DIFFERENTIATED THINKING

Generating alpha requires differentiated thinking

We bring a sharp focus to what really matters in stock selection. Our reports can become a comprehensive toolkit to augment your own stock selection process, giving you greater clarity and control over this complex analytical process.

In our approach, even a stock enjoying strong absolute cash flow generation does not necessarily make for a compelling buy idea as what actually matters for valuation is the incremental cash flow growth outlook. Our I-EVA (incremental economic value added) measure captures the economic profit as an “incremental” metric and is, in our view, the key driver of equity valuations.

It starts with our investment evaluation philosophy. In contrast to an “accounting” (earnings, EPS) valuation approach used by brokers, we use an “economic” approach which brings all three financial statements – income, cash flow & balance – together for an integrated analytical framework which focuses on incremental cash flow generation. With its emphasis on earnings.

FRAMEWORK

Articulating what matters: a framework that gives you an information edge

Our framework and proprietary metrics give investors – whether long, short, income, contrarian, growth or value – unique institutional grade insights to help generate alpha

Our unique investment framework is a structured and numerically based process for investment evaluation. Based around four core principles, it uses proprietary, forward-looking metrics to help investors make objective stock selection decisions.

Central to the framework is our conviction that it is the outlook for incremental shareholder value creation that is the key driver of equity valuations. Our proprietary calculation of incremental economic value added (I-EVA) captures this all-important metric.

Four core principles elemental to our framework
ECONOMIC
VALUE ADD

The outlook for incremental value creation (I-EVA) is the key driver of valuations

COMPETITIVE
ADVANTAGE

Management capital allocation decisions are the sources of value creation (or destruction)

CAPITAL
ALLOCATION

Competitive advantage shows the expected duration, strength of the forecast profitability.

MANAGING
RISKS

Risk and reward are two sides of the same coin. We elaborate three indicators of risks

PRODUCTS

Powerfully simple products

Our structured reports can become an essential part of your investing tool-kit. These structured reports will help you objectively weigh insights that can form part of your evidence for investing.

Gaining insights need not be a painful exercise. Our reports have a powerful simplicity that makes equity analysis into a routine experience. We have combined decades of human experience with advanced database analytics and visualisation technologies to help you get quickly to the information with the insights that you need. We present these insights either as a chart, or, in a table format which contains concise and clear textual statements.

You will find intriguing, essential insights that augments your own body of research and introduce powerful investing rigour which puts you are in better control of your stock selection process. You will have an engaging experience and insights that will empower you make the most well-informed investment analysis and decisions.

Explore our research products
GROWTH
STYLE IDEAS

The outlook for incremental value creation (I-EVA) is the key driver of valuations

VALUE STYLE
IDEAS

Management capital allocation decisions are the sources of value creation (or destruction)

INCOME
IDEAS

Competitive advantage shows the expected duration, strength of the forecast profitability.

MANAGING
RISKS

Risk and reward are two sides of the same coin. We elaborate three indicators of risks

SCREENING FOR IDEAS

Unearthing ideas

Stock selection is easier said than done. Faced with a universe of hundreds or even thousands of stocks, the challenge is to find a beginning. We offer alternatives as it allows investors to whittle down a large universe of stocks into bite-sized chunks. All that then remains is the task of unearthing the gems that have the most compelling shareholder value creation outlook.

GICS INDUSTRY BASED

We offer the familiar GICS based industry classification framework to investors who may be interested in a traditional, standard Industry approach to stock selection.

ERI THEMATICS BASED

Additionally, as economies and the societies undergo sustained, structural, and transformative changes, a grasp of consequent trends can provide a vital edge in investing. For investors who seek discover transformative ideas and future leaders we also offer a proprietary Thematic approach for stock selection.

The industry based approach

GICS Industry

Communication Services
Consumer Discretionary
Consumer Staples
Energy
Health Care
Industrials
Technology
Materials
Utilities
The ERI Thematics based approach

ERI Thematic Sectors

Consumer
Infrastructure
Innovation, Technology
Innovation, Health Care
Manufacturing
Services
UNIQUE INSIGHTS

Our reports are packed with information which lets you ask important questions

Gaining insights need not be a painful exercise. Our reports have a powerful simplicity that makes equity analysis into a routine experience. We have combined decades of human experience with advanced database analytics and visualisation technologies to help you get quickly to the information with the insights that you.

Management strategy and capital allocation decisions are the sources of value creation (or destruction). Using proprietary techniques we calibrate key capital allocation metrics

Which are the companies using an expansionary, playing-to-win, strategy to create value for shareholders? And those using a contractionary/defensive, playing-to-not-lose approach?

What is the risk to balance sheet due to a mis-allocation of capital due to weakening I-EVA?

Dissecting management’s capital allocation strategy. Is it driven by M&A or is it an organic strategy for value creation? How important is capital return to shareholders?

How does a company’s capital allocation strategy compare to its peers?

In our view, it is the outlook for incremental shareholder value creation (our proprietary metric is I-EVA) that is the key driver of equity valuations.

Is management truly creating shareholder value; or has it just been successful in hitting soft and vulnerable metrics such as EPS?

Which are the stocks that are likely to show the strongest (weakest) incremental shareholder value creation trends into the future?

Which stocks appear to be on the cusp of value creation (or destruction)?

How does the value creation outlook compare to peers; or even stocks in another sector?

Risk and reward are two sides of the same coin. We identify three risks: due to poor management execution; due to duration risk; and, due to excessive expectations

Capital allocation decisions present risks due to management execution going wrong and destroying shareholder value

Excessive optimism about a company’s competitive advantage poses valuation or duration risk

Our proprietary estimate of embedded expectations captures the margin-of-safety in a stock which can highlight stock price bubbles or the stocks trading on distressed valuations

I-EVA metric can be an integral part of an investing strategy that focuses on income. It is an indicator of whether management is indeed laying strong foundations for a sustainable dividend policy.

Are long-term dividend returns sticky and assured, or is a negative dividend announcement may be just around the corner?

Does an aggressive capital allocation, alongside a stretched balance sheet, when combined with a poor I-EVA outlook pose risks to future dividends.

A poor implied competitive advantage trend may portend weakness for dividend into the future.

Are the trends in I-EVA underpinned by sustainable competitive advantage? Or, is the competitive advantage enjoyed by a firm set to go into decline?

Our proprietary calculation of implied competitive advantage, (I-CAP) calibrates the the length of competitive advantage enjoyed by each company.

I-CAP also indicates the future value component of a stock’s valuation – the “option” component; which can be used as a proxy for duration risk.

I-CAP allow investors to make a relative call in stock (or sector) selection. Select stocks with the best implied sustainability and duration of cash flow generation using inter-peer or inter-sector comparisons.

Who We Serve
Sophisticated individual investors
Portfolio
Managers
Financial Advisors and Brokers
Hedge
Funds
Investment
Banks
Private
Equity
Private Wealth
Management
Family
Offices
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