Assignment on Investment Portfolio of Aurora Cannabis, Cymabay Therapeutics, Nantkwest, Telecom Argentina SA and Aquestive Therapeutics Companies

1.      Investment Portfolio of  ACB (Aurora Cannabis Inc.)

Aurora Cannabis Inc. is a Canadian company that produces cannabis under licensed production. Headquarter of the company is in Edmonton that trades with the Toronto stock exchange and Stock Exchange of New York as ACB. The company is producing eight licensed productions in 25 countries. The capacity of production is over 625,000 kilograms of cannabis per annum in the bulk. Aurora is listed as second in the largest companies of cannabis around the world on the basis of market capitalization after Canopy Growth Corporation. The company started to trade in 2018 by using ticker ACB.

In early 2019, Aurora had 20% in the retail market of Canada for Cannabis. The market capitalization in 2019 reached the US $ 4.8 billion. Time-series analysis shows that the average share price of ACB Company is declined from 26 August to 15 November 2019. In accordance with the presented below resulting model, share price fluctuated over the 12 weeks while inclining and declining at different time. However, the overall linear trend is declining.

Inflation rate changes and increasing share prices of competitor companies can be possible causes of this market behaviour. Moreover, calculated predicted return and risk measures for ACB Company are (-0.048) and 0.2136 respectively. 

2.      Investment Portfolio of CBAY (Cymabay Therapeutics)

Cymabay therapeutics is committed to improve control over disease and to improve the lives of patients suffering from liver and chronic diseases. The company is involved in the development and improvement of innovative therapies. The services of the company are designed in such a way that it enhances the quality of lifestyle and healthcare and address the complex needs of communities, caregivers, and patients by considering medical knowledge. Cymabay therapeutics is a clinical stage biopharmaceutical company that have two main product programs with a unique mechanism. According to the consolidated Balance sheets of Cymabay therapeutics in September 2019, the total cash and cash equivalent were $ 43,462. Analysis of CBAY stock indicates that the company is having changing share prices with a declining trend. During week 2 and 3 share price was increased to 6 but later on, decreased to 4.5. See the presented below resulting model with linear regression line presenting trend.

Market analysis suggests that decreasing share prices in week 4 and 5 encouraged shareholders trade shares which resulted in the decline of share prices during week 7. According to the return calculations, risk measure and predicted return of CBAY Company are 0.1014 and (-0.151) respectively. The risk factor is calculated by the use of coefficient variance in the share prices over the training period.   

3.      Investment Portfolio of NK (Nantkwest)

NantKwest Inc. was founded in San Diego, California in 2002. NantKwest is mainly dealing with the development of pioneering cellular therapies that can improve the innate immune system of the body and treat the infections and cancers. NantKwest is listed as well-known innovative clinical-stage immunotherapy. The company provide natural killer-based therapeutics with the immunotherapy protocol. The main concern of the company is to provide unique powder that can harness the immune system and treat to kill cancer and infectious diseases. The company has developed an agreement with the Altor BioScience and collaborate on the development of therapeutic applications. Moreover, stock analysis suggests that NantKwest Inc. (NK) is experiencing a slide declining trend. However, the overall volatility of the stock is quite low which can be a positive factor for investment.

Following market analysis major reason behind this stability is the positive reputation of NK Company in the equity market as it prevents shareholders from selling their shares immediately (that can decrease share prices). Predicted stock return is calculated by dividing net return with the close price of the share on 15^th November 2019. According to analysis predicted stock return and risk measures are (-0.055) and 0.068 respectively.  

4.      Investment Portfolio of TEO (Telecom Argentina SA)

Argentina S.A. is a local company in the telephone sector that provide services from the northern part of Argentina. The main service includes personal mobile phone services, cable modem services, cable operator Cablevision and Arnet Fibertel services. The Telecom Argentina SA was founded in 1990 and started with the privatization of its utilities including trains, communication, water, power and state-owned phone services. The services are split into two territories. Telecom Argentina SA owns 67.5% of Paraguayan mobile provider Nucleo S. A. The current approximate ownership of the company is 0.0% as class C shares, 29.65% traded publicly, 20.06% VLG S.A.U., 18.75% Cablevisión Holding S.A. (CVH), and 31.53% Fintech Telecom LLC.

The above-mentioned graph presents high fluctuation and volatility in the share prices of TEO. Although, the average trend is positive for investors. Even shares prices declined to in week 12 but still share price of 8.8 is relatively greater than the share prices of competitor companies. Moreover, the possible reasons behind this trend can be supportive market behaviour towards the trade and business of this company. Following stock analysis overall predicted stock return and risk measures are 0.0961 and 0.051 respectively. Demand increased because of low risk measure and high expected return are also reasons behind increasing share prices.

5.      Investment Portfolio of AQST (Aquestive Therapeutics)

Aquestive Therapeutics is a pharmaceutical company that produce and commercialize the products to solve therapeutic problems and it can be used to save the lives of people. The main concern of the company is to produce innovative drug delivery technology and other scientific expertise for the redesigning of important medicines. Time series analysis and linear modelling of AQST present that overall share prices are increasing gradually with a smooth trend. 

Positive market behaviour towards this stock has encouraged a continuous increase in the share prices of AQST Company. According to analysis, predicted stock return and risk measures are (-0.2) and 0.2216 respectively.   

Mathematical Formulation of Aurora Cannabis, Cymabay Therapeutics, Nantkwest, Telecom Argentina SA and Aquestive Therapeutics Companies

The mathematical formulation is used for portfolio optimization setup. The key objective behind portfolio optimization was to select and manage various stocks in such a way that provide a high return with low risk on investment. Regarding this, risk measures were calculated for all stocks through the use of the coefficient of variation (Cv) formulation. Moreover, while deciding about investment in a particular stock risk measure for each share was multiplied by the total volume of stock. The rationale behind this mathematical formulation was my thinking. I thought I should invest in different stocks with a high and low expected return while considering risk factors associated with these stock to ensure high probability for desirable return on investment. In each company, investment is made according to the weight plans and variables of interest. For instance, I invested more funds in the companies that had high share prices and relatively lower risk factor.

Comparative Analysis of Predicted Profit and Observed Profit

In the following table comparative analysis of predicted profit and observed profit are presented.

According to the analysis, the expected return calculated with the predicted price of 29^th November 2019 is lower than actual return on 29^th November 2019 for all selected companies.

Difference and Limitations of Aurora Cannabis, Cymabay Therapeutics, Nantkwest, Telecom Argentina SA and Aquestive Therapeutics Companies

The difference is calculated by subtracting expected return from actual return on investment. Following results of this calculation total difference between actual return and expected return are $127.38, $1,337.90, $3,549.09, $30,851.67 and $399.50 for ACB, CBAY, NK, TEO and AQST respectively. Conclusively, difference both returns suggest that the prediction model used in the analysis is unable to provide clear and reliable information about future share prices. Lack of market information, limited understanding of uncertainties and poor concern towards changing behaviour of investors in the stock markets are the key limitations of this method.