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This 26-session equity valuation class will be taped starting February 4, 2013, 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
.
Introduction to Valuation
Part
I: Discounted Cashflow Valuation : If you have trouble with this file, download the powerpoint file. You can then choose to print the slides, one to a page, two or a page, in note format or whatever your heart desires. (Updated for Spring 2013 class).
Part
II: Relative Valuation and Private Company Valuation. : Download the powerpoint file. You can then choose to print the slides, one to a page, two or a page, in note format or whatever your heart desires. (Updated for Spring 2013 class).
Part
III: Real
Options, Acqusition Valuation and Value Enhancement : Download the powerpoint file. You can then choose to print the slides, one to a page, two or a page, in note format or whatever your heart desires. (Updated for Spring 2013 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.
Finally, you can read the emails that I send to the class by this link,as well as the newsletters for the class.
| Session Webcasts | Topics covered | Lecture notes |
| Introduction to Class |
Syllabus
for class |
|
| Post-class test and solution. | ||
Valuation of the week # 1 |
Google spreadsheet for your estimates | |
| Valuation bias: A test and my solutions | Introduction to Valuation (Pages 5-End) Lecture note packet 1: Pages 1-10 |
|
| Valuation: How much detail? Valuation approaches DCF: Valuation choices |
||
| Post-class test and solution. | ||
Weekly Challenge #1 |
Reconciling firm and equity valuation |
Weekly challenge #1 Solution |
| Cash flow consistency: A test (Congoleum) | Lecture note packet 1: Pages 11-40 |
|
| 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 |
My blog post on the Dell buyout My valuation of Dell (2/2013) |
Google spreadsheet for your estimates |
| Risk Premiums: A test | Lecture note packet 1: Pages 41-59 | |
| The Equity Risk Premium - Historical Risk Premiums - Country risk premiums & measuring exposure - Implied Equity Risk Premium |
||
| Post-class test and solution. | ||
| Weekly Challenge #2 | Country risk and risk premiums | Weekly challenge # 2 (Simpler- China & Messier- Peru) Solution (Simpler & Messier) |
| Valuation Tools Webcast #1 Implied Equity Risk Premiums |
The logic and the measurement questions behind equity risk premiums | Presentation Spreadsheet S&P 500 on buybacks S&P 500 earnings |
| Valuation of the week #3 | News story: The Heinz Deal My valuation of Heinz Heinz 2012 annual report Heinz Bloomberg cheatsheet |
Google spreadsheet for your estimates |
5 (2/20/13)
|
Implied Equity Risk Premiums: A test | Lecture note packet 1: 60-85 |
| Implied Equity Risk Premiums - More on estimation - Interaction with other "risk" premiums First steps on betas |
||
| Post class test and solution | ||
| Weekly Challenge # 2a | Implied Premium versus Riskfree Rate |
Implied premium challenge, data and solution |
| Betas and cost of capital: A test | Lecture note packet 1: 86-108 | |
| Bottom up beta: The approach The cost of debt Debt ratios Cost of capital First steps on cash flows |
||
| Post class test and solution | ||
Valuation of the week #4 |
News story on Italy Italian CDS & Default Spreads Fiat 2011 Annual Report Fiat Financial Cheat Sheet My valuation of Fiat |
Google spreadsheet for your estimates |
| Cash flows: A test | Packet 1: 109-127 | |
| Earnings and cash flows - Cleaning up earnings - Normalizing earnings Reinvestment |
||
| Post class test and solution | ||
| Weekly Challenge # 3 | Adjusting Operating Earnings |
Weekly challenge Solution & Synthetic rating |
| Valuation Tools Webcast #2 Trailing 12 month earnings |
How to use financial statements to create trailing 12 month numbers | |
| Valuation Tools Webcast #3 Converting leases to debt |
The process of converting operating lease commitments to debt | |
| Valuation Tools Webcast #4 Capitalizing R&D expenses |
The process of converting R&D (and like expenses) from operating to capital expenses | |
| Growth rates I: A test | Packet 1: Page 128-153 | |
| Working capital investments From FCFF to FCFE Leverage and FCFE Growth rates - Historical growth rates - Analyst estimates of growth |
||
| Post class test and solution | ||
| Review session for the first quiz | ||
Valuation of the week #5 |
Groupon: The CEO departs Groupon stock price, beta and top stockholders Groupon: 10K for 2012 My blog post on Groupon from August 2012 My valuation of Groupon in February 2013 |
Google shared spreadsheet for your estimates |
| Take the first quiz and check out the solution as well as the distribution of grades for the class. | Packet 1: Pages 154-167 | |
| 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 | ||
| Weekly Challenge # 4 | Estimating fundamental growth |
Weekly challenge Solution |
| Terminal Value: A test | Packet 1: 168-188 | |
| Closing thoughts on growth Terminal value Choosing the right model |
||
