Description
synopis of iapm of OMDC
A Project Synopsis On
“Investment In Small Cap Stocks”
Being Submitted in Partial Fulfilment of the Degree of
M.B.A. – FINANCE
For the Course Investment Analysis and Portfolio Management
Submitted by: Praveen Rangay M.B.A- Finance Semester- III.
Submitted to: Ms. Ruchi Bhandari Assistant Professor NLU - Jodhpur
FACULTY OF MANAGEMENT STUDIES NATIONAL LAW UNIVERSITY, JODHPUR JULY- 2011 PROJECT TITLE: Investment in Small Cap Stocks
INTRODUCTION: Stock funds are often grouped by the size of the companies they invest in -- big, small or tiny. By size we mean a company's value on the stock market: the number of shares it has outstanding multiplied by the share price. This is known as market capitalization, or cap size. Big companies tend to be less risky than small fries. But smaller companies can often offer more growth potential. The best idea is probably to have a mix of funds that give you exposure to large-cap, midsize and small companies. Small Cap refers to stocks with a relatively small market capitalization. The definition of small cap can vary among brokerages, but generally it is a company with a market capitalization of between $300 million and $2 billion. Stocks with a market cap below $250 million are referred to as micro caps, and those below $50 million are called nano caps. Small-cap stocks can trade on any exchange although a majority of them are found on the Nasdaq or the OTCBB because of more lenient listing requirements. Small Cap is one of the biggest advantages of investing in small-cap stocks is the opportunity to beat institutional investors. Because mutual funds have restrictions that limit them from buying large portions of any one issuer's outstanding shares, some mutual funds would not be able to give the small cap a meaningful position in the fund. To overcome these limitations, the fund would usually have to file with the SEC, which means tipping its hand and inflating the previously attractive price. Keep in mind that classifications such as "large cap" or "small cap" are only approximations that change over time. Also, the exact definition can vary between brokerage houses. Small cap stocks have a bad reputation. The media usually focuses on the negative side of small caps, saying they are risky, frequently fraudulent and lacking in quality that investors should demand in a company. Certainly these are all valid concerns for any company, but big companies (think Enron and Worldcom) have still fallen prey to issues of internal fraud that virtually destroyed shareholder
interest. Clearly, company size is by no means the only factor when it comes to investors getting scammed. In this article we'll lay out some of the most important factors comprising the good and the bad of the small-cap universe. The volatility of the fund often depends on the aggressiveness of the manager. Aggressive small-cap managers will buy hot growth and technology companies, taking high risks in hopes of high rewards. More conservative "value" managers will look for companies that have been beaten down temporarily by the stock market. Value funds aren't as risky as the hot growth funds, but they can still be volatile. Because of their volatility, small-cap funds require that you have enough time to make up for short-term losses. And as we saw during 1997 and 1998, there are times when the market turns away from small-cap companies altogether for extended periods. (Large caps have taken the spotlight lately due to extreme volatility in the markets; small caps, meanwhile, have floundered.) But that's no reason to abandon these funds. History would indicate that small companies will eventually regain favor as markets settle down. And when they do, they will likely grow more quickly than their larger cousins -- which can provide a good kicker for aggressive investors who need to build as much wealth as possible while they're young.
Research Objectives:
1. To identify and analyze as to whether one should invest in small cap stocks or not. 2. To determine the profitability of investment in small cap stocks. 3. To suggest / generate the strategies to invest in small cap stocks.
Research Methodology:
My research methodology will be “case study methodology” in nature. The data will be collected from the various companies’ websites and their annual reports. Information would be collected and data would be tabulated, analysis and recommendation will be made.
Research Design:
The paper will follow embedded unit of analysis methodology with descriptive and explanatory approach, while analyzing the facts it will concentrate on the qualitative behaviour that the situations carry within themselves.
Collection of Evidences:
The required data will be collected primarily from secondary sources like the press releases of five companies that offer small cap stocks, annual reports, Articles of the professionally
concerned people in investment, past performance records and financial records from money control.com website.
Tentative Chapterization:• Executive Summary • Research Objectives • Research Methodology 1. Introduction: 2. Data Tabulation 3. Analysis 4. Conclusions 5. Recommendations • • • Annexure Collection of evidences Limitations(if any)
Bibliography and Websites visited:
• • • • www.google.co.in/ http://www.wikipedia.org/ http://www.moneycontrol.com Fisher Donald E and Jordan Ronald J, Security Analysis and Portfolio Management, Sixth Edition, Pearson Education, New Delhi, 2003.
doc_388120604.doc
synopis of iapm of OMDC
A Project Synopsis On
“Investment In Small Cap Stocks”
Being Submitted in Partial Fulfilment of the Degree of
M.B.A. – FINANCE
For the Course Investment Analysis and Portfolio Management
Submitted by: Praveen Rangay M.B.A- Finance Semester- III.
