• book

From the Publisher

In this book, Pascal Costantini gives a lively and wonderfully readable account of ten years of efforts by a small group of investment analysts to find a reliable, practical and implementable method for valuing and selecting shares. The result of their effort is an original investment methodology called CROCI (Cash Return on Capital Invested), best described as a variation of the economic profit model. For over a decade now, Costantinis group at Deutsche Bank has been using this valuation tool every time it has had to take a view on the pricing of an equity asset, be it a market, a sector or an individual sharein other words, every single working day, since it is this groups job to advise institutional investors on equity valuation. Costantini describes in detail, accompanied by concrete examples in the form of charts and graphs, the precise investment results of the actual implementation of the CROCI approach in the global equity markets since 1996. Readers will enjoy taking this journey with Costantini to see how and why the model was developed, assess the results of ten years of actual implementation and measure the successes of using this model in stock picking and portfolio construction. This book will also make it easy for them to see how the CROCI approach can be used successfully by others now and in the future.
The book is divided into four parts. The first part is a review and discussion of the fundamentals of investment analysis. The second part is dedicated to the construction of economic data, with the sole objective of calculating an economically meaningful asset multiple and relative return, the combination of which gives an economic PE ratio, the authors main stock selection tool. While the economic profit model is not exactly new, it is still largely ignored by the investment community. In essence, it does three things: it calculates the real amount of cash, or value created by a business; it compares the market value of an asset to an approximation of its replacement value; and it assumes that the former will converge to the latter through the arbitrage of investors and capital providers. The third part is dedicated to the analysis of economic data, and the last part deals with the actual implementation of the CROCI economic profit model, including real life examples. This final part also discusses how to use the output of the CROCI model with individual stocks, and then with investment portfolios.

*Techniques are based on the authors performance record at Deutsche Bank since 1996
*Based on almost ten years of proprietary knowledge and implementation of these techniques
*Factual illustrations of the results of the valuation techniques are provided at each step

*Techniques are based on the author's performance record at Deutsche Bank since 1996
*Based on almost ten years of proprietary knowledge and implementation of these techniques
*Factual illustrations of the results of the valuation techniques are provided at each step
Published: Elsevier Science an imprint of Elsevier Books Reference on
ISBN: 9780080461786
List price: $118.00
Read on Scribd mobile: iPhone, iPad and Android.
Availability for Cash Return on Capital Invested by Pascal Costantini
With a 30 day free trial you can read online for free
  1. This book can be read on up to 6 mobile devices.

Related Articles

3 min read

Negative Rates Get a Second Look

WHILE THE ODDS THAT THE FEDERAL Reserve will hike interest rates soon have fallen recently, so too has the likelihood that it will turn to another unpopular strategy to address the ailing economy: negative rates. Negative yields, which are particularly onerous to retirees who live off income from their bonds and cash accounts, flip the idea of interest on its head. Rather than getting paid on deposits, banks, businesses and savers can be charged a small amount for parking their cash. That penalty—critics call it a hidden tax on savers—is designed to encourage spending, investing and risk taki
2 min read

How To Determine The Value Of Your Pre-Revenue Startup

Good news: Despite the perception that we in the VC world employ armies of analysts working behind the scenes and prepping us to beat down the valuation expectations of poorly prepared entrepreneurs, nothing could be further from the truth. Bad news: Much like trading baseball cards, there is no science to pre-revenue valuations. It all comes down to a negotiation. However, there are some basic guidelines for founders that can help both sides come up with a figure that works for everyone. A pre-money valuation is what the company is worth before third-party dollars go into it. A post-money val
5 min read

Get Ready for a New Wave of Investing Apps

Financial-technology junkies gathered in San Jose, Calif., for a couple of days at the end of April to check out up-and-coming apps and websites at the Finovate Spring conference. Each presenting company was allotted exactly seven minutes to give the audience a live demo of its featured product. There were a number aimed directly at banks and brokers in the business-to-business space, with a focus on security and “know your customer” functionality. Barron’s was particularly interested in those that can be used by individual investors and traders. Here are our highlights from among the 59 pres