Valuing and Investing in Equities

Valuing and Investing in Equities

CROCI: Cash Return on Capital Investment

1st Edition - April 16, 2020

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  • Author: Francesco Curto
  • Paperback ISBN: 9780128138489
  • eBook ISBN: 9780128138496

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Description

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.

Key Features

  • Describes the Cash Return on Capital Invested (CROCI) methodology
  • Provides a step by step approach in building investment strategies
  • Presents 25 years of insights from CROCI’s valuation and investment results

Readership

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

Table of Contents

  • 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

Product details

  • No. of pages: 228
  • Language: English
  • Copyright: © Academic Press 2020
  • Published: April 16, 2020
  • Imprint: Academic Press
  • Paperback ISBN: 9780128138489
  • eBook ISBN: 9780128138496

About the Author

Francesco Curto

Francesco Curto, PhD, Managing Director is the Head of the Research House at DWS and the Head of CROCI® Investment Strategy and Valuation Group at DWS, majority owned by Deutsche Bank (DB) and one of the world's leading asset managers. He and his team joined DWS in 2013 from Deutsche Bank, where CROCI was developed in 1996. He has a vast experience in the financial services industry, having been senior European and global strategist. He has been involved in all the major developments of CROCI® since joining the team in 1998 from Warwick Business School, where he was a Research Fellow. He holds a degree in Business Economics (Economia Aziendale) from "Università di Venezia" and a PhD in Strategic Management from Warwick University. His interests are fundamental valuation, value strategies, politics, economics and the dynamics of industrial and corporate change and he is a regular guest-host at CNBC.

Affiliations and Expertise

Head, DWS Research House Head, CROCI Investment Strategy and Valuation Group, DWS, London, UK.

Ratings and Reviews

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  • Jean-Paul C. Mon Feb 15 2021

    A Must Read for Anyone Investing or Planning to Invest in Equity Markets

    Anyone planning on investing in equities or working in financial markets should read this book. The CROCI valuation framework described in it is critical to understanding what investing in equities is about. CROCI focuses on real life investing, where the rubber meets the tarmac. Valuation frameworks in the fixed income markets where I have spent the last three decades working and investing are inescapably context driven and eventually fall prey to market changes. By contrast the CROCI framework has proved its value through euphoric and pessimistic, dull and obsessed markets alike. Importantly, CROCI produces a quantifiable order in the equities world that most fixed income professionals including me otherwise fail to grasp. CROCI’s actionable results puts the equities markets at the reach of both young and seasoned financial markets professionals. Dr Curto does a remarkable job at justifying the framework as well as sharing his experience building and managing institutional indices based on it. At the very least what this book will do is show investors the traps they should avoid when investing in equities and the questions they should ask before committing their capital.

  • nicolas M. Mon Jun 22 2020

    a critical read

    Dr. Curto brings in 20 yrs of experience in valuing equities and the book does a great job at highlighting the concept of CROCI as well as usual traps into which investors may fall in when investing in equities

  • Markus C. Fri Jun 05 2020

    Outstanding perspective on the concept of valuation in equities

    Having spent the better part of 18 years working with CROCI , I can honestly say that investors who do not apply these principles are probably missing the economic reality of company financial statements. Francesco does a splendid job presenting these concepts in a way that is instantly palatable and easily understood. I found myself nodding as I read it as it really is just plain common sense. It is also interesting that such a basic concept - that reported financial statements rarely provide an accurate representation of a company's real economic picture - is so widely accepted by the investment community and yet rarely applied in practice. Hopefully this book will provide the incentive to think outside the box in the future. "Valuing and Investing in Equities" should be required reading for ANYONE thinking about equity analysis or investment or even those with an anecdotal interest in equity valuation. I highly recommend this book !