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Investing - Stock Project
Email Kathy


Biotech Stock Project
September 16, 2009


You and your money.... It's a love-hate relationship, isn't it! Reminiscent of the ocean tides...you watch it come in... and then go out...in...out...in... and here you sit, getting a day older - but not a penny richer. Well, no more!!!!

Are you ready to start investing in the Stock Market and possibly make some REAL profits? Thanks to a generous profit-sharing plan from IUPUI Biotech Inc., you have just been handed $20,000 in cold, hard cash. You will pick 2 stock to invest in. [In real life you would want to do some research on which stocks to invest in, and "diversify your portfolio" - invest in different areas and in companies of different sizes. More about this later]

The stocks are grouped into the following "sectors": Make sure you get 1 light green, and one other!

Purple: Big Business Blue: Oil companies "Big Oil"
Orange: "Big Food"

Pink: Biotechnology and "Big Pharma"

New for 09: Green for "Green" companies!

Important Disclaimer: The following is merely an exercise to teach you about following stock prices in the stock market - in Real Time! In doing this exercise, you are not actually buying stock, you are merely asking a computer program to track stock prices for you! You will not actually spend, make or lose real money on this project. The computer program does not know (and does not care) whether people really own the stock they are tracking. There are many web sites that offer this tracking feature, I think Money's is one of the easiest to use (and it is way fun to watch it change in real time!!!)

 

To Invest your $10,000 per company and hopefully make a killing in the Stock Market:
To complete the rest of the steps, you will need your ticker symbols and a calculator.

  1. Take yourself (and your ticker symbol) to Money.com (money.cnn.com)
  2. Scroll to the bottom of the page. Click on the word 'PORTFOLIO' (blue letters).
  3. A log-in page appears. Register on the "Ready to create a new portfolio?" box by typing in a user name of your choice and your e-mail. They will e-mail you back with a password.
  4. Once you have your password, go back to Money.com, click again on the word PORTFOLIO and log in.
  5. On the new page, click on 'New Portfolio'. Follow the next three steps and then do a little math:

  1. Name your portfolio (ie: "Biol540 Project"). Under Cash Options. Click the "Cash Position" button, and enter $20,000. Hit “Next”.

  2. Enter your two Ticker Symbols (separate with spaces). For the purposes of this sample portfolio we will set up in class, add DNA (Genentech) and APPL (Apple C0mputers) and Hit “Next”. You will do this with your OWN ticker symbols when you get home!

  3. Enter transaction Information. On this new page, your chosen ticker symbols are now shown to the left with trade date and blank boxes beside them. This is where you will fill in the number of shares purchased. However, you first need to determine the current TRADE PRICE. To do this, enter your ticker symbol in the box at the top of the page labeled “Get Quotes” and hit the button.

  4. A new page with the current TRADE PRICE of your stock will appear. To determine how many shares you can ‘buy’, divide $10,000 by the price per share. (Work it out with your calculator...or Google, of course). Write these numbers down HERE:
    1. Price / share (or 'TRADE PRICE') out to two decimal places:
      $ ____________; $____________
    2. # SHARES‘purchased’ out to three decimal places:
      _____________; _____________
    3. If you are a bit persnickety about these things, multiply these out beforehand so you make sure you are as close to $10,000 as possible for each.

  5. Go back 1 screen and enter “# SHARES” purchased and “TRADE PRICE” or price per share. Leave the position type as 'Long', and do not enter a commission. Hit “Finish”. You will now see your portfolio - live and growing as soon as the market is open! Note that your portfolio has a Cost of Holdings (and initially a Current Value) very close to $20,000.00. [If this number is NOT $20,000.00 or very close to it, a math error was probably made; you may have to repeat the process!]

  6. That's all there is to it! At this point, Money.com will start to keep track of the stock price (as soon as the market opens the next day, if you are doing this at night) and will determine how much value was gained or lost in that day of trading. Depending on your stocks performance that day, you may notice an immediate “gain” or “loss” as soon as you set up the portfolio.

  7. First assignment: (a) Print out your “PORTFOLIO” page NOW - on the day you create the portfolio - and turn it in with your final report Dec 6th. (b) Through ONCOURSE, not regular mail, send me an e-mail with the info from step 1 below no later than Friday, Sept 25th.

  8. To check in on your portfolio at any time thereafter, simply click the “PORTFOLIO” button as desired. Values are updated every 15 minutes while the trading floor is open. (Tip: Do NOT call Martha Stewart and ask her for advice on Buying and Selling stocks.) NOTE: You can add additional stocks to your portfolio if you are interested in 'following' them at any time! Think of a few companies that you think might be 'winners' and see how they do for a few months!

  9. I will make 1 big portfolio with all of our stocks on it so we can follow all the stocks as a unit in class! We will check back every Tuesday or so to see how the stocks are doing. (You can check yours more frequently if you wish). Fluctuations are normal - and remember - you don't lose money on a stock (or make money on a stock) until you sell it!!!!! However, in the week before the project due date of December 01, we "sell" - we will determine who made the most money on their stock and see who is the big winner......

