Portfolio Fundamentals

An exciting new capability is the integration of the Real Time System with Valuation Tutor (VT in what follows).  What it lets you do is conduct a fundamental analysis of your portfolio and also helps with stock selection.  I will describe the latter capability in a more general posting about using VT for stock selection.  Here, I will focus on the portfolio analysis.

Recall that in VT, you can analyze and compare companies along many dimensions.  These include common size analysis, cost-volume profit analysis, efficiency ratios, as well as price ratios.  Now, you can do the same for your stock portfolio.  This lets you answer questions such as: what is the ROE of my portfolio?  How does it compare to the stocks in my trading case?  How does it compare to specific industries or sectors?  And ROE is just one metric; you can compare your portfolio to any subset of stocks (in the VT dataset), sector and industry averages, and see exactly what are the fundamentals of your portfolio along any dimension covered by VT.

To use the capability, launch the FTS Real Time client and log in to one of our US Equity cases.  I will use the simplest case, the 30 stock case to illustrate the connection.  After you log in, click on the (new) Valuation Tutor tab:

 When you transfer the data, VT creates an (artificial) stock called “RT Portfolio”
, abbreviated to RTPORT in the chart legends.   It calculates and shows the weighted-average fundamentals of the portfolio.  For example, the chart on the top right shows the sales of the stocks in the portfolio normalized by assets, and compares them to the stocks in which I have a position.  If you put your mouse over a column, it will tell you the value.  Right click on the chart area and you can see numeric values:

and then download the Current FTS Dataset:

 Once you see the Valuation Tutor screen with the basic charts, go back to the Real Time Client and click “Send Data to VT”

Your portfolio will now be transferred to Valuation Tutor, and you will see a screen like this:

When you transfer the data, VT creates an (artificial) stock called “RT Portfolio”, abbreviated to RTPORT in the chart legends.   It calculates and shows the weighted-average fundamentals of the portfolio.  For example, the chart on the top right shows the sales of the stocks in the portfolio normalized by assets, and compares them to the stocks in which I have a position.  If you put your mouse over a column, it will tell you the value.  Right click on the chart area and you can see numeric values:

 Going back to the beginning, lets look at the ROE of my portfolio (select DuPont Decomposition in Valuation Tutor):

 You can see that the portfolio ROE is primarily due to the position in Boeing (BA).   The chart at the bottom left shows that buying IBM would raise the ROE of my portfolio.

Beyond this, the full power of VT now applies to the portfolio: you can conduct financial statement analysis of your portfolio, compare it to any subset of stocks or sectors or industries, perform advanced comparisons, and so on, and assess the strengths and weaknesses of your position at a fundamental level.