Investment Insights

American Depository Receipts (ADRs) are negotiable security that represents securities of a company that trades in the U.S.. Non-US companies often trade as ADRs in the US.

The Annual General Meeting takes place once a year. Shareholders get to vote on different topics concerning e.g. compensation of the board, dividend payout, etc.

In accounting, amortization refers to writing off an intangible asset's cost as an operational expense over its estimated useful life to reduce a company's taxable income.

The ask price is the price the investor pays when buying a stock.

The Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin) is the German regulator for the stock exchanges.

The balance sheet tells the investor what a company owns (e.g. property) and owes (e.g. borrowings, trade payables) on a specific date.

The bid price is the price the investor receives when selling a stock.

The amount of assets a company has on its balance sheet minus its debts.

Bottom line refers to a company's net income as it is stated at the bottom of the income statement.

A seasoned equity offering or secondary equity offering (SEO) or capital increase is a new equity issue by an already publicly traded company. Seasoned offerings may involve shares sold by existing shareholders (non-dilutive), new shares (dilutive) or both.

The cashflow statement provides an overview of the amounts of cash entering and leaving the company. It is split into operating, investing and financing cashflows.

The Chief Executive Officer (CEO) is the main executive in charge of a firm.

The Chief Financial Officer (CFO) is the executive in charge of a firm's financials.

This type of share gives the stockholder the right to a share in the profits of the company, to vote on matters of corporate policy and the composition of the members of the board of directors.

In accounting, depreciation refers to two aspects of the same concept: first, the actual decrease in value of fair value of an asset, such as the decrease in value of factory equipment each year as it is used and wears, and second, the allocation in accounting statements of the original cost of the assets to periods in which the assets are used.

Companies that want to do a public listing may not have the resources to pay underwriters, may not want to dilute existing shares by creating new ones or may want to avoid lockup agreements. Companies with these concerns often choose to proceed by using the direct listing process, rather than an IPO. The existing investors, promoters and even employees holding shares of the company can directly sell their shares to the public.

The amount of money that a company pays out to its shareholders. The amount is decided on the AGM. Dividends are usually paid yearly, quarterly or sometimes even monthly.

The dividend payout ratio how much of its earnings per share the company uses to pay out its dividend. Especially for high-yielding stocks the payout ratio is of high importance as it is often a signal for an unhealthy payout ratio.

Example: Company XYZ earned 2 EUR per share. They pay a dividend of 3 EUR per share. Their payout ratio is 150 %. As a consequence, 1 EUR per share is paid from substance and not from the company's earnings for that year.

The dividend yield shows the company's dividend return at the current share price. Example: Firm xy pays out a dividend of 1 EUR per share. The current share price is 100 EUR. The company has a dividend yield of 1 %.

Earnings Calls usually take place on the day the quarterly earnings are published. Management provides its take on the numbers and what has happened during the quarter.

EBIT refers to the earnings (E) before (B) interests (I) and taxes (T). It can be used to compare companies from different countries independent of their respective corporate tax rates and independent of their financing costs.

The EBIT-margin shows a company's profitability excluding the effects of financing and taxes.

The EBIT/Net assets ratio was proposed by legendary investor Joel Greenblatt. There are different variations of this formula.

EBITDA refers to the company's earnings (E) before (B) interest (I), tax (T), depreciation (D) and amortization (A). It can be used to compare companies from different countries independent of their respective corporate tax rates, their financing costs, depreciation on their tangible assets as well as amortization of their intangible assets.

The EBITDA-margin shows a company's profitability excluding the effects of financing, taxes, depreciation and amortization.

EBT refers to the earnings (E) before (B) taxes (T). It can be used to compare companies from different countries independent of their respective corporate tax rates.

Enterprise Value (EV) is a measure for a company's total value. It is often used to value a company in a potential takeover.

Earnings per share show how much of a company's total net income is attributable to each share it has issued. Example: Company xy earned 500 EUR and has 250 shares outstanding. Earnings per share are 2 EUR.

Exchange Traded Funds are passive index funds that replicate the performance of an index. They are usually much cheaper compared to actively managed funds that seek to outperform the broader market.

The Enterprise Value/Revenues ratio is a popular measure to value growth companies as they are often still unprofitable making the P/E-ratio unapplicable.

The ex-dividend date is the day after the record date. Usually the share price of a company falls equivalent to the amount of dividend that was recorded on the day before.

Free Cash Flow refers to the amount of cash a company generates that is free for distribution in the form of e.g. dividends. FCF is calculated by substracting the capital expenditures from the company's operating cashflow.

