Economics & Strategy – Quantitative Research: First
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Economics & Strategy – Quantitative Research: First

Extending his winning streak to an eighth year, Takaaki Yoshino continues to wow clients with quantitative research that is “firmly linked to market realities,” as one money manager puts it.

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Takaaki Yoshino

Daiwa Securities Group

"He does a masterful job of marrying the theoretical and the practical."

Extending his winning streak to an eighth year, Takaaki Yoshino continues to wow clients with quantitative research that is “firmly linked to market realities,” as one money manager puts it. Building on work published by the University of Mississippi’s Victoria Dickinson in April 2011, “Cash Flow Patterns as a Proxy for Firm Life Cycle,” the Daiwa Securities Group analyst produced a series of reports last year that examined the developmental stages of Japanese companies and ways in which clients might use an understanding of these classifications in constructing their portfolios. (Economics professors Michael Gort and Steven Klepper identified and defined five distinct phases of corporate evolution — introduction, growth, mature, shakeout and decline — back in 1982.) Dickinson noted that flows vary at each step, but investors often fail to understand the implications of the variations and, as a result, may overvalue some companies and undervalue others. Yoshino, 47, compared her findings against those of earlier, similar studies, then tested whether they applied to Japanese companies. He found that “analysis of profitability by life-cycle stage provided little evidence of a tendency for the return on net operating assets of growth- and mature-stage stocks to regress toward its mean, whereas that of introduction-, shakeout- and decline-stage stocks showed a clear tendency to rise over time.” Money managers can create a more effective investment strategy by evaluating cash flow statements in light of a company’s place on the progression, he believes. — Thomas W. Johnson


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