Investment Vehicles - Stocks, REITS, Investment Co Flashcards
Capitalization
Market Value of the Company Large Cap -> $10 Billion Mid Cap - $2 Billion- $10 Billion Small Cap - Under $ 2 Billion Micro Cap - Under $300K
Corporate Reports
10K Annual Report to SEC
10Q Quarterly report to SEC
Annual Report - previous years results to shareholders. Audited by independent auditors
Preferred Stock
resemble equity and debt pays a fixed dividend Issued at $25 pay div before common stock Noncumulative- missed div not made up
Often bought by corporate treasures with excess cash. If bought bonds all interest taxable…if corporation buys preferred 70% dividend exclusion
Can be callable
ADR
receipts for shares of a foreign company held in US vault
Alternative to buying stock on a foreign exchange
Quoted in US $
Dividends paid in US $ but declared in currency of origin
Exchange Traded Funds
basket of stocks or bonds Open end - UIT or Investment Co Traded on exchange SPDR- Broad based More tax efficient
Marketable non-liquid market risk Do not have to pay out gains-tax efficient Can be bought on margin or shorted
UIT
investment co
no day to day management
passive investment (investments frozen at purchase, no new, rarely sold)
Self liquidating
funds received distributed to unit holders not shareholders
Mutual Funds
Open End Investment Company
marked to market
Nav computed end of day
Aggressive Growth- max capital appreciation
Growth- potentially rising share price and capital appreciation
Growth and Income- equity and dividend income
Balanced- appreciation and income stocks and bonds
Global equity- worldwide including US
International- no US
Corporate Bond- US company bonds
GNMA-Mortgage Backed Securities
High Yield- non investment grade corporate bonds
Muni Bonds- bonds issued by states and municipalities
Speciality- sector
Index- components of various indicies - tax efficient
Redeemable NOT tradeable
Closed End Investment Company
issue stock once
trades on exchange after that
hold illiquid securities
favorable because can sell fund in market rather than try to liquidate illiquid securities
Investment Companies Act 1940
Open end Mutual Funds Closed End UIT Variable Annuities
Hedge Funds
Aggressive managed portfolio -leveraged, short, long, derivatives
limited number of investors
require large deposit.
illiquid-lock up
cater to sophisticated investors
require accredited investors
residence does not count toward net worth
$100 Million+ required to register with SEC
Limited Partnerships
common for real estate and oil and gas
Blind Pool
objective is known but investment not
GP performance is key
Guaranteed Investment Contracts GIC
similar to CD Issued by Insurance companies 2-5 years guaranteed rate of interest dependent on financial strength of issuer popular in defined benefit plans!
Net Operating Income
Real Estate Analysis
Gross rental receipts
+Non-Rental Income(Laundromat machine Income)
=Potential Gross Income (PGI)
-Vacancy and collection losses
=Effective Gross Income
-Operating Expenses(excluding interest and depreciation)
=Net Operating Income (NOI)
Divide by capitalization rate to get intrinsic value!
Operating Expenses include only cash expenses. No depreciation or amortization, or debt service, interest expense on mortgage.
REIT
similar to CE investment company.
Invests in real estate, construction loans, mortgages, not necessarily securities.
provides a way to invest in illiquid assets
Equity REIT - income producing properties
If Non-public- not tradeable or marketable
Derived from rental income and interest on loans
Mortgage REIT- loans to develop property or finance construction
higher default risk
Purchasing power risk
Spread between lending and borrowing
Produce a lot of income…best in retirement act
Private REIT -Reg D - accredited investors
75% from Real estate
90% income distributed - only remainder taxed to REIT
IF 90% not distributed all taxed to REIT
managed by BOD
RELP
Real Estate Limited Partnership relatively illiquid not popular anymore subject to passive loss rule not cap gains managed by GP
