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Val emails


The emails for this class will be collected on this page, arranged chronologically. Since I send quite a few, you can target it on a specific month by going here:

Have fun with them!

Email content
I am sure that you are finding that break is passing by way too fast, but the semester will soon be upon us and I want to welcome you to the Valuation class. One of the best things about teaching this class is that valuation is always timely (and always fun...) Just as examples: Is it time to buy or sell Twitter? Is Uber worth $120 billion? Is there a market bubble? What is the value added or destroyed by the Kardashians? Are the Dallas Cowboys really worth more than the New York Yankees? Is there a Trump effect on markets and if so what is it? If you have not visited my blog, I put my thoughts down on these issues (though I am still working on the Kardashian valuation): 

1. Preclass work: I  know that some of you are worried about the class but relax! If you can add, subtract, divide and multiply, you are pretty much home free... If you want to get a jump on the class, you can go to the class web page:

2. Syllabus & Calendar: The syllabus for the class is available on the website for the class and there is a google calendar for the class that you can get to by clicking on

 For those of you already setting up your calendars, it lists when the quizzes will be held and when projects come due. 

3. Lecture notes: The first set of lecture notes for the class should be available in the bookstore by the start of next week. If you want to save some money, they can also be printed off online (if you want to save some paper, you can print two slides per page and double sided). To get to the lecture notes, you can try
Please download and print only the first packet on discounted cashflow valuation. If you want to save paper, you can download the pdf file on you iPad, Android or Kindle and follow along... 

4. Delivery choices: I hope to see you all in class for every session, but there are two supporting delivery mechanisms that I would like you to take advantage of:
a. iTunes U: I will also be posting the material for the class on iTunes U. If you have never used iTunes U, you need an Apple device (iPad or iPhone) and have to download the iTunes U app (free). Then use the enroll code: FMK-HYW-MCA
Alternatively,  type in or click on the link for the class.
I really like the set up and I think you may enjoy it too. If you have an android, it is a little more involved, but try downloading Tunesviewer, an Android app that lets you use iTunes U.
b. YouTube Channel: There is a final option, if your broadband connection is not that great and you are watching on a Tablet/smartphone. There is a YouTube playlist for this class, where all class sessions will be loaded.
When you get a chance, check it out.

5. Books for the class: The best book for the class is the Investment Valuation book - the third edition. (If you already have the second edition, don't waste your money. It should work...) You can get it at Amazon or wait and get it at the book store... If you are the law-abiding type, you can buy "Damodaran on Valuation" - make sure that you are getting the second edition. If you can get the Asian edition, even better. It is exactly the same book and costs about a third. Or, as a third choice, you can try The Dark Side of Valuation, again the second edition, if you are interested in hard to value companies.. Or if you are budget and time constrained, try "The Little Book of Valuation". Finally, if you really want to take a leap, try my newest book, Narrative and Numbers at 
You will find the webpages for all of the books at http://www.stern.nyu.edu/~adamodar/New_Home_Page/public.htm. If you want a comparison of the books, try this link: http://people.stern.nyu.edu/adamodar/New_Home_Page/valbookcomp.html 

6. Valuation apps: One final note. I worked with Anant Sundaram (at Dartmouth) isn developing a valuation app for the iPad or iPhone that you can download on the iTunes store: http://itunes.apple.com/us/app/uvalue/id440046276?mt=8 
It comes with a money back guarantee...  Sorry, no Android version yet…  
I am looking forward to seeing you in three weeks. Until next time!
One of the themes of this class will be that while your valuation looks like a collection of numbers, the story that holds these numbers together is the glue. Consequently, to get a handle on valuation, you have to learn to navigate that space between stories and numbers and your skills have to be broad. I know that you are still on break and that the last thing you want to do is reading, but if you do get a chance, please read this post that I have on my blog:
The post was triggered by the awe I felt, looking up at Brunelleschi’s Duomo in Firenze a few summers ago, but the thoughts are all investing/valuation thoughts.

Another theme is that you should not be shy about challenging conventional wisdom, even when it comes with impeccable logic and backing. In this old post, I take on the notion that CAPE, a market metric that was developed by Robert Shiller (Nobel Prize winner and bubble forecaster extraordinaire), is an indicator of market pricing.
If you find talk of Superman’s cape and kryptonite distracting, ignore it. 

