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webcasts UG valuations

 


This 28-session equity valuation class will be recorded starting January 28, 2019, and the lectures are accessible in multiple ways. You can get the supporting lecture notes by clicking on the pdf files below - the pages covered by each lecture are provided next to each lecture. For the syllabus and other details, visit the home page .

Lecture Notes

  1. Introduction to Valuation
  2. Part I: Discounted Cashflow Valuation: This is a pdf file and works well if you have an iPad or tablet to read it on If you have trouble printing this file, download the powerpoint file. You can then choose to print the slides, one to a page, two or a page, in note format or whatever your heart desires. (Updated for Spring 2019 class).
  3. Part II: Relative Valuation and Private Company Valuation : This is a pdf file and works well if you have an iPad or tablet to read it on If you have trouble printing this file, download the powerpoint file. You can then choose to print the slides, one to a page, two or a page, in note format or whatever your heart desires. (Updated for Spring 2019 class).
  4. Part III: Real Options, Acqusition Valuation and Value Enhancement: This is a pdf file and works well if you have an iPad or tablet to read it on If you have trouble printing this file, download the powerpoint file.You can then choose to print the slides, one to a page, two or a page, in note format or whatever your heart desires. (Updated for Spring 2019 class).

  5. Part IV: Closing Presentation

Webcasts
This page will include the webcasts from the current class. The webcasts can be accessed in one of four ways:

  1. Streaming video (The file will be streamed to your computer. This will work only if you have a good internet connection, but should be of the best quality and the most information)
  2. Video podcast (The file will be downloaded to your computer and you can watch the video using Quicktime or video software or on your iPod)
  3. Audio podcast (The .mp3 file will be downloaded as an audio file and can be played on any audio player). The AV system used to record the lectures has changed and I think it is much improved.
  4. YouTube videos (if you have slower internet connection and/or a small device).

Options for following class

You can follow this class in other forums. One is iTunes U, where you can watch the webcasts and follow the class on your tablet or even smartphone. The other is YouTube.

  1. Apple iTunes U: If you would like to watch the sessions on Apple iTunes U on your Apple device, try this link.
  2. YouTube: I have created a playlist for the class, where the sessions will be posted sequentially with links to slides and other material.

Finally, you can read the emails that I send to the class by this link.

Session Webcasts Topics covered Lecture notes
Preview of the class
What is this class about?
 

1 (1/28/19)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


Introduction to Class
  1. Syllabus for class
  2. Project Description
Post-class test and solution.
Valuation of the week #1

A Jedi Valuation of Star Wars

  1. A Post on the value of the Star Wars Franchise (December 2015)
  2. Star Wars Franchise Valuation spreadsheet
  3. Star Wars, The Force Awakens - Actual Box Office
  4. Rogue One - Actual Box office
  5. Star Wars, The Last Jedi - Actual Box Office
  6. Solo - Actual Box Office
Google Shared Spreadsheet

2 (1/30/19)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


Valuation bias: A test and my solutions
  1. Introduction to Valuation

Why bother (with valuation)?
The Bermuda Triangle of Valuation
Intrinsic Valuation: The Big Picture
Relative Valuation: The Big Picture
Real Options: The Big Picture

Post-class test and solution.
Valuation Tools Webcast #1
Getting Data for Valuation
Data collection: The first step
In this webcast, I look at the basics of getting the raw material needed for valuing a business - financial statements, sector information and macro economic data.
  1. SEC website
  2. SEC Live
  3. FRED (Federal Reserve)

3 (2/4/19)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Cash flow consistency: A test (Congoleum)
  1. Lecture note packet 1: Pages 1-26
DCF Big picture
DCF inputs: The Discount Rate
- Setting the table
- Risk and the marginal investor
Post-class test and solution.
Valuation of the week # 2
  1. My first blog post on Apple & Amazon (from September 2018)
  2. My follow up blow post on Apple & Amazon (from September 2018)
  3. Apple's latest earnings report (Jan 2019) and last 10K
  4. An updated valuation of Apple (Feb 2019)
Google Shared Spreadsheet

4 (2/6/19)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube

 

Risk Free Rates: A test
  1. Lecture note packet 1: Pages 27-53
  2. Sovereign Ratings - January 2019
  3. Sovereign CDS Spreads - January 2019
  4. Equity Risk Premiums by Country - January 2019

Risk free Rates
- Across Currencies
- Across time
- Negative Risk free Rates?
The Equity Risk Premium
- Historical Risk Premiums
- Country risk premiums

