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This 26-session equity valuation class will be taped starting September 5, 2012, 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 (302 pages). If you prefer two
slides per page, click here. (Updated for Fall 2012 class)
Part
II: Relative Valuation and Private Company Valuation (202 pages) (If
you prefer two
slides per page, click here (Updated for Fall 2012 class)
Part
III: Real
Options, Acqusition Valuation and Value Enhancement (174 pages) If
you prefer two
slides per page, click here (Updated for Fall 2012 class)
Part
IV: Closing Presentation
PLEASE NOTE: A GLITCH IN THE SYSTEM LAST WEEK (AROUND JANUARY 23, 2013) HAS CAUSED A PASSWORD REQUEST TO POP UP. I AM WORKING ON GETTING THAT FIXED AND IT SHOULD BE BY NEXT WEEK. IN THE MEANTIME, YOU CAN ACCESS THE WEBCASTS OF THE CLASSES BY GOING TO ONE OF TWO PLACES:
LORE: http://lore.com/Valuation:-Fall-2012 (Use this code: d8d90ab1588b)
ITUNES U:
https://itunesu.itunes.apple.com/audit/COK8RVCXTC (Enrollment code: J4K-4AY-TMC)
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 |
|
| Valuation bias: A test and my solutions | Introduction
to Valuation (Page 4-End) Lecture note packet 1: Page 1-8 |
|
| Valuation: How much detail? Valuation approaches DCF: Valuation choices |
||
Valuation of the week (Facebook in August 2012) |
Google spreadsheet for your estimates | |
| Cash flow consistency: A test (Congoleum) | Lecture note packet 1: 9-36 |
|
DCF: The consistency principles |
||
Weekly challenge # 1 |
Reconciling firm and equity valuation | Weekly challenge #1 Solution |
Valuation of the week: Valuing the iPhone 5 franchise |
My valuation of the iPhone franchise | Google spreadsheet for your estimates |
| Risk Premiums: A test | Lecture note packet 1: 36-56 | |
| Equity risk premiums - Historical risk premiums and their limitations - Country risk premiums - Estimating company risk exposure to country risk |
||
| Weekly Challenge # 2 | Country risk and risk premiums | Weekly challenge # 2 Solution |
5 (9/24/12)
|
Implied Equity Risk Premiums: A test | Lecture note packet 1: 57-72 Replacement for page 66 Handout for ERP test at start of class |
| Implied Equity Risk Premiums - More on estimation - Interaction with other "risk" premiums First steps on betas |
||
| Valuation of the week: JP Morgan Chase | My valuation of JP Morgan (September 2012) | JP Morgan Earnings JP Morgan Cash flows JP Morgan Balance Sheet |
| 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: 73-92 | |
| Bottom up beta: The approach The cost of debt Debt ratios |
||
Valuation of the week: Microsoft in September 2012 |
My valuation of Microsoft | Microsoft 10K |
| Cash flows: A test | Lecture note packet 1: 93-113 | |
Closing the books on cost of capital |
||
| Weekly Challenge # 3 | Adjusting Operating Earnings |
Weekly challenge Solution & Synthetic rating |
| Growth rates I: A test | Lecture note packet 1: 114-145 | |
More on cash flows |
||
Valuation of the week: Research in Motion |
My valuation of RIM | RIM 10K RIM 10Q |
| Take the first quiz and check out the solution as well as the distribution of grades for the class. | Lecture note packet 1: 146-165 | |
| Fundamental Growth rates - The drivers of fundamental growth - Efficiency growth versus new investment growth - EPS, Net income and Operating income - Growth for money losing companies |
||
| Weekly Challenge # 4 | Estimating fundamental growth |
Weekly challenge Solution |
| Terminal Value: A test | Lecture note packet 1: 166-195 | |
| Terminal value - Approaches (right and wrong) - Constraints Choosing the right DCF model Loose Ends in Valuation (Cash and cross holdings) |
||
Weekly Challenge #4a |
Terminal Value | Weekly challenge Solution |
| Loose Ends: A test | Lecture note packet 1: 196-225 | |