Just a few quick notes leading into class two weeks from now 
1. Please make sure that you got my email from last week. If you joined the class this week or just don't read class related emails during your break, you can find the entire email by going to
2. Visit the website for the class and check out the Google calendar to make sure that you don't have any quiz conflicts: 
3. If you have an Apple device, please download iTunes U (a free app from the app store). 
a. iTunes U: You need an Apple device (iPad or iPhone) and have to download the iTunes U app (free). Then use the enroll code: FMK-HYW-MCA
Alternatively,  type in or click on the link for the class.
b. YouTube Channel: There is a YouTube playlist for this class, where all class sessions will be loaded.
The lectures will show up on this playlist as well.
Finally, I apologize if my previous version of the calendar showed your class starting three hours later. It was my fault, a failure to adjust for time differences when setting up the calendar, but all should be good now:
Lots to think about before class a week from today, on February 4, in Paulson. See you there! Until next time!
We are officially rolling. If you enrolled in the class in the last couple of days, you did miss the first two emails but they are already in the email chronicle, in case you are interested:
Email chronicles: http://www.stern.nyu.edu/~adamodar/New_Home_Page/eqemail.html
This chronicle will be updated at the end of each week to include all emails sent up until then. There were three handouts in class today. If you were unable to get one or more, here are the links:
Syllabus: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/eqsyllspr19.pdf 
Project: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/eqprojspr19.pdf
Introduction to Valuation (Slides for Wednesday’s class): http://people.stern.nyu.edu/adamodar/pdfiles/eqnotes/Valintrospr19.pdf 
A quick note about today's class. During the session, I told you that that this was a class about valuation in all of its many forms – different approaches (intrinsic, relative & contingent claim), different forums (for acquisitions, value enhancement, investing) and across different types of businesses (private & public, small and large, developed & emerging market). After spending some time laying out the script for the class (quizzes, exams, weekly tortures), I suggested that you start thinking about forming a group and picking companies. To get the process rolling, here is what I have done
1. Group: Please do find a group to nurture your valuation creativity, and a company to value soon. If you are ostracized, or feel alone, I have created a Google shared spreadsheet (an Orphan list, so to speak) that you use to find others like you in the class:
2. Company Choice: Once you pick a company, collect information on the company. I would start off on the company's own website and download the annual report for the most recent year (probably 2017) and then visit the SEC website (http://www.sec.gov) (for US listings) and download 10Q filings. (You can pick any publicly traded company anywhere in the world to value. The non-US company that you value can have ADRs (but does not have to have ADRs) listed in the US but you still have to value it in the local currency and local market. You can even analyze a private company, if you can take responsibility for collecting the information.)
3. Webcast of today’s class: The web cast for the first class are up and running (or at least the streaming version). You can access it by going to:
The links to iTunes U and YouTube will also be up shortly.
4. Lecture Note Packets: You can wait for the bookstore to get its act together and get the packets ready or you can get a jump by downloading the lecture note packet online. It is available at the top of the webcast page (see link above) in either pdf or ppt format.
5. Post class test: To review what we did in class today, I prepared a very simple post-class test. I have attached it, with the solution. Give it your best shot.
If you did not get the syllabus, project description and the valuation intro in class this morning, they are all available to print off from this site. I will also be sending out a post class test and solution after each session that should take you no more than 5-10 minutes to do. It is a good way to review the class and I hope that you find it useful. Sorry about the length of this email, but there will be more to come (I promise!). Until next time!

Attachments: Post-class test and solution.

(Sorry. My send finger moved too fast) It is Tuesday, and if you remember my promise (or threat) yesterday, it is time for the valuation of the week. I decided to revisit one of my favorite companies, Apple, and value it. Since it is a company, I have valued before and that my most recent valuation was only in September, the best place to start is with two blog posts that I wrote about my valuation of Apple (with Amazon thrown in for good measure):
Post 1 (from September 2018): http://aswathdamodaran.blogspot.com/2018/09/apple-and-amazon-at-trillion-looking.html 
Post 2 (from September 2018): http://aswathdamodaran.blogspot.com/2018/09/amazon-and-apple-at-trillion-follow-up.html 
I got incredibly lucky in terms of timing, since my value was about $200 and the stock was at $230. The stock dropped as low $145 early this year, right after a China surprise, and it came out with both an annual and a quarterly report after my 2018 valuation:
10 K from November 2018: https://d18rn0p25nwr6d.cloudfront.net/CIK-0000320193/68027c6d-356d-46a4-a524-65d8ec05a1da.pdf
10Q from February 2019: https://d18rn0p25nwr6d.cloudfront.net/CIK-0000320193/8f91c57f-9dbf-48c4-889c-792e2acc05d4.pdf 
I revisited my valuation, with updated inputs not just for Apple but for risk free rates and risk premiums. My valuation of Apple in February 2019 is at this link:

