The Applied Research Of A Stock Selection Method--Margin Of Safety Driven By Managerial Ownership And Private Placement

China's stock investors generally rendered irrational investment behavior, the blind pursuit of hot stocks, causing the market's ups and downs is very large, is not conducive to the healthy development of China's capital market, and therefore in the future investing in the stock market must be led by value, and investors also need to have some knowledge about the stock value.There are various ways of value investing, the investment philosophy of safe margin is the core of value investing. Margin of safety guides our investment seeking "safe" stocks, namely undervalued, the risk is relatively small.The author explores effective ways to find a margin of safety stock in practice- " top executives increase holdings, private placement, event-driven margin of safety" stock picking, the method integrated currently several ways of "margin of safety" stock picking, the operation is relatively simple, is a practical approach, the author through a period of time stock tracking, found that using this method for screening out samples during tracking the overall performance of the stock is significantly better than the broader market, which also proved the effectiveness of this kind of approach.The main content of this paper is organized as follows: The first part is an introduction to explain the background of this study, the main content and significance; and the literature review; the second part is the theory expounded, the existing margin of safety theory, the theory of the intrinsic value of the stock, executives increase holdings and theories private placement will be described; the third part is to explore the status of our safety margin shares of listed companies, partly distribution of the main board, small plates and GEM stocks were studied to explore different sections of the stocks' margin of safety situation and safety margin stocks' distribution of industry; the fourth part studied the holdings of executives and private placement shares of the margin of safety, screened the executives stock holdings safety margin samples and placement margin of safety stock sample, and tracked those samples for a period time; the fifth part is the case analysis, we selected a sample of executives increase holdings safety margin stock and a simple of private placement safety margin stock for a specific research; the sixth part illustrated some considerations of using this paper' stock picking way; the seventh part is the conclusion, summarized the main findings of this paper and insufficient.There are five main conclusions of this paper:(1)The GEM presented high valuation of the most common phenomenon, the motherboard stocks have higher margin of safety;(2)traditional industries accounted for a larger proportion of executives holdings and private placement safe margin stocks,traditional industries stocks who have the transformation of the company or have industry-good can have more excellent performance, leaving aside the "transformation of the company and industry-good" factor, non-traditional industry stock have more excellent performance;(3)The stock selection method “Executives increase holdings, private placement for driving margin of safety stock” is effective;(4)Earnings per share and net profit CAGR of different weights can't significantly affect the stock price changes;(5)The lower the margin of safety is not a factor, the better the performance of the share price.