About 30 people attended the class titled “Stock Picking 101” at the Richardson Public Library on Tuesday, 26 February 2013. Ryan Wood and Norman Tang of Crown Capital Management LLC taught this class. Ryan Wood is a Portfolio Manager, and Norman Tang is a Research Analyst.
“Buy stocks that go up. If they don’t go up don’t buy them.” Will Rogers
There are three types of analysis: technical, quantitative, and fundamental. Quantitative analysis studies statistical patterns and uses mathematical models. Fundamental analysis looks for financial patterns, earnings, profitability, and P/E, P/S, P/B multiples.
There are three types of investors: value, growth, and blend/GARP. These types of investor are recognized in the Morningstar Style Box™.
Fundamental Scope can be top down or bottom up. Top down starts with global factors, focuses on country specific factors, narrows the field to sector specific factors, and then makes a stock selection. Bottom up starts with stock selection them follows the sequence up to global factors.
Capital Structure – Corporate
Lowest Risk Senior Secured Debt
Next Higher Risk Senior Debt
Next Higher Risk Subordinated Debt
Next Higher Risk Hybrids
Highest Risk Equity
Key financial statements were described. Income statement places operating section at the top and earnings section at the bottom. Profitability ratios are sales measures. Balance sheet is a statement of financial position at a specific point in time.
There are three liquidity ratios.
Current Ratio
Quick Ratio
Working Capital
There are three solvency ratios.
Debt to Equity
Debt to (Debt + Equity)
Financial Leverage
There are three valuation ratios.
Price to Earnings
Price to Sales
Price to Cash Flow
Price to Earnings ratio is historical because it changes over time.
Warning signs that companies have problems include.
Companies will typically warn that inventory is being increased because they anticipate increased demand.
Channel stuffing makes distributors take more inventory than what they need.
Share repurchases are usually good; they are NOT good when share was repurchase was made to improve earnings per share.
It is best for Chief Executive Officer and Chairman of the Board to be different people.
World Wide Web resources for stock pickers include:
Value Line® Reports are available in the Richardson Public Library.
“Buy stocks that go up. If they don’t go up don’t buy them.” Will Rogers
There are three types of analysis: technical, quantitative, and fundamental. Quantitative analysis studies statistical patterns and uses mathematical models. Fundamental analysis looks for financial patterns, earnings, profitability, and P/E, P/S, P/B multiples.
There are three types of investors: value, growth, and blend/GARP. These types of investor are recognized in the Morningstar Style Box™.
Fundamental Scope can be top down or bottom up. Top down starts with global factors, focuses on country specific factors, narrows the field to sector specific factors, and then makes a stock selection. Bottom up starts with stock selection them follows the sequence up to global factors.
Capital Structure – Corporate
Lowest Risk Senior Secured Debt
Next Higher Risk Senior Debt
Next Higher Risk Subordinated Debt
Next Higher Risk Hybrids
Highest Risk Equity
Key financial statements were described. Income statement places operating section at the top and earnings section at the bottom. Profitability ratios are sales measures. Balance sheet is a statement of financial position at a specific point in time.
There are three liquidity ratios.
Current Ratio
Quick Ratio
Working Capital
There are three solvency ratios.
Debt to Equity
Debt to (Debt + Equity)
Financial Leverage
There are three valuation ratios.
Price to Earnings
Price to Sales
Price to Cash Flow
Price to Earnings ratio is historical because it changes over time.
Warning signs that companies have problems include.
Companies will typically warn that inventory is being increased because they anticipate increased demand.
Channel stuffing makes distributors take more inventory than what they need.
Share repurchases are usually good; they are NOT good when share was repurchase was made to improve earnings per share.
It is best for Chief Executive Officer and Chairman of the Board to be different people.
World Wide Web resources for stock pickers include:
- Trading Economics,
- Edgar,
- YCharts,
- Yahoo! Finance,
- Google Finance,
- Federal Reserve Economic Data (FRED), and
- EconStats.
Value Line® Reports are available in the Richardson Public Library.
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