Snapshot of portfolios October 5th

Dear all,

Thanks for coming to OIG’s last meeting before fall break. Sophia introduced a form created by our previous president Sasha. This form will help us keep a record of all the stocks we purchase henceforth. The form will record some detailed information about the stock we purchased, including the PE, Beta and stock number at the time we purchase the said stock.

Lingyi went over our portfolio starting with a video talking about market updates. The financial crisis in Greece continues to have an impact on the global financial market. Microsoft and Yahoo are reported to prepare their financial books. Market has different attitude towards Bernanke’s new economy stimulate plan. We had the big news about the passing away of Apple’s former CEO and co-founder, Steve Jobs. We would be anxious to find out more about how that new would affect our portfolio because Apple occupies a big proportion in our portfolio.

Bank of America and Morgan Stanley both need to find enough capital to meet new regulations. Morgan Stanley faces more problem because its exposure to European debts.

Lingyi start her presentation about the market. There several distinct features about current market:

  •  Banking sectors, it’s hard to find anyone doing well,
  •   Market is at its cheapest in 20 years, which means it has the best buying opportunities,

Lingyi recommended REIT (real estate investment trust), to be good options for OIG’s future investments. They are usually stable compared to other sectors in the market because most come from stable sources, like rent for real estate. Because of the stable cash generating, they give out dividends and usually don’t profit much from the transaction.

The specific stock Lingyi recommend is HCP, which is a REIT company. HCP is a defense stock. The five compositions of the company include hospitals, senior housing and health care. The net assets are worth about 18.6 billion dollars. The negative potential problem is changes in government policies such as cuts in funding for health care. Also hospital revenue might be affected by acquisition, and cash generated more concentrated in certain sectors.

The members voted to decide to look at HCP at a later date. If there are any stocks you are particularly interested and want OIG to consider purchasing, let one of the Exec Board members know about the stock.

Wanda presents the words of the day.

  • EPS: Earnings per share (Net income –dividends on preferred stock) /average outstanding shares
  • PE ratios: market value per share/ EPS,

Despite the careful calculation of each ratio, the indexes of ratios are only just one of the measurements of the stock. To make the decision, we will need more information about the operation of the stock and company. We looked at several companies with odd EPS or PE ratio, such as LinkedIn.

For the week after the fall break, we will have one of OIG’s tradition club donations. Please look forward to our emails about the New York trip on October 21st.