Rebalancing the Student Managed Investment Fund

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Question 1: The company that I was assigned was Exelixis Inc. The organization is a small-cap growth company in the health care sector, and is expected to underperform the market over the next six months with very high risk (http://www.investing.money.msn.com). Based on the value line report for this security, short-term gains are feasible. Having a technical rating of 2, which was raised recently, it is likely that Exelixis Inc. will grow in the short term. However, long-term, this stock scores poorly with a rating of 4 for timeliness. This rating likely has to do with the large abatement the stock took back in 2000. The stock price had a peak of $47.50 and dropped dramatically to approximately $11.00 that same year. Ever since then, the stock price has yet to even come close to reaching the heights that it once had. This lack of augmentation is likely the reason for the low technical and safety ratings. The safety rating itself is a 5, meaning that the stock is as risky as any security can be. Exelixis Inc. also has a capital structure that is highly weighted on debt. The debt is likely needed based upon their poor financial position, but in ten years it would make sense to have more of the capital structure to be elsewhere. In addition, the cash flow per share has not been consistent. This likely means that Exelsis Inc. is not utilizing the debt to grow and instead to simply upkeep its operational expenses. Revenues and revenues per share have also fluctuated significantly, which could potentially mean that the organization does not have an effective business strategy and/or product line. There are articles online that discuss the benefits of buying Exelixis Inc. right now, considering how low of a price poi... ... middle of paper ... ...ocks at a low value, and gain even more money when these securities appreciate in value. Having the chance to hear from Tyler, Martha, and Doug about their investing strategies and opinions was a fantastic experience. Each individual brought the class their own take on the financial markets and how to best move forward with rebalancing the Student Managed Investment Fund. Works Cited • David Swensen Insight. (n.d.). David Swensen Insight. Retrieved April 15, 2014, from http://david-swensen.com Piper says time to buy shares of Exelixis. (n.d.). Yahoo Finance. Retrieved April 15, 2014, from http://finance.yahoo.com/news/piper-says-time-buy-shares-101803604.html • Value Line - The Most Trusted Name in Investment Research. (n.d.). Value Line - The Most Trusted Name in Investment Research. Retrieved April 15, 2014, from http://www.valueline.com

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