Continuous Improvements for Better Insights

Through rigorous research, empirical testing, and feedback from our clients, Credit Suisse HOLT continually improves the accuracy, insights, and ease of use of the HOLT™ Valuation Framework.

The model is improved not only through changes to the underlying calculations and algorithms, but also through incorporation of better economic forecasts and accounting adjustments. Our ultimate goal is to improve the underlying inputs and economic drivers to allow clients to more accurately estimate company value and identify investment opportunities.

Improvement Process

Metrics and Assessment:

We have established a core set of vital metrics as the basis for assessing the quality, performance, and predictability of our model. Through continuous back-testing of our global database, we assess these metrics and identify any gaps in the model's tracking. We perform testing on a database of more than 50,000 active and inactive companies to ensure that we test the absolute largest sample of companies and control for market conditions, as well as survivor bias and short-term noise.

Improvement Implementation:

Using a combination of proprietary and standard tools, we constantly evaluate changes in the software model code and end-user application. Such changes allow us to continually improve the asset-allocation insights derived from using the framework.

Knowledge Growth:

Changes are only made after testing and review . As the model is improved, we are committed to educating clients about the improvements and the new insights they provide.

Benefits to Clients:

Eliminate the Discount Rate Debate:

The HOLT™ Methodology of market-derived discount rates provide a consistent foundation for understanding investors' risk and return preferences. Through the use of market-derived discount rates we provide insights into potential equity allocation opportunities across markets and tactical style allocation within a market. Analysis of discount rate drivers and comparison to CFROI® metric results enable clients to directly assess management's ability to create or destroy wealth. Moreover, the CFROI® Valuation Framework permits CFROI® result and discount rate comparisons over time and across countries, while observations of the changes in the underlying drivers (e.g., risk and liquidity preferences, taxes, inflation) guide style choices and other asset allocation decisions.

Improved Forecasting and Management Competency Analysis:

Our fade algorithms provide an objective and consistent framework to create default financial forecasts and evaluate management performance. They give users a solid foundation, based upon significant company characteristics, to evaluate the plausibility of management and analyst forecasts.

Understanding Investor Expectations:

A key hallmark of the HOLT™ Valuation Framework is its ability to calibrate investor expectations from the interaction between current market prices and our systematic cash flow forecasts. We are constantly improving our forecasting methodology by comparing the results to achieved returns and changes in corporate financial performance. More recently, we have added the ability to compare our fundamental projections with the probabilistic price ranges derived from implied volatility.

Economic Benchmarking at a Glance:

HOLT helps clients make asset allocation decisions by evaluating on a consistent basis sector and industry performance across markets and over time.