Money and Finance
From The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns:
- Ed Chancellor On The Capital Cycle...
From his introduction to Capital Returns: Investing Through the Capital Cycle: A Money Manager's Reports 2002-15, which was released in hardcover today: Typically, capital is attracted into high-return businesses and leaves when returns fall...
- Starting With A Qualitative Search...
From The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns: Most investment processes begin with quantitative elements like filters and screens. The qualitative work is often left for the latter stages, after suitable...
- Competitive Forces And Competitive Advantages...
From The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns: If a company is earning far in excess of its cost of capital, it is likely to attract competition. Competitive forces chip away at economic margins in...
- Quality And Value...
From The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns: Factor screening on any of the aforementioned ratios suffers from a major flaw: Company value is determined by all future free cash flows discounted...
- What Distinguishes A First-class Business From An Ordinary Business?
From Deep Value: In a cruel irony, most good businesses earning high returns on invested capital can’t absorb much incremental capital without reducing those high returns, while most bad businesses earning low returns on invested capital require all...
Money and Finance
The linkage between returns-on-capital and competitive advantage...
From The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns:
The small-cap manager should attempt to understand the linkage between returns-on-capital and competitive advantage. The latter drives the former, but the former is also indicative of the latter. If an analyst discovers that a company exhibits high returns on capital employed for long time periods, it is likely that the descriptive qualities of the business will reveal a competitive edge. This symbiosis may support the case for a quantitative screen using returns on capital as a factor; however, companies that exhibit sustainably high internal compounding are more likely to be priced as superior businesses, given their success. A better approach is to find those businesses that exhibit competitive advantages but have yet to post stellar financial results. These rare situations can be a source of high total returns for the astute manager.
- Ed Chancellor On The Capital Cycle...
From his introduction to Capital Returns: Investing Through the Capital Cycle: A Money Manager's Reports 2002-15, which was released in hardcover today: Typically, capital is attracted into high-return businesses and leaves when returns fall...
- Starting With A Qualitative Search...
From The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns: Most investment processes begin with quantitative elements like filters and screens. The qualitative work is often left for the latter stages, after suitable...
- Competitive Forces And Competitive Advantages...
From The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns: If a company is earning far in excess of its cost of capital, it is likely to attract competition. Competitive forces chip away at economic margins in...
- Quality And Value...
From The Small-Cap Advantage: How Top Endowments and Foundations Turn Small Stocks into Big Returns: Factor screening on any of the aforementioned ratios suffers from a major flaw: Company value is determined by all future free cash flows discounted...
- What Distinguishes A First-class Business From An Ordinary Business?
From Deep Value: In a cruel irony, most good businesses earning high returns on invested capital can’t absorb much incremental capital without reducing those high returns, while most bad businesses earning low returns on invested capital require all...