Stanford’s Premier Investing Group Charles R. Blyth Fund Stanford’s Premier Investing Group STOCK ANALYSIS 101

Who are we? Student-led investing group on campus Manage $140k portfolio of mostly stocks Focus on teaching students investing through hands-on valuation Meetings MW 5:15-6:15PM Wallenberg 120 STOCK ANALYSIS 101 4/21/2017

Training Session Plan Goal: Although you are in a trading competition, you need to build your fundamental investing skills before your technical skills Session 1: Stock analysis basics Session 2: Ratio analysis Session 3: Technical analysis STOCK ANALYSIS 101 4/21/2017

Key Takeaways How do I research a stock? What qualitative factors do I need to consider? What quantitative factors do I need to consider? STOCK ANALYSIS 101 4/21/2017

How do I research a stock?

How do I research a stock? Start with the Annual Report (10K) Google Finance, Yahoo! Finance, Wall Street Journal Investopedia Let’s now show you how to navigate these resources STOCK ANALYSIS 101 4/21/2017

How do I pick a good stock? Fundamental Analysis Qualitative Questions Quantitative Questions / Financial Statements Technical Analysis Charts, graphs Recent News STOCK ANALYSIS 101 4/21/2017

What qualitative factors do I need to consider?

Qualitative Questions Does the company have significant competitive advantages/barriers of entry? How has the company performed historically? What risks are involved in investing in the company? How much debt does the company carry? Are they making lots of money? Where does the company’s money go? STOCK ANALYSIS 101 4/21/2017

Qualitative Factors Business Model – How does the company make money? Competitive Advantages – What makes the company unique? Barriers of entry? Risk Factors Management STOCK ANALYSIS 101 4/21/2017

What quantitative factors do I need to consider?

Quantitative Analysis Part I: What do the financial statements say? Part II: What do its financial ratios say? Part III: How can charts & technical analysis help me trade better? Part IV (Advanced): How much is this company truly worth? Note: Today we will only be focused on Part I. STOCK ANALYSIS 101 4/21/2017

Financial Statements On Google Finance or Annual Report (10K) Three Main Statements Income Statement Cash Flow Statement Balance Sheet STOCK ANALYSIS 101 4/21/2017

Income Statement STOCK ANALYSIS 101 4/21/2017

Cash Flow Statement STOCK ANALYSIS 101 4/21/2017

STOCK ANALYSIS 101 4/21/2017

Balance Sheet STOCK ANALYSIS 101 4/21/2017

Now what do I do? Run through company’s statements line by line and figure out: What are the trends? Why are there such trends? Income Statement Questions Has the company consistently been turning a profit? What are its sources of revenue / expenses? Cash Flow Statement Questions Has the company consistently been making cash? Balance Sheet Questions Does it have enough assets to cover its debts? STOCK ANALYSIS 101 4/21/2017

Why are these useful? Foundation for understanding how much a company is worth Used for ratio analysis and other “fair value” analysis Not used for technical analysis STOCK ANALYSIS 101 4/21/2017

Key Takeaways How do I research a stock? Annual Report, Google Finance, Investopedia What are qualitative factors I need to consider? Business Model, Competitive Advantage, Growth What are quantitative factors I need to consider? Financial Statement Trends STOCK ANALYSIS 101 4/21/2017

Action Items Pick a company that you like in an industry that you’re interested in Read the company’s Annual Report (10K) Look through the company’s financial statements on Google Finance and see if you can identify trends STOCK ANALYSIS 101 4/21/2017