Individual Share Portfolio Review Assessment - Term Paper Example

INDIVIDUAL SHARE PORTFOLIO REVIEW ASSESSMENT BRIEF Individual Share Portfolio Review assessment brief Individual share portfolio review assessment entails the analysis of the performance of a group of shares over a specific period. Share portfolio review can be done quarterly, yearly or after every six months. The share portfolio review enhances the trading of securities. The security exchange council co-ordinates the international security trade affairs. According to Elton (2010, 56), the share portfolio review is also responsible for the reduction of frauds within its security exchange operations. The application of individual stock portfolio assessment enables investors to benefit from the risk spread. In this regard, there is regulation of any form of fraud. The form of payment mode that the targeted shareholders prefer determines the strategies to be adopted by the arbitrageur in the trading process. There are two types of payment methods in a share performance analysis. In a stock merger, there is receipt of bid stocks by the targeted shareholders. On the other hand, share portfolio review shows how a share trader buys and sells stock to the highest bidder at the offer price after the completion of the bid exercise (Fernholz, 2012, 34). This type of investment entails the buying of stock and consequent selling of the bid stock at a suitable offer price. After the trading is completed, the target stock is exchanged for the bidder stock in order to cover the short position. The stock analyst can benefit from the trading when the bid succeeds. Therefore, if the bid does not go through, then the investor remains at the break-even state. The disclosure of information used by the stock analyst in decision-making is crucial because it makes him more a versed with the bid in quest. Equity indices FTSE 100 FTSE 250 LAST SINCE PREV CLOSE LOW52-WEEK HIGH FTSE 100 Index 6,838.87 -34.68 / -0.50% FTSE 250 MID INDEX 16,087.63 -123.01 / -0.76% FTSE TECHMARK FOCUS IDX 3,276.43 -17.22 / -0.52% FTSE AIM 100 Index 3,475.77 -26.38 / -0.75% FTSE ALL SHARE INDEX 3,655.75 -19.46 / -0.53% FTS Euro-first 300 Index 1,391.59 -6.59 / -0.47% The graph indicates the fluctuation in prices of the shares within the share portfolio over the period. Share portfolio review uses of only public information with regard to bids. Therefore, it is not a covert deal with concealed information. Guiso (2012, 47) asserts that the trading is not subject to rumor information but investors only respond when a sealed deal on a bid has been announced to the public domain. Stock analysts believe that profitable trading is not contingent on a bid occurrence. The period set for the bid to be consummated is the overriding factor in the business. Risk is a crucial aspect in risk arbitrage because the whole process of risk spread involves some element of uncertainty. The result of the bid is usually unknown to the public. This owes to the fact that it may result to a profit or loss. For instance, the stock analyst is likely to benefit if the bidding is completed at the initial offer price. If the initial price is revised upward, the investor will benefit more. On the other hand, if the initial offer price is lowered, the Stock analyst is bound to lose in the trade. Moreover, the time constraint on the decision-making increases the uncertainty with regard to indulging in the bidding. According to Strong (2009, 37) the stock mergers that involve collar deals employ dynamic hedging in the risk arbitrage business. This is because the exchange ratio is determined by the target stock price and the bidder price respectively. In the extreme case, the bid may be cancelled. In this case, the loss experienced is high because there is no information used in pricing. According to Ramaswamy (2012, 73), the probability of a security exchange deal failing to materialize is negligible and it is estimated at a probability of 10%.Risk arbitrage is considered to shift risk from the target shareholders to the Stock analysts. This is because the shareholders sell the stock to the Stock analyst in order to avoid the risks involved with the completion of the bid especially a fall in the initial bid price. Therefore, the stock analysts offer insurance against exposure to risks for the shareholders. The risk spread in the bid deal compensates the Stock analysts for this service. Security exchange returns are based on the level of risks an investment is facing. The level of profits earned in this investment strategy increase with reduction in risk exposure. Wegener (2011) asserts that it takes an estimate of 41 days to the bid announcement for the target stock price to increase. Additionally, individual stock portfolio assessment helps in the safeguarding of confidential government security information through the installation of sophisticated software. Companies are also able to safeguard insider information, which is vital for competition in the security market. According to Brentani (2013), stock database management system enhances productive speculation in the security market because it collects all information pertaining to the environment, securities, market and competitors. This helps in outdoing rivals