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Web Casts: Valuation - Spring 2012

This 26-session equity valuation class will be taped starting January 30, 2012, and the lectures are accessible as live streams. 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. The quality of the video and audio leaves much to be desired but it will get better over time. For the syllabus and other details, visit the home page .
Introduction to Valuation
Part I: Discounted Cashflow Valuation (258 pages). If you prefer two slides per page, click here. (Updated for Spring 2012 class)
Part II: Relative Valuation and Private Company Valuation (202 pages) (If you prefer two slides per page, click here (Not yet updated for Spring 2012 class)
Part III: Real Options, Acqusition Valuation and Value Enhancement (172 pages) If you prefer two slides per page, click here(Not yet updated for Spring 2012 class)
Part IV: Closing Presentation

This page will include the webcasts from the current class. The webcasts can be accessed in one of three ways:
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)
Video podcast (The .m4v file will be downloaded to your computer and you can watch the video using Quicktime or video software or on your iPod)
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. The prior semester's webcasts can be found here.
If you want to join the Coursekit page for this class (or just lurk), here is the link.
The emails related to this class can be accessed here.

Session (Click here) Topics covered Lecture notes

1 (1/31/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Introduction to Class

Syllabus for class
Project Description
Introduction to Valuation (pg 1-4)

2 (2/2/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Bias in valuation
Valuation Approaches
Introduction to DCF valuation

Bias Tests

Introduction to Valuation (5-End)
Packet 1 (pg 1-9)
Weekly challenge # 1
Reconciling firm and equity valuation Weekly challenge #1
Solution

3 (2/7/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Equity vs firm valuation: Wrap up
Inputs to DCF valuation
The Discount rate
- Choices of models
- The riskfree rate

Congoleum Valuation test (to start class)
Sovereign default spreads (CDS & Sovereign bonds)

Packet 1 (10-32)

4 (2/9/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Equity Risk Premiums
- Historical risk premiums
- Implied risk premoiums
- Country risk premiums

A Risk Premium Test

Packet 1 (33-52)

Weekly Challenge # 2

Implied Premium versus Riskfree Rate

Implied premium challenge, data and solution

5 (2/14/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Equity Risk Premiums: Closing thoughts
Betas
- The problem with regression betas
- Alternatives
Cost of debt
Beta tests
Packet 1: 53-80

6 (2/16/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Subsidised debt
Weights for debt and equity
Dealing with hybrids
Estimating cash flows
- Updating
- Operating leases
- R&D

Cash flow tests
Packet 1: 81-104
Weekly Challenge # 3

Adjusting Operating Earnings

Weekly challenge
Solution & Synthetic rating

7 (2/23/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

One time and extraordinary charges
Accounting malfeasance
Money losing companies
Cap ex and working capital
Cash flows to equity
Growth rates
- Historical growth
Packet 1: 104-130

8 (2/28/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Historical Growth rates: Final thoughts
Analyst estimates of growth
Fundamental growth
Growth for young companies

Growth rate test

Packet 1: 131-156

9 (3/2/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Take the first quiz and check out the solution as well as the distribution of grades for the class.

Terminal Value
- Approaches
- Basic Rules
Choosing the right DCF model

Packet 1: 157-173
Weekly Challenge # 4A Terminal Value Mechanics Weekly challenge
Solution

10 (3/7/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Loose Ends in Valuation
- The value of cash
- The value of cross holdings
- Any other assets?
- The cost of complexity
Packet 1: 174-193

11 (3/9/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Debt: Cost of capital versus Netting out
Management options and equity value
Valuations
- Implied growth rates
- Financial service companies
Packet 1: 194-221
Weekly Challenge # 5 Dealing with management options Weekly challenge
Solution

12 (3/21/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Decomposing value
Valuing market indices
The Dilution effect in DCF
Corporate governance and value
Valuing young growth companies
Packet 1: 222-245

13 (3/23/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Value over time
R&D and value
Valuing declining companies
Valuing distressed companies
Introduction to relative valuation
Packet 1: 246- End
Packet 2: 1-3
Weekly Challenge # 6 Circular Reasoning in DCF valuation Weekly Challenge
Daimler valuation
Solution

14 (3/28/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Four steps in deconstructing multiples
The PE ratio
- Definitiona
- Description and characteristics
- Analaysis
- Application

Packet 2: 4-33

15 (3/30/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

More on PE ratios
PEG ratios
Value multiples
Packet 2: 34-79

16 (4/4/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Take the second quiz and check out the solution and the distribution.
EV/EBITDA Multiples
PBV ratios

Packet 2: 80-95

17 (4/6/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Price to Book ratios and ROE
Revenue Multiples
The "companion variable"
Forward multiples

Packet 2: 96-140
Weekly Challenge # 8 Relative Valuation versus DCF valuation Weekly challenge
Solution

18 (4/11/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

The value of a brand name
Choosing between multiples
Valuing Private businesses
- Special issues
- Motive matters
- Total betas
Packet 2: 140-172

19 (4/13/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Private company valuation
Valuing a company for an IPO
Valuing a company for a venture capitalist
Packet 2: 173-End

20 (4/18/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

The essence of real options
Three questions to ask about real options
The option to delay
Valuing a patent

Packet 3: 1-36

21 (4/20/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Valuing undeveloped natural resource reserves
The option to expand (strategic considerations)
The option to delay
The value of financial flexibility
Packet 3: 37-71

22 (4/25/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Take the third quiz and check out the solution and the distribution.

Valuing equity in a troubled firm as an option
- Implications for risk shifting
- Implications for investing

Packet 3: 72-97

23 (4/27/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Acquisition Valuation
- A brief and depressing history
- Acquisition errors
Packet 3: 98-123

24 (5/2/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Improving your odds on acquisitions
Value Enhancement
- vs price enhancement
- Pathways to increase value
Slide of cost vs growth synergies
Packet 3: 124-138

25 (5/4/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Value of Control
Expected value of contron and implications for
- hostile acquisitions
- market pricing
- voting and non-voting shares
Value enhancement measures (EVA, CFROI)

Packet 3: 139-172

26 (5/9/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Dante meets DCF: Valuation Sins
Project and course recap
Closing presentation
The Final Exam

Take the final and check out the solution.