👍 Type of stock
Stocks are classified into various categories according to criteria such as the rights of shareholders or characteristics of the intrinsic value of stocks.
Shareholders follow the "Principle of Shareholder Equality" in which they are treated equally according to the number of shares they have.
In other words, the more shares you have, the more rights you have.
In the Commercial Act, stocks are classified into common stock, preferred stock, junior stock, and mixed stock according to standards such as dividends and distribution of residual assets.
👊 Common stock
Generally speaking, "stocks" is true.
Investment risks are high because future dividend payments and share prices are uncertain, but profitability is good.
Rights of common stock shareholders
-Management participation right
-Profit distribution right
-Voting rights to elect executives who will directly participate in corporate management (thereby shareholders themselves participate in corporate management indirectly)
-What shareholders of common stock are aiming for
-Dividend (can be obtained according to the company's performance)
-Capital gains (buy cheap and sell expensive)
👊 Preferred stock
Stocks that have priority over common stocks in terms of dividends and distribution of residual assets (of course, they are subordinate to corporate bond owners).
Unlike common stock, there is no voting right.
Therefore, new preferred stocks can be viewed as stocks close to convertible bonds.
Rights of preferred shareholders
-Priority dividend party
-In the case of cumulative preferred stocks, when priority dividends are not received in the current business year, -priority can be accumulated in the following year (excluding non-cumulative)
-Participating preferred stocks receive preferred dividends and can be received later with common stock shareholders (non-participating preferred stocks are only eligible for preferred dividends)
-Lots of dividends
👊 Growth vs. value stocks
Growth stock
It refers to stocks that are expected to increase in business performance or profits higher than the market average.
At this time, since the company will rise anyway, it does not spread the profits as dividends, but intends to make more profits by holding back in-house and reinvesting.
Therefore, growth stocks should invest when aiming for trading profits, not dividends.
Value stock
Contrary to growth stocks, these are stocks whose current share price level is undervalued than the intrinsic value of the stock.
Corporate profits are classified as “low PER stocks” that are undervalued compared to current earnings and “low PBR stocks” that are undervalued compared to the book value of the stock.
👊 Cyclical stock vs defensive stock
Cyclical stock
It refers to stocks that are subject to fluctuations in profits due to economic boom/recession.
This includes construction, automobile, wholesale, steel, shipbuilding, and semiconductor industries.
defensive stock
It is a stock that is less susceptible to changes in the economy and has a relatively low rate of growth during booms but steady demand during recession.
This includes food and beverage, pharmaceutical, gas, and power industries.
👊 Large vs medium vs small cap
In terms of market capitalization, the 1st to 100th places are called large, the 101st to 300th are medium-sized, and the 301th or less are called small caps.
The larger the stock, the smaller the fluctuations in the stock price as more institutions hold it.
👊 Bluechip stock
It refers to the stock of a company that has been generating stable profits and paying dividends for a considerable period of time, and is also referred to as "super excellent stock".
Usually, it is a company with good profits and financial details and a strong position in the industry (ex Samsung Electronics).
👊 Depositary Receipts
It is a form of issuing stocks in a form of receipt that can be easily converted to the original stock in order to solve complex procedures and problems such as language/law when trading stocks in foreign countries.
👍 Issuance of shares
There are several ways to issue shares:
👊 Public offering (≠ listing)
Public offering refers to recruiting a large number of investors for the issuance of new stocks or selling and distributing outstanding stocks owned by major shareholders.
Allowing investors who acquired public offerings through public offerings to trade freely afterward is called "listing".
👊 Capital increase
The company issues new shares to increase the company's capital, which is the most representative way to improve a company's financial structure and reduce dependence on other capital.
In order to sell as much as new stocks are issued, they are sold at a lower price than existing stocks. In order to avoid conflict of interest with old stockholders, the right to acquire new stocks, the “right to underwrite new stocks,” is assigned.
Shareholder Allocation Method: Allocate new stocks to existing shareholders and employee stock ownership associations, and when real rights (unsold and leftovers) occur, the disposal method is decided according to the resolution of the board of directors.
Shareholders Priority Public Offering Method: In case of occurrence of real rights, a subscription is received from general investors, and if the subscription is not reached, the disposal method is decided according to the resolution of the board of directors.
Third party allocation method: A method in which a third party, such as an affiliated company or a creditor bank, takes over new shares instead of existing shareholders
General public offering method: A method of receiving subscriptions from general investors without giving shareholders the right to underwrite new stocks
👊 Free increase
It is a method of transferring reserves or asset revaluation reserves, etc. to capital at the resolution of the board of directors without payment of shares, and issuing new shares issued in proportion to the number of shares owned to existing shareholders at no cost to the existing shareholders. There is no.
The person who is the shareholder as of the date of capital increase, whether it is a paid-in or free-in capital increase, is confirmed as a shareholder, and the day before the increase date becomes the ex-date, new shares cannot be received.
Also, on the ex-date, the base stock price starts to fall by the value of the new stock right.
👊 Stock dividend
This is a method of paying dividends with stocks instead of paying dividends in cash because a company is in financial difficulty or when profits are at a record high.
Since you receive it in proportion to the stocks you own, there is no change in your equity ratio or actual wealth.
👊 Stock split and stock merger
Splitting stocks to lower stock prices so that investors can buy more corporate stocks
Conversely, reducing the number of shares to increase the par value per share is called stock merger.