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A popular Wendy's commercial in the 80s made famous the question: "Where's the beef?" Good one. And here's an even better one: "Where's the alpha?" You might want to whip this one out the next time you meet with your portfolio manager.
Alpha is the over-and-above-the-expected return. It is the "value added." Therefore, it makes sense that a positive alpha means an investment has outperformed its market-predicted return, while a negative alpha would mean just the opposite. The expected return is calculated by a formula that takes into account the investment's level of unavoidable risk (aka beta).
Ever stepped into an elevator and after the doors close you become aware of an almost-suffocating scent coming from the woman next to you who must have bathed in perfume? Well, as you know, once the doors close you can't escape the smell until the ride is over. This is similar to beta, which is risk that can't be reduced or diversified away. A measure of "systematic" or market related risk, beta is used as a measure relative to a certain index -- such as the S&P 500.
So, for example, let¿s say your portfolio is managed to compete against the S&P 500. If you generate a better return than the index while not taking on added risk (standard deviation of returns) then you get alpha. Low beta means the market-related risk is low and vice versa for high beta.
Another example, let's say a mutual fund or stock has a beta of 1.5 relative to the S&
P500 ¿ that means it is 1.5 times as risky. So, over time, if the S&P 500 goes up 1%, your portfolio should be up 1.5%
plus (one can hope) some percentage of alpha. If the S&P 500 is down 1%, your portfolio should be down 1.5%.
Alpha
and beta are based off of linear regression of a set of data. Warning: this may cause a high school fifth-period flashback,
but it will be over before you know it:
The equation for a line is Y = a + bX.
a = alpha (the Y intercept - the added
value)
b = Beta (the coefficient you multiply X by)
X = S&P 500 (in this case)
Y = your portfolio
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Thursday, May 08, 2008
Family Dollar Reports April Sales
Comtex
MATTHEWS, N.C., May 08, 2008 (BUSINESS WIRE) ----Family Dollar Stores, Inc. (NYSE: FDO) reported that net sales for the four weeks ended May 3, 2008, increased 7.2% to $516.0 million compared with $481.3 million for the four-week period ended May 5, 2007. April sales results were positively impacted by one more day of sales resulting from the shift of Easter into the March period. Total sales for the four-week period were strongest in the consumables category; sales of apparel and home products were softer. Comparable store sales increased 4.3%. The Company had 6,539 stores as of May 3, 2008, including 12 new stores opened in the April period.
FY08 Sales Comparable Store (millions) Sales Change ---------------- ----------------- April 2008 $ 516.0 4.3% Third Quarter-to-date $ 1,157.2 -0.7% Year-to-date $ 4,672.9 -0.5%
May Sales Outlook
The Company expects that comparable store sales in the May period will increase 0% to 2%.
Cautionary Statements
Certain statements contained in this report are forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements address the Company's plans, activities or events which the Company expects will or may occur in the future. Various risks, uncertainties and other factors could cause actual results to differ materially from those expressed in any forward-looking statement. Such risks, uncertainties and other factors include, but are not limited to:
-- general economic conditions that could adversely impact consumer spending;
-- economic conditions, including inflation and energy prices, that could affect our profitability;
-- competitive factors that could limit our sales, growth or profitability;
-- increases in comparable store sales and the success of our new store opening program;
-- failure of existing or new technology to provide anticipated benefits;
-- unusual weather, natural disaster, pandemic outbreaks, political events, war or acts of terrorism;
-- our ability to select, obtain and market merchandise attractive to our customers at prices that allow us to profitably sell such merchandise;
-- operational difficulties;
-- our ability to operate distribution facilities;
-- changes in regulations;
-- changes in legal, regulatory or accounting guidance that could adversely affect our financial performance;
-- higher costs or failure to achieve targeted results associated with the implementation of new programs or initiatives;
-- adverse impacts associated with legal proceedings;
-- our ability to attract and retain employees; and
-- the impact of the economic stimulus package adopted by Congress and currently being implemented.
Consequently, all of the forward-looking statements made by the Company in this and other documents or statements are qualified by these and other factors, risks and uncertainties, including those set forth under "Cautionary Statement Regarding Forward-Looking Statements" or "Risk Factors" in the Company's Annual Report on Form 10-K and Quarterly Reports on Form 10-Q filed or to be filed. Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. The Company does not undertake to publicly update or revise these forward-looking statements even if experience or future changes make it clear that projected results expressed or implied in such statements will not be realized, except as may be required by law.
About Family Dollar
Operating small store locations, Family Dollar is one of the fastest growing discount retail chains in the United States. Beginning with one store in 1959 in Charlotte, North Carolina, the Company currently operates more than 6,500 stores in 44 states. Family Dollar Stores, Inc., a Fortune 500 company, is based in Matthews, North Carolina, and is a publicly held company with common stock traded on the New York Stock Exchange under the symbol FDO. For more information, please visit www.familydollar.com.
SOURCE: Family Dollar Stores, Inc.
Family Dollar Stores, Inc. INVESTOR CONTACT: Kiley F. Rawlins, CFA, 704-849-7496 krawlins@familydollar.com or MEDIA CONTACT: Josh Braverman, 704-814-3447 jbraverman@familydollar.com
Copyright Business Wire 2008
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