3Dstyle7>David C. Brown</SPAN></TD></TR>
              <TR class=3Dperformancefulltable>
                <TD><SPAN class=3Dstyle7>Ivo Voynov</SPAN></TD>
                <TD><SPAN class=3Dstyle7>Jeremy =
Richardson</SPAN></TD></TR>
              <TR class=3Dperformancefulltable>
                <TD><SPAN class=3Dstyle7>Scott Jones</SPAN></TD>
                <TD><SPAN class=3Dstyle7>Todd and Colleen =
Preheim</SPAN></TD></TR>
              <TR class=3Dperformancefulltable>
                <TD class=3Dstyle7>Julie Colahan </TD>
                <TD class=3Dstyle7>Scott F. Jones </TD></TR>
              <TR class=3Dperformancefulltable>
                <TD class=3Dstyle7>Kellye Abernathy </TD>
                <TD>&nbsp;</TD></TR></TBODY></TABLE>
            <P class=3DmainParagraph>If you would like to donate, Kent =
is matching=20
            alumni donations 2:1 and all other 1:1. Send your =
contributions to=20
            <BR><BR><SPAN class=3Dsmalltext>School of Business=20
            Endowment<BR>Applied Portfolio Management<BR>c/o Gregory J. =
Lamb=20
            <BR>KU School of Business<BR>1300 Sunnyside =
Avenue<BR>Lawrence,=20
            Kansas 66045-7585</SPAN></P>
            <P class=3DmainParagraph><A name=3Dclass></A><A=20
            =
href=3D"http://www2.business.ku.edu/apm/class/classgroupsSpring05.html"><=
STRONG>Visit=20
            our website to see this semester's group =
pictures.</STRONG></A><IMG=20
            height=3D171 =
src=3D"http://www2.business.ku.edu/apm/images/new0105.jpg"=20
            width=3D256 align=3Dright></P>
            <P class=3DmainParagraph><BR>The groups are:</P>
            <P class=3DmainParagraph>Group 1 - Chris Allen, Amy Boomer, =
Joe Bush,=20
            Jeff Morrison, and Mike Switzer</P>
            <P class=3DmainParagraph>Group 2 - Jon Haugh, Leo Khayet, =
and David=20
            Warner</P>
            <P class=3DmainParagraph>Group 3 - Wes Cannon, Jarod =
Clarrey, Justin=20
            Pickert</P>
            <P class=3DmainParagraph>Group 4 - Brianna Kelly, Jason =
Mitchell,=20
            Brandon Turner, Megan Wood</P>
            <P class=3DmainParagraph>Group 5 - Peggy Cameron, Jamie =
Melzer,=20
            Carolyn Mohr, Marcelo Moreira, Elizabeth White</P>
            <P class=3DmainParagraph>Group 6 - Surabhi Drona, Thinh =
Huynh, Vimbayi=20
            Kajese, Joe Ramirez</P>
            <P class=3DmainParagraph>Group 7 - Tim Burger, Philipp Gehr, =
Heidi=20
            Landherr, Lyle Niedens <BR><BR>Jimmy Dai and Patrick Quinn =
also=20
            attended class. </P>
            <P=20
        class=3DmainParagraph><BR></P><!-- InstanceEndEditable =
--></TD></TR></TBODY></TABLE>
      <TABLE width=3D"100%" border=3D0>
        <TBODY>
        <TR>
          <TD class=3Dcopyright vAlign=3Dcenter align=3Dmiddle>Copyright =
2004,=20
            Applied Portfolio Management Program<BR>University of Kansas =
School=20
