Value Portfolio 6203 PDF

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FINA 6203 Fall 2020 Value Portfolio Due September 30 Your team is to choose 5 deep value stocks. Value in this case is represented by Book/Market ratios (B/M) above 1.25 or Price/Book ratios (P/B) less than 0.80. Use the screening tools on the web site of your choice. Yahoo! Finance and FINVIZ have the best. Note: Due to the unique character of the balance sheets of the financial industry, if you include banks, bank holding companies, or insurance companies, you must use book-market ratios that are in the lower quartile for their industry. Also, avoid stocks currently in bankruptcy proceedings. Your report to me should include the following: Page 1.

Rationale. As always, WHY? Thoroughly explain the rationale behind his method of portfolio selection. Refer to my lecture on the Fama and French article and on Haugen’s discussion of value stocks from his chapter. You may also cite any evidence obtained from Internet sites on the topic. There are many. Note that we are dealing with deep value stocks – not undervalued stocks. DON’T FORGET TO CITE LECTURE NOTES!

Page 2.

Table. On a separate sheet, provide a table, using the Table Template Value, which includes information on all five stocks in an order that facilitates comparisons across firms and within industries. You need to list: name and ticker symbol of each stock, sector, industry, dividend yield, estimated or forward P/E, beta, total market value of equity (capitalization), total owners’ equity (book value), book value per share, closing price on the day the portfolio was created, the price-to-book ratio ratios of the firm and its industry, target price estimate, Forward P/E ratio, and forward PEG ratio. Don’t forget the value of the S&P 500 and the treasury bill yield.

Pages 3-7.

A one-page summary for each stock. Each summary should note its P/B in relation to its industry. Feel free to add any information that helps justify your choices! Your report for each stock should provide a brief description of the company, a brief analysis (provided by the source of your choice), and the source(s) of your information. There are a lot of high B/M (low P/B) stocks out there. You must justify your five choices. For example, are your firms in industries that are poised for turnaround? Are the firm’s potential takeover candidates? Are they financially sound? What do analysts say? Also, for each stock you choose, answer the question, “Why is this stock’s B/M high (P/B low)?” You must provide specific reasons!

Pages 8.

Appendix. Include links to your sources.

With the exception of items stating “if available”, no firms with “NA” for required items qualify. Remember, NA for dividends means they don’t pay one. Firms that don’t pay dividends are acceptable....