This 26-session equity valuation class will be taped starting September
8, 2004 and the lectures will be available as Real Player files (You
can download Real Player for free by going to http://www.real.com).
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 for the class.
Introduction to Valuation
Part
I: Discounted Cashflow Valuation (256 pages). If you prefer two
slides per page, click here.
Part
II: Relative Valuation and Private Company Valuation (227 pages) (If
you prefer two
slides per page, click here)
Part
III: Real Options, Acqusition Valuation and Value Enhancement (212 pages) If you prefer two
slides per page, click here.
Part
IV: Closing Presentation
| Session (Click here) | Topics covered | Lecture notes |
| 1 (9/8/04) | Introduction to Class A Philosophical Defense of Valuation |
Syllabus for class Project Description Introduction to Valuation (Pg 1-4) |
| 2 (9/13/04) | Approaches to Valuation Efficient and inefficient markets Discounted Cashflow Valuation - Equity versus Firm Valuation |
Introduction to Valuation (Pg 5-End) Packet 1 (Pg 1-7) |
| 3 (9/15/04) | Valuation: Dividends, FCFE and FCFF Estimating Discount Rates - Consistency Principle - Estimating Riskfree Rates |
Packet 1 (Pg 8-25) |
| First Weekly Challenge | Reconciling firm and equity valuation | Weekly Challenge Solution |
| 4 (9/20/04) | Risk Premiums - Historical Risk Premiums: Pluses and Minues - Country Risk Premiums - Implied Equity Risk Premiums |
Packet 1 (Pg 26-40) |
| 5 (9/22/04) | More on implied equity risk premiums |
Packet 1 (41-58) |
| Second Weekly Challenge | Estimating country risk premiums | Weekly Challenge Solution |
| 6 (9/27/04) | More on bottom-up betas |
Packet 1 (58-78) |
| 7 (9/29/04) | Estimating Current Earnings |
Packet 1 (79- 95) |
| Third Weekly Challenge | Estimating free cashflow to the firm | Weekly Challenge Solution |
| 8 (10/04/04) | Capital Expenditures and Depreciation Non-cash Working Capital Estimating free cashflow to equity Estimating Growth - Historical growth - Analyst estimates |
Packet 1 (96-123) |
9
(10/06/04) |
First
quiz , solution as
well as the
distribution of scores on the quiz. Growth Rates from fundamentals |
Packet 1 (124-139) |
| Fourth Weekly Challenge | Fundamental growth | Weekly Challenge Solution |
| 10 (10/11/04) | Growth for Negative Earnings companies Terminal Value Choosing the Right DCF Model |
Packet 1 (140-160) |
| 11 (10/13/04) | Dealing with loose ends in valuation - Cash and marketable securities - Holdings in other companies - Management options and warrants |
Packet 1 (161-191) |
| Fifth Weekly challenge | Management Options | Weekly Challenge Solution |
| 12 (10/18/04) | Valuation Examples - Valuing a bank (Amro) - Valuing the S&P 500 - FCFE valuations |
Packet 1 (192-215) |
| 13 (10/20/04) | More valuation examples - The value of corporate governance - Dealing with Distress in valuation |
Packet 1 (216-236) |
| Sixth Weekly Challenge | Circularity in Cost of Capital Calculation | Weekly Challenge Daimler valuation Solution |
| 14 (10/25/04) | The Dark Side of Valuation - Valuing young companies: The estimation challenge |
Packet 1 (237-256) |
| 15 (10/27/04) | Relative Valuation - Why it matters.... - Classifying Multiples - A Four Step process for analyzing multiples - PE Ratios |
Packet 2 (1-21) |
16
(11/1/04) |
Second
quiz , solution as
well as the distribution of
scores on the quiz. PE Ratios across markets PE ratios across time |
Packet 2 (21-39) |
| 17
(11/3/04) |
PE Ratios continued PEG Ratios |
Packet 2 (40-76) |
| Seventh Weekly Challenge | PEGY Ratio | Weekly Challenge Solution |
| Mystery Project | Relative Valuation of Large Market Cap companies | |
| 18 (11/8/04) | Relative PE Ratios EV/EBITDA Multiples |
Packet 2 (77-110) |
| 19 (11/10/04) | Price to Book Ratios Value to Book Ratios Price to Sales Ratios |
Packet 2 (111-149) |
| 20 (11/15/04) | Relative Valuation of young companies |
Packet 2 (150-186) |
| 21 (11/17/04) | Valuing Private Businesses Estimating Discount Rates Estimating Cashflows The Valuation Motive and Value Illiquidity Discounts |
Packet 2 (187-213) |
| 22
(11/22/04) (Quiz in first 30 minutes) |
Third quiz , solution as well as the distribution of scores on the quiz. | Packet 2 (214-229) |
| 23 (11/24/04) |
The Allure of Real Options Key Tests for Real Options The Option to Delay Valuing patents as options |
Packet 3 (1-30) |
| Ninth Weekly challenge | Valuing a patent | Weekly Challenge Solution |
| 24 (11/29/04) | Valuing a company with patents Valuing undeveloped natural resource options Valuing the option to expand |
Packet 3 (31-56) |
| 25 (12/1/04) | Valuing the option to abandon The value of financing flexibility Valuing equity in a deeply, troubled firm - Why equity has value even in troubled firms - Conflicts between debt and equity investors - Conglomerate mergers |
Packet 3 (57-95) |
| 26 (12/6/04) | Valuing Equity in troubled firms: Closing Thoughts |
Packet 3 (96-129) |
| 27 (12/8/04) | The Value of Financial Synergy |
Packet 3 (130-161) |
| 28 (12/13/04) | Value Enhancement (continued) EVA: The Bottom Line Closing Thoughts on Valuation |
Packet 3 (162-End) Closing Presentation |
12/20/04 |
Take the final exam and check out the solution. |