ROTA/ROME®

We believe that ROTA/ROME® is: Logical. Simple. Intuitive. Actionable. 

ROTA/ROME® is Cognios' proprietary quantitative, value-based stock selection and portfolio construction methodology. It serves as Cognios' Core Investment Philosophy and underpins everything we do.

ROTA = Return on Total Assets

ROTA = Return on Total Assets
Data on a Touch Pad
  • Un-levered proprietary metric of a company’s profits divided by total assets

  • Cognios' Core Philosophy is that ROTA quantifies the attractiveness of a business relative to other investment alternatives

  • By generating more cash flow relative to their assets as compared to lower ROTA companies, high ROTA businesses tend to have:

    • More cash to reinvest for growth

    • Less need to raise external capital (i.e. raise debt & sell equity)

    • A greater ability to pay dividends & buyback shares

    • Which Cognios believes over time can lead to higher returns to shareholders

"ROTA Quantifies the Attractiveness of a Business"
ROME = Return on Market Value of Equity
Stocks
  • Levered proprietary metric of a company’s profits divided by its current stock price

  • Essentially "cash flow yield"

  • Cognios' Core Philosophy is that ROME is a key measure of how expensive or inexpensive a stock is at any given point in time

  • Cognios believes that in general buying a company's stock when it happens to be cheaper relative to other investment opportunities can lead to higher returns to shareholders than buying a company's stock when it happens to be expensive relative to other investment opportunities.

"ROME is a key measure of whether a stock is cheap or expensive"