Post-class test and solution.
Weekly Challenge #1

Reconciling firm and equity valuation

  1. Weekly challenge #1
  2. Solution
Valuation Tools Webcast #2
Downloadable webcast
YouTube
Much of the raw material (data) that we use for valuation comes from annual reports and financial filings. (10, 10Q). In this presentation, I lay out a template for extracting information from these filings, separating the stuff that matters from the stuff that does not, using P&G in September 2012 as an illustration.
  1. Presentation
  2. P&G: 10K
  3. P&G: Valuation (Excel spreadsheet)

5 (2/11/19)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Risk Premiums: A test
  1. Lecture note packet 1: 54-75
  2. Implied ERP: February 2019


Measuring Company Risk Exposure to Country Risk
Implied Equity Risk Premiums
- More on estimation
- Interaction with other "risk" premiums

Post class test and solution
Valuation of the week #3
  1. Blog post on Amazon and Apple from September 2018
  2. Amazon's latest 10K (from January 2019)
  3. My updated valuation of Amazon (February 2019)
  4. A Side Note: My Blog Post on Amazon Prime (from 2017)
Google Shared Spreadsheet

6 (2/13/19)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


Betas and cost of capital: A test (just page 2) Lecture note packet 1: 76-100
Measuring Relative Risk (Betas & Alternatives)
The cost of debt
Post class test and solution
Weekly Challenge # 2a

Implied Premium versus Riskfree Rate

Implied premium challenge, data and solution
Valuation Tools Webcast #3
Estimating a risk free rate

Estimating a risk free rate

Estimating a risk free rate should be simple but it is often not. In some currencies, where there are no default free entities, it may take some work getting to a risk free rate. In this webcast, I look at the mechanics of this adjustment.

  1. Presentation
  2. Moody's ratings (3/13)
  3. CDS spreads (3/13)
Valuation Tools Webcast #4
Implied Equity Risk Premiums
The logic and the measurement questions behind equity risk premiums are examined in this webcast. Presentation
Spreadsheet
S&P 500 on buybacks
S&P 500 earnings
Valuation of the week #4
  1. Blog post on GE Valuation and Pricing (November 2018)
  2. GE Financials
  3. My GE Valuation and Pricing in February 2019
Google Shared Spreadsheet
7 (2/20/19)
  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube

Cash flows: A test

Lecture Notes 1: 101-128

Subsidized Debt
Earnings and cash flows
- Updating earnings
- Cleaning up earnings

Post class test and solution
Weekly Challenge # 3

Adjusting Operating Earnings

Weekly challenge #3
Solution & Synthetic rating
Valuation Tools Webcast #5
Trailing 12 month earnings
How to use financial statements to create trailing 12 month numbers
  1. Apple: 10K
  2. Apple: 10Q
  3. Apple Trailing 12-month (spreadsheet)
Valuation Tools Webcast #6
Converting leases to debt
The process of converting operating lease commitments to debt
  1. Disney Annual Report
  2. Converting leases to debt (spreadsheet)
Valuation Tools Webcast #7
Capitalizing R&D expenses
The process of converting R&D (and like expenses) from operating to capital expenses
  1. Microsoft: 10K for 2012
  2. Microsoft: 10K for 2011
  3. Converting R&D to capital (spreadsheet)

8 (2/25/19)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


Growth rates I: A test Packet 1: Page 129-160

Accounting Fraud & Negative Earnings
Tax Rates
Reinvestment
From FCFF to FCFE
Leverage and FCFE
Growth rates
- Historical growth rates

Post class test and solution
Valuation of the week #5
  1. Blog post on Kraft Heinz, post earnings report
  2. Kraft Heinz Earnings for 2018
  3. My valuation of Kraft Heinz in February 2019
Google Shared Spreadsheet

9 (2/27/19)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Growth Rates II: A Test Packet 1: Pages 160-184
Historical Growth Rates
Analyst Estimates of growth
Fundamental growth rates
- Growth in earnings per share
- Growth in non-cash net income
- Growth in operating income
- Efficiency growth
- Growth when margins are changing
Post class test and solution
Weekly Challenge # 4

Estimating fundamental growth

Weekly challenge
Solution
Valuation Tools Webcast #8
Estimating accounting returns (ROE, ROIC)
In assessing whether a company's existing investments are good or not, we draw on accounting return measures: return on invested capital and return on equity. However, navigating what should be in invested capital and what should not, and how to adjust for accounting inconsistencies is tricky.
  1. Walmart 10K (2013)
  2. Walmart 10K (2012)
  3. Spreadsheet

