The Columbine Valuation Model forecasts future alpha from an objective measure
of each stock’s intrinsic value. The model’s rankings are a synthesis of five
individual value-oriented factors drawing on reported and estimated earnings,
book value, cash flow, and dividends.
This is a “building block” model; it is not intended to stand alone. The Valuation
Model complements, but does not duplicate the characteristics of other forms of
analysis; it is intended to be used as one element of a complete stock selection
Our design goal for this model is to maximize its ability to discriminate between
attractive and un-attractive issues. This is measured as the difference in alphas
generated by a model’s top (1st) and bottom (10th) deciles over the long-term time
horizons of interest to institutional investors. Valuation Model alpha forecasts are
predictive out as far as three years in the future.
We developed the Valuation Model in 1997 and began publishing Valuation Model rankings
from live data in 1998.
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