Web Casts: Equity Instruments - Spring 2008

This 26-session equity valuation class will be taped starting January 28, 2008, 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 (276 pages). If you prefer two slides per page, click here. (Updated for Spring 2008 class)
Part II: Relative Valuation and Private Company Valuation (186 pages) (If you prefer two slides per page, click here) (Updated for Spring 2008 class)
Part III: Real Options, Acqusition Valuation and Value Enhancement (186 pages) If you prefer two slides per page, click here.(Updated for Spring 2008 class)
Part IV: Closing Presentation

This page will include the webcasts from the current class. The prior semester's webcasts can be found here.

Session (Click here) Topics covered Lecture notes
1 (1/28/08) Introduction to Class
Approaches to Valuation

Syllabus for class
Project Description
Introduction to Valuation

2 (1/30/08)
The essence of DCF valuation
The essence of Relative valuation
The essence of Real Options
DCF Valuation: First steps
Packet 1: 1-10
Weekly challenge # 1
Reconciling firm and equity valuation Weekly challenge #1
3 (2/4/08)

Setting the table for DCF valuation
Discount Rates: Do they matter?
The Riskfree rate

Congoleum cashflow page
Packet 1: 11-24
4 (2/6/08)
Equity Risk Premiums
- Historical premiums and problems
- Country Risk Premiums
- Company exposure to country risk
- Implied Equity Premiums
Packer 1: 25-45
Weekly Challenge # 2

Estimating country risk premiums (or)
Implied Premium versus Riskfree Rate

Country premium challenge and solution
Implied premium challenge, data and solution
5 (2/11/08)
Closing thoughts on the equity risk premium
- The problem with regression betas
- A "perfect" beta
- Alternatives (Bottom up betas)
Packet 1: 46-61
6 (2/13/08)
Closing thoughts on cost of equity
The cost of debt
Weights in the cost of capital
First steps towards cash flows
Packet 1: 62-84
Weekly Challenge # 3

Adjusting Operating Earnings

Weekly challenge
7 (2/20/08)

Adjusting for operating leases
Adjusting for R&D
One-time and extraordinary items
Negative earnings?\
Tax rate for operating income
Cap ex and depreciation

Packet 1: 84-103
8 (2/25/08)
Working capital estimates and forecasts
Free Cashflow to Equity
Estimating Growth
- Historical growth rate
- Analyst estimates of growth
- Fundamental growth in EPS
Packet 1: 104-134
9 (2/27/08)

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

More on fundamental growth
Growth in equity earnings versus operating earnings
Estimating growth in money losing companies

Packet 1: 135-148
Weekly Challenge # 4 Estimating fundamental growth Weekly challenge
10 (3/3/08)
Terminal value
- ConstrainLoose Ends in Valuation
- Dealing with cash
- Valuing cross holdings
- Other assets?
- The cost of complexityts on growth
- Length of growth period
- Excess returns and consistentcy
Picking the right model
Packet 1: 149-164
11 (3/5/08)


Packet 1: 165-181
Weekly Challenge # 4A Terminal Value Mechanics Weekly challenge
12 (3/10/08)
Dealing with Debt
Management Options
Valuation Examples
- Dividend discount model
Packet 1: 182-205
13 (3/12/08)

More dividend discount valuation
Valuing the Market
FCFE valuation

Packet 1: 206-225
14 (3/24/08)
Information and Value
Dilution and Value
Distress and Value
Packet 1: 226-256
15 (3/26/08)
The Dark Side of Valuation
- Valuing young companies
Dealing with uncertainty in DCF valuation
Relative Valuaton: Introduction
Packet 1: 257-276
Packer 2: 1-4
Weekly Challenge # 5 Dealing with management options Weekly challenge
Weekly Challenge # 6 Circular Reasoning in DCF valuation Weekly Challenge
Daimler valuation
16 (3/31/08)
Take the second quiz and check out the solution as well as the distribution of grades for the class.
Deconstructing Multiples: The four basic steps
Packet 2: 5-16
17 (4/2/08)
The determinants of PE
The perfect undervalued company
Packet 2: 17-44
18 (4/7/08)
PEG Ratios
EV Multiples
Packet 2: 45-83
Weekly Challenge # 7 Analyzing the PEGY ratio Weekly challenge
19 (4/9/08)
Book Value Multiples
Revenue Multiples
Packet 2: 84-124
Weekly Challenge # 8 Relative Valuation versus DCF valuation Weekly challenge
20 (4/14/08)
Multiples in "young" sectors
Multiples with distressed companies
Picking the right multiple
Valuing private businesses - introduction
Packet 2: 125-159
21 (4/16/08)
More on private businesses - Total betas and Illiquidity Discounts
Valuing private companies for sale to publicly traded companies
Valuing for an initial public offering
Introduction to Real options
Packet 2: 160-189
Packet 3: 1-5
22 (4/21/08)
Take the third quiz and check out the solution as well as the distribution of grades for the class.
Basic Questions about Real Options
The Option to Delay
Packet 3: 6-28
23 (4/23/08)
Patents as options
Natural resource options
The option to expand
Packet 3: 29-55
24 (4/28/08)
The option to abandon
Financial Flexibility as an option
Equity in Deeply Troubled firms
Packet 3: 56-96
25 (4/30/08)
Aquirer's Anonymouns: Seven Steps to Sobriety
- Background on Acquisitions
- Common Errors in acquisition valuation
Packet 3: 97 - 133
26 ( 5/5/08)
Value Enhancement
- Value versus Price Enhancement
- Ways of enhancing value
- The expected value of control
Packet 3: 147- End
Closing Presentation
Class valuation - summary
Take the final exam and check out the solution as well. If you are so inclined, check out the distribution.