INVESTMENT PORTFOLIO(09/03/2013 TO 11/20/2013)

Thu NguyenFIN-640/Investment Analysis and Portfolio

Prefer• Include five different stocks from U.S • Each have different invested amount• Portfolio is monitored, evaluated and estimated on period

of 12 weeks (September 3rd – November 20th, 2013)• The portfolio is a medium to high-risk appetite

Investment Objective• Achieve short-term profit with $1,000,000 account balance• Expected profit for portfolio is approximate 10% of

$1,000,000.

Strategies• Chosen Industries: technology, business services, steel

& iron, copper and health care• Chosen Stocks: Apple Inc. (AAPL), Steel Dynamics

Inc. (STLD), Global Payments Inc. (GPN), Freeport-McMoRan Copper & Gold Inc. (FCX) and Rite Aid Corporation (RAD)

• Mixing of top-down and bottom-up approach • Using the top-down approach to identify key macroeconomic->

identify stocks’ benefit from the same sector• Applying the bottom-up approach based on individual

companies provide attractive investment opportunities in various industry and market conditions.

Strategies (cont.)• Three high-risk stocks and

two low-risk are chosen-> keep the portfolio balance

• Two stocks have betas lower than 1 (market’s beta), and three other stocks have betas higher than 1• The riskier high-beta stocks

are, the higher returns • The less risk low-beta stocks,

the lower returns

• The expectation of this portfolio is gain 10% in 12-week period

CompanyTicker Symbol Industry Shares Beta

Apple Inc. AAPL Technology 400 0.35

Steel Dynamics Inc STLD Steel & Iron

13,100 1.41

Global Payments Inc. GPN

Business Services

4,200 0.79

Freeport-McMoRanCopper & Gold Inc. FCX Copper

6,400 1.32

Rite Aid Corporation RAD Health Care

30,000 1.71

Decision• STLD and FCX are affected by gold price, which is

recently in the good shape – stocks’ prices will increase• AAPL – many new products in September and October• GPN – electronic payments transaction processing

services worldwide – large market – big income. • RAD – new change in Obamacare

CompanyTicker Symbol Industry Shares

Beginning Price

Total transaction amount Market Weight

Apple Inc. AAPL Technology 400 $ 488.58 $ 195,432 21.69%

Steel Dynamics Inc STLD Steel & Iron 13,100 $ 15.22 $ 199,382 22.13%

Global Payments Inc. GPNBusiness Services 4,200 $ 47.85 $ 200,970 22.30%

Freeport-McMoRanCopper & Gold Inc. FCX Copper 6,400 $ 31.12 $ 199,168 22.10%

Rite Aid Corporation RAD Health Care 30,000 $ 3.54 $ 106,200 11.78%

$ 901,152 100.00%

Portfolio Performance ( Profit/Loss)• The Beta is important to measure of stock’s volatility in

relation to the market. • AAPL underperformed comparing to the market because

the actual increase is less• STLD, GPN, FCX and RAD outperformed the market

S & P 500

DATESCHANGE IN PRICE %

% x β β9/3/2013 11/20/2013 1,639.77

1,781.37 141.60 9%

AAPL 488.58 515.00 26.42 5% 2% 0.35

STLD 15.22 18.93 3.71 24% 34% 1.41

GPN 47.85 62.81 14.96 31% 25% 0.79

FCX 31.12 36.18 5.06 16% 21% 1.32

RAD 3.54 5.10 1.56 44% 75% 1.71

Reasons of the changes• New products, new investment, or any movement in the

management strategies or acquisitions-> stock prices change

• Also have some specific reasons regarding possible changes in the stocks’ prices

Apple, Inc. (AAPL)• AAPL announced new products in 2013 such as iPhone

5S, iPhone 5C, iPad Air, iPad mini Retina, Mac Pro, MacBook Pro, iOS5 and OS X 10.9 Mavericks

• Given dividends $3.05• Put on “NEUTRAL” rating• Small gains

Arithmetic 0.117%Geometric 0.103%Standard Deviation 1.620335

Avg Excess Return -2.57327Beta 0.35Coefficient of Variation 1085.478

HPR 0.991242HPY -0.876%

Steel Dynamics, Inc. (STLD) • Announcing two notes in operating:

• Offering up to $400,000,000 aggregate principal amount of its registered 6 1/8% senior notes due in 2019

• Offering up to $350,000,000 aggregate principal amount of its registered 6 3/8% senior notes due in 2022

• Dividends $0.11• Preventing from “BUY’ to “NEUTRAL”

Arithmetic 0.411%Geometric 0.395%Standard Deviation 1.356826

Avg Excess Return -2.27907Beta 0.35Coefficient of Variation 283.0919

HPR 0.994223HPY -0.578%

Global Payments, Inc. (GPN) • First quarter profit increased to 87 cents/share from 59

cents/share• Announce an accelerated $100 million stock buyback plan• The effect of changing in management, new chief

executive-> share of GPN up almost 4%• Put GPN on “HOLD” and wait for price increasing more

Arithmetic 0.503%Geometric 0.479%Standard Deviation 1.808762272

Avg Excess Return -2.187839025Beta 0.35Coefficient of Variation 267.5375346

HPR 0.990381583HPY -0.962%

Freeport-McMoRan Copper & Gold, Inc. (FCX)

• Return on equity is respectable• The exploration of mineral resource • Limits:

• feeble growth in the earnings per share• deteriorating net income • higher debt management risk.

• Decide to rate as a “HOLD”

Arithmetic 0.295%

Geometric 0.281%

Standard Deviation 1.347124

Avg Excess Return -2.39555

Beta 0.35

Coefficient of Variation 393.4673

HPR -0.0095

HPY 9.744%

Rite Aid Corporation (RAD)• Based on Jim Cramer, stock analyst on Wall St. Cheat

Sheet, reported on August 29, 2013• Have upward movement in the stock’s value.• Decide to rank it as “BUY”

Arithmetric 0.713%Geometric 0.643%Standard Deviation 3.628434

Avg Excess Return -1.97763Beta 0.35Coefficient of Variation 267.1958

HPR 1.005917HPY 0.592%

• The following graphs show the correlation between stocks inside portfolio and the overall performance of the portfolio during 12 weeks of investment.

Conclusion• Good diversified portfolio• Different industries

• Not correlated• Profit of $204,997.00

9/3/

2013

9/9/

2013

9/15

/201

3

9/21

/201

3

9/27

/201

3

10/3

/201

3

10/9

/201

3

10/1

5/20

13

10/2

1/20

13

10/2

7/20

13

11/2

/201

3

11/8

/201

3

11/1

4/20

13

11/2

0/20

13 800,000 850,000 900,000 950,000

1,000,000 1,050,000 1,100,000 1,150,000 1,200,000 1,250,000

Investment Performance

Series1Total Value