You have just graduated from Keiser University?s MBA program and have secured a position as a fund manager for a well known investment banking house. You have been given $300 million to manage/invest. The fund is a pension/retirement fund so its perspective is long term with moderate risk of loss of capital and a required return of 9% per annum. In order to reduce the investment risk you are instructed to make 12 investments of $25 million dollars each. Your first assignment is to determine if the fund you are managing should invest $25 million dollars in the stock of the company you have selected for your first analysis/investment decision. Do not select a bank or financial intermediary. Your decision to invest or not invest will be supported by the research paper and a 12 to15 minute presentation to the Executive Committee of the Fund (your hardnosed capitalist classmates)
Your analysis, based on the concepts covered in this course, will address each of the following:
Business Strategy Analysis: Develop an understanding of the business and
competitive strategies of the company. Which of the three generic competitive
strategies does it utilize (low cost provider, differentiation, or focus)? This
should be covered in not more than three paragraphs. Do not spend time
writing a history of the company. This is an analysis, not a history lesson.
Accounting Analysis: Do the accounting practices adopted by the company
generally reflect an accurate picture of the economic performance of the
company? Did your research find any public announcements of restatement of earnings or other financial statements that would indicate that the financial statements may be of dubious value? This can be done by reviewing the company’s 8K filings with the SEC (a mandatory requirement for this paper). These filings can generally be found on the company’s website under Investor Relations – SEC filings.
Financial Analysis: Analyze financial ratios and cash flow measures of the
company relative to its historical performance. For purposes of this research paper a 2 year look back is sufficient and required. You must use at least 10 of the ratios noted on page 112 of the text including all four of the profitability ratios.
Prospective Analysis: Develop forecasted performance measures and list the
assumptions associated with your forecast. List your assumptions and reasons for your forecast. You may also cite the works of other analysts who have published forecasted earnings for the time frame you are addressing. (Hint: take a look at Yahoo/finance – analysts opinion
Conclusion: Will you or will you not invest $25 million in this particular
Company? Support your conclusion? Remember a negative conclusion is just as valid and valuable as a positive conclusion.