 |
 |
 |
 |
 |
 |
 |
Web Casts: Valuation - Fall 2015
|
|
|
|
|
|
|
This 26-session equity valuation class will be taped starting September 9, 2015, 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
.
Introduction to Valuation
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 Fall 2015 class).
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 Fall 2015 class).
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 Fall 2015 class).
Part
IV: Closing Presentation
Webcasts
This page will include the webcasts from the current class. The webcasts can be accessed in one of three ways:
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.
Finally, you can read the emails that I send to the class by this link.
| Session Webcasts | Topics covered | Lecture notes |
| Valuation Priors Test | ||
| Introduction to Class | ||
| 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. |
|
Valuation of the week # 1 |
Narrative and Numbers |
Google Shared Spreadsheet |
| Valuation bias: A test and my solutions | ||
Narrative versus Numbers |
||
| Post-class test and solution. | ||
Weekly Challenge #1 |
Reconciling firm and equity valuation |
Weekly challenge #1 Solution |
| 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. | ||
Valuation of the week # 2 |
Valuing the Market |
Google Shared Spreadsheet |
| Cash flow consistency: A test (Congoleum) | ||
| DCF Big picture DCF inputs: The Discount Rate - Setting the table - Risk and the marginal investor - The riskfree rate |
||
| Post-class test and solution. | ||
| Weekly Challenge #2 (due 9/27) | Country risk, risk free rates and risk premiums | Weekly challenge # 2 Solution |
Valuation Tools Webcast #3 Estimating a risk free rate |
Estimating a risk free rate |
|
| Risk Premiums: A test | ||
| The Equity Risk Premium - Historical Risk Premiums - Country risk premiums & measuring exposure |
||
| Post-class test and solution. | ||
Valuation of the week # 3 |
Country Risk and Value |
Google Shared Spreadsheet |
| 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 |
| Implied Equity Risk Premiums: A test | Lecture note packet 1: 65-81 | |
| Implied Equity Risk Premiums - More on estimation - Interaction with other "risk" premiums First steps on betas |
||
| Post class test and solution | ||
Valuation of the week # 4 |
Scandalous Stocks
|
Google Shared Spreadsheet |
| Betas and cost of capital: A test | Lecture note packet 1: 82-104 | |
| Bottom up beta: The approach The cost of debt Debt ratios Cost of capital First steps on cash flows |
||
| Post class test and solution | ||
| Weekly Challenge # 2a | Implied Premium versus Riskfree Rate |
Implied premium challenge, data and solution |
| Valuation Tools Webcast #5 Trailing 12 month earnings |
How to use financial statements to create trailing 12 month numbers | |
| Cash flows: A test | Lecture Notes 1: 104-122 | |
Earnings and cash flows |
||
| Post class test and solution | ||
Valuation of the week # 5 |
The Streaming Star |
Google Shared Spreadsheet |
| Growth rates I: A test | Packet 1: Page 123-148 | |
| Reinvestment From FCFF to FCFE Leverage and FCFE Growth rates - Historical growth rates |
||
| Post class test and solution | ||
| Weekly Challenge # 3 | Adjusting Operating Earnings |
Weekly challenge #3 Solution & Synthetic rating |
| Review session for the first quiz | ||
| Valuation Tools Webcast #6 Converting leases to debt |
The process of converting operating lease commitments to debt | |
| Valuation Tools Webcast #7 Capitalizing R&D expenses |
The process of converting R&D (and like expenses) from operating to capital expenses | |
9 (10/12/15) (First 30 minutes for quiz) |
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 149-162 |
| 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 | ||
Valuation of the week # 6 |
The Dream Machine (Ferrari IPO) |
Google Shared Spreadsheet |
| Ferrari IPO: Mea Culpa | Packet 1: 163-184 | |
| Closing thoughts on growth Terminal value |
||
| Post class test and solution | ||
| Weekly Challenge # 4 | Estimating fundamental growth |
