Expectations Investing

by Rappaport, Alfred

• ISBN13: 9781578512522
• ISBN10: 1578512522
• Format: Hardcover
• Copyright: 2001-10-01
• Publisher: Harvard Business School Pr

Summary

A guide to reading stocks.

Table of Contents

Greater Expectations: How Investing Differs from Art Collecting	xi
Peter L. Bernstein
Preface	xv
Acknowledgments	xix
The Case for Expectations Investing	1	(16)
Active Management: Challenge and Opportunity	4	(3)
The Expectations Investing Process	7	(1)
The Twilight of Traditional Analysis	8	(6)
Essential Ideas	14	(3)
Appendix: Earnings Growth and Value Creation	15	(2)
Part I Gathering the Tools	17	(50)
How the Market Values Stocks	19	(20)
The Right Expectations	19	(2)
Shareholder-Value Road Map	21	(1)
Free Cash Flow	22	(6)
Cost of Capital	28	(5)
Forecast Period	33	(1)
From Corporate Value to Shareholder Value	33	(1)
Summary Illustration	34	(1)
Essential Ideas	35	(1)
Appendix: Estimating Residual Value	36	(1)
The Perpetuity Method	36	(1)
The Perpetuity-with-Inflation Method	37	(2)
The Expectations Infrastructure	39	(12)
The Expectations Infrastructure	40	(6)
Not All Expectations Revisions Are Equal	46	(3)
Essential Ideas	49	(2)
Analyzing Competitive Strategy	51	(16)
The Dual Uses of Competitive Strategy Analysis	51	(1)
Historical Analysis	52	(1)
Competitive Strategy Frameworks	53	(12)
Essential Ideas	65	(2)
Part II Implementing the Process	67	(84)
How to Estimate Price-Implied Expectations	69	(16)
Reading Expectations	71	(2)
Gateway Case Study	73	(3)
Why Revisit Expectations?	76	(1)
Essential Ideas	76	(2)
Appendix: Employee Stock Options and Expectations Investing	78	(1)
Valuing ESOs	78	(7)
Identifying Expectations Opportunities	85	(20)
Searching for Expectations Opportunities	86	(4)
Pitfalls to Avoid	90	(2)
Gateway Case Study	92	(12)
Essential Ideas	104	(1)
Buy, Sell, or Hold?	105	(12)
Expected-Value Analysis	105	(3)
Gateway Case Study	108	(2)
The Buy Decision	110	(2)
The Sell Decision	112	(2)
The Role of Taxes	114	(1)
Essential Ideas	115	(2)
Beyond Discounted Cash Flow	117	(18)
Real Options	118	(7)
When to Use Real-Options Analysis in Expectations Investing	125	(3)
The Value of Real Options in Amazon.com	128	(4)
Reflexivity	132	(2)
Essential Ideas	134	(1)
Across the Economic Landscape	135	(16)
Business Categories	136	(4)
Business Categories and the Value Factors	140	(9)
Essential Ideas	149	(2)
Part III Reading Corporate Signals	151	(46)
Mergers and Acquisitions	153	(18)
How Acquiring Companies Add Value	154	(1)
Evaluating Synergies	155	(2)
What to Do When a Deal Is Announced	157	(11)
Essential Ideas	168	(3)
Share Buybacks	171	(14)
The Golden Rule of Share Buybacks	173	(2)
Four Popular Motivations for Share Buybacks	175	(8)
Essential Ideas	183	(2)
Incentive Compensation	185	(12)
CEO and Other Corporate-Level Executives	186	(5)
Operating-Unit Executives	191	(2)
Middle Managers and Frontline Employees	193	(2)
Essential Ideas	195	(2)
Notes	197	(16)
Index	213	(10)
About the Authors	223