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 |
What is valuation? A test |
Syllabus
for class |
|
Introduction to Class | ||
2 (9/12/11) Webcast, streamed (need a good internet connection) |
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 |
||
Cash flow consistency: A test (Congoleum) | Benchmark Government Bond Rates (FT: 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 |
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 |
||
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 |
Betas and cost of capital: A test | Packet 1: 70-91 | |
Bottom up Betas Cost of debt Weights and hybrids Cost of capital |
||
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 |
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) |
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 |
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 |
||
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 |
DCF valuation: A test | Packet 1: 211-231 | |
Closing thoughts on management options Valuations - Dividend discount model - Bank valuations - Dealing with dilution |
||
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 |
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 |
||
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 |
||
Relative valuation II: A test | Packet 2: 26-54 | |
PE Ratio tests - Comparing PE across markets - Comparing PE across time - Comparing PE across companies |
||
Relative Valuation III: A test | Packet 2: 55-96 | |
PEG Ratios: The weakest link |
||
Relative Valuation IV: A test | Packet 2: 96-136 | |
Book value multiples Revenue multiples Relative valuation in young sectors |
||
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 |
Private Company Valuation II: A test | Packet 2: 173-End Packet 3: 1-10 |
|
Private company valuation |
||
Real Opitons 1: A test | Packet 3: 11-37 | |
Option Pricing Basics The option to delay - A patent as an option - Implications |
||
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 |
||
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 |
||
Acquisitions: A test | Packet 3: 98-131 | |
Acquistion Valuation - A short and sorry history - Acquisition errors - Valuing Synergy |
||
Value Enhancement: A test | Packet 3: 132-149 | |
Value enhancement - Versus Price Enhancements - Mechanisms - The Expected Value of Control |
||
Valuation: The Big Picture - Approaches to valuation - New and revolutionary approaches (not) - Concluding thoughts |
||
Final Exam (12/16/11) | Take the final exam and check out the solution |