10 (3/4/19) (Online to cover snow day)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
No start of the class test Packet 1: Pages 185-212

Fundamental growth rates
- Efficiency growth
- Growth when margins are changing
Terminal Value: Constraining Rules
Picking the Right Valuation Model
Post class test and solution
     

11 (3/6/19)

(First 30 minutes for quiz)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Take the first quiz (a or b) and check out the solution (a or b) as well as the distribution of grades for the class. Packet 1: Pages 213-220

Loose Ends in Valuation
- Valuing Cash

Post class test and solution
Valuation of the week #6
  1. My blog post on Lyft's IPO
  2. My blog posts on ride sharing
    1. On the Uber Rollercoaster
    2. An early blog post on Uber versus Lyft
    3. The Future of Ride sharing
  3. Lyft - Prospectus (2019)
  4. My valuation of Lyft IPO in March 2019
Google Shared Spreadsheet
Valuation Tools Webcast #9 (Checking Terminal Value)
The terminal value is a "big" number in DCF valuation, but it is subject to misuse and manipuluation. In this session, I take a look at how you can detect problems with a terminal value computation (in both your own DCFs and in other people's DCFs) Sample DCF valuation
Terminal value analyzer

12(3/11/19)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


More Loose Ends: A Test Packet 1: 221-247
Cross Holdings
Other Assets
Complexity
Debt & Legal Jeopardy
Dealing with Employee Options& Restricted Stock
Post class test and solution

13 (3/13/19) (The audio is messed up. Try this as an alternate)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


DCF Valuation 101

Packet 1: 248-261
Narrative & Numbers
Post class test and solution
Weekly Challenge #4a
Terminal Value Weekly challenge
Solution
Valuation Tools Webcast #10: Dealing with Employee Options
When companies compensate employees with options, they create a second claim on equity. When valuing common shares in these companies, you have to incorporate the effect of options outstanding on equity value and I try to look at how in this webcast. Cisco 10K
Option spreadsheet

14 (3/25/19)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


Story Telling and Number Crunching Packet 1: 262-285
Changing your story
Valuing a stable growth, dividend paying company
Valuing the market
First steps into the dark side
Post class test and solution
Valuation of the week #7
  1. easyJet: My Story and Valuation(s)
  2. easyJet Valuations
    1. No-deal Brexit
    2. Delayed/Messy Brexit
    3. Smooth/No Brexit
Google Shared Spreadsheet

15 (3/27/19)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


DCF Valuation II: A test

Packet 1: 285-306
Valuing young companies & start-ups
Valuing mature companies in transition
Post class test and solution
Weekly Challenge #5
Management Options and Equity Value

Weekly challenge
Solution & Option value

Review session for Quiz 2
Webcast
Review session for the second quiz
  1. Review presentation
  2. Past Quiz 2s
  3. Solution to Past Quiz 2s

16 (4/1/19)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube



Take the second quiz (a or b) and check out the solution (a or b) as well as the distribution of grades for the class.

Packet 1: 307-321

Valuing Declining & Distressed Companies
Valuing Emerging Market Companies

No post class test and solution
Valuation of the week #8

Valuing a Sports Franchise (from 2014)

  1. Ballmer buys Clippers: News story
  2. My blog post on the Clippers
  3. My spreadsheet for valuing the Clippers
  4. Pricing of sports franchises (NFL, NBA, MLB & NHL)
  5. Soccer and IPL cricket Team numbers
 
17 (4/3/19)
  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube

Price and Value: A Test Packet 1: 320-347

Valung Emerging Market Companies
Valuing Financial Service Companies
Valuing Commodity Companies
Value versus Price

Valuation Tools Webcast #11: EV, Firm Value and Equity Value

The "value" embedded in a multiple can be the value of the entire firm, the value of its operating assets (enterprise value) or the value of the equity. In this webcast, we look at the differences between the three and why you may use one over the other. Blog post on topic
Presentation
Excel spreadsheet

18 (4/8/19)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


Relative Valuation I: Test

Packet 1: 348-End
Packet 2: 1-25

The Essence of Pricing
Multiples, Standardized Pricing
The Allure of Pricing
Defining & Describing Multiples
Analyzing Multiples

Post class test and solution
Valuation of the week #10

Valuing an IPO (Levi Strauss)