            of Business</TD></TR></TBODY></TABLE></TD>
    <TD class=3Drightpane vAlign=3Dtop align=3Dleft>
      <P>&nbsp;</P></TD>
    <TD><IMG height=3D167 alt=3D""=20
      =
src=3D"http://www2.business.ku.edu/apm/newsletter/templates/spacer.gif"=20
      width=3D1 border=3D0></TD></TR></TBODY></TABLE><!-- InstanceEnd =
--></BODY></HTML>

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------=_NextPart_000_00DB_01C7EBDB.BFE1CD00
Content-Type: text/css;
	charset="iso-8859-1"
Content-Transfer-Encoding: quoted-printable
Content-Location: http://www2.business.ku.edu/apm/css/apm_styles.css

.leftpane {
	BORDER-RIGHT: #666666 1px solid; PADDING-RIGHT: 0px; PADDING-LEFT: 0px; =
FONT-SIZE: 10px; BACKGROUND-IMAGE: url(left_bgnd.jpg); PADDING-BOTTOM: =
0px; PADDING-TOP: 0px; BACKGROUND-REPEAT: repeat-x; FONT-FAMILY: Tahoma, =
Verdana, Arial
}
.toppane {
	BORDER-BOTTOM: #666666 1px solid; FONT-FAMILY: Verdana, Tahoma, Arial; =
BACKGROUND-COLOR: #990000
}
.headingsub {
	FONT-WEIGHT: bold; FONT-SIZE: 10px; COLOR: #cccccc; FONT-FAMILY: =
Verdana, Tahoma, Arial
}
.topright {
	BACKGROUND-POSITION: right top; BACKGROUND-IMAGE: =
url(topright_bgnd.jpg); BACKGROUND-REPEAT: repeat-y; BACKGROUND-COLOR: =
#990000
}
.topleft {
	BACKGROUND: url(topleft_watermark.jpg) #990000 fixed no-repeat right =
top
}
.title1 {
	FONT-WEIGHT: bold; FONT-SIZE: 24px; COLOR: #cccccc; FONT-FAMILY: =
Tahoma, Verdana, Arial
}
.rightpane {
	BACKGROUND-POSITION: left top; FONT-SIZE: 10px; BACKGROUND-IMAGE: =
url(rightpane.gif); BORDER-LEFT: #666666 1px solid; BACKGROUND-REPEAT: =
no-repeat; FONT-FAMILY: Tahoma, Verdana, Arial; BACKGROUND-COLOR: =
#cccccc
}
.leftnewsheading {
	PADDING-LEFT: 1px; FONT-SIZE: 12px; COLOR: #ffffff; FONT-FAMILY: =
Verdana, Tahoma, Arial; BACKGROUND-COLOR: #666666
}
.leftsubheading {
	PADDING-RIGHT: 0px; PADDING-LEFT: 2px; FONT-SIZE: 10px; PADDING-BOTTOM: =
0px; COLOR: #000000; PADDING-TOP: 0px; FONT-FAMILY: Tahoma, Verdana, =
Arial
}
.copyright {
	FONT-SIZE: 9px; COLOR: #666666; FONT-FAMILY: Tahoma, Verdana, Arial
}
A:link {
	COLOR: #666699; TEXT-DECORATION: none
}
A:hover {
	COLOR: #666699; TEXT-DECORATION: underline
}
A:visited {
	COLOR: #666699; TEXT-DECORATION: none
}
bodyHeading {
	FONT-SIZE: 14px; WORD-SPACING: 5px; FONT-FAMILY: Verdana, Tahoma, Arial
}
mainHeading {
	FONT-SIZE: 18px; FONT-FAMILY: Verdana, Tahoma, Arial
}
.mainHeading {
	FONT-SIZE: 18px; WORD-SPACING: 7px; COLOR: #333333; BORDER-BOTTOM: =
#999999 1px solid; FONT-FAMILY: Verdana, Tahoma, Arial; LETTER-SPACING: =
4px
}
.mainParagraph {
	PADDING-RIGHT: 3px; PADDING-LEFT: 3px; FONT-SIZE: 12px; PADDING-BOTTOM: =
1px; COLOR: #000000; TEXT-INDENT: 1em; PADDING-TOP: 1px; FONT-FAMILY: =
Tahoma, Verdana, Arial; TEXT-ALIGN: justify
}
.portperformtitle {
	FONT-WEIGHT: bold; FONT-SIZE: 14px; LEFT: 0px; COLOR: #333333; =
BORDER-BOTTOM: #666666 1px solid; FONT-FAMILY: Verdana, Tahoma, Arial
}
.performancetotal {
