How to Find Stocks

GMG Investing Criteria

1. Economic Moats2. Market Leader3. Healthy Financials4. Rational Valuation5. Positive Earnings Trend6. Secular Trends

GMG Investing Criteria

1. Economic Moats– Unique market advantage– Significant barriers to entry to maintain long run growth

2. Market Leader– Management theory predicts industry leaders perform

best over time– Proven business model within industry– Best positioned for taking advantage of industry growth

GMG Investing Criteria

3. Healthy Financials– Debt coverage/leverage– Sustained operating margins– Revenue/NI growth – CapEx expenditures and reinvestment

4. Rational Valuation– P/E ratio and Boom/Bust macro context– EV/EBITDA trading multiple– DCF, intrinsic valuation

GMG Investing Criteria

5. Positive Earnings Trend– Dividends and EPS– Earnings trends and analyst expectations– Understanding causes of revenue growth

6. Secular Trends– Growth potential of country and industry sector– Other macro trends e.g. interest rates/commodity prices

Top-Down Approach Begins with Macro

Macroeconomic Analysis1. Current State of Global Economy2. Global trends3. Analyze industry of focus4. Pick industry leaders

Top-Down Approach: Current State of Global Economy

• Current State of Global Economy– Chinese economic growth slowing– Recent equity market volatility– Oil supply glut ~ $32/Barrel– International policy uncertainty • Brexit and Grexit• US Fed roadmap• Moving exchange rates

Brent Crude Price Chart

Euro to USD

Top Down Approach: Global Trends• Global Trends– Depressed oil prices: Winners and losers

• Favorable consumer trend for net oil importers: Poland, India, Chile, and Kenya

• Economic uncertainty for net oil exporters: Nigeria, Russia, and Venezuela

– Appreciating USD relative to other EM currencies• Positive outlook for manufacturing and export industries• Decreases purchasing power of citizens

– Chinese economic turbulence• Slowing GPD growth and signs of financial market

uncertainty plague equity investments• Government tightening control of financial regulations

Movements in ForEx

Chinese Non-Performing Loans

Top Down Approach: Pick an Industry

• Healthcare Industry Sector– EM markets have seen a very large growth in

pharmaceutics sales: Brazil, Russia, India, China, and South Africa

– Rising drug prices are an opportunity for BioSimilar drugs

– New tech advances: wearable technology, patentable R&D findings (pipeline)

– Opportunities in generics and hospital facility development in EM markets

Top-Down Approach: Industry Leaders

• Identification Sources– Bloomberg News– Wall Street Journal (WSJ)– Financial Times (FT)– Seeking Alpha

• Use Bloomberg Industry Market Leaders: http://www.bloomberg.com/visual-data/industries/rank/name:market-share

Bottom-Up ApprochFinding stocks based on our Investment Criteria

Use various Stock Screeners

1.Bloomberg Terminal Screener*

2.www.4-traders.com Screener

3.finviz.com Screener

4.Reuter Screener

5.Brokers Screener - Interactive Broker’s

Bloomberg Terminal: EQS Function

Hit “EQS” then “GO” in the terminal

Why BB Terminal?• Fancy and Cover broad markets• ***BB can exclude some interesting

companies if they dont have information.• LEARN HOW TO USE IT! BB is really powerful.

EQS 101

Select Regions

Select Sectors

Save as PDF, Excel

Back Testing

Alternative way to spot LEADER

4-Trader Screener

Relative Strength - Leaders

Relative Strength - Leaders

Finviz Screener

Reuter Screener

Reuter Screener

Interative Broker Screener

Interative Broker Screener

Watch Lists

Portfolio Management Tools

Portfolio Management Tools

Portfolio Management Tools