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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

  1. Introduction to Valuation (Updated for Spring 2024 class).
  2. Part I: Discounted Cashflow Valuation: This is a pdf file and works well if you have an iPad or tablet to read it on If you have trouble printing this file, download the powerpoint file. You can then choose to print the slides, one to a page, two or a page, in note format or whatever your heart desires. (Updated for Spring 2024 class)
  3. Part II: Relative Valuation and Private Company Valuation : This is a pdf file and works well if you have an iPad or tablet to read it on If you have trouble printing this file, download the powerpoint file. You can then choose to print the slides, one to a page, two or a page, in note format or whatever your heart desires. (Updated for Spring 2024 class).
  4. Part III: Real Options, Acqusition Valuation and Value Enhancement: This is a pdf file and works well if you have an iPad or tablet to read it on If you have trouble printing this file, download the powerpoint file.You can then choose to print the slides, one to a page, two or a page, in note format or whatever your heart desires. (Updated for Spring 2024 class).
  5. Part IV: Closing Presentation

Webcasts
This page will include the webcasts from the current class. The webcasts can be accessed in one of four ways:

  1. 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 and the most information)
  2. Video podcast (The file will be downloaded to your computer and you can watch the video using Quicktime or video software or on your iPod)
  3. 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.
  4. YouTube videos (if you have slower internet connection and/or a small device).

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
What is this class about?
 

1 (1/29/24)

  1. Recorded session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


Valuation: Priors and Preconceptions

  1. Syllabus for class

Introduction to Class
Post-class test and solution.
Valuation of the week #1

Tesla: Is the Corporate Teenager growing up?

  1. My blog post on Tesla on November 1, 2023
  2. My updated valuation of Tesla on January 28, 2024
  3. Tesla 10K (from 2023)
  4. Tesla's October 2023 earnings call
  5. Tesla's January 2024 earnings call
Google shared spreadsheet

2 (1/31/24)

  1. Recorded session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


Valuation bias: A test and my solutions
  1. Project Description
  2. Introduction to Valuation (1-11)

Valuation Project/Grading Criteria
The Bermuda Triangle of Valuation
Intrinsic Valuation: The Big Picture
Relative Valuation: The Big Picture
Real Options

Post-class test and solution.
Valuation Tools Webcast #1
Downloadable webcast
YouTube
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.
  1. Presentation
  2. P&G: 10K
  3. P&G: Valuation (Excel spreadsheet)

3 (2/5/24)

  1. Recorded session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


Cash flow consistency: A test (Congoleum)
  1. Introduction to Valuation (11-End)
  2. Lecture Note Packet 1 (1-12)


Relative Valuation: The Big Picture
Real Options
Cash flow Consistency

Post-class test and solution.
Valuation of the week #2

Valuing Intangibles: The Birkenstock Valuation

  1. My blog post on Birkenstock
  2. Birkenstock Prospecus
  3. My valuation of Birkenstock
Google shared spreadsheet

4 (2/7/24)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube

 

Risk free Rates: A test
  1. Lecture note packet 1: Pages 13-41
  2. Sovereign Ratings - January 2024
  3. Sovereign CDS Spreads - January 2043

DCF Big Picture
Risk: What matters and what does not....
The Risk free Rate
- The inflation effect
- Estimation and Usage
- Differences across Currencies

Post-class test and solution.
Weekly Challenge #1

Reconciling firm and equity valuation

  1. Weekly challenge #1
  2. Solution
Valuation Tools Webcast #2
Estimating a risk free rate

Estimating a risk free rate

Estimating a risk free rate should be simple but it is often not. In some currencies, where there are no default free entities, it may take some work getting to a risk free rate. In this webcast, I look at the mechanics of this adjustment.

