Kenneth S. Hackel C.F.A., Biography Kenneth S. Hackel is founder and President of CT Capital LLC, an institutional investment advisory firm specializing in the analysis of corporate cash flow and cost of capital in investment decision making. Until 1996, he was President of Systematic Financial Management Inc., (SFM) a multi-billion dollar institutional investment firm he conceived and founded in 1982. At SFM, Kenneth successfully implemented his free cash flow-based investment philosophy in managing funds for institutional investors across multiple US equity investment disciplines. Kenneth's upcoming book, "Security Valuation and Risk Analysis: Assessing Value in Investment Decision-Making", to be published by McGraw Hill later this November, significantly extends the theories and analysis presented in his earlier book, "Cash Flow and Security Analysis," 2nd edition (McGraw Hill, 1995). His new book provides extensive analysis and discussion of innovative methods for cost of capital and return on invested capital that are not dependent upon generally accepted accounting principles or market-derived measures of stock volatility. Instead, the models are based on cash flows and extensive credit analysis. To this end, half the book is devoted to the understanding of cash flow; half to cost of capital, as risk to cash flows are meticulously expounded upon. The analysis of risk represents, according to Mr. Hackel, the single most important under-explored factor in security analysis and the primary reason for investor disappointment of their investment returns. He posits that using fundamental factors to calculate cost of equity capital (reflecting a company's operating and financial risk, capital structure, and miscellaneous intrinsic items) and return on invested capital based upon free cash flow generation (in lieu of traditional earnings or EBITDA-based measures) more accurately reflect the underlying financial profitability and stability of a firm, its growth potential and value enhancement level. Kenneth believes that while beta measures stock volatility, it is, at best, a very loose surrogate for financial health. Consequently, using a more robust discount rate (to model and discount free cash flows) to arrive at 'fair value' will provide a more accurate comparison to current valuation levels, thus leading to more accurate trading signals. He illustrates the use of a comprehensive cost of capital credit worksheet utilizing 50+ credit variables in place of the popular Capital Asset Pricing Model in divining an entity's true cost of equity, which results in superior investment performance with considerably lower risk. Ken is the author of many articles on security valuation and analysis, and pioneered the use of adding a percentage of excess corporate expenditures to free cash flow. He is internationally recognized as a leading expert in valuation analysis, having also created the use of free cash flow in lieu of EBITDA in ROIC analysis. EBITDA, he explains, is a deficient metric, in many respects. Ken is accepted to be the sole investment advisor in US equity mutual fund history to take over management of the worst performing mutual fund, and in a single year turn it into the best performing fund. With over 35 years of investment experience, he has consulted on mergers and acquisitions, including fairness opinions. His work has been published in leading academic journals as well as leading financial news media, and is quoted worldwide. He is a graduate of City College of New York and earned his MBA (Finance) from Baruch College. His blog may be read at www.credittrends.com and his twitter @credittrends.