Free Cash Flow Research

  • TTAM

  • Free Cash Flow Reporting

Free cash flow is the cash a company generates through its operations after accounting for capital expenditures on assets. It is important for investors because it avoids the discretionary aspects of standard accounting. In TTAM, we further research different aspects of Free Cash Flow and develop our proprietary investment indicator which historically delivered superior investment return.
  • Cumulative Growth of $10K based on relative Free Cash Flow Strength Quintiles

  • S&P 1500 Universe, 11/30/1998 to 05/31/2019

Source: TrimTabs Asset Management, FactSet, S&P Global

Free Cash Flow Strength is a proprietary indicator developed by TrimTabs Asset Management to measures a company's free cash flow conditions. The hypothetical portfolios are constructed in an equally weighted, monthly rebalanced approach. They do not represent actual fund or portfolio performance. Past performance does not guarantee future returns.

Although the pervasive and intuitive notion is that high-quality companies should have better overall performance than low-quality companies, their differentiating characteristics are hotly debated. Practitioners and academics alike often simply relate quality to some measure of profitability, capital structure, or quality of earning, but our research shows that Free Cash Flow is the key to define quality and historically outperformed the other “quality” factors.
  • Top-Bottom Quality Factor Performance Spread

  • S&P 1500 Universe, 11/30/1998 to 05/31/2019

Source: TrimTabs Asset Management, FactSet, S&P Global,

Free Cash Flow Strength is a proprietary indicator developed by TrimTabs Asset Management to measures a company's free cash flow conditions. Return on Assets, Gross Margin, Debt to Equity are calculated with trailing twelve-month data. Earnings persistence is the trailing three-year earning volatility. Asset Turnover is the year over year growth in asset turnover. The top/Bottom portfolios are constructed by equally weighted top/bottom 50% stocks ranked by factor exposure on a monthly rebalance approach. They do not represent actual fund or portfolio performance. Past performance does not guarantee future returns

Sector allocation is a key consideration in building an investment model. Many of the investment strategies, however, result in over concertation on specific sectors, making the performance inconsistent and unintentionally increase exposure to industry-specific risks. We carefully examine the performance of Free Cash Flow-based investing on a sector-neutral basis and found that the outperformance is widely spread across the different sector. The excess return of Free Cash Flow-based investing is not a result of sector concentration.
  • Annualized Return of Sector Portfolios with High Free Cash Flow Strength Exposure

  • S&P 1500 Universe, 11/30/1998 to 05/31/2019

Source: TrimTabs Asset Management, FactSet,

S&P Global Free Cash Flow Strength is a proprietary indicator developed by TrimTabs Asset Management to measures a company's free cash flow conditions. High Free Cash Flow Strength is the portfolio with the top 50% stocks in each sector. Benchmark is the equally weighted portfolio for each sector. For sector classification please refer to FactSet RBICS sector classification system. The hypothetical portfolios are constructed in a monthly rebalanced approach. They do not represent actual fund or portfolio performance. Past performance does not guarantee future returns

Beyond the US market, we extended our research to the global equity universe. We found that Free Cash Flow-based investing historically produced excess return against the average stock return across different equity markets. The research capability on global equity market builds a solid foundation for our mission: Provide investors with Free Cash Flow-based investment products and services to fulfill their long-term investment success.
  • Annualized Return of Market Portfolios with High Free Cash Flow Strength Exposure

  • Global Equity Market, 11/30/1998 to 05/31/2019

Source: TrimTabs Asset Management, FactSet

Free Cash Flow Strength is a proprietary indicator developed by TrimTabs Asset Management to measures a company's free cash flow conditions. Stocks with high free cash flow exposure are defined as stocks in the top 50% based on the free cash flow factor ranking in each country/region. The excess return is calculated by subtracting the average annual return of all stocks by the average annual return of stocks high free cash flow factor exposure. Past performance does not guarantee future returns.