This 26-session equity valuation class will be taped starting September 8, 2010, 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 . You can also access the emails sent out during the course of this class by clicking here.
Lecture Notes
Introduction to Valuation
Part
I: Discounted Cashflow Valuation (258 pages). If you prefer two
slides per page, click here. (Updated for Fall 2010 class)
Part
II: Relative Valuation and Private Company Valuation (199 pages) (If
you prefer two
slides per page, click here (Updated for Fall 2010 class)
Part
III: Real Options, Acqusition Valuation and Value Enhancement (162
pages) If you prefer two
slides per page, click here(Updated for Fall 2010 class)
Part
IV: Closing Presentation
Emails
Class emails
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) This
option was having trouble, but it is fixed now.
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.
| Session (Click here) | Topics covered | Lecture notes |
1 (9/8/10)
|
Introduction to Class |
Syllabus for class |
| 2 (9/13/10) Webcast, streamed (need a good internet connection) Video podcast (downloadable) Audio Podcast (downloadable) |
Approaches to Valuation |
Introduction to Valuation (5-End) |
Firm versus Equity Valuation: A test |
Congoleum Valuation (to start class) Packet 1 (11-30) |
|
Weekly challenge # 1 |
Reconciling firm and equity valuation | Weekly challenge #1 Solution |
| 4 (9/20/10) Webcast, streamed (need a good internet connection) Video podcast (downloadable) Audio Podcast (downloadable) |
Equity Risk Premium |
Packet 1 (31-50) |
| More on implied equity risk premiums - Comparing premiums across risky asset classes - Implied equity risk premiums for emerging markets Betas - The perils of regression betas - Alternatives - Bottom up Betas |
Packet 1 (51-70) |
|
| Weekly Challenge # 2 | Implied Premium versus Riskfree Rate |
Implied premium challenge, data and solution |
| 6 (9/27/10) Webcast, streamed (need a good internet connection) Video podcast (downloadable) Audio Podcast (downloadable) |
Final thoughts on bottom up betas |
Packet 1 (71-87) |
| Cash flows - Definitons of cash flows - Updating earnings - Correcting earnings for * Leases * R&D -One time charges - Negative earnings |
Packet 1: (88-107) | |
| Weekly Challenge # 3 | Adjusting Operating Earnings |
Weekly challenge Solution & Synthetic rating |
| 8 (10/410) Webcast, streamed (need a good internet connection) Video podcast (downloadable) Audio Podcast (downloadable) |
NOLs and Cash flows Net Cap Ex: Investing in long term assets Change in working capital: Definition and Consequences FCFE: Measurement and Effect of Leverage Estimating growth - Historical growth - Analyst Estimates |
Packet 1: 108-136 |
Take the first quiz and check out the solution as well as the distribution of grades for the class. More on growth- Fundamental growth - Efficiency growth |
Packet 1: 137-154 | |
| Weekly Challenge # 4 | Fundamental growth | Weekly challenge Solution |
| 10 (10/11/10) Webcast, streamed (need a good internet connection) Video podcast (downloadable) Audio Podcast (downloadable) |
Terminal Value - Approaches - Four tests for consistency Choosing the right valuation model Loose Ends in Valuation - The value of cash |
Packet 155-178 |
Valuing closed end funds |
Packet 1: `179-202 | |
| Weekly Challenge # 4A | Terminal Value Mechanics | Weekly challenge Solution |
| 12 (10/18/10) Webcast, streamed (need a good internet connection) Video podcast (downloadable) Audio Podcast (downloadable) |
More on management optoins Valuation examples - Implied Growth rates - Decomposing value - Valuing the entire market |
Packet 1: 203-225 |
| Dealing with Dilution Valuing corporate governnance Valuing Young, start-up firms |
Packet 1: 226-245 | |
| Weekly Challenge # 5 | Dealing with management options | Weekly challenge Solution |
| 14 (10/25/10) Webcast, streamed (need a good internet connection) Video podcast (downloadable) Audio Podcast (downloadable) |
Valuing companies with R&D expenses Dealing with uncertainty: What if? and Monte Carlo Simulations Valuing Distressed Companies Basics of Relative Valuation |
Packet 1: 246-End Packet 2: 1-8 |
Multiples |
Packet 2: 9-39 | |
| Weekly Challenge # 6 | Circular Reasoning in DCF valuation | Weekly Challenge Daimler valuation Solution |
| 16 (11/1/10) Webcast, streamed (need a good internet connection) Video podcast (downloadable) Audio Podcast (downloadable) |
Take the second quiz and check out the solution as well as the distribution of grades for the class. More on PE ratios |
Packet 2: 40-62 |
| PEG ratios and risk EV Multiples EV to EBITDA multiple Price to Book Ratios |
Packet 2: 63-97 | |
| Weekly Challenge # 7 | Analyzing the PEGY ratio | Weekly challenge Solution |
| 18 (11/8/10) Webcast, streamed (need a good internet connection) Video podcast (downloadable) Audio Podcast (downloadable) |
Finding mismatches with multiples - Eyeballing the data - Regressions - Scatter plots Revenue Multiples Companion variables |
Packet 2: 98-142 |
| Picking the right multiples Sector vs Market Comparisons Intrinsic vs Relative Value Valuing Private Businesses - Challenges: No market price & Accounting differences - Motive matters |
Packet 2: 143-174 | |
| Weekly Challenge # 8 | Relative Valuation versus DCF valuation | Weekly challenge Solution |
| 20 (11/15/10) Webcast, streamed (need a good internet connection) Video podcast (downloadable) Audio Podcast (downloadable) |
The cost of illiquidity Private to Public - Selling to a public buyer - Initial public offerings - Venture capitalists Introduction to Real Options |
Packet 2: 175-End Packet 3: 1-14 |
Take the third quiz and check out the solution as well as the distribution of grades for the class. More on option pricing models |
Packet 3: 15-29 | |
| 22 (11/29/10) Webcast, streamed (need a good internet connection) Video podcast (downloadable) Audio Podcast (downloadable) |
More on valuing patents Valuing undeveloped reserves (natural resource) Valuing the option to expand Valuing the option to abandon |
Packet 3: 30-61 |
| The value of financial flexibility Valuing equity in a troubled company as option - When does equity become worthless? - Conflicts of interests between debt and equity |
A Test on Real Options Packet 3: 62-97 |
|
| 24 (12/6/10) Late for class. First 15 minutes are blank. Webcast, streamed (need a good internet connection) Video podcast (downloadable) Audio Podcast (downloadable) |
Acquirer's Anonymous: Seven Steps to Sobriety - The sorry history of acquisitions - Seven tests on acquisions - A plan for a successful acquisition strategy? |
Acquirer's test Packet 3: 98-130 |
| Value Enhancment - Price versus Value Enhancment - Components to value creation - The expected value of control |
Packet 3: 131-154 | |
| 26 (12/13/10) Webcast, streamed (need a good internet connection) Video podcast (downloadable) Audio Podcast (downloadable) |
Dante meets DCF: Biggest Valuation Sins Which approach is best for you? Closing thoughts on valuation |
Closing
Presentation Valuation sumamry for class |
| Take the final exam and check out the solution. |