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This 26-session equity valuation class will be recorded starting January 29, 2024, 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
This page will include the webcasts from the current class. The webcasts
can be accessed in one of four ways:
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 |
||
| Introduction to Class | ||
| Post-class test and solution. | ||
Valuation of the week #1 |
Tesla: Is the Corporate Teenager growing up? |
Google shared spreadsheet |
| Valuation bias: A test and my solutions | ||
Valuation Project/Grading Criteria |
||
| 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) | ||
|
||
| Post-class test and solution. | ||
Valuation of the week #2 |
Valuing Intangibles: The Birkenstock Valuation |
Google shared spreadsheet |
| Risk free Rates: A test | ||
DCF Big Picture |
||
| Post-class test and solution. | ||
Weekly Challenge #1 |
Reconciling firm and equity valuation |
|
Valuation Tools Webcast #2 Estimating a risk free rate |
Estimating a risk free rate |
|
| Country and Currency Risk | Lecture note packet 1: Pages 42-66 | |
Country Risk and Company Risk Exposures |
||
| Post class test and solution | ||
Valuation of the week # 3 |
Aramco: A loaded bet on Oil and the House of Saud |
Google Shared Spreadsheet |
| Betas and Relative Risk: A test | Lecture note packet 1: 67-91 | |
| Wrapping up implied ERP First steps on betas Measuring Relative Risk (Betas & Alternatives) Bottom up Betas |
||
| Post class test and solution | ||
| Weekly Challenge # 2a | Implied Premium versus Riskfree Rate |
Implied premium challenge, data and solution |
| Valuation Tools Webcast #3 Implied Equity Risk Premiums |
The logic and the measurement questions behind equity risk premiums are examined in this webcast. | |
Valuation Tools Webcast #4 Company Equity Risk Premium |
Estimate a company's equity risk premium | |
| Review session for the first quiz | ||
Valuation of the week # 4 |
JP Morgan: Valuing a Bank with the dividend discount model |
Google Shared Spreadsheet |
7 (2/21/24) (Zoom session) |
Cashflows: A Test | |
More bottom up betas |
||
| Post class test and solution | ||
| Valuation Tools Webcast #5a Trailing 12 month earnings |
How to use financial statements to create trailing 12 month numbers | |
| Cash Flows: A test | ||
Capitalizing lease expense |
||
| Post class test and solution | ||
| Weekly Challenge # 3 | Adjusting Operating Earnings |
Weekly challenge #3 Solution & Synthetic rating |
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, though it has found new life as a streaming franchise) |
No Google shared spreadsheet: Just have fun with it! |
9 (2/28/24) (Quiz in first 35 minutes, shorter session) |
Quiz 1 (Quiz and solution) | Lecture note packet 1: 146-172 |
| Free Cashflow to Equity Growth rates - Historical growth rates - Analyst estimates of growth - Fundamental Growth: First steps |
||
| No post class test | ||
| Weekly Challenge # 4 | Estimating fundamental growth |
Weekly challenge Solution |
| 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 | |
| Start of the class test | Lecture note packet 1: 173-193 | |
Fundamental growth rates - Efficiency growth - Growth when margins are changing Terminal Value: Constraining Rules |
||
| Post class test and solution | ||
Valuation of the week #6 |
Valuing a Sports Franchise (from 2014) |
|
11 (3/6/24) |
Start of the class test | Lecture note packet 1: 194-218 |
Terminal Value: Final Loose Ends |
||
| Post class test and solution | ||
Weekly Challenge #4a |
Terminal Value | 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. | |
| 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 (3/11/24) |
Start of the class test | Lecture note packet 1: 219-238 |
Loose Ends in Valuation |
||
| Post class test and solution | ||
Valuation of the week #7 |
Stories and Numbers |
Google shared spreadsheet |
13 (3/13/24) |
Start of the class test | Lecture note packet 1:239-263 |
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 (3/25/24) |
Start of the class test | Lecture note packet 1: 264-289 |
More on story telling Valuation training wheel |
||
| Post class test and solution | ||
Valuation of the week #8 |
Valuing the Index
|
Google shared spreadsheet |
15 (3/27/24) |
Start of the class test | Lecture note packet 1: 290-317 |
The Dark Side of Valuation |
||
| Post class test and solution | ||
16 (4/1/24) |
Quiz 2 (Quiz and solution) | Lecture note packet 1: 318-338 |
Valuing Declining and Distressed Companies |
||
| Post class test and solution | ||
17 (4/3/24) |
Start of the class test | |
Valuing commodity companies |
||
| Post class test and solution | ||
Weekly Challenge #6 |
Multiple: Definitional test | Weekly Challenge Solution |
Valuation Tools Webcast #11: EV, Firm Value and Equity Value |
The "value" embedded in a multiple can be the value of the entire firm, the value of its operating assets (enterprise value) or the value of the equity. In this webcast, I look at the differences between the three and why you may use one over the other. | Blog post on topic Presentation Excel spreadsheet |
18 (4/8/24) |
Start of the class test | |
Analyzing a Multiple |
||
| Post class test and solution | ||
Pricing/Valuation of the week #8 |
Pricing Severstal (a Russian steel company) |
No Google shared spreadsheet |
19 (4/10/24 |
Start of the class test | |
Pricing young companies |
||
| Post class test and solution | ||
Weekly Challenge #7 |
Relative valuation | Weekly challenge Solution |
| Weekly Challenge # 8 | Relative Valuation versus DCF valuation | 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. | |
20 (4/15/24) |
Start of the class test | |
Asset Based Valuation |
||
| Post class test and solution | ||
| Review session for the third quiz | ||
21 (4/17/24) |
Start of the class test | |
Valuing Private Companies: Private to Public |
||
| Post class test and solution | ||
22 (4/22/24) |
Quiz 3 (Quiz and solution) | |
The Allure of Real Options |
||
| Post class test and solution | ||
23 (4/24/24) |
Start of the class test | |
Valuing patents |
||
| 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 companiesGMT20240501-192816_RecordingGMT20240501-192816_Recording_1920x1080, 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 |
||
24 (4/29/24) |
Through the class test | |
Valuing distressed equity as an option |
||
| Post class test and solution | ||
25 (5/1/24) |
Start of class test | |
Valuing Synergy |
||
| Post class test and solution | ||
| Project summaries (for entire class) | ||
Closing Presentation |
||
| Final Exam (5/8/24) | Final Exam and Solutions |