The Applied Finance Group (AFG) is an independent equity research and consulting firm that corrects accounting distortions and analyzes how global markets set prices in order to help its clients make better investment decisions. AFG’s deep research engine systematically applies bottom-up fundamental analysis on over 20,000 companies worldwide to build proprietary factors that explain levels and changes in equity prices through time. Since 1995 AFG has been a global thought leader on valuation and corporate performance, helping its partners grow their investment advisory businesses.
AFG developed its proprietary framework, Economic Margin™ (EM), to evaluate corporate performance from an economic cash flow perspective and is an alternative to accounting-based valuation metrics. EM measures the return a company earns above or below its cost of capital and provides a more complete view of a company’s underlying economic vitality
The core of AFG’s framework is the conviction that insightful valuations require understanding how well a firm has utilized its invested capital. Currently, common measures of corporate performance are based on earnings, such as earnings growth, price to earnings and ROE. Consequently, firms will often undertake actions that increase earnings (and taxes), but do not create value, in the hope of inducing stock analysts upgrades. Such a misplaced importance on the role of earnings is tragic, as earnings are only a part of the shareholder wealth creation process.
EQUITY INSIGHTS PLATFORM
AFG has developed a complete set of products and services to augment the capabilities of your investment process and harnesses the unique insights of our Economic Margin framework to help you make better investment decisions. AFG’s web based Equity Insights platform enables Portfolio Managers and Analysts to quickly find and evaluate investment ideas, calibrate models & expectations, along with a suite of tools to diagnose client portfolios.
COMPANY PHILOSOPHY AND CULTURE
Research and development are critical parts of AFG’s culture, with 70 percent of its employees dedicated to improving products and research. The AFG team includes a mix of financial analysts, quants, database engineers, and programmers. AFG is 100% employee owned by key partners representing every department. It’s two co-founders Rafael Resendes and Daniel Obrycki met while obtaining their MBA at the University of Chicago. Both are still at the helm of AFG.