| Post class test and solution | ||
Valuation of the week #6 |
JP Morgan: My blog post on JPM after the Big Whale Valuation of JP Morgan in February 2013 |
Google shared spreadsheet for JP Morgan valuation |
| Loose Ends: A test | Packet 1: 189-207 | |
| Dealing with cross holdings Other assets Complexity |
||
| Post class test and solution | ||
Weekly Challenge #4a |
Terminal Value | Weekly challenge Solution |
| DCF valuation: A test | Packet 1: 208-247 | |
| Debt & Legal Jeopardy Dealing with Employee Options Valuing companies - Stable growth DDM - Macro effects on valuation - Valuing young, growth companies |
||
| Post class test and solution | ||
Valuation of the week #7 |
Valuing the S&P 500 - March 26, 2013 | Google shared spreadsheet for S&P 500 valuation |
| DCF Valuation II: A test | Packet 1: 248-277 | |
| Valuing young, growth companies Valuing mature companies Valuing declining and distressed companies Valuing emerging market companies |
||
| Post class test and solution | ||
| Weekly Challenge # 5 | Management Options and Equity Value | Weekly challenge Solution |
| Packet 1: 278-End | ||
| Valuing financial service companies Valuing commodity companies Price versus Value |
||
| Post class test and solution | ||
Valuation of the week #8 |
The Value of a Sports Franchise |
Sports franchise valuation issues/ questions |
15 (4/3/13) |
Packet 2: 1 -22
|
|
| Relative valuation - Description - Ingredients - Deconstruction of multiples - Definitional tests - Descriptional tests |
||
| Post class test and solution | ||
| Review session for the second quiz | ||
| Take the second quiz and check out the solution as well as the distribution of grades for the class. | Packet 2: 23-42 | |
| Analysis of multiples - PE ratio for a high growth firm - PEG ratios - EV/EBITDA - PBV |
||
| Post class test and solution | ||
Valuation of the week #9 |
Is JC Penney cheap or expensive? |
Data on bigger sample of retail firms |
| Relative Valuation IIa: Test | Packet 2: 43-75 | |
| - EV multiples - Comparables - Choices - Applications |
||
| Post class test and solution | ||
Weekly Challenge #7 |
Relative valuation | Weekly challenge Solution |
Mystery Project (Due April 26 at 5 pm) |
The mystery project | Data for mystery project |
| Relative Valuation IIIa: Test | Packet 2: 76-108 | |
| Sector regressions: Unstable or young sectors Market regressions Picking the right multiple Relative versus Intrinsic value Sector versus Market value Asset based valuation: Introduction |
||
| Post class test and solution | ||
Valuation of the week #10 |
What is the value of the gold? |
Google shared spreadsheet on gold price views |
| Private Company Valuation: A test | Packet 2: 109-148 | |
| Sum of the parts value: Relative vs DCF value Valuing private businesses - The missing pieces - Why motive matters - Private to private transactions |
||
| Post class test and solution | ||
| Weekly Challenge # 8 | Relative Valuation versus DCF valuation | Weekly challenge Solution |
| Private Company Valuation II: Test | Packet 2: 149-End Packet 3: 1- 19 |
|
Valuing an initial public offering (IPO) |
||
| Post class test and solution | ||
Valuation of the week #11 |
The Seaworld IPO |
Google shared spreadsheet on Seaworld |
| Real Options: Introduction | Packet 3: 20-44 | |
| Options in investment analysis - The option to delay - A patent as an option - Natural resource reserves as options |
||
| Post class test and solution | ||
| Review session for the second quiz | ||
Weekly Challenge #9 |
Private company valuation | |
| Take the third quiz and check out the solution as well as the distribution of grades for the class. | Packet 3: 45-63 | |
| More on real options - The option to expand - The option to abandon - Financial flexibility as an option |
||
| Post class test and solution | ||
Valuation of the week #12 |
A revaluation of Apple (with the new earnings report) - Apple's most recent quarterly earnings report - My blog post on Apple after earnings report - Updated valuation of Apple (April 2013) - Optimal capital structure for Apple (April 2013) |
Google shared spreadsheet for Apple 2013 valuations |
| Real Options II: Test | Packet 3: 64-85 | |
| Equity as a liquidaiton option - Set up - Implications for investors - Extending to the real world Acquisitions: The sorry history |
||
| Post class test and solution | ||
Weekly Challenge #10 |
Patent valuation | Weekly Challenge Solution |
| Acquisition tests | Packet 3: 86-122 | |
Acquisition Valuation |
||
| Post class test and solution | ||
| Value Enhancement: Test | Packet 3: 123-End | |
| Value enhancement - Price versus Value Enhancement - Ways of enhancing value - The expected value of control - Implications |
||
| Post class test and solution | ||
| Project summaries (for entire class) | ||
| Closing Presentation - Dante meets DCF (Ten tests of valuation) - Project findings |
||
| Review session for the second quiz | ||
Final exam (5/15/13) |
Take the final and check against the solution |