Expectations Investing

Cover Page
Title Page
Copyright Page
Dedication
Contents
Greater Expectations: How Investing Differs from Art Collecting by Peter L. Bernstein
Preface
Acknowledgments
1    The Case for Expectations Investing
Active Management: Challenge and Opportunity
The Expectations Investing Process
The Twilight of Traditional Analysis
Essential Ideas
Appendix: Earnings Growth and Value Creation
Part I    Gathering the Tools
2    How the Market Values Stocks
The Right Expectations
Shareholder-Value Road Map
Free Cash Flow
Cost of Capital
Forecast Period
From Corporate Value to Shareholder Value
Summary Illustration
Essential Ideas
Appendix: Estimating Residual Value
The Perpetuity Method
The Perpetuity-with-Inflation Method
3    The Expectations Infrastructure
The Expectations Infrastructure
Not All Expectations Revisions Are Equal
Essential Ideas
4    Analyzing Competitive Strategy
The Dual Uses of Competitive Strategy Analysis
Historical Analysis
Competitive Strategy Frameworks
Essential Ideas
Part II    Implementing the Process
5    How to Estimate Price-Implied Expectations
Reading Expectations
Gateway Case Study
Why Revisit Expectations?
Essential Ideas
Appendix: Employee Stock Options and Expectations Investing
Valuing ESOs
6    Identifying Expectations Opportunities
Searching for Expectations Opportunities
Pitfalls to Avoid
Gateway Case Study
Essential Ideas
7    Buy, Sell, or Hold?
Expected-Value Analysis
Gateway Case Study
The Buy Decision
The Sell Decision
The Role of Taxes
Essential Ideas
8    Beyond Discounted Cash Flow
Real Options
When to Use Real-Options Analysis in Expectations Investing
The Value of Real Options in Amazon.com
Reflexivity
Essential Ideas
9    Across the Economic Landscape
Business Categories
Business Categories and the Value Factors
Essential Ideas
Part III    Reading Corporate Signals
10  Mergers and Acquisitions
How Acquiring Companies Add Value
Evaluating Synergies
What to Do When a Deal Is Announced
Essential Ideas
11  Share Buybacks
The Golden Rule of Share Buybacks
Four Popular Motivations for Share Buybacks
Essential Ideas
12  Incentive Compensation
CEO and Other Corporate-Level Executives
Operating-Unit Executives
Middle Managers and Frontline Employees
Essential Ideas
Notes
Index
About the Authors