Can anyone share their insight into the Credit Suisse HOLT model? Interviewed for a buy-side equity analyst position, and they mentioned using the HOLT model and tweaking it as need be for their DCF analysis. Is this a good or bad thing? Does this weaken the quality of the role if they don’t build it from scratch, or is this a good program that provides a good experience?
Swiss Hot Models?
Seriously, you all need a new outlet!!! It’s summer, get to the beach or the outdoor bar, something…
I had one of those for lunch today – ham, onion, lettuce, and tomato.
Amber! Do not aim them towards an outlet…they will electrocute their bits off!
At least that would give them a jolt, of some sort.
I think this is a good thing…provides uniformity, allowing you to focus on the drivers, vs the mechanics model itself. why would not having to build a model from scratch each time be a bad thing? btw, what the heck are bits?
So Credit Suisse has done a ton of work on HOLT and sells it presumably for a bunch of money. All over their smersh on HOLT it talks about “idea generation”. There aren’t empirical studies that I know of showing that HOLT is any good for anything. That means either a) it’s not worth much or b) it’s just doing something you need to do first to get good valuation models or c) something else. If it really was useful at valuing equities, why would Credit Suisse be selling it to other people? Here’s the description from their website: "The CFROI® metric result is calculated in two steps: First, we measure the inflation-adjusted gross cash flows available to all capital owners in the company and compare that to the inflation-adjusted gross investment made by the capital owners. We then translate this ratio of gross cash flow to gross investment into an Internal Rate of Return (IRR) by recognizing the finite economic life of depreciating assets and the residual value of non-depreciating assets. The CFROI® result approximates the economic return produced by the firm’s projects. HOLT’s proprietary CFROI® performance measure corrects many common distortions found in traditional accounting measures of performance, such as: inflation, depreciation method, asset mix, asset life, deferred taxes, pension accounting, research and development, off-balance sheet items, inventory accounting, asset holding gains or losses, acquisition accounting, investments, and revaluations. Thus, true economic wealth creation or destruction can easily be assessed to determine a company’s warranted value. " Edit: Can’t believe all these other posters just blew you off there.
hmmm how is asking a question about an interview I had necessitate the need for a new outlet? Now maybe if I was asking 'what was the answer to #24 on the afternoon session of the exam, A or D??" thennnn I would be needing a new outlet.
I know that in the UK, M&G (big manager - owned by prudential) swear by it. Load of stuff on it here: http://www.credit-suisse.com/ib/en/holt/index.html (although I assume you’ve already found that stuff).
CFAdetroit Wrote: ------------------------------------------------------- > Can anyone share their insight into the Credit > Suisse HOLT model? Interviewed for a buy-side > equity analyst position, and they mentioned using > the HOLT model and tweaking it as need be for > their DCF analysis. Is this a good or bad thing? > Does this weaken the quality of the role if they > don’t build it from scratch, or is this a good > program that provides a good experience? what was your profile,obtained charter???
nope, just took level 2 last month.
joey raises some good points. No knowing much about the operating model / business model of holt, it may be something akin to MSCI Barra and the relationship with Morgan Stanley, really just a market opportunity to generate incremental earnings for the franchise. Again, not having actually used the model, I would argue that the inputs and the assumptions (and the access to the database, which presumably is user friendly and integrated flexibly into the model), provides the “value add” vs. a proprietary model which is built from scratch, has to be debugged, vetted, etc. i still don’t know what bits are. (must be a british version of kazats)
Maybe I’m reading it wrong, but I don’t see how calling it HOLT makes it “theirs” if HOLT = CFROI…That’s like saying I made a new model called CRACKER, which uses NPV…
Why you gotta break out the racial slurs now?? Just because JDV is the only non-Jew white guy on this board doesn’t mean you gotta insult him.
I’m a non-Jew white guy as well … ok now packing up to hit some traffic.
Here is a white paper that gives a good overview of CFROI, EVA and Economic Margin which is a framework built by the Applied Finance Group which competes with HOLT & Stern Stewart http://www.economicmargin.com/PDF/EMwhitepaper.pdf
I’m more interested in the STEVE HOLT! model.