Ativo Capital Management

Ativo's goal is to identify firms that earn significantly more than their cost of capital as it is these earnings that drive growth in shareholder value and stock price. Firms that don't earn their cost of capital destroy shareholder value.

1930 - Irving Fisher introduced the Net Present Value Rule which demonstrates that benefits and costs of an investment can be reduced to identifying the cash flows and discounting those flows to the present.

1958 - Jack Hirschleifer shows that Net Present Value dominates all other decision methods.

1961 - Miller and Modigliani derive the "investment opportunities equation."

1962 - Myron Gordon formulates the Dividend Growth Model relating value to current dividend, growth rate of dividends and investor's required rate of return.

1965 - David Salomons constructs return on investment using accounting numbers.

1970's - Chuck Callard and Bart Madden begin the empirical validation and application of these methods to securities valuation.

1980's - Building on the foundational work at Callard, Madden & Associates, residual income models gain wide acceptance. Stern-Stewart ("EVA"), CSFB-HOLT ("CFROI"), Applied Finance Group (Economic Margin"), and CharterMast Partners ("Value Performance Factors") each represent respected applications of finance theory.

The Ativo valuation model incorporates cash flow return on investment, cost of capital, and growth and life-cycle theory in the identification of securities and in the construction of portfolios.