Posted: December 9th, 2014

Stock Research

Stock Research

A client would like to invest his money in a company that has listed its shares on the London Stock Exchange. As an investment analyst, you need to write a report on the company that the client is interested in investing. You may assume that the client has an understanding of the risk involved in investment in shares.

The company is BT Group PLC(Listed on the London Stock Exchange) and you are expected to produce an investment report and recommendation on the shares of this company. This would include the following sections.

(i) Performance and news analysis: Compare the company’s returns with that of the market as well as calculate the company’s risk adjusted returns. Identify news (which include earnings announcements, release of relevant economic data, analysts’ recommendations) which are relevant to the firm’s price performance as well as supporting your analysis in the report.

(ii) Valuation: Carry out the DDM valuation under the CAPM framework using multistage growth model. Use PE, DY, PB and PS metrics to complement the DDM valuation. The valuation results are presented using the SML. Finally, a discussion on the DDM versus market multiples to inform the client is required.

(iii) Conclusion: This will demonstrate your understanding of the subject and ability to include the results in a coherent summary

UMAC3Q-20-3 Investment Management 2013/14

Assessed Referral Assignment: Investment Report (50% of module)

Module Leader: Chris Worthington

Referral Coursework

Those students who have to resubmit the coursework (1RB or 1RAll) have the option of studying the same FTSE listed company for the second attempt. In this case you should pay close attention to the feedback on each section that was provided by the original marker.

However it is possible for you to change focus for your referral coursework and you will then be allocated an alternative company. If you wish to change the company please mail [email protected] as soon as possible with your student number and the company that you evaluated for your original course work in January.

The Task

A client would like to invest his money in a company that has listed its shares on the London Stock Exchange. As an investment analyst, you need to write a report on the company that the client is interested in investing. You may assume that the client has an understanding of the risk involved in investment in shares.

You will be allocated a listed company by the Module Leader and you are expected to produce an investment report and recommendation on the shares of this company. This would include the following sections.

(i)    Performance and newsanalysis: Compare the company’s returns with that of the market as well as calculate the company’s risk adjusted returns. Identify news (which include earnings announcements, release of relevant economic data, analysts’ recommendations) which are relevant to the firm’s price performance as well as supporting your analysis in the report.

(ii)    Valuation: Carry out the DDM valuation under the CAPM framework using multistage growth model. Use PE, DY, PB and PS metricsto complement the DDM valuation. The valuation results are presented using the SML. Finally, a discussion on the DDM versus market multiples to inform the client is required.

(iii)    Conclusion:This will demonstrate your understanding of the subject and ability to include the results in a coherent summary

Investment Report

The report must be word-processed,cannot exceed 2,000 words and contains the following:

A summarytear sheet (not more than 1 page)

A main report (not more than 5 pages) to support your analysis based on the analytical elements described above.

Assessment criteria

The assessment criteria for the investment report are based on the following criteria:
•    Provision of relevant financial data in forming the arguments
•    Application of valuation models (DDM and market based methods)
•    Overall presentation of your report
•    Demonstrate your understanding of the relevant topics (such as systematic and firm-specific risk, risk premium, intrinsic value, required rate of return) and your ability to combine the various analyses into a coherent practical conclusion

Specifically, the following marking scheme is used:

Tear Sheet    10%
Risk Adjusted Returns    10%
News analysis – firm-specific and systematic    10%
Multi-stage DDM valuation    20%
Valuation by other methods    10%
SML analysis    10%
DDM and market based methods discussion    10%
Conclusion (include introduction and analyst recommendation)     20%
Total    100%

An investment report companion file

A companion file has been made available onBlackboard which provides the template for the investment report. The companion file also contains further details and examples on how you may present your analysis.

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