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This 28-session equity valuation class will be recorded starting January 23, 2017, 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
Webcasts
This page will include the webcasts from the current class. The webcasts
can be accessed in one of four 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 |
Preview of the class |
||
Introduction to Class | ||
Post-class test and solution. | ||
Valuation of the week #1 |
A Jedi Valuation of Star Wars |
Google Shared Spreadsheet |
Valuation bias: A test and my solutions | ||
Why bother (with valuation)? |
||
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. |
|
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. | ||
Valuation of the week #2 |
Valuing a Sports Franchise |
Google Shared Spreadsheet |
Risk Free Rates: A test | ||
Risk free Rates |
||
Post-class test and solution. | ||
Weekly Challenge #1 |
Reconciling firm and equity valuation |
|
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. | ||
Risk Premiums: A test | ||
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 #3 |
Apple, The Greatest Cash Machine in History?
|
Google Shared Spreadsheet |
Betas and cost of capital: A test (just page 2) | Lecture note packet 1: 80-107 | |
Measuring Relative Risk (Betas & Alternatives) The cost of debt Subsidized 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 |
|
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 |
Cash flows: A test | Lecture Notes 1: 108-129 | |
Earnings and cash flows |
||
Post class test and solution | ||
Valuation of the week #4 |
A Valuation of PZ Cussons Nigeria |
Google Shared Spreadsheet |
Growth rates I: A test | Packet 1: Page 130-158 | |
Accounting Fraud & Negative 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 | |
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 | |
Valuation of the week #5 |
A Camera Company? The Snap IPO |
Google Shared Spreadsheet |
Growth Rates II: A Test | Packet 1: Pages 159-183 | |
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 | ||
Review session for the first quiz | ||
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. | |
10 (2/27/17) (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 184-195 |
Fundamental growth rates - Efficiency growth - Growth when margins are changing Terminal Value: First steps |
||
Post class test and solution | ||
Valuation of the week #6 |
Tesla: The Story Stock |
Google Shared Spreadsheet |
Terminal Value | Packet 1: Pages 196-220 | |
Terminal Value |
||
Post class test and solution | ||
Weekly Challenge #4a |
Terminal Value | Weekly challenge Solution |
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 |
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More Loose Ends: A Test | Packet 1: 221-248 | |
Cross Holdings Other Assets Complexity Debt & Legal Jeopardy Dealing with Employee Options& Restricted Stock |
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Post class test and solution | ||
Valuation of the week #6 |
Deutsche Bank: A German Bank in Crisis! |
Google Shared Spreadsheet |