The Financial Conduct Authority (FCA) is a financial regulatory body in the United Kingdom, but operates independently of the UK Government, and is financed by charging fees to members of the financial services industry.

The Federal Reserve System ("Fed") is the central banking system in the United States.

The amount of shares that is held by investors <5 %. This figure may vary depending on the country.

Fundamental analysis, in accounting and finance, is the analysis of a business's financial statements (usually to analyze the business's assets, liabilities, and earnings), health, competitors and markets.

Goodwill in accounting is an intangible asset that arises when a buyer acquires an existing business. Goodwill represents assets that are not separately identifiable.

The gross margin tells the investor how much of the company's costs are directly associated with its sales and is a measure of profitability. Gross margins are typically high for software companies and low for e.g. retailers.

The income statement shows the investor the financial performance of a company.

Intrinsic value is calculated by building valuation models based on aspects of a business that include qualitative, quantitative and perceptual factors. It is highly individual.

The Initial Public Offering (IPO) is the process of a company going public on a stock exchange.

International Security Identification Number (ISIN) is an international identifyer code assigned to every security.

A limit order sets a specific target price and the stock order will only be executed once the share prices matchs the target price.

A margin of safety is a concept developed by Benjamin Graham, widely regarded as the founding father of value investing. Margin of safety means that investors should deduct a certain percentage from their calculated intrinsic value to leave room for error. In a way, a margin of safety is an insurance for miscalculation or an above average share of bad luck.

The market capitalization (usually: market cap) tells the investor how much the whole company is currently worth on the market.

Companies are commonly classified in several categories based on their market cap:

• micro (<250 Mio)
• small (250 Mio - 2 billion)
• mid (2 - 10 billion)
• large (10 - 200 billion)
• mega (> 200 billion)

A market order executes a stock order immediately at the given market price.

Market Identifyer Code (MIC) is a unique code assigned to each stock exchange.

Net debt shows the investor a company's debt burden after substracting its cash and cash equivalents that could be used for instant repayment.

The net debt/EBITDA ratio gives the investor a hint at the company's debt situation.

The ratio shows how many years of the firm's EBITDA are needed in order to repay its debts.

The Price/Book value ratio shows the investor the net book value at the current share price. If the ratio is below one, the company trades below the book value on its balance sheet.

The Price/Earnings-Ratio (P/E-Ratio) tells the investor how many years it would take the company to earn his/her investment at the current share price.

Example: Company XZY trades at 20 EUR and earned 1 EUR per share this year. At the current level and if earnings remain stable, it would take 10 years to earn the amount of your investment. Problem: Company earnings are very volatile and are highly unlikely to be stable over the course of ten years.

The Price/Revenue-Ratio (also: Price/Sales) shows how much of the company's revenues are attributable to each share.

The following features are usually associated with preferred stock: Preference in dividends, preference in assets in the event of liquidation, convertibility to common stock, callability (ability to be redeemed before it matures) at the option of the corporation, possibly subject to a spens clause, nonvoting, higher dividend yields.

The record date is the day where investors have to hold shares of a company in order to receive a dividend. It is followed by the ex-dividend day.

Real Estate Investment Trusts (REIT) are tax-privileged property firm's that have a pay out a large part of their earnings as dividends. They can operate in e.g. office space, rental appartments, timberland, hotels and many more.

The U.S. Securities and Exchange Commission (SEC) is primary responsibility for enforcing the federal securities laws, proposing securities rules and regulating the securities industry, which is the nation's stock and options exchanges and other activities and organizations, including the electronic securities markets in the United States.

General term used for all kinds of products that can be traded.

The total of amount of shares that a company has issued.

In finance, being short in an asset means investing in such a way that the investor will profit if the value of the asset falls. This is the opposite of a more conventional "long" position, where the investor will profit if the value of the asset rises.

Spread refers to the difference between ask and bid prices.

A stock split or stock divide increases the number of shares in a company. A stock split causes a decrease of market price of individual shares, not causing a change of total market capitalization of the company. It is often used when the company's share price is so high that it becomes hard for smaller investors to invest in.

In finance, technical analysis is an analysis methodology for forecasting the direction of prices through the study of past market data, primarily price and volume.

A ticker symbol is an abbreviation used to identify publicly traded shares of a particular stock on a particular stock market. A ticker symbol may consist of letters, numbers or a combination of both. It is most common in the US.

Top line refers to a company's revenues as it is stated at the top of the income statement.

Volatility refers to the fluctuation in asset prices. A volatile asset tends to go up and down often.

Wertpapierkennnummer (WKN) is a German identifyer code for securities.