Transcript StockPointer

“A GPS in the Stock Market Jungle”
An Introduction to StockPointer©
for Investment Advisors
Claude Morel
Senior Partner
EVA© is a registered Trademark of Stern Stewart & Co.
Copyright © 2001 StockPointer©
© 2000 Arthur Andersen All rights reserved.
2007
Contents
“A GPS in the Stock Market Jungle”
 The basic Concepts behind StockPointer
–
–
–
–
EVA
Economic Performance Performance Index (EPI)
Intrinsic Value
Future Growth Value
 The StockPointer Functions
–
–
–
–
–
SPreport – EVA Executive Summary
SPiX – Top 10, 20, 40, 80 or 100 stocks
PfScan – Portfolio Analyzer
MktScan – Market Analyzer
SPfilter – Customized Evaluation Criterion
 The value of StockPointer for an Investment Professional
– Business Development
– Account Management
– Client Relationship
Confidential
2
What is EVA?
“A GPS in the Stock Market Jungle”
EVA (Economic Value Added) is a measure that takes the Cost
of Capital out of the Net Operating Profit, in order to have a
real picture of the financial performance of a company, in
face of its shareholders.
EVA is an estimate of the true “Economic Profit”, or the
amount by which Net Operating Profit After Tax exceeds or
falls short of the required minimum rate of return that
shareholders and lenders could get by investing in other
securities of comparable risk.
''EVA © analysis is at the heart of understanding how companies create shareholder wealth.
Most importantly, it helps investors measure and understand those factors that create or
destroy value.'‘
Steven Einhorn, Global Investment Research, Goldman, Sachs & Co.
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What is StockPointer ?
“A GPS in the Stock Market Jungle”
StockPointer© is a Web-based offering
which provides key metrics and valuation graphics
using the EVA method
in
order to allow investments managers
to rapidly detect stock investment opportunities.
“EVA© is today’s hottest financial idea and getting hotter”
Fortune magazine
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How does StockPointer work?
“A GPS in the Stock Market Jungle”
Reports & Graphs
SPiX –Top 40
5600 US Stocks
1200 Canadian Stocks
Intrinsic Value
Economic Performance
Market Performance
Accounting Performance
StockPointer©
Adjust. NOPAT & CAPITAL
Reports Production
Financial reports
+ figures
captured in the
footnotes
Data Management
Internet
Security & Access
Specific
Analysis
Utilities & Administration
Formatting
Adjustments to
NOPAT et CI
Validating
Enrichment
File
server
Transmitting
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The Enron Case: Difficult to mask EVA
compared to Net Income and EPS1
“A GPS in the Stock Market Jungle”
What a customer will like about his Advisor using StockPointer ?
Net income showed
great Results
…while EVA showed
not so great
1 Stern Stewart & Co.
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EVA change explains market price more
significantly than other typical measures1
“A GPS in the Stock Market Jungle”
1 Stern Stewart & Co.
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StockPointer key Metrics
“A GPS in the Stock Market Jungle”
To invest only in companies that create wealth for the shareholders
and are not overvalued by the market
Economic Performance
Stock Price Evaluation
Identify the companies that properly
manage their capital in the best
interest of their shareholders and
generate a return that is higher than
expected for a similar level of risk
Wealth Creation (or EVA)
becomes criteria #1
Insure that stock is not over-priced
compared to the company’s
Intrinsic Value
EVA-$ = NOPAT-$ – Cost of Capital-$
= ROC-$ – COC-$
= (ROC-%-COC-%) x Capital
> 0 if and only if ROC > COC
Performance Index = ROC / COC
Intrinsic Value = NPV of future EVA’s
Performance Index > 1
0.4 < P\IV < 2.5
« Better to invest in an economically sound company at the
reasonable price than invest in a poor company at a cheap price »
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StockPointer key Metrics
“A GPS in the Stock Market Jungle”
To align the risk associated with a portfolio with the
degree of tolerance that the end-customer is
comfortable with
Level of risk associated with a stock
Adjust the desired level of risk of the overall portfolio using the
Future Growth Value (FGV) calculation for each of its stocks
FGV = Market Value of Company – Current Operations Value
= MV – NPV of future Profits
= or < 0 for minimum risk
FGV < Acceptable Risk level
Other risk factors include:
- Sector over-weighting compared to Top-80
- P/IV too good to be true
- Profit and EVA going in different directions
Confidential
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StockPointer really works
“A GPS in the Stock Market Jungle”
SPiX-Top 100-US vs S&P 500