| Dealing with cross holdings Other assets Complexity Management Options |
||
| Weekly Challenge # 5 | Management Options and Equity Value | Weekly challenge Solution |
| DCF valuation: A test | Lecture note packet 1: 226-250 | |
| Macro effects on valuation The Dark Side of Valuation - Valuing young, start up companies - Valuing mature companies in transition |
||
Valuation of the week (Ambev) |
US $ valuation of Ambev R$ valuation of Ambev |
Ambev financials (summary) |
| DCF Valuation II: A test | Lecture note packet 1: 251-285 | |
| More on the dark side of valuation - Valuing declining & distressed companies - Valuing emerging market companies - Valuing financial service companies |
||
| Weekly Challenge # 6 | Circular Reasoning in DCF valuation | Weekly Challenge Daimler valuation Solution |
14 (10/29/12) |
Valuing cyclical & commodity companies |
Lecture note packet: 285-End |
15 (10/31/12) Class canceled |
||
| Relative valuation I: A test | Lecture note packet 2 (modified): 1-29 | |
| Relative valuation - Essence of relative valuation - Why it is so prevalent - Deconstructing multiples |
||
Valuation of the week: Star Wars (Lucasfilm for Disney) |
My valuation of the Star Wars franchise | |
| Take the second quiz and check out the solution as well as the distribution of grades for the class. | Lecture note packet 2 (modified): 30-48 | |
| Analyzing multiples - PEG & PBV ratios - EV multiples - Finding a "cheap" stock - The value of a brand name |
||
Mystery Project (due November 19, 5 pm) |
The mystery project | Data for mystery project |
| Relative Valuation IIa: Test | Lecture note packet 2 (modified): 49-82 | |
| Finding comparables - Small versus large samples - Controlling for diffierences across companies Market regressions |
||
| Valuation of the week: Danone and Nelson Peltz | Capital structure analysis for Danone |
Danone financials |
| Relative Valuation III: TestMore market regressions Choosing the right multiple Relative vs Intrinsic valuation Private Business Valuation - Discount rates |
Lecture note packet 2 (modified): 83-118 | |
| Weekly Challenge # 8 | Relative Valuation versus DCF valuation | Weekly challenge Solution |
| Private company valuation: Test | Lecture note packet 2 (modified): 119-End Lecture note packet 3: 1-18 |
|
Valuing private businesses |
||
| Real Options: Introduction | Lecture note packet 3: 19-44 | |
| The option to delay - Valuing the option - Valuing a patent - Valuing natural resource companies The option to expand |
||
Valuation of the week: Autonomy's accounting hit |
Valuation of Autonomy: Pre-deal versus alleged post-accounting impropriety | HP press release for deal HP annual report - 2011 HP press release on write off |
| Take the third quiz and check out the solution as well as the distribution of grades for the class. | Lecture note packet 3: 45-67 | |
| The option to expand The option to abandon Value of financial flexibility |
||
| Valuing distressed equity as an option Acquisition valuation - Track record - Tests on cost of equity/capital - The control premium |
Lecture note packet 3: 68-100 | |
| The HP/Autonomy Deal | Lecture note packet 3: 101-123 | |
| Acquisition Valuation - Valuing synergy - Transaction multiples - CEO whims - Success with an acquisition strategy Value Enhancement versus Price Enhancement |
||
| Start of the class test on value enhancement | Lecture note packet 3: 124-149 | |
| The drivers of value - Cash flows - Expected growth - Excess returns and competitive advantages - Cost of capital The expected value of control |
||
| Summary of valuations/recommendations | Closing presentation | |
| Wrapping up Dante meets DCF: A quick 10-question test of your DCF savvy Most under valued and overvalued stocks Recommendations |
||
Final exam (12/14/12 |
Take the final and check against the solution Check your grade |