My value for Apple is $183, and the stock is trading at $ 174. I am not trying to sell you on my conclusions. What I would like you to do is to take my valuation (and story) and make it yours, by entering the spreadsheet and changing the numbers. To keep you focused, here are the four numbers that drive the value:
  1. Revenue growth: My assumption is that the China shock notwithstanding, the expected growth rate in revenues will be about 3% a year, with services picking up some of the lag. You might disagree).
  2. Operating margin: Apple’s operating margin is about 28.6%, down from 30% a couple of years ago. I think it will continue to drift down as the smart phone business continues to become more competitive and my target margin is 25%, reached in 5 years. Again, you might disagree.
  3. Sales to Capital: I know that this sounds mysterious but I use it to determine how much Apple will have to reinvest to get its growth. It is not a big deal since I am not assuming much growth. I am using the US industry average for electronics companies of 1.81 to estimate reinvestment. If you think that I am reinvesting too much, raise this number. If you think I am reinvesting too little, lower this number.
  4. Cost of capital My cost of capital for Apple is 9.45% and if you go into the cost of capital worksheet in the valuation, you will see what I am assuming. This is higher than the median cost of capital for a US or global company, and puts them in about the 65% percentile in terms of risk. You are welcome to disagree.
Once you have made your changes and come up with a value, please enter your inputs and resulting value into a Google shared spreadsheet. Please don’t wreak havoc by deleting other peoples’ inputs.
I will keep a running tab of what you are finding. Have fun! Until next time!

Today's class started with a test on whether you can detect the direction bias will take, based on who or why a valuation is done. The solutions are posted online on the webcast page for the class. We then moved on to talk about the three basic approaches to valuation: discounted cash flow valuation, where you estimate the intrinsic value of an asset, relative valuation, where you value an asset based on the pricing of similar assets and option pricing valuation, where you apply option pricing to value businesses. With each approach, we talked about the types of assets that are best priced with that approach and what you need to bring as an analyst/investor to the table. For instance, in our discussion of DCF valuation and how to make it work for you, I suggested that there were two requirements:  a long time horizon and the capacity to act as the catalyst for market correction. Since I mentioned Carl Icahn and Bill Ackman as hostile acquirers (catalysts), you may want to look at Herbalife, the company that Ackman has targeted as being over valued and Icahn did for being under valued. See if you can get a list going of how each is trying to be the catalyst for the correction... and think about the dark side of this process. 

Attachments: Post-class test and solution.

Each week, I will use the Thursday email to prod, nag and bug you about the project. So, without further ado, here is where you should be this first week:
  1. Find a group: The groups are yours to create and you should try to have at least 4 people in a group and not more than 8 (that limit is for your own projection).  If you are being ostracized and no one wants you, I would suggest some therapist time in the near future, but for the moment, you can add your name to the orphan list for the class: https://docs.google.com/spreadsheets/d/1OLvGqPSG40Nvit3sn6r8Gqdmpfj2AdCizfHzFQAmfr0/edit?usp=sharing 
  2. Pick a company: This will require some coordination across the group to make sure that you meet the minimum criteria (at least one money loser, high growth, emerging market, service company). In making this choice, remember that you can value any business you want, public or private, small or large, listed in any market. There are at least a couple of entrepreneurs in the class who are valuing their own businesses and  quite a few valuing privately owned family businesses. 
  3. Annual Report: Find the most recent annual report for your company. If you are valuing a private business, just ask for income statements and balance sheets for as long as you can get them (I will assume that you know the owner or better still, you are the owner).
  4. Public filings: If your company has quarterly reports or filings pull them up as well. 
In doing all of this, you will need data and Stern subscribes to one of the two industry standards: S&P Capital IQ (the other is Factset). It is truly a remarkable dataset with hundreds of items on tens of thousands of public companies listed globally, including corporate governance measures. As MBAs, you should have access to Capital IQ on the Stern Dashboard, but if you don’t, I will work on getting it for you. Until next time!
Just two quick notes. The first is that I did put up an in-practice webcast today. It is a very basic webcast on how to read a 10K, using P&G as my example. The links are below:
Downloadable video:  http://www.stern.nyu.edu/~adamodar/podcasts/Webcasts/Reading10Knew.mp4 
YouTube Video:   https://youtu.be/UzUJzdn7c2w?list=PLUkh9m2BorqmRAGzJb5OIvTAKZZu9HWF- 
P&G 10K: http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/PG/Reading10KPG.pdf
P&G Valuation (excel spreadsheet): http://www.stern.nyu.edu/~adamodar/pdfiles/eqnotes/PG/P&Gvaluationfixed.xls
I had mentioned that S&P Cap IQ was a great resource to use for data, but It turns out that you have to go to self-register to be able to access it. Until next time!


