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Web Casts: Valuation - Fall 2011

This 26-session equity valuation class will be taped starting September 7, 2011, 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 .
Introduction to Valuation
Part I: Discounted Cashflow Valuation (265 pages). If you prefer two slides per page, click here. (Updated for Fall 2011 class)
Part II: Relative Valuation and Private Company Valuation (202 pages) (If you prefer two slides per page, click here (Updated for Fall 2011 class)
Part III: Real Options, Acqusition Valuation and Value Enhancement (173 pages) If you prefer two slides per page, click here(Updated for Fall 2011 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 iPad or Smartphone)
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.
If you want to join the Facebook page for this class (or just lurk), here is the link.
The emails related to this class can be accessed here.

Session (Click here) Topics covered Lecture notes

1 (9/7/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

What is valuation? A test

Syllabus for class
Project Description
Introduction to Valuation

Introduction to Class

2 (9/12/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Valuation bias: A test and my solutions

Introduction to Valuation
Packet 1: 1-3
Bias, Uncertainty and Complexity: The Bermuda Triangle of Valuation
Valuaiton Approaches: Intrinsic, Relative and Contingent Claim

3 (9/14/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Cash flow consistency: A test (Congoleum)

Benchmark Government Bond Rates (FT: 9/14/11)
Sovereign CDS spreads (9/14/11)

Packet 1: 4-34

Cash flow consistency
Discount Rates
- How much do they matter?
- Cost of equity basics
- Riskfree Rate
Weekly challenge # 1
Reconciling firm and equity valuation Weekly challenge #1
Solution

4 (9/19/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Risk Premiums: A test Packet 1: 34-48
Equity risk premiums
- Historical risk premiums and their limitations
- Country risk premiums
- Estimating company risk exposure to country risk

5 (9/21/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Implied Equity Risk Premiums: A test

S&P: Update on buybacks: Second Quarter

Packet 1: 49-69

Implied equity risk premium: Intuition and Dynamics
Historical estimates of US equity risk premium
Risk Premium: Equities, Bonds and Real Estate
Emerging Market Equity Risk Premium
Introduction to Beta
Weekly Challenge # 2

Implied Premium versus Riskfree Rate

Implied premium challenge, data and solution

6 (9/26/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Betas and cost of capital: A test Packet 1: 70-91
Bottom up Betas
Cost of debt
Weights and hybrids
Cost of capital

7 (9/28/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Cash flows: A test Packet 1: 92-112
Cash flows: Set up
Earnings
- Updating
- Cleaning up
- Normalizing
Weekly Challenge # 3

Adjusting Operating Earnings

Weekly challenge
Solution & Synthetic rating

8 (10/3/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Take the first quiz and check out the solution as well as the distribution of grades for the class. Packet 1: 112-128
Dealing with NOLs
Capital expenditures: R&D and Acquisitons
Working Capital: What, why and how?
Cash flows to equity: No free lunches...

9 (10/5/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Growth rates: A test Packet 1: 129-156
Estimating Growth
- Historical Growth
- Analyst and Management Estimates
- Fundamental growth
Weekly Challenge # 4

Estimating fundamental growth

Weekly challenge
Solution

10 (10/10/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Terminal Value: A test Packet 1: 156-183
Estimating cash flows for young, growth companies
Terminal Value: Keepimg it in control
Choosing the right DCF model
Loose Ends in Valuation

11 (10/12/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Loose Ends: A test Packet 1: 184-210
Valuing cross holdings & complexity
Dealing with debt
Management options
DCF valuations
Weekly Challenge # 5 Dealing with management options Weekly challenge
Solution

12 (10/17/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

DCF valuation: A test Packet 1: 211-231
Closing thoughts on management options
Valuations
- Dividend discount model
- Bank valuations
- Dealing with dilution

13 (10/19/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

DCF Valuation II: A test Packet 1: 232-254
Valuing poor corporate governance
The effect of R&D on value
Valuing young, growth companies
Valuing declining companies
Weekly Challenge # 6 Circular Reasoning in DCF valuation Weekly Challenge
Daimler valuation
Solution

14 (10/24/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Relative valuation I: A test Packet 1: 254-End
Packet 2: 1-11
Dealing with Distress in Valuation
Dealing with Uncertainty in Valuation
Relative Valuation: Introduction

15 (10/26/11)

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. Packet 2: 12-25
PE Ratios
- Definition
- Description
- Drivers

16 (10/31/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Relative valuation II: A test Packet 2: 26-54
PE Ratio tests
- Comparing PE across markets
- Comparing PE across time
- Comparing PE across companies

17 (11/2/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Relative Valuation III: A test Packet 2: 55-96

PEG Ratios: The weakest link
EV Multiples
EV/EBITDA
Price to Book

18 (11/7/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Relative Valuation IV: A test Packet 2: 96-136
Book value multiples
Revenue multiples
Relative valuation in young sectors

19 (11/9/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Private Company Valuation: A test Packet 2: 137-172
The value of a brand name
Choosing the right multiple
Private company valuation
- Challenges
- Valuation motive and valuation
Weekly Challenge # 8 Relative Valuation versus DCF valuation Weekly challenge
Solution

20 (11/14/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Private Company Valuation II: A test Packet 2: 173-End
Packet 3: 1-10

Private company valuation
- Dealing with illiquidity
- The key person discount
- Illiquidity
- IPO valuation
Real Options: Introduction

21 (11/16/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Real Opitons 1: A test Packet 3: 11-37
Option Pricing Basics
The option to delay
- A patent as an option
- Implications

22 (11/28/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Real Options 2: A test Packet 3: 38-71
Natural resources
- The value of an undeveloped reserve
- Implications
The option to expand (and its limits)
The option to abandon
Financial flexibility as an option

23 (11/30/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Take the third quiz and check out the solution as well as the distribution of grades for the class. Packet 3: 72-97
Valuing equity as an option
- Basis
- Implications

24 (12/5/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Acquisitions: A test Packet 3: 98-131
Acquistion Valuation
- A short and sorry history
- Acquisition errors
- Valuing Synergy

25 (12/7/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Value Enhancement: A test Packet 3: 132-149
Value enhancement
- Versus Price Enhancements
- Mechanisms
- The Expected Value of Control

26 (12/9/11)

Webcast, streamed (need a good internet connection)
Video podcast (downloadable)
Audio Podcast (downloadable)

Valuation: The Big Picture
- Approaches to valuation
- New and revolutionary approaches (not)
- Concluding thoughts

Closing presentation

Summary of all valuations

Final Exam (12/16/11) Take the final exam and check out the solution