Winning at Active Management

The Essential Roles of Culture, Philosophy, and Technology

Inbunden, Engelska, 2016

AvWilliam W. Priest,Steven D. Bleiberg,Michael A. Welhoelter,William W Priest,Steven D Bleiberg,Michael A Welhoelter

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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.

Produktinformation

Utgivningsdatum2016-09-09
Mått158 x 226 x 31 mm
Vikt567 g
FormatInbunden
SpråkEngelska
Antal sidor336
FörlagJohn Wiley & Sons Inc
ISBN9781119051824

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Finansiering inom Ekonomi och Ledarskap

WILLIAM W. PRIEST is Chief Executive Officer, Co-Chief Investment Officer, and a co-founder of Epoch Investment Partners, and a long-time advocate of free cash flow investing. His other books include Free Cash Flow and Shareholder Yield and The Financial Reality of Pension Funding Under ERISA. STEVEN D. BLEIBERG is a Managing Director and Global Portfolio Manager at Epoch Investment Partners. MICHAEL A. WELHOELTER is a Managing Director, Portfolio Manager, and Head of Quantitative Research and Risk Management at Epoch Investment Partners.

Preface xiActive Management is Not Dead YetPart I CultureChapter 1 Culture at The Core 3The Original Organizational Culture: Command-and-Control 5An Alternative Culture for Knowledge Businesses 8The Partnership Culture Model 10Justice and Fairness 17Chapter 2 Culture in Investment Management 21Values 22Integrity 26Trust 28Culture and Clients 32Firm Culture under Stress 34Culture in Recruiting 35Acquisitions 38Evolution of Culture 41Part II Philosophy and MethodologyChapter 3 The Nature of Equity Returns 49Linkages: The Real Economy and the Financial Economy 49Components of Stock Returns 51Price-Earnings Ratios 53The Historical Makeup of Stock Returns 59Chapter 4 The Great Investment Debate: Active or Passive Management? 63The Debate Is Timeless 65An Elegant Theory: The Capital Asset Pricing Model 66Further Elegance: The Efficient Market Hypothesis 68Reality Intrudes 69The Problem with MPT 71Chapter 5 A More Human Description of Investors and Markets: Behavioral Finance 73Loss Aversion 74Mental Accounting 75Minimizing Regret 76Overconfidence 77Extrapolation and Reversal 78Investor Behavior in Action 78MPT Still Lives 80Chapter 6 Active Versus Passive Management: The Empirical Case 85Market Regimes 87Correlation and Dispersion 87Company Quality 89The Weight of Cash 90Luck versus Skill 91Investors Voting with Their Dollars 96Chapter 7 The Case for Active Management 101April 2015: Investment Giants Square Off in New York City 101An Active-Passive Equilibrium 103The Case for Active Management 105Chapter 8 Debates On Active Managers’ Styles and Methods 109Manager Style 110Free Cash Flow Is the Measure of Value 112Depreciation 113Accruals 114Research and Development Costs 118The CFO Perspective 120Chapter 9 The Jump from Company Earnings to Stock Prices 125Flaws in Traditional Valuation Measures 125Accounting versus Finance: A Case Study 128Chapter 10 Epoch’s Investment Philosophy 133The Starting Point: Generating Free Cash Flow 134Choosing to Reinvest 135Capital Investment: Returns and Capital Costs 136Once More: Cash Flow-Based Measures Are Superior 139Trends in Capital Allocation 142Dividends 143Share Repurchases 145Debt Buydowns 150Capital Allocation: What’s the Right Mix? 151Part III TechnologyChapter 11 High-Speed Technology 159Information Technology: Three Relentless Forces 162Chapter 12 Technology in Investing 171Information at Work 172Order from Chaos: Applying Scientific Frameworks 172Computers to the Rescue 174A Virtuous Circle 176Expansion of Index Funds 177Betting Against the CAPM 177Concurrent Developments 179The Spread of Quant 181Computing and Data, Neck and Neck 181Big Data—Beyond Bloomberg 183Artificial Intelligence 187Chapter 13 The Epoch Core Model 191Factors in the Epoch Core Model 192Results of the Epoch Core Model 196Chapter 14 Racing with The Machine 201Investing Is Too Important for Robots Alone 201Racing with the Machine 202Seeking High Return on Capital 204A More Practical Study 206Is Persistence Contradictory? 208An ROIC Strategy 211The Value of Judgment 214Epilogue 219Appendix A: Selected Articles and White Papers of Epoch Investment Partners 223Appendix B: Financial Asset Valuation 273Appendix C: Feathered Feast: A Case 285Acknowledgements 295About the Authors 297Index 299