Submitted to: Ms. Ruchi Bhandari Assistant Professor NLU - Jodhpur
FACULTY OF MANAGEMENT STUDIES NATIONAL LAW UNIVERSITY, JODHPUR JULY- 2011 PROJECT TITLE: Investment in Small Cap Stocks
INTRODUCTION: Stock funds are often grouped by the size of the companies they invest in -- big, small or tiny. By size we mean a company's value on the stock market: the number of shares it has outstanding multiplied by the share price. This is known as market capitalization, or cap size. Big companies tend to be less risky than small fries. But smaller companies can often offer more growth potential. The best idea is probably to have a mix of funds that give you exposure to large-cap, midsize and small companies. Small Cap refers to stocks with a relatively small market capitalization. The definition of small cap can vary among brokerages, but generally it is a company with a market capitalization of between $300 million and $2 billion. Stocks with a market cap below $250 million are referred to as micro caps, and those below $50 million are called nano caps. Small-cap stocks can trade on any exchange although a majority of them are found on the Nasdaq or the OTCBB because of more lenient listing requirements. Small Cap is one of the biggest advantages of investing in small-cap stocks is the opportunity to beat institutional investors. Because mutual funds have restrictions that limit them from buying large portions of any one issuer's outstanding shares, some mutual funds would not be able to give the small cap a meaningful position in the fund. To overcome these limitations, the fund would usually have to file with the SEC, which means tipping its hand and inflating the previously attractive price. Keep in mind that classifications such as "large cap" or "small cap" are only approximations that change over time. Also, the exact definition can vary between brokerage houses. Small cap stocks have a bad reputation. The media usually focuses on the negative side of small caps, saying they are risky, frequently fraudulent and lacking in quality that investors should demand in a company. Certainly these are all valid concerns for any company, but big companies (think Enron and Worldcom) have still fallen prey to issues of internal fraud that virtually destroyed shareholder
interest. Clearly, company size is by no means the only factor when it comes to investors getting scammed. In this article we'll lay out some of the most important factors comprising the good and the bad of the small-cap universe. The volatility of the fund often depends on the aggressiveness of the manager. Aggressive small-cap managers will buy hot growth and technology companies, taking high risks in hopes of high rewards. More conservative "value" managers will look for companies that have been beaten down temporarily by the stock market. Value funds aren't as risky as the hot growth funds, but they can still be volatile. Because of their volatility, small-cap funds require that you have enough time to make up for short-term losses. And as we saw during 1997 and 1998, there are times when the market turns away from small-cap companies altogether for extended periods. (Large caps have taken the spotlight lately due to extreme volatility in the markets; small caps, meanwhile, have floundered.) But that's no reason to abandon these funds. History would indicate that small companies will eventually regain favor as markets settle down. And when they do, they will likely grow more quickly than their larger cousins -- which can provide a good kicker for aggressive investors who need to build as much wealth as possible while they're young.
Research Objectives:
1. To identify and analyze as to whether one should invest in small cap stocks or not. 2. To determine the profitability of investment in small cap stocks. 3. To suggest / generate the strategies to invest in small cap stocks.
Research Methodology:
My research methodology will be “case study methodology” in nature. The data will be collected from the various companies’ websites and their annual reports. Information would be collected and data would be tabulated, analysis and recommendation will be made.
Research Design:
The paper will follow embedded unit of analysis methodology with descriptive and explanatory approach, while analyzing the facts it will concentrate on the qualitative behaviour that the situations carry within themselves.
Collection of Evidences:
The required data will be collected primarily from secondary sources like the press releases of five companies that offer small cap stocks, annual reports, Articles of the professionally
concerned people in investment, past performance records and financial records from money control.com website.
Tentative Chapterization:• Executive Summary • Research Objectives • Research Methodology 1. Introduction: 2. Data Tabulation 3. Analysis 4. Conclusions 5. Recommendations • • • Annexure Collection of evidences Limitations(if any)
Bibliography and Websites visited:
• • • • www.google.co.in/ http://www.wikipedia.org/ http://www.moneycontrol.com Fisher Donald E and Jordan Ronald J, Security Analysis and Portfolio Management, Sixth Edition, Pearson Education, New Delhi, 2003.
doc_388120604.doc