HOLT & Fundamental Research: Looking For Growth Outside the AI Theme?

Research evidence excerpt

HOLT & Fundamental Research: Looking For Growth Outside the AI Theme?

Valuation Method and Risk Statement

Equity market returns are influenced by corporate earnings, interest rates, risk premia, as well

as other variables influenced by the business cycle. The outlook for any and all of these

variables is subject to change. Forecasting earnings and corporate financial behavior is

difficult because it is affected by a wide variety of economic, financial, accounting, and

regulatory trends, as well as changes in tax policy.

The HOLT methodology does not assign ratings or a target price to a security. It is an analytical

tool that involves use of a set of proprietary quantitative algorithms and warranted value

calculations, collectively called the HOLT valuation model, that are consistently applied to all

the companies included in its database. The HOLT valuation model is a discounted cash flow

model. Third-party data (including consensus earnings estimates) are systematically translated

into a number of default variables and incorporated into the algorithms available in the HOLT

valuation model. The source financial statement, pricing, and earnings data provided by

outside data vendors are subject to quality control and may also be adjusted to more closely

measure the underlying economics of firm performance. These adjustments provide

consistency when analyzing a single company across time, or analyzing multiple companies

across industries or national borders.

The default scenario that is produced by the HOLT valuation model establishes a warranted

price that represents the expected mean value for a security based upon empirically derived

fade algorithms that forecast a firm's future return on capital and growth rates over an

extended period of time.