Valuing and Investing in Equities

Valuing and Investing in Equities: CROCI: Cash Return on Capital Investment develops a common-sense framework for value investors. By distinguishing investors from speculators, it acknowledges the variety of styles and goals in the financial markets. After explaining the intuition behind due diligence, portfolio construction, and stock picking, it shows the reader how to perform these steps and how to evaluate their results. Francesco Curto illuminates the costs and opportunities afforded by valuation strategies, inflation, and bubbles, emphasizing their effects on each other within the CROCI framework. Balancing analytics with an engaging clarity, the book neatly describes a comprehensive, time-tested approach to investing. Annual returns from this investment approach demand everyone’s attention.

• Describes the Cash Return on Capital Invested (CROCI) methodology
• Shows how CROCI identifies undervalued and overvalued sectors
• Provides a step-by-step approach in building investment strategies
• Presents 20 years of insights from CROCI’s valuation and investment results
• Highlights the practical advantages of CROCI over other factors

Graduate students and professionals working in equities markets, especially in financial trading, company valuations, portfolio construction, and market microstructure

1. Investment and valuation

Section 1: CROCI on valuation
2. Valuing non-financial companies
3. The analytical idiosyncrasies of banks
4. Stock picking based on economic fundamentals

Section 2: CROCI on investing
5. The performance of economic value
6. Value investing and dividends
7. Diversified investments: CROCI real earnings weighted
8. Thematic investments - CROCI intellectual capital

Section 3: Through the looking glass
9. Equities, inflation and valuation
10. Bubbles in equities
11. Odysseus on valuing and investing in equities