Strategic Financial Management Definition

Running head: FINANCIAL MANAGEMENT
Financial Management
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Table of Contents
Investment Overview.......................................................................................................................2
Criteria for Stock Selection.............................................................................................................3
Company Analysis...........................................................................................................................3
Brookfield Asset Management (BAM).......................................................................................4
Alphabet (GOOGL).....................................................................................................................6
Starbucks Corporation (SBUX)...................................................................................................7
Stock Analysis.................................................................................................................................9
Monthly Stock Return..................................................................................................................9
Stock Risk and Return.................................................................................................................9
Correlation Coefficient................................................................................................................9
Portfolio Optimization.................................................................................................................9
Portfolio Risk and Return..........................................................................................................10
Normal Distribution...................................................................................................................11
Value at Risk (VaR)...................................................................................................................12
Portfolio Random Weight (%)...................................................................................................12
References......................................................................................................................................14
Appendix........................................................................................................................................16
1) Monthly Stock Return...........................................................................................................16
2) Portfolio Return.....................................................................................................................19
3) Random Change in Portfolio Weights...................................................................................22

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Investment Overview
Investment in stock markets could provide investors an opportunity to earn a sound risk
return ratio along with the help of gaining additional amount of exposure to various global
companies. Investment in stock market sounds interesting however, there are a multiple set of
factors that needs to be factored and analysed while considering the same as an asset class for
investment purpose. It is important to note that investing in fact is hard and building a portfolio
of stocks to beat the market is something which even financial professional sometimes have
problem with. It was found out that only about 15% of the actively managed funds had in turn
could only manage to beat the benchmark index. On the other hand, retail and single investors
could hardly beat the market as a whole as charted by JP Morgan Company (How to Invest in the
Stock Market, 2020).
However, at the same time there are a various amount of independent, disciplined
investors in which one can build good amount of wealth in the long-term from the market. It is
not easy, but still can be manageable to get a healthy return from the stocks. Dividend Growth
Strategy of Investment is considered as the best and optimum strategy for selecting stocks that
would be giving the investors a regular flow of income (How the Stock Market Affects You, Even
If You Don't Invest, 2020). Thus, companies that have a stable and consistent amount of dividend
history, along with a stable dividend payout ratio and an optimum growth prospects have been
well considered for selection process. The stocks selected for the purpose of investment and
analysis will be further analysed based on the risk and return generated on an individual and on a
portfolio basis. Finally, the three selected stocks would be considered from a portfolio

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perspective in the sense giving an appropriate/optimal set of weight generating the highest set of
returns (Alden, 2020).
Criteria for Stock Selection
The key criteria that would be placed for selecting the stocks would be done based on the
dividend growth strategy as stated. The key reason behind the same in particular has been
because companies that in particular had a more than 10 years of past sound dividend growth,
along with a sustainable dividend payout ratio along with a solid growth prospect of the
company (Paul R. La Monica, 2020). The strategy would help the investors in getting a sound
source of getting reliable source of current or regular income from the investment done. In
particular buying shares according through this strategy would not only help the investor earn
consistent return, but at the same time would help the investor re-invest the dividends into stocks
considered (Diversity and Diversity, 2020). The key set of criteria that were placed for the stocks
were as follows:
 Criteria 1: The Company does get advantage from long-term market run and has
considerably a lesser amount of risk.
 Criteria 2: The analyzed company must generate above-average return and the same
must be consistent.
 Criteria 3: Strong Financials of the company in the financial trend period analyzed.
 Criteria 4: The tenure of management of company should be aligned with the
profitability of the company.
 Criteria 5: Profitable Growth is seen in the company creating value for the company.
 Criteria 6: The valuation of the company is justifiable.
It is important to note that the key and main focus would not only to find out the key stocks, but
would be to generate a better set of risk-return on an adjusted basis.

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Company Analysis
The considered companies are reasonably valued and are having a sound risk-return basis
and are well meeting the above set criteria. It is expected that the analyzed companies does well
beat the market as they have done in the past so that the portfolio build would be able to earn a
consistent amount of return with the lowest possible risk (Investment tip: Merits and risks of
investing in US equity market, 2020).
Brookfield Asset Management (BAM)
The Canadian Financial Firm is an asset management firm that specializes in a range of
managing real estate services like property, infrastructure assets and renewable form of energy.
The root back of the company take us to Brazil where it first started its operations. In the last 20
year of time period the company has evolved and has shown a rapid growth and this is the key
reason why the company is currently having around $500 Billion of Assets under Management.
The assets included are in turn internally diversified into various categories into Toll Roads,
Hydroelectric Dams, Toll Roads, Solar Farm, Skyscrapers (GuruFocus.com, 2020). The
operations of the company is divided into key four key parts as follows which are publically
traded:
 Brookfield Property Partners (BPY)
 Brookfield Renewable Partners (BEP)
 Brookfield Infrastructure Partners (BIP)
 Brookfield Business Partners (BBU)
The operations of the firm operates as a private equity firm whereby they invest their own
investible amount or available amount into a variety of real estate. Secondly any institutional
investors willing to invest in response to company are guided for investment purpose and fees for
the same are collected for revenue purpose. (Stock Analysis & News, 2020). Finally, in the
above mentioned companies the BAM Company hold a significant amount of stake which help
them generate a considerable amount of cash distribution, management fees and others like
performance fees.

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The above created or business operation set up allow the company to generate or earn a
consistent amount of profit as in addition to the direct stake which the company has in real assets
which are turning out to be profitable, along with the same they are also benefiting from a
majority of trend that is coming from an increased allocation into a group of assets like
infrastructure, real assets and private equity fund. The insiders of the company has around 20%
Ownership stake. While, Mr. Bruce Flat acting as the CEO of the company had been associated
with the company for 30 years and has been the CEO for the last 15 years. The investment trend
that can be well seen in the company from the inception date can be well seen whereby the
company had outperformed the S&P500 (Benchmark Index Ratings et al., 2020).
The company has well positioned itself well in terms of economic recession, when the
management has built up a fortress balance sheet and then it buys assets for a bargain price from
a large amount of distressed assets. It has been often seen that companies that take a higher