 

 

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What you will need to hand for your 50 points
1. Your Name:

Company 1:Your $10,000 investment will go to (name of company and ticker symbol):

Company Name: ______________________________________
Ticker Symbol: ________________________________
Price per share: ________________________________
Number of shares 'purchased': ____________________ = $10,000
Date 'purchased' (must be before 9/25) _______________________
Company Website: ______________________________________
52-week high and low for this stock (on date of purchase): _________________________

Company 2: Your $10,000 investment will go to (name of company and ticker symbol):

Company Name: _____________________________________
Ticker Symbol: ________________________________
Price per share: ________________________________
Number of shares 'purchased': ____________________ = $10,000
Date 'purchased' (must be before 9/25) _______________________
Company Website: ______________________________________
52-week high and low for this stock (on date of purchase):: _________________________

Include
Initial stock portfolio sheet from
Money.com (must be before 9/25)


Stock Research; In addition, include answers to the following questions in your final report. Questions 2 and 9-12 apply to BOTH of your companies. Questions 3-8 apply to your Biotechnology / Pharma company ONLY. Plan to write a minimum of 1 paragraph for each question, and be sure to cite any quotes, images, or tables you use from company website. Do not copy blocks of text wholesale into your report.

2. List BOTH company's successful products on the market and, for Biotech / Pharma companies, what the products do (indications): (if none, write n/a and answer question 3 thoroughly!). You do not need to list more than 5-6 products if it is a company with a lot of products on the market!!! Use common sense!

3. List some products in the pipeline with late-stage candidates: This is usually right on the webpage, although you may have to do a little searching. (If they have no pipeline candidates, write n/a and provide an analysis for the long term prospects for this company.)

4. Look on the company website for their Annual Report (or actually call or e-mail the company and ask them to send you a copy!) [Sample from Genentech] In the old days, companies would send you a packet in the mail full of glossy booklets, sales projection, annual revenues, company history, etc. etc. Now, most companies just have you download (or scan through) a large, color glossy PDF file of their company report. Print out ONE PAGE of this annual report that really was interesting or impressive to you (include it at the end of the report) and write one paragraph about why this was interesting or important to you (as an investor, patient or patient advocate, or future physician, etc.)

 

5. Drugs revenues of their major products: Find info on their company annual report, web site, or, more likely, find this information from the company’s most recent 10-Q filing with the SEC. Go to the SEC form at Money.com -->Get quotes -->; SEC filings; OR Yahoo Finance/ The Motley Fool, Enter symbol, --> left hand column. You may need to look through a few 10-Qs before you find the one that lists revenues.

6. List any partnerships or marketing agreements (if none, write n/a). Again, you will need to research this on the company web site and/ or with a recent SEC filing.

7. Research & development spending - Find info on their company annual report, web site, or go to the SEC form linked in step

8. Experienced management – Investigate and report on who runs the business end of the company – CEO and the scientific end of the company – CSO.

9. Tell me something recent in the news about BOTH of your companies that resulted in a recent rise or fall in the stock price of the two companies. Look on the company "Press Room" link, Motley Fool, Yahoo Business, Money, NY Times, etc.

10. Print out the company’s stock chart for the last year, and for all years since the company was started "all data"from
Money.com. Include these two charts in your final writeup. When would have been the best time in the history of the company to have bought stock? Sold stock? When in the last year would have been the best to have bought stock? Sold stock? Note: You can't go back in time - ie: buy in 2001, sell in 1996....

11. Calculate the Return on Investment (ROI) you earned during this project . Sadly, all good things must come to an end, including this project. Imagine that you must sell your stock within a week before the due date of December 5th. Based on the ending price of the stock that day, (you pick the day), you will find that you either “earned” or “lost” money on the project (or broke even). Calculate your Return on Investment, which may be expressed as a positive or a negative number.

Example 1: Calculating the ROI for a stock that made money over the course of the project. Example: The stock value for our biggest “Advancer” was $18,400 at the end of the project on 11/18/03. By ‘selling’ the stock that day, the owner would now have $18,400 in cash, and would have earned $8,400 on this 3-month investment.

[(Return - Capital) / Capital] x 100% = Return on Investment
[($18,405 - $10,000) / $10,000] x 100% =
(+)84 % Return on Investment

Example 2: Calculating the ROI for a stock that lost money over the course of the project. The stock value for our biggest “Decliner” was $3,153 at the end of the project on 11/18/03. The owner of this stock would have lost $6,847 in 3 months (ouch!), and at the end of the project would have substantially less money than they started with. [Moral: Don't invest for the short term]

[(Return - Capital) / Capital] x 100% = Return on Investment
[($3,153 - $10,000) / $10,000] x 100% = (-)68.4 % Return on Investment

12. Based on what you learned from doing research on your company as part of this project, would you consider your companies to be worthy of your real investing dollars? Why or why not. If you had your choice, what other company might have been a better pick for you and why?

13. Turn in the complete report by class time, Tuesday December 01