Weekly challenge Solution |
Weekly Challenge #4a |
Terminal Value | 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. | |
| Loose Ends: A test | Packet 1: 185-207 | |
Choosing the Right DCF Model |
||
| Post class test and solution | ||
Valuation of the week # 7 |
The Fog of the "Big" Deal (ABInBev and SABMiller) |
Google Shared Spreadsheet |
| DCF valuation: A test | Packet 1: 208-238 | |
| Complexity Debt & Legal Jeopardy Dealing with Employee Options Narrative and Numbers |
||
| Post class test and solution | ||
Weekly Challenge #5 |
Management Options and Equity 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 |
|
| DCF Valuation II: A test | Packet 1: 239-258 | |
| Valuing a stable growth, dividend paying company Valuing the market Valuing young, growth companies |
||
| Post class test and solution | ||
Valuation of the week # 8 |
Valuing an Athlete's Earnings Power |
Google Shared Spreadsheet (Not Applicable on this valuation) |
| Packet 1: 259-289 | ||
| Valuing mature companies in transition Valuing distressed companies Valuing emerging market companies |
||
| Post class test and solution | ||
| Review session for the second quiz | ||
| 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 |
|
Valuing financial service companiesValuing pharmaceutical companies |
||
| Post class test and solution | ||
Valuation of the week # 9 |
Valuing (Pricing) a company with a stock price that is down |
Google Shared Spreadsheet |
16 (11/4/15) Quiz in first 35 minutes. Skip forward.
|
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 2: 1-13 |
| Relative Valuation - First steps - Four steps in deconstructing multiples |
||
| Post class test and solution | ||
Weekly Challenge #6 |
Multiple: Definitional test | Weekly Challenge Solution |
This is a group project that is due on November 20. |
||
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 |
| Relative Valuation I: Test | Packet 2: 14-52 | |
Describing Multiples: Statistical Properties |
||
| Post class test and solution | ||
Valuation of the week # 10 |
Pricing a Hotel and Keeping it Simple |
Google Shared Spreadsheet |
| Relative Valuation IIIa: Test | Packet 2: 53-90 | |
| Defining comparable firms Controlling for differences Pricing examples |
||
| Post class test and 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. | |
| Relative Valuation IIa: Test | Packet 2: 91-133 | |
Closing thoughts on relative valuation |
||
| Post class test and solution | ||
Valuation of the week # 11 |
Valuing the Tax Effect of an Inversion: Pfizer's Allergan Deal |
Google Shared Spreadsheet |
| Private Company Valuation:: Test | Packet 2: 134-End | |
Valuing Private Businesses |
||
| 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 the third quiz | ||
21 (10/23/15) First 35 minutes for quiz
|
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: 1-19 |
Options Introduction |
||
| Real Options: Introduction | Packet 3: 20-50 | |
| More on real options - The option to delay - The option to expand |
||
| Post class test and solution | ||
Valuation of the week # 12 |
Valuing a Middle Eastern Packaged Food company (Almarai) |
Google Shared Spreadsheet |
| Real Options II: Test | Packet 3: 51-84 | |
The Option to Abandon |
||
| Post class test and solution | ||
Weekly Challenge #9 |
Patent valuation | Weekly Challenge Solution |
| 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. | ||
| 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. | ||
| Acquisition tests | Packet 3: 85-122 | |
Acquisition Valuation |
||
| Post class test and solution | ||
| Value Enhancement: Test | Packet 3: 123-End | |
| Value enhancement - Price versus Value Enhancement - Ways of enhancing value - The expected value of control - Implications |
||
| Post class test and solution | ||
Review session for the final exam |
||
| Project summaries (for entire class) | ||
| Closing Presentation - Dante meets DCF (Ten tests of valuation) - Project findings |
||
Review session for the final exam |
||
Final Exam (12/18/15) |
Take the final exam & check the solution. |