I hope that you are enjoying your first weekend back at school. I will intrude with a couple of notes. First, the first newsletter for the class is attached. As I said, there is usually not much news in these newsletters. Think of it more as a timeline for the class, telling you where we went last week and laying out our plans for the week ahead. If you get a chance, take a look at it. Second, we will be starting with the first lecture note packet in class on Monday. Please have it with you for class. Have a great weekend! Until next time!

Attachment: Issue 1 (February 9)

First things first. This week, we will be delving into the mechanics of discount rates, starting with the risk free rate and then moving on to the equity risk premium. They are both central to valuation and we live in unusual times, where the former, in particular, is doing strange things.

Second, we will be starting off tomorrow's class with the question of firm versus equity valuation. I am attaching the cash flow table that we will be using for the start-of-the-class test as well. If you get a chance, please take a look at it before you come into class. The question is at the bottom of the page.

Third, I was checking out the Google shared spreadsheet on my first valuation of the week. Well done! I see 85 of you have tried to value the franchise. You can still do it, if you have not done it already. If you have already forgotten about it, you can find the details on the webcast page for the class.

Until next time!

Attachment: Cash flow consistency: A test (Congoleum)

Today's class started with a look at a major investment banking valuation of a target company in an acquisition and why having a big name on a valuation does not always mean that a valuation follows first principles. We began our intrinsic value discussion by talking about the weapons of mass distraction. If you want to read the blog post I have on the topic, try this link:
After setting the table for the key inputs that drive value - cash flows, growth, risk, we looked at the process for estimating the cost of equity in a valuation. In particular, we broke down risks into different types and argued that only some of these risks belong in discount rates, if investors are diversified. Next session, we will start with a discussion of risk free rate, a foundational number that will drive the rest of our calculations. I have attached a post class test for today, with the solution, but I think that four of the questions relate to risk free rates, which we have not covered yet. So, if you want to wait until Wednesday’s class, you might have an easier time. Until next time!

Attachments: Post-class test and solution.

You did such a good job with the Apple valuation that I decided to stay with another high profile company for this week’s valuation and it is the other company that I wrote about tin my Apple blog post, Amazon. I have not been obsessed with Amazon since its early days, but everything I do, when valuing young companies, I learned the hard way, trying to value Amazon in 1998. I have valued the company every year since. I have bought it four times during its lifetime and sold it four times. After my September 2018 post (http://aswathdamodaran.blogspot.com/2018/09/amazon-and-apple-at-trillion-follow-up.html ), I sold short on the stock for the first time in my life. I was terrified, but I got lucky, and my short sale closed out at $1312. A few days ago, Amazon came out with its most recent 10K (annual report).
Most recent 10K: https://ir.aboutamazon.com/sec-filings/sec-filing/10-k/0001018724-19-000004 
The stock is back up to $1626 today and my most recent valuation is at the link below:
Amazon valuation in February: http://www.stern.nyu.edu/~adamodar/pc/blog/AmazonFeb2019.xlsx
As with the Apple valuation, I have created a shared Google spreadsheet and the link is below:
As a side note, I am an Amazon Prime member and I have been fascinated by how Amazon has used Prime to create an army that it can send out disrupt any business. In fact, I used my user-valuation platform to value a Prime member and the entire service in 2017. It is dated, but you can update the numbers yourself and see what Prime is worth to Amazon:
We started the class with a discussion of risk free rates, exploring why risk free rates vary across currencies and what to do about really low or negative risk free rates. The blog post below captures my thoughts on negative risk free rates:
If you want to see my updated perspective on risk free rates, try my data post on the issue from earlier this year:

We just started on the discussion of equity risk premiums but the contours of the discussion should be clear.Historical equity risk premiums are not only backward looking but are noisy (have high standard errors). You can the historical return data for the US on my website by going to
Click on current data, and look to the top of the table of downloadable data items. Finally, The post class test and solution are attached. 

One final note. It is Wednesday and time for the first weekly challenge, and it relates to the consistency of equity versus firm valuation. I have attached it and will post my solution by Sunday night. Until next time!

Attachments: Post-class test and solution.