What is HOLT? Consulting Services
Helping clients manage risk, find value and make better decisions
We provide objective portfolio reviews to help clients manage risk and find additional value. We also provide unique insights and solutions for better corporate decisions and strategies.
Helping an investment fund blend objective and subjective analysis to refocus its portfolio
The challenge
The international team at a large US mutual fund approached HOLT for assistance with a major review of their holdings. The fund had delivered very strong performance historically (top quartile for the last three, five, and ten years), but was in the bottom 10% of its peer group year-to-date. The client asked us to evaluate the portfolio through the lens of HOLT's methodology and recommend modifications.
Our solution
We employed three different analytical approaches to review the portfolio: HOLT Portfolio Consultant review, HOLT Sector Specialist review, and an objective, quantitative scorecard ranking of the portfolio. We found that the fund's "Blue Chip" strategy was too restrictive, contributing to sharp underperformance during periods of outperformance by lower-quality stocks.
The outcome
The client incorporated the scorecard ranking into their monthly portfolio review, and the fund has since modified its investment objectives.
Applying HOLT-screened indices to select outperforming stocks
The challenge
High net worth clients often want exposure to regions or themes, and ETFs are the most common way to gain that exposure. However, ETFs most often include the largest stocks, but not necessarily the most attractive ones.
Our solution
In order to identify the most attractive stocks linked to a theme or region, we introduced a wealth manager to HOLT's series of indices, which use our highly developed screening process.
The outcome
The historical simulations of results with this unique HOLT portfolio made the wealth manager comfortable making a significant investment for his client.
Hedging a client's large portfolio position
The challenge
A private bank client with large single stock positions was interested in diversifying, but wanted to realize the full value of their holdings.
Our solution
The client, wealth manager and HOLT team worked through plausible fundamental scenarios and the resulting valuations to help determine reasonable levels at which to hedge or monetize a position.
The outcome
Our team quickly and clearly demonstrated the market's expectations for each company, which allowed the client to make selective disposals at advantageous prices.
Broadening a fund's reach through direct investments in undervalued companies
The challenge
A private equity firm wanted to implement a new strategy for investing in firms that had lagged the market significantly.
Our solution
Working with the client and leveraging the HOLT methodology, we developed a new screening process that:
- Highlighted well-managed firms with low market expectations, giving them significant upside potential;
- Used HOLT's focus on cash to ferret out accounting quality issues and quantify the performance risk where relevant;
- Identified relevant companies in diverse geographic regions.
The outcome
The client identified new targets in sectors where they had been operating for years. They also decided to broaden their investments to industry sectors and geographic regions, which they had previously ignored.
Helping a retailer get a better view of its own performance
The challenge
A large US retailer needed a clear, comprehensive picture of its operations to reveal which business units were acting as the true drivers of value.
Our solution
We helped the company develop an internal performance measurement framework based on the CFROI® measure. The metric served as a comparable measure of operating performance across business units and as a means of setting corporate strategy.
The outcome
The HOLT treatment of goodwill, operating leases and inflation adjustment serves the company well due to its acquisitive history and broad mix of assets.
Using equity market expectations to identify excessive credit risk
The challenge
A bond investor, worried by signals from the equities markets, sensed his portfolio had started to carry excessive risk. But he wasn't sure which of his holdings were most vulnerable.
Our solution
With HOLT's forward-looking credit metrics, we were able to tell the client which companies were most likely to experience deteriorating credit fundamentals. Furthermore, we were able to identify which of these companies was the object of bearish equity market sentiment, further indicating likely credit quality deterioration. The credit metrics eventually deteriorated over the subsequent months as implied by the equity market.
The outcome
By utilizing the equity market expectations our client was able to reduce exposure in the risky bonds prior their decline in value.
Proving the value of an M&A bid target to the acquirer
The challenge
After receiving an unsolicited takeover approach, a client of Credit Suisse needed a fast, thorough assessment of the situation so it could enter negotiations with the maximum possible advantage.
Our solution
Our client was a key player in a consolidating industry. For the acquirer, the company fit their desired profile of a high-return business with a growth platform and sustainable operating performance.
Using the HOLT framework, we quantified the expectations embedded in our client's share price and highlighted the growth and profitability improvements implied by the offer price. We then valued the management plan and compared it with the acquisition scenario.
Our M&A evaluation was not focused on accounting EPS accretion, but on whether the acquisition premium would deliver more value to shareholders than the stand-alone strategy.
The outcome
Significant merger-synergies were identified, and helped convince the acquirer to bid an 11.5x EBITDA multiple on a $2 billion offer.