in the competition for market share. The system has also enhanced the working of search strategies on the Internet platform. The share portfolio table: Open 17.00 Day High 17.25 Day Low 12.00 Bid 13.75 Offer 14.50 Previous close 17.50 Average volume 74.70m Shares outstanding 6.19bn Free float 4.12bn P/E (TTM) 9.03 Market cap 1.08bn GBP EPS (TTM) 0.0194 GBP Annual div (TTM) 0.10 GBX Annual div yield (TTM) 0.57% Div ex-date Apr 09 2014 Div pay-date May 02 2014 The best time for portfolio review is the start of a year because it gives a basis for the measurement of the progress of a share over the years. The regular reviewing of the share portfolio leads to the achievement of objectives of the portfolio. The information system involves the integration of the processes of capturing, storage, management and transmission of information. This involves the routine information systems and surveillance systems. This also includes administration, stock data management system and information system. According to Hobson (2013, 49), the share portfolio review assessment also incorporates the security trade. In this regard, this system enables the collection, safe custody, processing of the information and eventual creation of security reports based on reliable stock information. The stock Information system constitutes of databases, telecommunications and software. Additionally, the share portfolio review assessment also incorporates the stock profiles. This model functions on the basis of business to consumer relationships (Strong, 2009, 29). The system strengthens the coordination between the security consumers and the security markets. The individual stock portfolio assessment is enhanced by adherence to the disclosure requirements for both the markets. This makes the security purchasing easy. Individual share portfolio review is based on the level of risks an investment is facing. The level of profits earned in this investment strategy increase with reduction in risk exposure. Elton (2010, 94) asserts that it takes an estimate of 41 days to the bid announcement for the target stock price to increase. The intentional tort involves a deliberate move to harm a person while negligence constitutes failure to rectify a particular problem, which can cause harm to an individual. Negligence occurs when duty of care has been full proved beyond doubt by the aggrieved party. In addition, the accused must have breached his duty to care. The aggrieved party must have been injured in the course of negligence of duty by the accused. Furthermore, the negligence of the accused person must have been the major cause of the affliction of the plaintiff. According to Fernholz (2012, 44), the negligence must have been the proximate cause of the injury suffered by the aggrieved party. The Citi group bank and the consumers have a fiduciary relationship whereby the ban ought to keep secret the details pertaining to the different clients. The tort action regarding the interference of the contractual relations and participating in a breach of fiduciary duty entails proving of breach of contractual agreements prior to apprehending the accused person. If the bank behaves like J.P Morgan did the tort action will still hold given the duty of care and due diligence responsibility of a firm. A company improves the manner of communication of people. This firm generates sufficient revenue through online advertisements and marketing. The major areas the company focuses on include search, enterprising and operating systems. This firm succeeds because of its focus on advertising, which many companies utilize to sell their products. The different types of companies enable a firm to amass sales because of economics of scale associated with its business operation especially advertisements. The program used by a firm for advertisement is called program. This enables different companies to use the Google platform to market their wares concurrently. Additionally, the company has the program, which helps in delivering of advertisements, which leads to substantial revenues. The company also uses a program, which helps in the sharing of many Internet users. The firm was the leading firm given that it had 65% of the overall market share. This feat was achieved because this firm allowed the Internet users to surf on the basis of cost per impression, which enabled the firm to gauge its cost per customer search. This was applicable especially in the advertising of products on the online platform. This model also encompassed the monitoring if cost-per-click. In this regard, all the advertisements on a firm were analyzed. They generated high amounts of revenue to the firm, which amounted to $28.2 billion (Guiso, 2012, 34). Additionally, Google firm has managed to get high revenues from the licenses charged ion various businesses operating on the online platform especially the firms, which opted to engage the firm in their intranet connections. The other strategy that enabled the firm to surpass its competitors like Amazon is the creation of new ventures. This has helped the company spread is risks. This new ventures strategy worked for the firm given that it majorly focused on search-based advertisements. A firm has an approximate growth rate of 25% per year. However, in 