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webcasts UG valuations

 


This 28-session equity valuation class will be recorded starting January 27, 2020, 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 (Updated for Spring 2020 class).
  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 2020 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 2020 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 2020 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 (1/27/20)

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


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

A Jedi Valuation of Star Wars (Old and you are welcome to update, now that the series has played out)

  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 (1/29/20)

The sound system failed catastrophically & the sessions recordings are uselesss. I have posted a recorded version of the session that I did last year. Sorry.

  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 (1-10)

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 (2/3/20)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
No start of the class test today (to make up for time lost in last session)
  1. Introduction to Valuation (1-10)
  2. Lecture note packet 1: Pages 1-19

Pricing Set Up
Real Options
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

Tesla: A Corporate Teenager

  1. My June 2019 Post on Tesla
  2. My January 2020 Post on Tesla
  3. My January 2020 Valuation of Tesla
Google Shared Spreadsheet

4 (2/5/20)

  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 20-47
  2. Sovereign Ratings - January 2020
  3. Sovereign CDS Spreads - January 2020
  4. Equity Risk Premiums by Country - January 2020

Risk Perspectives
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 (2/10/20)

  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: 50-74
  2. Implied ERP: February 2020


Country Risk Premiums
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

Aramco: A loaded bet on oil and the House of Saud

  1. Aramco's Prospectus
  2. My blog posts on Aramco
    1. A coming out party for the world's largest company
    2. Regime Change and Value
  3. My valuation of Aramco
Google Shared Spreadsheet

6 (2/12/20)

  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 Lecture note packet 1: 75-97
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

Heineken: Negative Interest Rates & Value

  1. My blog post on negative interest rates
  2. Heineken: The financials
  3. Heineken: The story
  4. Heineken: The valuation
Google Shared Spreadsheet
7 (2/19/20)
  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: 98-124

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

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)

8 (2/24/20)

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


Cash Flows II: A test Packet 1: Page 125-144
  • Capitalizing R&D
  • Accounting Fraud & Negative Earnings
  • Tax Rates
  • Reinvestment
Post class test and solution
Review session for Quiz 1
Webcast
Review session for the first quiz
  1. Review presentation
  2. Past Quiz 1s
  3. Solution to Past Quiz 1s
Valuation of the week # 5

A Market Crisis: The Corona Effect on the Market

  1. My write up on the Corona Virus effect on the S&P 500
  2. My valuation of the S&P 500
Google Shared Spreadsheet

9 (2/26/20)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Growth Rates: A Test Packet 1: Pages 145-185
Free Cashflows to Equity
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
Post class test and solution
Weekly Challenge # 4

Estimating fundamental growth

Weekly challenge
Solution
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)
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 (3/2/20) (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 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 185-202

Fundamental growth rates
- Efficiency growth
- Growth when margins are changing
Terminal Value: Constraining Rules
Post class test and solution
Valuation of the week #6
  1. My blog posts on ride sharing
    1. On the Uber Rollercoaster
    2. The Future of Ride sharing
  2. Uber - Prospectus (2019)
  3. My Uber IPO post
  4. IPO lessons for Public Market Investors (with Uber valuation from October 11, 2019)
  5. My Uber valuation in October 2019
Google Shared Spreadsheet

11 (3/4/20)

  1. Webcast, streamed (need a good internet connection)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Terminal Value: A Test Packet 1: Pages 203-226

Terminal Value: Final Thoughts
Picking the right model in DCF
Loose Ends in Valuation
- Valuing Cash
- Valuing Cross holdings

Post class test and solution
Weekly Challenge #4a
Terminal Value Weekly challenge
Solution
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(3/9/20)

  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: 227-250
Cross Holdings
Other Assets
Complexity
Debt & Legal Jeopardy
Dealing with Employee Options & Restricted Stock
Post class test and solution
Valuation of the week #7
  1. Background on online meeting market
  2. Zoom Prospectus (2019)
  3. Zoom Updated Financials
  4. My Zoom Valuation
Google Shared Spreadsheet

13 (3/11/20)

  1. Zoom Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


Narrative & Numbers
- Why stories matter in valuation
- Steps in going from story to valuation
- The Feedback Loop
Packet 1: 251-270
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 (3/23/20)

  1. Zoom session (accessible only those in the class)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


Story Telling and Number Crunching Packet 1: 271- 292
Valuing a stable growth, dividend paying company
Valuing the market
First steps into the dark side
- Valuing Young companies
Post class test and solution
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
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 (3/25/20)

  1. Zoom session (accessible only those in the class)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


DCF Valuation II: A test

Packet 1: 293-318
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

Valuation Tools Webcast: Spreadsheet Gymnastics - Using the Ginzu spreadsheet (Corona Virus version)
In this session, I use the spreadsheet that I built to value a company, adapted fro the earnings shock that is coming from the crisis and higher risk premiums to value Boeing. In the process, you may be able to get ideas on how to build your own or adapt this one to make it better. Spreadsheet

16 (3/30/20) (Shorter session)

  1. Zoom session (accessible only those in the class)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube



Second quiz

Packet 1: 318-331

Valuing Emerging Market Companies

No post class test & 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 (4/1/20)
  1. Zoom session (accessible only those in the class)
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Price and Value: A Test Packet 1: 332-360

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

Post class test and solution

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