Question

11.2 Russ Alonzo Takes Stock of His Securities Russ Alonzo is 42 years old, single, and works as a designer for a major architectural firm. He is well paid and has built up a sizable portfolio of investments. He considers himself an aggressive investor and, because he has no dependents to worry about, likes to invest in high-risk/high-return securities. His records show the following information. 1. In 2006, Russ bought 200 shares of eBay (NASDAQ: symbol EBAY) at $29.77 a share. 2. In 2013 he bought 250 shares of Facebook (NASDAQ; symbol FB) at $26.89 a share. 3. In 2008, Russ bought 200 shares of United Technologies Corp. (NYSE; symbol UTX) at $74.92 a share. 4. In early 2009, he bought 450 shares of JPMorgan Chase (NYSE, symbol JPM) at $16 a share. 5. Also in 2009, Russ bought 400 shares of PepsiCo (NYSE, symbol PEP) at $52.50 a share. 6. He has $12,000 in a 1 percent money market mutual fund. Every three months or so, Russ prepares a complete, up-to-date report on his investment holdings

Answer 1

Ans 1 -

Considered closing price of 1st Nov 2019.

1. eBay had stock split in ratio of 2376 share per 1000 share so that has been adjusted with current quantity held by Russ.

Company	Buy Year	Buy Price	Buy Quantity	Investment	Events	Current Quantity	Current Price	Current Value
eBay	2006	$    29.77	200	$      5,954.00	Share Split 2376 for 1000	475.2	$            35.25	$      16,750.80
United Technologies Corp	2008	$    74.92	200	$    14,984.00			$          146.68	$      29,336.00
JP Morgan Chase	2009	$    16.00	450	$      7,200.00			$          127.80	$      57,510.00
PepsiCo	2009	$    52.50	400	$    21,000.00			$          136.93	$      54,772.00
Facebook	2013	$    26.89	250	$      6,722.50			$          193.62	$      48,405.00

Ans 2 -

Russ has been a good investor. He has invested in good business and companies which are growing so his investment value. He has also created a diversified portfolio not restricted his investments to sector or industry specific. Few of his stocks like United Technologies Corp is giving dividend consistently, which also adds to return. Return on his investments are almost higher than bonds or T-Bills.

Ans 3 -

Though Russ has a good portfolio and his investments has grown over a period of time, few of investment ideas have been multibagger JP Morgan Chase and Facebook however he can think of reshuffling his portfolio by investing into stocks like Amazon, Google and Apple as these companies are doing really well and will continue doing good in future the way people are using products/services of these companies. He can withdraw money from eBay and United Technologies Corp to invest into Amazon, Google and Apple.

Hope you like the explanation and investment ideas.