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Investment Research

Private Company or a Public Company

When deciding to make an investment you should first research whether the company under consideration is privately-held or publicly-held. The latter represents a company which stocks are listed on the stock exchange and thus are freely traded. On the other hand, privately-held companies are not listed on the stock exchange and are generally owned by an individual, employees or a group of investors. Family businesses also fall in this category.

To illustrate the difference between a public and a private company consider the following example. We assume that company X, a sports wear company, falls in the category of publicly traded companies. This means that you can go to the New York Stock Exchange, for example, and purchase shares of the company. As a result you will enjoy a percentage of the profits made by company X on every product sold. On the other hand, the company Y, again a sports wear producing company, is owned by the Y family. Therefore, it is not listed in any stock exchange and you cannot purchase its shares and enjoy its profits. An exception can be made only after the agreement of the Y family.

Distinction between a Private and a Public Company

In order to find whether a company is public or private, you can directly address the company under consideration and ask for their status. The other option you have is to visit the corporate website and search for an "investor relations" category to check its status. In most cases the existence of such a category on the website implies in itself that the company is publicly traded. However, there are many exceptions, so you should get first hand information by directly addressing the company.

Ticker Symbols Analysis

A combination of letters, the ticker symbols represent the abbreviation for a particular stock that is traded on the exchange or over-the-counter market. After you have decided on the company you want to invest in and have verified that it is publicly traded, you should acquaint yourself with the specific ticker symbol assigned to it. It is possible for one company to have two ticker symbols to represent its different classes of shares. For example Berkshire's class A is signified as BRKA and its class B as BRKB.

If you are not familiar with the specific ticker symbol of the company of your choice, you can either ask your broker or go to specialized websites such as Yahoo Finance. If you have decided on the second option, look for the option "symbol lookup". This option allows you to enter the company's name and find out its specific ticker symbol.

After you have found the ticker symbol of the company under consideration, you can return to Yahoo Finance. After this search for the "get quote" option to enter the ticker symbol and view such information about the company as:

  • Current quote for a share of the company's stock
  • Recent dividend payment
  • Yield information
  • The business's total market capitalization
  • The price-to-earnings ratio for twelve months and etc.

Official Documents Acquiring

Once you have made the already mentioned researches and are satisfied with the results, the next step you should make is to view a copy of:

  • 10k
  • Annual report of the company
  • Proxy statement

In order to get them for free, you can browse through the Internet and find the necessary information in a timely manner. Another source of information is the company itself that the investor is researching. If you choose this second option you should address the shareholder relations department. This can be done either by phone or by sending an email from the corporate website.

Direct Stock Purchase Plans and Dividend Reinvestment Programs (DRIPs) Options

After you have made all the preliminary researches and have set your mind on a particular company by making a long-term investment in it, it will be good to consider an automatic direct stock purchase plan or a dividend reinvestment program. You can combine them as well. These plans provide a good starting point for dollar cost averaging.

The dividend reinvestment program is a plan under which a direct reinvestment of the investor's dividends is executed in the company's stocks. On the other hand, the direct stock purchase plan represents a program under which deductions from the checking or savings accounts are made for the provision of resources to be used for the acquisition of the company's stocks. This plan eliminates the services of a broker.

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