Investment Strategy Flashcards - Public Equity / Stocks

Flashcards covering public equity investment strategies, company size classifications, benchmark indices, and various investment vehicles used in professional finance.

Value strategy

An investment strategy focused on buying companies that appear underpriced compared to what they may truly be worth.

Contrarian investing

Buying companies or assets that the broader market is ignoring, avoiding, or undervaluing.

High-conviction strategy

A focused strategy where the manager invests in fewer companies they strongly believe in, instead of spreading money across hundreds of names.

Market capitalization / market cap

The total market value of a public company. It equals $\text{stock price} \times \text{number of shares outstanding}$.

Public equity

Ownership in publicly traded companies through stocks listed on exchanges.

Micro-cap

Very small public companies, usually riskier and less liquid, but with more potential upside.

Small-cap

Smaller public companies that are more established than micro-cap companies but still relatively early in their growth.

SMID-cap

Small-to-mid cap. A blend of small and medium-sized public companies.

Large-cap

Larger, more established public companies. Usually more stable, but often with slower growth.

All-cap

A flexible strategy that can invest across all company sizes: small, mid, and large.

Benchmark

The index used to measure how well an investment strategy performs.

Russell 2000 Value Index

A benchmark for small-cap value stocks.

Russell 1000 Value Index

A benchmark for large-cap value stocks.

Russell 2500 Value Index

A benchmark for small-to-mid-sized value stocks.

Russell 3000 Value Index

A broad benchmark covering much of the U.S. public stock market.

Russell Microcap Value Index

A benchmark for very small public value companies.

Separately Managed Account / SMA

A customized investment account managed for one investor, usually an institution or high-net-worth client.

Mutual fund

A pooled investment vehicle where many investors buy shares and the fund manager invests the pooled capital.

Collective Investment Fund / CIF

A pooled institutional investment vehicle often used by retirement plans or large institutions.

3(c)(7) Fund

A private investment fund generally available only to highly qualified investors, not the general public.

Liquidity

How easily an investment can be bought or sold without significantly affecting its price.

Portfolio

A collection of investments owned by an investor or managed by an investment firm.

Balance sheet

A company's financial snapshot showing assets, liabilities, and equity.

Strong balance sheet

A company has healthy finances, manageable debt, and enough assets or cash to support operations.

Management team

The executives and leaders responsible for running the company.

Undervalued company

A company whose stock price may be lower than its true business value.

Investment vehicle

The structure used to access an investment strategy, such as an SMA, mutual fund, or private fund.