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This 26-session equity valuation class will be starting February 1, 2021, and the sessions will be online, though recordings will be acceible on multiple platforms. 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 .
Lecture Notes
Webcasts
Options for following class
You can follow this class on YouTube. I have created a playlist for the class, where the sessions will be posted sequentially with links to slides and other material.
Finally, you can read the emails that I send to the class by this link.
| Session Webcasts | Topics covered | Lecture notes |
Preview of the class |
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| Introduction to Class | ||
| Post-class test and solution. | ||
Valuation of the week #1 |
GameStop: The Storming of the Bastille! |
Google shared spreadsheet |
| Valuation bias: A test and my solutions | ||
The Bermuda Triangle of Valuation |
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| Post-class test and solution. | ||
| Much of the raw material (data) that we use for valuation comes from annual reports and financial filings. (10, 10Q). In this presentation, I lay out a template for extracting information from these filings, separating the stuff that matters from the stuff that does not, using P&G in September 2012 as an illustration. | ||
| Cash flow consistency: A test (Congoleum) | ||
| DCF Big picture DCF inputs: The Discount Rate - Setting the table - Risk and the marginal investor |
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| Post-class test and solution (riskfree questions from session 4, but you can do them...) | ||
Valuation of the week #2 |
Airbnb: A Hospitality Disruptor? |
Google shared spreadsheet |
| Risk free Rates: A test | ||
The Risk free Rate The Equity Risk Premium |
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| Post-class test and solution. | ||
Weekly Challenge #1 |
Reconciling firm and equity valuation |
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Valuation Tools Webcast #2 Estimating a risk free rate |
Estimating a risk free rate |
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| Valuation Tools Webcast #3 Implied Equity Risk Premiums |
The logic and the measurement questions behind equity risk premiums are examined in this webcast. | Presentation Spreadsheet S&P 500 on buybacks S&P 500 earnings |
Valuation of the week # 3 |
Heineken: Negative Interest Rates & Value |
Google Shared Spreadsheet |
| Country and Currency Risk | Lecture note packet 1: 54-76 | |
Country Risk and Company Risk Exposures |
||
| Post class test and solution | ||
| Weekly Challenge # 2a | Implied Premium versus Riskfree Rate |
Implied premium challenge, data and solution |
Valuation Tools Webcast #4 |
Estimate a company's equity risk premium | |
| Betas and Relative Risk: A test | Lecture note packet 1: 77-101 | |
| First steps on betas Measuring Relative Risk (Betas & Alternatives) The cost of debt |
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| Post class test and solution | ||
Valuation of the week # 4 |
An Intrinsic Valuation of the Market |
Google Shared Spreadsheet |
| Cash flows: A test | ||
Debt in Cost of Capital |
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| Post class test and solution | ||
| Review session for the first quiz | ||
| Weekly Challenge # 3 | Adjusting Operating Earnings |
Weekly challenge #3 Solution & Synthetic rating |
| Valuation Tools Webcast #5a Trailing 12 month earnings |
How to use financial statements to create trailing 12 month numbers | |
| Valuation Tools Webcast #6 Converting leases to debt |
The process of converting operating lease commitments to debt | |
| Valuation Tools Webcast #7 Capitalizing R&D expenses |
The process of converting R&D (and like expenses) from operating to capital expenses | |
| Cash Flows II: A test | Lecture note packet 1: 131-157 | |
Capitalizing R&D |
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| Post class test and solution | ||
Valuation of the week #5 |
A Jedi Valuation of Star Wars (Old and you are welcome to update, now that the series has played out) |
Google shared spreadsheet |
9 (3/3/21) |
No start of the class test. Quiz 1 | Lecture note packet 1: 158-185 |
| Growth rates - Historical growth rates - Analyst estimates of growth - Fundamental Growth |
||
| Post class test and solution | ||
| Weekly Challenge # 4 | Estimating fundamental growth |
Weekly challenge Solution |
| Valuation Tools Webcast #8 Estimating accounting returns (ROE, ROIC) |
In assessing whether a company's existing investments are good or not, we draw on accounting return measures: return on invested capital and return on equity. However, navigating what should be in invested capital and what should not, and how to adjust for accounting inconsistencies is tricky. | |
| Start of the class test | Lecture note packet 1: 186-217 | |
Fundamental growth rates - Efficiency growth - Growth when margins are changing Terminal Value: Constraining Rules |
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| Post class test and solution | ||
Valuation of the week # 6 |
Aramco: A loaded bet on Oil and the House of Saud |
|
11 (3/10/21) |
Start of the class test | Lecture note packet 1: 218-235 |