2009 this rate dropped to 7%. This implies that the revenue growth is high. Additionally, the sales growth helps in the creation of confidence in a firm. Additionally, this also confirms that this company has the ability to offer various kinds of products and services in the online platform. Pricing Policy a firm has a great policy of pricing. An organization usually never discounts its profit on the basis of gaining more sales. This notwithstanding, this company thrives especially in sales growth .It aims at achieving the optimum level of performance. The marginal profit for this company is high in almost all the years under consideration. This is manifest in the graph provided above. Although the company has not fully laid enough measure of controlling its operating expenses, it has done its best in regulating the increase of operating expenses. This has led to the cannibalizing of the strength of pricing. This is manifest in the stalling of the net-income in 2011 as shown in the graph. The graph reveals that a firm earns high levels of cash flows. Moreover, it holds high amounts of cash compared to the total cash produced in the whole year. The cash produced helps in the reduction of the return on assets and negatively impacts on the innovativeness and creativity of the firm. The return on assets for a firm is approximately a quarter of the expectation. The distribution of excess cash balances usually leads to increase in the return on assets. This also serves to boost the stoke price. The company creates sufficient working capital. However, the company invests cash in various assets. The company also portrays its transparency through the investment of capital in other assets and distribution of excess working capital. Additionally, the firm was prudent and visionary given that it managed to attain high growth rates unlike its competitors. The firm experienced growth in its earnings and revenue. Its customers also attributed this to prompt payment. The other strength of this firm is that it had developed a sophisticated system of android for the mobile phones. This system enabled the mobile phone manufacturers to manufacture internet-based. According to Strong (2009, 66), this system created stiff competition with a firm’s iPhones. In this regard, a firm had a competitive edge over the other rival companies given that its search tool boost the demand for various phones like Nokia. Additionally, this feature enabled the firm to increase its market share with regard to video displays on mobile phones. The banner advertisements also increased enabling the firm to be a head of many companies. A firm has used conglomeration in order to boost its market influence. Brentani (2013, 52) asserts that the firm had alliances with Sony and Intel, in a bid to establish the sophisticate technology of launching a program. This feature was a great feat for the firm given that the Internet users were enabled to do cable programming. Moreover, the loyalists could be able to access live network and stream various videos from companies like Netflix. A program also enabled the users to download a program. The other competitive strategy for a firm was a cloud computing. This application changed the use of applications like spreadsheets and other application software. This strategy propelled the firm to great heights in the industry. The firm also managed to acquire another firm mobility in 2011 (Hobson, 2011, 67). This enabled the firm to access the hardware market for smartphones. This enabled the firm to acquire much know-how with regard to the smartphones. Moreover, this acquisition enabled the firm to join the tablet industry. This was a great competitive strategy against a firm. In this regard, the firm adopted the strategy of integration of software and hardware of most of the phones subscribed to its features. The firm also focused on improving its search technology, which was the backbone of its progress.th firm also employed tactics like Internet censorship to sabotage its competitors. Although this strategy worked in the short-run it was not viable because of the aspect of unhealthy competition. A firm managed to strategize its operations in the market, which led to its great influence in the industry. In this regard, the use of cost-per-click strategy in monitoring of cost is a brilliant idea for a firm. The acquisition of an organization’s mobility and alliance with a firm were also great competitive strategies. This company is compliant to financial regulations Reference list Elton, E. J. (2010). Modern portfolio theory and investment analysis. Hoboken, NJ, J. Wiley & Sons. Fernholz, E. R. (2012). Stochastic portfolio theory. New York, Springer. Guiso, L. (2012). Household portfolios. Cambridge, Mass. [u.a.], MIT Press. Strong, R. A. (2009). Portfolio construction, management, and protection. Mason, Ohio, South- Western Cengage Learning. Ramaswamy, J. (2012). Creating a portfolio like Warren Buffett a high return investment strategy. Hoboken, N.J., Wiley. Brentani, C. (2013). Portfolio Management in Practice. Burlington, Elsevier. Hobson, R. (2011). How to build a share portfolio a practical guide to selecting and monitoring a portfolio of shares. Petersfield, Hampshire, Harriman House Ltd Read More