Equity Analysis and Investments Strategies

Agenda Program
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Prague, NH Hotel Prague
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Equity Markets and Instruments
Sector and Region Analysis
Financial Statement Analysis for Investment Decisions
Equity Investment Strategies
Portfolio Strategies and Diversification
Implementing Equity Investment Strategies with Derivatives
The objectives of this seminar are to give you a thorough introduction to equity markets and instruments, and a good understanding of how equity investment strategies can be formulated and implemented in practice.

We start with a general introduction to equity instruments, and we explain how shares and related instruments are traded and settled in the primary and secondary markets. We then look at the regional and sector-specific factors that commonly affect share value, and we explain how factor models can be used to quantify the effects of (changes in) such factors as growth, inflation, commodity prices.

Further, we present and thoroughly explain methods for fundamental stock analysis, covering the entire valuation process through the final investment recommendation or decision. We also explain how information about an individual firm's financial health, profitability, growth prospects etc. can be extracted from the firm's financial statements and combined into useful ratios and multiples. We discuss possible shortcomings of such ratios, including the problems arising from the use of different accounting principles and "financial shenanigans".

We devote a significant part of the seminar to explain how the results from equity analysis can be used for the design of investment strategies that are consistent with investors' views, preferences and constraints. We present quantitative tools for portfolio management and we explain how diversified/optimized portfolios can be constructed. We also present and explain the benchmark timing and core-satellite approaches to portfolio construction. Further, we present and discuss relative value strategies such as Value/Growth, Regional/Sector, Long only/ Long and Short etc.

Finally, we explain how these investments and portfolio strategies can be implemented in practice, using cash instruments, derivatives and structured products. We explain in detail how synthetic indexation strategies, CPPI, leveraged investment strategies etc. can be designed and implemented, and we illustrate with practical examples and case studies.

Program of the seminar: Equity Analysis and Investments Strategies

The seminar timetable follows Central European Time (CET).

09.00 - 09.15 Welcome and Introduction

09.15 - 12.00 Equity Markets and Instruments

  • Characteristics of Equity Instruments
  • Global Equity Markets
  • Equity Funds
  • ETF�s
  • Equity Derivatives
  • Hybrid Equity Instruments and Structured Products
  • Alternative Equity Investments (Hedge Funds, Private Equity)

Sector and Region Analysis

  • Equity Sectors/Regions and their Behaviour
    • Basic materials, consumer cyclical, consumer stable, �
    • US, Asian, European, Emerging markets
    • How sectors/regions behave under changing economic conditions
  • Using Factor Models in Sector Analysis
    • Economic vs. statistical factor models
    • Quantifying sector returns
    • Risk/return decomposition using variance decomposition technique
    • Estimating factor loadings and factor sensitivities
  • Exercises

12.00 - 13.00 Lunch

13.00 - 16.30 Financial Statement Analysis

  • Brief Review of Financial Statements
  • Analysis of Assets, Liabilities and Cash Flows (Brief Review)
  • Financial Ratios and EPS Analysis
    • Common-size statements
    • Measures of a company�s liquidity
    • Ratios for operating performance, risk profile, growth potential, and external liquidity
    • Relationships between financial ratios and rating
    • Decomposing return on equity using traditional/extended DuPont Systems
    • Treatment of dilutive securities
  • Financial Shenanigans
  • Exercises

Equity Investment Strategies

  • Quantitative Tools for Equity Investing
    • Brief recap of equity valuation techniques, CAPM and other models
    • The �Alpha� concept - forecasting and analysis

09.00 - 09.15 Brief recap

09.15 - 12.00 Equity Investment Strategies (continued)

  • Style Management and Style Allocation
    • Value vs. growth investing
    • Information ratios for different styles
  • Portfolio Optimization
    • Traditional mean/variance optimization
    • Optimization under shortfall risk constraints
    • Benchmark-relative optimization
    • Bayesian analysis and portfolio choice
  • International Diversification
  • Core-Satellite Investing
  • Short-selling
    • How short-selling works in practice
    • Risks of short-selling
  • Portable Alpha
  • Equity Strategies
    • Market neutral and relative value strategies
    • Long-short strategies
    • Sector rotation vs. pairs trades
    • Statistical and fundamental arbitrage
    • Exercises

12.00 - 13.00 Lunch

13.00 - 16.00 Implementing Equity Investment Strategies with Derivatives

  • Overview of Equity Derivatives
  • Synthetic Equity Investments
    • Minimizing cash drag through synthetic indexation strategies
    • �Sector-switching� with futures
  • Equitizing a Long/Short Strategy
  • Using Futures to Create �Overlays�
  • Equity Portfolio Management with Options
    • Securing minimum portfolio value
    • Enhancing portfolio return/reducing risk through covered call strategies
    • Management of shortfall-risk
  • Implementing CPPI and other Dynamic Strategies with Futures
  • Using Structures Products in Portfolio Management
    • Leveraged structures
    • Principal protected structures
    • Discount structures
  • Exercises

Evaluation and Termination of the Seminar

Training catalogue in PDF
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