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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
Home / Markets / Industries / Telecom
Friday, May 09, 2008
Nortel Inversora S.A. Announces Consolidated First Quarter Results for the Fiscal Year Ending December 31, 2008
Comtex
BUENOS AIRES, Argentina, May 9, 2008 /PRNewswire-FirstCall via COMTEX News Network/ ----Nortel Inversora S.A. (NYSE: NTL), whose sole substantial activity is owning 54.741682% of the stock of Telecom Argentina S.A. ("Telecom") and whose sole substantial source of cash income is cash dividends and other distributions paid on such stock, today announced consolidated net income of Ps. 148 million for the first quarter of fiscal year 2008.
Nortel's consolidated financial results for the first quarter of fiscal year 2008 are substantially identical to Telecom's results for the same period, after accounting for minority interest and financial income and expenses at the holding-company level.
Summary of the resolutions passed by the General Ordinary Shareholders' Meeting, and the Class A Preferred Stockholders Special Meeting held on April 30, 2008.
On April 30, 2008, Nortel held its General Ordinary Shareholders' Meeting and Class A Preferred Stockholders' Special Meeting. Among other points, the Shareholders' Meetings approved:
-- Fiscal year 2007 Annual Report and Financial Statements. -- The proposal to increase the legal reserve (5% of the fiscal year retained earnings) and transfer to the new fiscal year the entire balance as of December 31, 2007 of positive retained earnings. -- The election of regular and alternate Board members and the election of regular and alternate members of the Supervisory Committee (for the 20th fiscal year). -- The auditing Committee's budget for Fiscal Year 2008 . -- The designation of Price Waterhouse & Co. as external auditors of the Company. FINANCIAL TABLES BELOW NORTEL INVERSORA S.A. FIRST QUARTER, FISCAL YEAR ENDING DECEMBER 31, 2008 (In millions of Argentine pesos, except statistical and ratio data) Consolidated Balance Sheet (*) 2008 2007 Current assets 3,187 2,384 Non-current assets 6,524 6,786 Total assets 9,711 9,170 Current liabilities 3,790 3,647 Non-current liabilities 2,521 2,419 Total liabilities 6,311 6,066 Minority interests 1,583 1,449 Total shareholders' equity 1,817 1,655 Total liabilities and shareholder's equity 9,711 9,170 (*) As a consequence of the application of the new rules, the comparative information for the intermediate periods of the Annual Financial Statements should be the one corresponding to the last complete fiscal year. The comparative information of the Income Statement, evolution of Shareholders' Equity and Cash Flow Statements should be the one corresponding to the equivalent period of the previous fiscal year. Consolidated Income Statement 2008 2007 Net revenues 2,480 2,058 Cost of services provided administrative and selling expenses (1,947) (1,700) Operating Profit 533 358 Equity gain from related companies ---- ---- Financial results, net (60) (132) Other,net (47) (33) Income tax (149) (52) Minority interest (129) (65) Net loss from discontinued operations (-----) (2) Net Income 148 74 Ratios 2008 2007 Liquidity (a) 0.84 0.65 Indebtedness (b) 1.86 1.95 (a) Current Assets to current liabilities (b) Total liabilities to shareholders' equity plus third party interests. Contact: Jose Gustavo Pozzi General Manager Nortel Inversora S.A. (5411) 4 968-3630
SOURCE Nortel Inversora S.A.
Copyright (C) 2008 PR Newswire. All rights reserved
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