Loose Ends in Valuation |
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| Post class test and solution | ||
Weekly Challenge #4a |
Terminal Value | Weekly challenge Solution |
| The terminal value is a "big" number in DCF valuation, but it is subject to misuse and manipuluation. In this session, I take a look at how you can detect problems with a terminal value computation (in both your own DCFs and in other people's DCFs) | Sample DCF valuation Terminal value analyzer |
|
12 (3/15/21) |
Start of the class test | Lecture note packet 1: 236-266 |
Loose Ends in Valuation |
||
| Post class test and solution | ||
Valuation of the week #7 |
|
Google Shared Spreadsheet |
13 (3/17/21) |
Start of the class test | Lecture note packet 1: 267-283 |
Stories and Numbers |
||
| Post class test and solution | ||
Weekly Challenge #5 |
Management Options and Equity Value | |
| When companies compensate employees with options, they create a second claim on equity. When valuing common shares in these companies, you have to incorporate the effect of options outstanding on equity value and I try to look at how in this webcast. | Cisco 10K Option spreadsheet |
|
| Review session for the second quiz | ||
14 (3/22/21) |
Start of the class test | Lecture note packet 1: 284-308 |
Valuing the market |
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| Post class test and solution | ||
Valuation of the week #8 |
Valuing a Sports Franchise (from 2014) |
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| In this session, I use the spreadsheet that I built to value a company, adapted fro the earnings shock that is coming from the crisis and higher risk premiums to value Boeing. In the process, you may be able to get ideas on how to build your own or adapt this one to make it better. | Spreadsheet | |
15 (3/29/21) |
Start of the class test | Lecture note packet 1: 309-340 |
The Dark Side of Valuation |
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| Post class test and solution | ||
Valuation of the week #9 |
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16 (3/31/21) |
Start of the class test | Lecture note packet 1: 341-End & Lecture note packet 2: 1-5 |
Valuing financial service companies |
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| Post class test and solution | ||
17 (4/5/21) |
Start of the class test | |
Deconstructing a multiple |
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| Post class test and solution | ||
Valuation of the week #10 |
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18 (4/7/21) |
Start of the class test | |
PEG, PBV and EV Multiples |
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| Post class test and solution | ||
Weekly Challenge #6 |
Multiple: Definitional test | Weekly Challenge Solution |
Valuation Tools Webcast #12: Multiples and Fundamentals - Analyzing relationships |
When asked the value a company, relative to other companies, one of the biggest challenges you face is in assessing and analyzing the data. In this presentation, I looks at steps in analysis. | |
19 (4/12/21) |
Start of the class test | |
Pricing young companies |
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| Post class test and solution | ||
Pricing/Valuation of the week #11 |
Pricing Severstal (a Russian steel company) |
No Google shared spreadsheet |
20 (4/14/21) |
Start of the class test | |
Valuing Private Companies: Private to Private |
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| Post class test and solution | ||
Weekly Challenge #7a |
Relative valuation | Weekly challenge Solution |
| Weekly Challenge # 8 | Relative Valuation versus DCF valuation | Weekly challenge Solution |
| Review session for the third quiz | ||
21 (4/21/21) |
Start of the class test | |
Valuing Private Companies: Private to IPO |
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| Post class test and solution | ||
22 (4/26/21) |
Start of the class test | |
Option Pricing Models vs Decision Trees |
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| Post class test and solution | ||
23 (4/28/21) |
Start of the class test | |
Valuing flexibility as an option |
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| Post class test and solution | ||
Weekly Challenge #9 |
Patent valuation | Weekly Challenge Solution |
| The exclusive rights to produce a product or provide a service can provide the owner with "optionality", allowing for a premium on top of a discounted cash flow value. In this webcast, I look at a simplified example. | ||
| With money-losing companies, with a lot of debt, equity takes on the characteristics of a call option (to liquidate the business). In this webcast, I look at the mechanics of applying this approach to a troubled company. | ||
Review session for the final exam |
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24 (5/3/21) |
Through the class test | |
The Seven Deadly Sins in Acquistion Valuation |
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| Post class test and solution | ||
25 (5/5/21) |
Start of class test | |
The Seven Deadly Sins in Acquistion Valuation |
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| Post class test and solution | ||
| Project summaries (for entire class) | ||
Closing Presentation |