	BORDER-TOP: #666666 1px solid; FONT-SIZE: 11px; FONT-FAMILY: Tahoma, =
Verdana, Arial
}
.performancefulltable {
	BORDER-RIGHT: #666666 1px solid; BORDER-TOP: #666666 1px solid; =
BORDER-LEFT: #666666 1px solid; BORDER-BOTTOM: #666666 1px solid
}
.author {
	FONT-SIZE: 10pt; WORD-SPACING: 7px; COLOR: #333333; TEXT-INDENT: 3em; =
FONT-FAMILY: Verdana, Tahoma, Arial; LETTER-SPACING: 3px
}
.subtitle {
	FONT-WEIGHT: bold; FONT-SIZE: 11pt; COLOR: #666666; FONT-STYLE: normal; =
FONT-FAMILY: Verdana, Tahoma, Arial
}
.mainHeadingpagebreak {
	FONT-SIZE: 18px; PAGE-BREAK-BEFORE: always; WORD-SPACING: 7px; COLOR: =
#333333; BORDER-BOTTOM: #999999 1px solid; FONT-FAMILY: Verdana, Tahoma, =
Arial; LETTER-SPACING: 4px
}
.caption {
	FONT-WEIGHT: bold; FONT-SIZE: x-small; FONT-STYLE: normal; FONT-FAMILY: =
Verdana, Tahoma, Arial, sans-serif
}
.link {
	FONT-WEIGHT: bold; FONT-SIZE: small; COLOR: #0066ff; FONT-FAMILY: =
Verdana, Tahoma, sans-serif; TEXT-DECORATION: underline
}
.perfomancelink {
	BORDER-TOP: #666666 1px solid; FONT-WEIGHT: bolder; FONT-SIZE: 11px; =
COLOR: #0066cc; FONT-FAMILY: Tahoma, Verdana, Arial; TEXT-DECORATION: =
underline
}
.list {
	PADDING-RIGHT: 3px; PADDING-LEFT: 3px; FONT-WEIGHT: lighter; =
LIST-STYLE-POSITION: inside; FONT-SIZE: 12px; PADDING-BOTTOM: 1px; =
COLOR: #000066; TEXT-INDENT: 5em; PADDING-TOP: 1px; FONT-FAMILY: Tahoma, =
Verdana, Arial; LIST-STYLE-TYPE: disc; POSITION: relative; TOP: auto; =
TEXT-ALIGN: justify
}
.smallpurplelink {
	FONT-SIZE: 10px; COLOR: #666699; FONT-STYLE: normal; FONT-FAMILY: =
Verdana, Tahoma, Arial; TEXT-DECORATION: none
}
.smalltext {
	FONT-SIZE: 10px; FONT-STYLE: normal; FONT-FAMILY: Verdana, Tahoma, =
Arial
}
.smallpurplelink A:hover {
	TEXT-DECORATION: underline
}
A.smallpurplelink:hover {
	TEXT-DECORATION: underline
}
.mainHeadingBlue {
	FONT-SIZE: 18px; WORD-SPACING: 7px; COLOR: #000066; BORDER-BOTTOM: =
#999999 1px solid; FONT-FAMILY: Verdana, Tahoma, Arial; LETTER-SPACING: =
4px
}
.donor {
	BORDER-RIGHT: 0px; BORDER-TOP: #666666 0px; FONT-SIZE: 11px; =
BORDER-LEFT: 0px; BORDER-BOTTOM: 0px; FONT-FAMILY: Tahoma, Verdana, =
Arial
}
.golfheader {
	FONT-WEIGHT: bold; FONT-SIZE: x-large; TEXT-TRANSFORM: capitalize; =
COLOR: #000066; FONT-STYLE: normal; FONT-FAMILY: Verdana, Tahoma, Arial, =
sans-serif; TEXT-ALIGN: center; FONT-VARIANT: normal
}
.golfsubheader {
	FONT-WEIGHT: normal; FONT-SIZE: large; TEXT-TRANSFORM: capitalize; =
COLOR: #970f1d; FONT-STYLE: normal; FONT-FAMILY: Verdana, Tahoma, Arial, =
sans-serif; TEXT-ALIGN: center; FONT-VARIANT: normal
}
.golfmain {
	FONT-WEIGHT: bold; FONT-SIZE: 14px; WORD-SPACING: 7px; COLOR: #000066; =
BORDER-BOTTOM: #999999 thin; FONT-FAMILY: Verdana, Tahoma, Arial; =
LETTER-SPACING: 4px; TEXT-ALIGN: center
}
.researchlist {
	FONT-SIZE: small; COLOR: #000033; FONT-STYLE: normal; FONT-FAMILY: =
Verdana, Tahoma, Arial, sans-serif; HEIGHT: auto; TEXT-ALIGN: left
}

------=_NextPart_000_00DB_01C7EBDB.BFE1CD00--