  1. Presentation
  2. Moody's ratings (3/13)
  3. CDS spreads (3/13)

5 (2/12/24)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube

 

Country and Currency Risk Lecture note packet 1: Pages 42-66

Country Risk and Company Risk Exposures
Implied Equity Risk Premiums
- More on estimation
- Interaction with other "risk" premiums

Post class test and solution
Valuation of the week # 3

Aramco: A loaded bet on Oil and the House of Saud

  1. Aramco's Prospectus
  2. My blog posts on Aramco
    1. A coming out party for the world's largest company
    2. Regime Change and Value
  3. Updated financials for Aramco (through 2024)
  4. My updated valuation of Aramco on Feb 14, 2024
Google Shared Spreadsheet

6 (2/14/24)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


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.
  1. Presentation
  2. Spreadsheet
  3. S&P 500 on buybacks
  4. S&P 500 earnings
Valuation Tools Webcast #4
Company Equity Risk Premium
Estimate a company's equity risk premium
  1. Webcast
  2. Presentation
  3. ERP & GDP spreadsheet
Review session for Quiz 1
Webcast
Review session for the first quiz
  1. Review presentation
  2. Past Quiz 1s
  3. Solution to Past Quiz 1s
Valuation of the week # 4

JP Morgan: Valuing a Bank with the dividend discount model

  1. JP Morgan Chase Financials
  2. My valuation narrative of JP Morgan
  3. Valuation spreadsheet for JP Morgan Chase
Google Shared Spreadsheet
7 (2/21/24) (Zoom session)
  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube

Cashflows: A Test

Lecture note packet 1: 92-116

More bottom up betas
Cost and weight ofDebt in Cost of Capital
Hybrids in Cost of Capital
Free Cash Flows - The Big Picture
Earnings and cash flows: A Start

Post class test and solution
Valuation Tools Webcast #5a
Trailing 12 month earnings
How to use financial statements to create trailing 12 month numbers
  1. Apple: 10K
  2. Apple: 10Q
  3. Apple Trailing 12-month (spreadsheet)

8 (2/26/24)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube


Cash Flows: A test

Lecture note packet 1: 117-145

Blog post on Free Cashflow

Capitalizing lease expense
Capitalizing R&D
Extraordinary & one-time losses
Accounting Fraud & Negative Earnings
Tax Rates
Reinvestment

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)

  1. A Post on the value of the Star Wars Franchise (December 2015)
  2. Star Wars Franchise Valuation spreadsheet
  3. Star Wars, The Force Awakens - Actual Box Office
  4. Rogue One - Actual Box office
  5. Star Wars, The Last Jedi - Actual Box Office
  6. Solo - Actual Box Office
  7. Streaming numbers for Star Wars spin offs
No Google shared spreadsheet: Just have fun with it!

9 (2/28/24) (Quiz in first 35 minutes, shorter session)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
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
  1. Disney Annual Report
  2. Converting leases to debt (spreadsheet)
Valuation Tools Webcast #7
Capitalizing R&D expenses
The process of converting R&D (and like expenses) from operating to capital expenses
  1. Microsoft: 10K for 2012
  2. Microsoft: 10K for 2011
  3. Converting R&D to capital (spreadsheet)

10 (3/4/24)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
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)

  1. Ballmer buys Clippers: News story
  2. My blog post on the Clippers
  3. My spreadsheet for valuing the Clippers
  4. Pricing of sports franchises (NFL, NBA, MLB & NHL)
  5. Soccer and IPL Cricket Team numbers
 

11 (3/6/24)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Start of the class test Lecture note packet 1: 194-218

Terminal Value: Final Loose Ends
Customizing DCF Models
Loose Ends in Valuation


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.
  1. Walmart 10K (2013)
  2. Walmart 10K (2012)
  3. Spreadsheet
Valuation Tools Webcast #9 (Checking Terminal Value)
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)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Start of the class test Lecture note packet 1: 219-238

Loose Ends in Valuation
- Dealing with Cash
-Dealing with cross holdings
- Other assets
- Complexity
- Debt

Post class test and solution
Valuation of the week #7

Stories and Numbers

  1. A Disruptive Cab Ride to Riches: My June 2014 Uber valuation
  2. Possible, Plausible and Probable: Big Markets and Networking Effects
  3. Up, up and away: A Crowd Valuation of Uber in December 2014
  4. My IPO post on Uber & valuation of Uber (June 2019)
  5. Uber's updated financials (2024)
Google shared spreadsheet

13 (3/13/24)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Start of the class test Lecture note packet 1:239-263

