Waseda Financial Investment Team 7 th November 2011.

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Presentation transcript:

Waseda Financial Investment Team 7 th November 2011

Market update  Ugly week for stocks  Greece referendum  G20 discussions unfavorable  Good  ECB announced rate cut (25bp to 1.25%)– SURPRISING!  Jobless number below  Nonfarm payrolls grow by 80k  Bernanke’s assurance

Companies  MF global file for bankruptcy  Nomura net loss (-590M)  J&J purchase of Synthes  antitrust?  Anglo American buy Oppenheimer’s stake in Debeers

FX  BoJ intervene on Monday

 Euro/USD  Rate cut  EURO fell initially  EURO strengthened on  Greece cancelling referendum  Continued fall on dollar on loosening policies

Options trading Call

Short call

Put

Short put

Long butterfly Buy one call x1, short two calls x2, long one call x3

Straddle Buy put and call

Strangle Put and call at different Strike px

Spread

Bear Spread

Net-net

How much will you pay?  Furniture $100  Building $10,000  Land $50,000  Total $60,100  Loan $30,000

JP: 8066 MITANI CORP (billion JPY) Cash and equivalent33 Receivables and inventory70 Factories, real estate25 Note receivable3 Total tangible assets131 Less Debt86.5 TOTAL NET ASSET44.5 If you are the owner of this business, how much will you sell? a)33billion b)44.5 bn c)>44.5 bn Generated 0.8bn profit over last 10 years Dividend of 0.4bn last year

Principles of net-net investing  Assume company will be liquidated  Net Net Working Capital = Cash and short-term investments + (0.75 * accounts receivable) + (0.5 * inventory) – total liabilities

Risk  Will markets correct?  Japan  Activist investor  How long?