  1. Levi Strauss Prospectus
  2. My Levi Strauss Story
  3. My Levi Strauss Valuation
Google Shared Spreadsheet

19 (4/10/19)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


Relative Valuation IIa: Test Packet 2: 26-63
Defining comparable firms
Controlling for differences
Pricing examples
Post class test and solution
Weekly Challenge #6
Multiple: Definitional test Weekly Challenge
Solution

Valuation Tools Webcast #12: Multiples and Fundamentals - Analyzing relationships

When asked the value a company, relative to other companies, one of the biggest challenges you face is in assessing and analyzing the data. In this presentation, I looks at steps in analysis.
  1. Presentation
  2. Bank raw data
  3. Descriptive Statistics
20 (4/15/19)
  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube

Relative Valuation IIIa: Test Packet 2: 64-120

More pricing examples
Closing thoughts on relative valuation
Asset Based Valuation

Post class test and solution
Valuation of the week #11

Valuing and Pricing Uber

  1. Uber Prospectus
  2. My blog post on Uber
  3. Top-down valuation of Uber
  4. Rider-based valuation of Uber
  5. Pricing of Uber
Google Shared Spreadsheet

21 (4/17/19)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


Private Company Valuation Packet 2: 121-163

Valuing Private Businesses
- Diversification & Total Betas
- Key Person Discount
- Initial Public Offerings

Post class test and solution
Weekly Challenge #7a
Relative valuation Weekly challenge
Solution
Weekly Challenge # 8 Relative Valuation versus DCF valuation Weekly challenge
Solution
Review session for Quiz 3
Webcast
Review session for the third quiz
  1. Review presentation
  2. Past Quiz 3s
  3. Solution to Past Quiz 3s
22 (4/22/19) (Quiz in first 30 minutes)
  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube

Take the third quiz (a or b) and check out the solution (a or b) as well as the distribution of grades for the class. Packet 3: 1-15
The Essence of Real Options
Tests for Real Options
Post class test and solution
Pricing/Valuation of the week #12

Pricing Severstal (a Russian steel company)

  1. Severstal's financials
  2. Steel Companies - Data
  3. Steel Company Multiples - Data Analysis
  4. Pricing Severstal
No Google shared spreadsheet
23 (4/24/19)
  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube

Real Options: A Test Packet 3: 16-45
The Option to Delay
- The Set up
- Patents as Options
- Valuing a company with patents
- Undeveloped Natural Resource Reserves
Post class test and solution
Weekly Challenge #9
Patent valuation Weekly Challenge
Solution
Valuation Tools Webcast #13: Valuing Patents as Options
The exclusive rights to produce a product or provide a service can provide the owner with "optionality", allowing for a premium on top of a discounted cash flow value. In this webcast, I look at a simplified example.
  1. Presentation
  2. Spreadsheet
24 (4/29/19)
  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube

Real Options Test II Packet 3: 46-78

The Option to Expand
The Option to Abandon
Financial Flexibility as an Option
Distressed Equity as an Option

Post class test and solution
25 (5/1/19)
  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Distressed Equity as Option: Test Packet 3: 79-96

Equity as a liquidaiton option
- Extending to the real world
- Implications for distressed investing
M&A Introduction

Post class test and solution
Valuation Tools Webcast #14: Valuing Distressed Equity as an Option
With money-losing companies, with a lot of debt, equity takes on the characteristics of a call option (to liquidate the business). In this webcast, I look at the mechanics of applying this approach to a troubled company.
  1. Jet India Financials
  2. Jet DCF valuation
  3. Jet Option valuation
26 (5/6/19)
  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


Acquisition tests

Packet 3: 97-130

Acquisition Valuation
- Common valuation errors
- Synergy & Control
- Ego & Value
- Improving the odds
The InBev/SABMiller Deal

Post class test and solution
Review session for Final
Webcast

Review session for the final exam

  1. Review presentation
  2. Past finals
  3. Solution to past finals

27 (5/8/19)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


Value Enhancement: Test Packet 3: 131-150
Value enhancement
- Price versus Value Enhancement
- Ways of enhancing value
- The expected value of control
- Implications
Post class test and solution
28 (5/13/19)
  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube

Project summaries (for entire class)

Closing presentation

Closing Presentation
- Dante meets DCF (Ten tests of valuation)
- Project findings
- Closing thoughts

Final Exam (5/20/19)

Take the final exam & check the solution.
Check your grade with the grade checker.