Stories and Numbers
- Steps in story telllingTie to Valuation Inputs
- Checking the story
- Connecting to inputs

Post class test and solution
Weekly Challenge #5
Management Options and Equity Value

Weekly challenge
Solution & Option value

Valuation Tools Webcast #10: Dealing with Employee Options
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 Quiz 2
Webcast
Review session for the second quiz
  1. Review presentation
  2. Past Quiz 2s
  3. Solution to Past Quiz 2s

14 (3/25/24)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Start of the class test Lecture note packet 1: 264-289

More on story telling
Story breaks, changes and shifts

Valuation training wheel
Valuing in a crisis
Valuing the market


Post class test and solution
Valuation of the week #8

Valuing the Index

  1. My (very old) post on market bubbles
  2. Bubble talk now (WSJ, CNBC, CNN, Economist)
  3. Background data for index valuation
    - S&P 500 Buyback report (3/15/24)
    - S&P Historical earnings & dividends
    - Analyst forecasts of earnings for S&P 500
  4. Intrinsic value of the S&P 500 (current)
Google shared spreadsheet

15 (3/27/24)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Start of the class test Lecture note packet 1: 290-317

The Dark Side of Valuation
- Valuing young companies
- Valuing Mature Companies in Transition


Post class test and solution

16 (4/1/24)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Quiz 2 (Quiz and solution) Lecture note packet 1: 318-338

Valuing Declining and Distressed Companies
Valuing financial service companies
Valuing commodity companies
Closing up intrinsic value

Post class test and solution

17 (4/3/24)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Start of the class test

Lecture note packet 1: 338-End, Lecture note packet 2: 1-12

Valuing commodity companies
Deconstructing a multiple
Consistency & Uniformity Tests
Moneyball with pricing
Analytical Tests

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)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Start of the class test

Lecture note packet 2: 13-52

Analyzing a Multiple
PEG, PBV and EV Multiples
The Value of a Brand Name
Pricing examples

Post class test and solution
Pricing/Valuation of the week #8

Pricing Severstal (a Russian steel company)

  1. Severstal's financials
  2. Steel Companies - Data
  3. Steel Company Multiples - Data Analysis
  4. Pricing Severstal
No Google shared spreadsheet

19 (4/10/24

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Start of the class test

Lecture note packet 2: 53-97

Pricing young companies
Forward Multiples
Market Pricing

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.
  1. Presentation
  2. Bank raw data
  3. Descriptive Statistics

20 (4/15/24)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Start of the class test

Lecture note packet 2: 98-138

Asset Based Valuation
Valuing Private Companies: Private to Private
- Motive
- Dealing with undiversified buyers


Post class test and solution
Review session for Quiz 3
Webcast
Review session for the third quiz
  1. Webcast
  2. Review presentation
  3. Past Quiz 3s
  4. Solution to Past Quiz 3s

21 (4/17/24)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Start of the class test

Lecture note packet 2: 139-End

Valuing Private Companies: Private to Public
Valuing Private Companies: Private to IPO
Valuing Private Companies: VC to IPO


Post class test and solution

22 (4/22/24)

  1. Recorded Session
  2. Video podcast (downloadable)
  3. Audio podcast (downloadable)
  4. YouTube
Quiz 3 (Quiz and solutions)

Lecture Note Packet 3: 1-20

The Allure of Real Options
The Options Test
Option Pricing Models


Post class test and solution

23 (4/24/24)

  1. Recorded Session
  2. Video podcast (downloadable
  3. Audio podcast (downloadable)
  4. YouTube
Start of the class test

Lecture Note Packet 3: 21-60

Valuing patents
Valuing undeveloped natural resource reserves
Valuing flexibility as an option

Post class test and solution
Weekly Challenge #9
Patent valuation Weekly Challenge
Solution
Valuation Tools Webcast #13: Valuing Patents as Options
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.
  1. Presentation
  2. Spreadsheet
Valuation Tools Webcast #14: Valuing Distressed Equity as an Option
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.
  1. Jet India Financials
  2. Jet DCF valuation
  3. Jet Option valuation
Review session for Final
Webcast

Review session for the final exam

  1. Review presentation
  2. Past finals
  3. Solution to past finals