1. Mutual Investment Club of Cornell Week 5: Company Research Oct. 6, 2010

2. Mutual Investment Club of Cornell Company Research  What to look for  Products  Financials  Opportunities  Threats and competition  Where to find useful resources

3. Mutual Investment Club of Cornell The Big Question Why should I invest in this company?

4. Mutual Investment Club of Cornell Products and Services  What does the company offer?  Do they have a competitive advantage?  Are there growth opportunities?  Do customers really need this?

5. Mutual Investment Club of Cornell Products and Services  Breakdown sales by category and location  Show similar products and market response  Showcase trends over past years  Look at product updates and future changes  Investigate where the company can take current products and expand

6. Mutual Investment Club of Cornell Products and Services  Look at competitors offerings  Lots of overlap, or economic moat?  Look at necessity of product and target audience  May do well in different types of markets

7. Mutual Investment Club of Cornell Financials  Three financial statements  Cash flows  Balance sheet  Income statement  Look back over Week 2 slides  Make sure to compare to previous year and competitors

8. Mutual Investment Club of Cornell Cash Flow Statement  Focus on operating cash flow  Can company support itself by operations alone?  Operating cash flow / Net sales  History of free cash flow  Operating cash minus capital expenditures  More of this usually means more money to shareholders

9. Mutual Investment Club of Cornell Balance Sheet  Snapshot of company health  Assets, Liabilities and Equity  Use ratios to better understand the balance sheet  Financial strength ratios  Activity ratios  Want to see how company is leveraged  Easy to hide information within balance sheet  Very subjective

10. Mutual Investment Club of Cornell Income Statement  Provide info on company profitability  Look at margins to see how profitable company actually is  Impairment charges usually signal poor decisions  Important to track changes over time  Many investors skip to EPS to judge company’s performance

11. Mutual Investment Club of Cornell Opportunities  Read through 10-Q, 10-K for management statements  Do they talk about new products or new markets?  Do they talk about competitors falling behind?  How are they going to ensure company stays ahead?  Can use industry analysis for part of this  Forecast out probable opportunities in valuation

12. Mutual Investment Club of Cornell Threats  Look at competitors  What products are they offering?  How do they differentiate themselves from your company?  Where are they growing/what areas are they pushing?  Do they have sustainable economic moats?  Look at legislation  International competition

13. Mutual Investment Club of Cornell Resources  Thompson One Banker  Great to use for past financial information  Treasure trove of research reports by analysts  FINVIZ.com  Best stock screener I’ve found  Lots of options to search by  Yahoo Finance  Basic company information  Industry, competitor comparison

14. Mutual Investment Club of Cornell Resources  Blogs  Above Average Odds  Old School Value  John Mauldin’s Outside the Box  Wall Street Journal  Seeking Alpha  SEC.gov

15. Mutual Investment Club of Cornell How to Find a Company  Read the news!  Great way to get different perspectives on companies and industries  WSJ, Economist, Seeking Alpha, Yahoo Finance  Hedge fund quarterly reports  Famous investors give their take on markets and where they are putting their money

16. Mutual Investment Club of Cornell See you next week  Thanks for coming!