Winning at active management : the essential roles of culture, philosophy, and technology / William W. Priest [and three others].

Format:

Book

Author/Creator:

Priest, William W., author.

Language:

English

Subjects (All):

Cash flow.

Rate of return.

Portfolio management.

Investments.

Corporate culture.

Physical Description:

1 online resource (336 pages)

Edition:

1st edition

Place of Publication:

Hoboken, New Jersey : Wiley, 2016.

System Details:

text file

Summary:

Winning at Active Management conducts an in-depth examination of crucial issues facing the investment management industry, and will be a valuable resource for asset managers, institutional consultants, managers of pension and endowment funds, and advisers to individual investors. Bill Priest, Steve Bleiberg and Mike Welhoelter all experienced investment professionals, consider the challenges of managing portfolios through complex markets, as well as managing the cultural and technological complexities of the investment business. The book’s initial section highlights the importance of culture within an investment firm – the characteristics of strong cultures, the imperatives of communication and support, and suggestions for leading firms through times of both adversity and prosperity. It continues with a thorough discussion of active portfolio management for equities. The ongoing debate over active versus passive management is reviewed in detail, drawing on both financial theory and real-world investing results. The book also contrasts traditional methods of portfolio management, based on accounting metrics and price-earnings ratios, with Epoch Investment Partners’ philosophy of investing on free cash flow and appropriate capital allocation. Winning at Active Management closes with an inquiry into the crucial and growing role of technology in investing. The authors assert that the most effective portfolio strategies result from neither pure fundamental nor quantitative methods, but instead from thoughtful combinations of analyst and portfolio manager experience and skill with the speed and breadth of quantitative analysis. The authors illustrate the point with an example of an innovative Epoch equity strategy based on economic logic and judgment, but enabled by information technology. Winning at Active Management also offers important insights into selecting active managers – the market cycle factors that have held back many managers’ performance in recent years, and the difficulty of identifying those firms that truly possess investment skill. Drawing on behavioral economic theory and empirical research, the book makes a convincing case that many active investment managers can and do generate returns superior to those of the broad market.

Contents:

Intro

Winning at Active Management

Contents

Preface: Active Management is Not Dead Yet

Part I Culture

Chapter 1 Culture at the Core

The Original Organizational Culture: Command-and-Control

Drawbacks of Command-and-Control

An Alternative Culture for Knowledge Businesses

The Partnership Culture Model

Interdependence

Support

Shared Interest

Justice and Fairness

Notes

Chapter 2 Culture in Investment Management

Values

Integrity

Trust

Culture and Clients

Firm Culture under Stress

Culture in Recruiting

Acquisitions

Evolution of Culture

Evolution of Culture: A Parable

Part II Philosophy and Methodology

Chapter 3 The Nature of Equity Returns

Linkages: The Real Economy and the Financial Economy

Components of Stock Returns

Price-Earnings Ratios

The Historical Makeup of Stock Returns

Chapter 4 The Great Investment Debate: Active or Passive Management?

The Debate Is Timeless

An Elegant Theory: The Capital Asset Pricing Model

Further Elegance: The Efficient Market Hypothesis

Reality Intrudes

The Problem with MPT

Chapter 5 A More Human Description of Investors and Markets: Behavioral Finance

Loss Aversion

Mental Accounting

Minimizing Regret

Overconfidence

Extrapolation and Reversal

Investor Behavior in Action

MPT Still Lives

Chapter 6 Active versus Passive Management: The Empirical Case

Market Regimes

Correlation and Dispersion

Company Quality

The Weight of Cash

Luck versus Skill

Investors Voting with Their Dollars

Chapter 7 The Case for Active Management

April 2015: Investment Giants Square Off in New York City

An Active-Passive Equilibrium

The Case for Active Management

Chapter 8 Debates on Active Managers' Styles and Methods.

Manager Style

Free Cash Flow Is the Measure of Value

Depreciation

Accruals

Research and Development Costs

Why Do Accounting Figures Still Dominate the Discussion?

The CFO Perspective

Chapter 9 The Jump from Company Earnings to Stock Prices

Flaws in Traditional Valuation Measures

Accounting versus Finance: A Case Study

Chapter 10 Epoch's Investment Philosophy

The Starting Point: Generating Free Cash Flow

Choosing to Reinvest

Capital Investment: Returns and Capital Costs

Once More: Cash Flow-Based Measures Are Superior

Trends in Capital Allocation

Dividends

Share Repurchases

Debt Buydowns

Capital Allocation: What's the Right Mix?

Part III Technology

Chapter 11 High-Speed Technology

Information Technology: Three Relentless Forces

Moore's Law

Massive Digitization

Recombinant Technology

Racing with the Machine: The Human-Computer Interface

Chapter 12 Technology in Investing

Information at Work

Order from Chaos: Applying Scientific Frameworks

Computers to the Rescue

A Virtuous Circle

Expansion of Index Funds

Betting Against the CAPM

Concurrent Developments

The Spread of Quant

Computing and Data, Neck and Neck

Big Data-Beyond Bloomberg

Artificial Intelligence

Chapter 13 The Epoch Core Model

Factors in the Epoch Core Model

Historical Free Cash Flow Yield

Forward-Looking Free Cash Flow

Leverage

Accruals and Earnings Quality

Results of the Epoch Core Model

Chapter 14 Racing with the Machine

Investing Is Too Important for Robots Alone

Racing with the Machine

Seeking High Return on Capital

A More Practical Study

Is Persistence Contradictory?

An ROIC Strategy

The Value of Judgment

Epilogue.

Appendix A: Selected Articles and White Papers of Epoch Investment Partners

Appendix B: Financial Asset Valuation

Appendix C: Feathered Feast: A Case

Acknowledgements

About the Authors

Index

EULA.

Notes:

Description based on print version record.

Includes index.

Includes bibliographical references and index.

ISBN:

9781119051770

1119051770

OCLC:

953661404