Real Client Managed Portfolio Memorandum

TO: Real Client Managed Portfolio, Fall 2010 Class

FROM: Tyson Banbury, Katsy Douangvichit, Nate Evett, and Matt Hawk

SUBJECT: Diamond Offshore Investment Recommendation

DATE: October 28th, 2010

RECOMMENDATION: BUY

Company Overview

Diamond Offshore Drilling, Inc. is a leading deepwater drilling contractor that has been providing services to oil and gas companies worldwide for over four decades. The company’s headquarters are located in Houston, TX, but the firm also has offices in Scotland, Brazil, and Australia. Diamond Offshore offers various forms of oil exploration and drilling to their clients. Their fleet of rigs includes semisubmersibles, jack-ups, and a drillship. Some of the main drilling locations are the Gulf of Mexico (GOM), Brazil, the Middle East, Asia, and Europe.

Portfolio Position

The portfolio currently holds 50 shares of Diamond Offshore Drilling, Inc. (DO), which were purchased in November 2008 for $72.96 per share for a total cost of $3,648. Diamond Offshore provides diversification because it is the only company that exposes our portfolio to the oil and gas drilling industry. As of October 27th, 2010, the security is yielding an unrealized loss of 7.07%.

Recent News

Crude oil prices have been in the range of $70-$85 over the last three months. There continues to be steady demand for oil around the globe; particularly China. In April 2010, a rig contracted out by competitor Transocean exploded causing an oil leak that lasted over three months. As a result, the federal government enacted an oil drilling moratorium which was lifted early on October 12, 2010. Diamond is reducing their exposure to the Gulf of Mexico and expanding into international waters.

Recommendation

We recommend a buy of 100 shares of DO. We believe the company is well positioned in the oil drilling industry with a backlog of contracts totally approximately $8.5 billion stretching as far as 2016. As the economy recovers and the externalities of the oil spill disaster and moratorium dissipate, Diamond will continue to be one of the global leaders in the industry. Demand for oil is continuing to grow in the emerging markets and their oil drilling expansion globally indicates untapped resources of revenue.