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2.  http://www.investopedia.com/video/play/un derstanding-fundamental-analysis/ http://www.investopedia.com/video/play/un derstanding-fundamental-analysis/ 2

3. Academy #6 Fundamental analysis

4. “I’ve never bought a stock unless, in my view, it was on sale.” John Neff 4

5.  Cornerstone of investing  Analyzing fundamentals  Qualitative and quantitative  Great for proposals  Asking the right questions 5

6.  Is the company’s revenue growing?  Is it actually making a profit?  Is the cash flow positive?  Is it in a strong-enough position to beat out its competitors in the future?  Is it able to repay its debts?  Is management trying to ”cook the books"? 6

7.  Quantitative  Qualitative  Applications  Risks 7

8.  Intrinsic Value  Accounting  Valuation methods  Stock screener(s) 8

9.  Price on a:  Specific time  Quantity (supply / demand)  Market price is subjective  Opinions differ 9

10.  The “real” value of a company  But what determines the real value? 10

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12.  Balance sheet  Income statement  Cash flow statement 12

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14.  What a company owns (debit): ◦ Short term assets ◦ Long term assets ◦ Intangible assets  How a company owns it (credit): ◦ Equity ◦ Short term liabilities ◦ Long term liabilities 14

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17.  Net profit -> Shareholders’ equity 17

18.  Profit/earnings  Accrual accounting  Revenue – cash flow  Costs – expenses  EBITDA  Earnings before interest, taxation, depreciation and amortization 18

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20.  Cash is king!  Cash in and outflow  No influence of bookkeeping tricks 20

21.  Earnings Per Share (EPS)  Dividend yield  Price/Earnings (P/E)  EV/EBITDA  Book to market value  Gordon’s growth model 21

22.  Earnings per share (EPS)  Earnings divided by shares outstanding  Dividend per share  (money now – reinvesting)  Shell - Google 22

23.  Value of the company divided by earnings (profit)  Price per share divided by EPS  What determines height of the ratio? 23

24.  Enterprise Value/EBITDA  EBITDA – Earnings  - Earnings before I tricked that dumb auditor  Book to market value  Book value firm / market value firm 24

25.  D = dividend  g = growth rate  r = discount rate 25

26.  Compare P/E ratio with peers  Is it higher, lower?  Why?  Good reason(s)? 26

27.  Multiple expansion – contraction ◦ Longitudinal: compare ratio’s with previous years ◦ EPS growth, dividend growth ◦ Cross-sectional: compare ratio’s with each other ◦ EPS growth, dividend per shares growth but P/E decline -> why? 27

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30.  Business model  Markets  Competitive environment  Management  Market opinion 30

31.  What does the company do?  Where does it generate money?  Look at key drivers/factors  Don’t invest in a business you don’t understand! 31

32.  Boston Chicken  Fixed fee  MC Donald's  Franchise system 32

33.  Strategy  Value proposition  Cost structure  Fixed costs – variable costs  Commodities (Air France-KLM)  Patents (Pharmaceutics) 33

34.  What drives success?  How are these factors changing?  Characteristics of markets: ◦ Spare car parts example ◦ Smartphones example ◦ Nintendo Wii example 34

35.  What can a company do better than it’s competitors? (Michael Porter) ◦ Cheaper/better/faster  Google: best search engine  Apple: strong brand name  Toyota: efficiency advantage  Coolblue: fast delivery 35

36.  How competitive is the industry? ◦ Airlines ◦ Soft drinks 36

37.  Incentives ◦ Shareholder alignment  Consistency ◦ Skagen funds  Track record  Example: Angela Ahrendts – Apple 37

38.  Material events ◦ Earnings, public announcements  World events ◦ Central bank policies, political and war events  Industry appeal ◦ Social media stocks  Example: BP oil spill 38

39.  Finding an edge & catalysts  Where to find valuable information?  Let’s do this! 39

40.  Edge: asymmetric information distribution ◦ Interpretation  Catalyst: why now ◦ Intrinsic value versus market price 40

41.  www.google.com/finance www.google.com/finance  www.yahoo.com/finance www.yahoo.com/finance  www.finviz.com www.finviz.com  Company website ◦ Investor Relations 41

42.  Which company? 42

43.  Timing ◦ Technical analysis  Efficient market hypothesis ◦ No free lunch  Is the market ever going to reflect the intrinsic value?  One can be wrong in calculating intrinsic value 43

44.  Information transfer ◦ B&R members ◦ Traders  Large cap vs small cap ◦ Apple - musclepharm  Stock reflects all available information 44

45.  Weak form: ◦ past prices can’t lead to outperformance  Semi-strong form: ◦ Public information can’t lead to outperformance  Strong form: ◦ All information is incorporated in the price of an asset, even inside information 45

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