“This is a must‐read for any serious student of equity market valuations. Holland and Matthews systematically debunk the widely held view that EPS and other flawed accounting metrics are what drive stock markets. Cash flow is king and this book provides a step‐by‐step guide to calculating a vastly superior measure of corporate performance, the Cash Flow Return on Investment metric.”
John Birkhold, Partner, Origin Asset Management
“This fascinating book is a must‐read for all serious investors and business leaders who want to understand how companies really create value for shareholders.”
Nigel Bolton, Chief Investment Officer Fundamental Active Equity, BlackRock
“HOLT CFROI is a useful framework through which we can compare a stock’s market valuation versus what the economic enterprise’s cash flow prospects are ultimately likely to support, and this book does a great job explaining it in a plain‐English fashion.”
Gunnar Miller, Global Director of Research, Allianz Global Investors
“The HOLT CFROI framework focuses on what really matters in company valuation. A must‐read for every serious fundamental investor!”
Michael Schmidt, Deka Investment, Managing Director Asset Servicing and Alternative Investments, Member of Board
“This is by far the best book I have read on corporate valuation. Every board member should read this book.”
Aled Smith, Director of Global Equities, M&G Investments
“This book makes a significant contribution to performance evaluation and valuation methodology. The authors explain the use of the HOLT framework and CFROI to measure corporate performance and value creation.”
Emeritus Professor Carlos Correia, University of Cape Town
“This book is indispensable to anyone wanting to use HOLT for valuation; for those not familiar with HOLT, however, the book may more appropriately be seen as a form of reference book, to warn the reader about potential problems in valuation and to suggest possible solutions.”
Professor Dr. Michel Habib, University of Zurich
“I would argue that every Director of any public company should spend about a week going through this material very carefully. If they cannot pass an examination on this text they are not fit to be custodians of shareholder capital.”
Emeritus Professor Brian Kantor, University of Cape Town; Chief Economist & Investment Strategist, Investec Wealth & Investment
“Beyond Earnings introduces the concepts of Cash Flow Return on Investment (CFROI) and Economic Profit. Holland and Matthews bring these abstract concepts to life, as they apply them to real world examples of publicly‐listed companies. They show that, as well as helping to judge the effectiveness of corporate management teams, CFROI and Economic Profit can be invaluable in helping to identify mispriced securities. I have no hesitation in recommending this book to anyone interested in investment or corporate finance.”
Tom Mann, Senior Portfolio Manager, Schroder Investment Management
“Using a time‐tested, total systems, CFROI approach to valuation, Holland and Matthews offer theoretical and implementation insights about valuation that are missing from mainstream finance. The HOLT valuation technology is now an integral part of the investment process at a large number of worldwide money management organizations.”
Bartley J. Madden, Author, Value Creation Thinking
“A must‐read for anyone with a mindset of improving their long term investing skills.”
Jacob Gemmel, Senior Portfolio Manager, Swedbank Robur Asset Management
“In our age of alternative truths in politics as well as finance, HOLT has proven to be one of very few truthful voices in analyzing corporate performance.”
Henrik Andersson, Fund Manager, Didner & Gerge
Copyright © 2018 by Credit Suisse Securities (USA) LLC. All rights reserved.
Published by John Wiley & Sons, Inc., Hoboken, New Jersey.
Published simultaneously in Canada.
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Library of Congress Cataloging‐in‐Publication Data is Available:
ISBN 9781119440482 (Hardcover)
ISBN 9781119440505 (ePDF)
ISBN 9781119440529 (ePub)
Cover Design: Wiley
Cover Image: © De Space Studio/Shutterstock
This book is dedicated to the memory of Bob Hendricks who passed away on May 28, 2017. The global success of the HOLT CFROI framework never would have been realized without Bob’s vision, persistence, and uncanny marketing skills. Bob brought the CFROI framework to life for countless fund managers, corporate clients and HOLT employees. He distilled the art of stock selection to its essence in his famous 2‐minute drills. He reminded us that investing was fun but required many hours of attention.
Bob was an amazing presenter – one of the best we’ve seen. To be on the same presentation bill with him was daunting. We recall having to precede him at a seminar in Germany after he had retired. Bob was the keynote speaker. After a full day of lectures on the mechanics of financial performance analysis and equity valuation, when listeners were surely mentally exhausted, he held the audience of fund managers spellbound. Bob de‐mystified stock analysis, breezed through 2‐minute drills, and told tales from his forty years in the financial industry. At the end of his speech, the audience jumped out of their seats and enthusiastically applauded. The Director of Research at a distinguished fund manager told us that he leapt up wondering why Bob Hendricks hadn’t been awarded a Nobel prize only to realize after calm reflection that the presentation simply described the skilled application of a discounted cash flow model. Bob brought the subject of investing to life!