Confidential
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StockPointer Functions
“A GPS in the Stock Market Jungle”
Login/Logout
Individual Stock
Basic Report
SPreport
+
Portfolio Analyser
PDF Printout
Feature
PfScan
Market Analyser
MktScan
Best Cad/US Stocks
SPiX
+
Excel Export
Feature
Customize requests
SPfilter
IV Scenario Building
SPiV
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Customer Base (Canada)
“A GPS in the Stock Market Jungle”
StockPointer is currently a strategic tool for
more than 275 investment professionals in Canada
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©
PfScan - Testimonies
“A GPS in the Stock Market Jungle”
“Reviewing his portfolio with my top client (in terms of assets) based
on PfScan convinced him of the great intrinsic value of his
holdings”, Gilbert, FBN
“Portfolio compliancy processes
at the branch and firm levels
could be much more productive
and efficient if PfScan was used
throughout the organization”,
Bergeron, FBN
“PfScan has proven to be a very productive marketing
tool in our process of creating and monitoring a
portfolio model for our IA’s”, Roy, IAVM
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Most recent Testimonies
Confidential
“A GPS in the Stock Market Jungle”
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Most recent Testimonies
Confidential
“A GPS in the Stock Market Jungle”
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What will StockPointer do for a
Financial Professional?
“A GPS in the Stock Market Jungle”
 Develop a special relationship between you and your client
– For any impromptu phone call, the SPreport will instantaneously allow you
to have a strong position on any company/stock
– The SPreport is the most complete documentation you can give to a
customer in regard to any specific stock
– The list of Peers in the SPreport allows comparisons with any other
comparable company or competitor
 Business Development & Prospecting
– SPiX and SPfilter will help you in the identification of prospect Buys, using a
series of your own (or already defined) specific criteria's
– PfScan is the best tool to analyze a current prospect portfolio and see the
winners/losers amongst the included stocks
….then SPiX, PfScan and MktScan will allow you to make appropriate
recommendations, based on the real economic value of a company and on
the Market composition and trends
 Account Management
– SPreport, PfScan and MktScan will be of great support in respecting any
client compliancy rule
Confidential
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“A GPS in the Stock Market Jungle”
Thank You
***********************
You can subscribe Now!!!
at
www.stockpointer.ca
User-ID = client
Password = synchro
© 2000 Arthur Andersen All rights reserved.
“A GPS in the Stock Market Jungle”
Sample Reports
© 2000 Arthur Andersen All rights reserved.
A sample standard EVA report
from StockPointer - Page 1-A
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A sample standard EVA report
from StockPointer - Page 1-B
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“A GPS in the Stock Market Jungle”
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A sample standard EVA report
from StockPointer - Page 2
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“A GPS in the Stock Market Jungle”
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A sample standard EVA report
from StockPointer - Page 3
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A sample standard EVA report
from StockPointer - Page 4
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Analyzing a Portfolio: PfScan©
“A GPS in the Stock Market Jungle”
Using a standard Portfolio from a customer…
Confidential
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Analyzing a Portfolio: PfScan©
“A GPS in the Stock Market Jungle”
…to perform a Portfolio assessment
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SectorTrends
“A GPS in the Stock Market Jungle”
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SectorScan
“A GPS in the Stock Market Jungle”
Cnd MktScan
Indice de Performance Économique (ROC / COC)
2.5
Création
de
richesse
Én.
2.0
Énergie
Ser.
Matériaux
Fin.
Moyenne
Ind.
Tél.
TI
Risque
croissant
-19.0%
Cons.
disc.
Mat.
Industrie
1.5
Consommation discrétionnaire
Consommation de base
Cons.
base
Santé
Finance
Santé
1.0
-14.0%
-9.0%
-4.0%
1.0%
6.0%
11.0%
Risque
décroissant
16.0%
Technologie de l'information
Télécommunications
Services aux collectivités
Moyenne
0.5
Destruction de
richesse
Indice de risque (- FGV / VE)
Confidential
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SPfilter
“A GPS in the Stock Market Jungle”
Confidential
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